Top Careers & You

Indian Economy
Sectoral Growth

Sectoral Growth
India is world's 12th largest economy and also the 4th largest in terms of purchasing power parity adjusted exchange rates (PPP). It is the 128th largest in the world on per capita basis and 118th by PPP. However, the development has not been uniform across various sectors. India's Economic Development: Role of States The states have a major role to play in the economic development of India because without effective participation in the development process, no development can be meaningful. There are a few states which have higher annualized 1999-2008 growth rates compared to others. The growth rates for the states like Gujarat (8.8%), Haryana (8.7%) and Delhi (7.4%) are considerably higher than those for other states like Bihar (5.1%), Uttar Pradesh (4.4%) and Madhya Pradesh (3.5%). Economic Development: The Decisive Factors Economic development of India largely rests upon a few factors, which prove to be decisive. The World Bank report states that; for a better economic development, India needs to give due priorities to various issues like infrastructure, public sector reform, agricultural and rural development, reforms in lagging states, removal of labour regulations and HIV/AIDS. Agriculture In farm output, India ranks second in the world. In 2009, agriculture and forestry, logging and fishing comprised about16% of the GDP which employed around 55% of the population. Though its share of the GDP has declined, it is still the largest economic sector and plays a major role in the socio-economic development of the country. The country is the world's largest producer of tea, turmeric, black pepper, ginger, milk, cashew nuts. It is also the second largest producer of wheat, rice, groundnut, sugar and inland fish and third largest tobacco producer. Around 10% of the world fruit production is from India with the highest production of bananas and mangoes. India is the world's largest silk consumer and the second largest silk producer. Since 1950, India has observed a steady growth in the yields per unit area of all the crops. And the reason behind this is the special emphasis given on agriculture in the five-year plans. In the late 60s, the country saw green revolution. This has led to improvements in various areas like irrigation, technology, provision of agricultural credit, application of modern agricultural practices and subsidies. India has done considerably well in agriculture and allied sectors. The country is the worlds largest producer of tea, coconut, cashew nuts, black pepper, turmeric, ginger and milk. India also has the largest cattle population in the world. It is the worlds second largest producer of sugar, rice, wheat and inland fish. It is in the third position in the list of tobacco producers in the world. India also produces 10% of the overall fruit production in the world, holding the first position in banana production. Second Green Revolution in India The urgent need for taking agriculture to a higher trajectory of 4 per cent annual growth can be met only with improvement in the scale as well as quality of agricultural reforms undertaken by the various states and agencies at the various levels. These reforms must aim at efficient use of resources and conservation of soil, water and ecology on a sustainable basis, and in a holistic framework. Such a holistic framework must incorporate financing of rural infrastructure such as water, roads and power.

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Indian Economy
Sectoral Growth

The Approach Paper to the Eleventh Five Year Plan has aptly highlighted such a holistic framework and suggested the following strategy to raise agricultural output. Doubling the rate of growth of irrigated area Improving water management, rain water harvesting and watershed development Reclaiming degraded land and focusing on soil quality Bridging the knowledge gap through effective extension Diversifying into high value outputs, fruits, vegetables, flowers, herbs and spices, medicinal plants, bamboo, bio diesel, but with adequate measures to ensure food security Promoting animal husbandry and fishery Providing easy access to credit at affordable rates Improving the incentive structure and functioning of markets; and Refocusing on land reform issues

National Commission on Farmers has already laid the foundation for such a framework. Program formulation as well as their implementation in the States must be based on unique regional contexts incorporating agro climatic conditions; and availability of appropriate research and development (R and D) backed by timely and adequate extension of finance. Agriculture Holdings in India Type Holding (in hect.) (% of Total) 59% 32.2% 7.2% 1.6%

Marginal Holding Less than one Small Holding Medium Holding Large Holding 1-4 4 - 10 More than 10

Other Revolutions Revolution Yellow Revolution White Revolution Blue Revolution Pink Revolution Gray Revolution Area Oil seeds Milk Fish Shrimp Wool

Golden Revolution Horticulture White Revolution and Operation Flood in India White revolution is associated with a sharp increase in milk production. During 1964 65, Intensive Cattle Development Program (ICDP) was introduced in the country in which a package of improved animal husbandry was given to cattle owners for promoting white revolution in the country. Later on, to accelerate the pace of white revolution, a new program named Operation Flood was introduced in the country. The Operation Flood Program, which is the worlds largest integrated dairy development program, has made considerable progress in achieving its outlined objectives.

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Indian Economy
Sectoral Growth

Buffaloes, Cows and Goats contribute 50%, 46% and 4% respectively in total milk production of the country. India stands first in the world in milk production. USA stands second in the world. Dr. Varghese Kurien is the pioneer of operation flood in India. Industrial Output India occupies 14th position in the world in industrial output. The manufacturing sector along with gas, electricity, quarrying and mining accounts for about 27% of the countrys GDP. It also employs 20% of total workers. The economic reforms of 1991 brought a number of foreign multinational players to the Indian market. The period saw the privatization of several pubic sector industries. Consequently, expansion in the production of FMCG (Fast-moving Consumer Goods) started taking place. But these multinationals brought a lot of competition with them for their Indian counterparts. However, the Indian firms managed to handle it by cutting down costs, refurbishing management, banking on technology and low labour costs and concentrating on new products designing. After agriculture, textile manufacturing has the second largest employment and comprises 24% of manufacturing output. Distinction between Cottage, Small and Village Industries In a broad sense, cottage, small and village industries are treated similar but they fundamentally differ from each other. Cottage industry is run by family members on full or part time basis. It possesses negligible capital investment. There is hand made production and no wage earning person is employed in cottage industry. Small industrial units employ wage earning labour and production is done by the use of modern techniques. Capital investment is also there. A few cottage industries which are export oriented have been included in the category of small sector so that facilities provided to small units may also be given to export oriented cottage industries. The industries established in rural areas having population below 10,000 and having less than 15,000 as fixed capital investment per worker will be termed as village industries. KVIC and State Village Industries Board provide economic and technical assistance in establishing and operating these industrial units. Services One of the fastest growing sectors is business services which includes information technology enabled services, information technology, business process outsourcing etc. In services output, India occupies 15th spot in the world. Around 25% of the total workforce in India works in service industry. This sector provides quick growth (growth rate of 7.5% during 1991-2000 from 4.5% in 1951-80). With a substantial growth in IT sector, a number of foreign consumers are showing interests in Indias service exports as India has got low cost, educated, highly skilled workers in abundance. Besides this, ITES-BPO sector has also become a big source of employment for a number of youths. Seven Indian firms were among the world's top 15 technology outsourcing companies in 2009. The annual revenues from outsourcing operations amounted to US$60 billion in March 2009. As of 2008, organized retail like supermarkets was 4% of the market. Tourism is also a booming industry now. The Indian service sector has performed a major role in complementing Indias growth. Since 2007, the growth rate in this sector has been around 12% on an average with around 55% contribution to the GDP. During the same time, the industrial sector grew by around 11% and contributed around 32% to the GDP.

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Indian Economy
Sectoral Growth

Banking and Finance The Indian money market is divided into the organized sector and unorganized sector. The organized sector includes private, public and foreign owned commercial banks and cooperative banks known as scheduled banks. The unorganized sector includes individual or family bankers, money lenders and nonbanking financial companies (NBFCs). It is mandatory that banks provide 40% of their net credit to important sectors like agriculture, retail trade, small-scale industry, small businesses etc. In 1969, 14 banks were nationalized by Prime Minister Indira Gandhi and six more nationalized in 1980. Around 75% of the banking industry's total assets are held by public sector banks, 18.2% are held by private banks and 6.5% are held by foreign banks. The Rural Economy The Rural Economy in India is wholly agriculture based. It plays a vibrant role due to its forward-backward linkages with other sectors of the economy. Agriculture is the mainstay of the Indian economy. Further, Rural Economy in India has been playing an important role towards the overall economic growth and social growth of India. India has been predominantly an agriculture-based country and it was the only source of livelihood in ancient time. Today, the Ministry of Agriculture, the Ministry of Rural Infrastructure, and the Planning Commission of India are the main governing bodies that formulate and implements the policy related to rural economy in India and its subsequent development for the overall growth of the Indian economy.

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