Read this article to learn why India is Considered as a Developing Economy!

After 62 years of Indian independence the economy has achieved several qualities for which she can be considered as a developing nation.

Following are some important reasons behind this terminology:

(i) Increase in Net National Product:

According to the CSO (Central Statistical Organization), India’s net national product at factor cost (NNP at FC), i.e. national income was only Rs 1, 32,367 crores in 1950-51 increased to Rs 12,66,005 crores in 2003-04. During the last two decades the national income has increased significantly to 5.8 % per year compared to 3.4% in first three decades. NN. estimates of first two years of 10th Fiver year plan are available. In these two years NNP rose at the rate of 6.5% per year although the growth rate was not adequate still it reflects some sign of improvement in terms of NNP at FC.

(ii) Increase in Per Capita (Per Head) Income:


Increase in per capita net national product at factor cost (per capita income) is considered to be far better index of economic growth. For this reason the planners of Indian economy want to progress the economic growth in terms of per head income.

According to 1993-94 prices, Indian’s per capita income in 1950-51 was Rs, 3,687.1. In 2003-04, within the five decades the per capita income rose to Rs 11,798.7, Although the Planning Commission expected that the per capita income of India would be doubled in twenty years.

However this is an over-optimistic view without any basis. Over twelve years since 1992, the per capita income increased at a rate of 4.2% per year. In the first two years of 10th Five Year Plan per capita NNP at FC increased at the rate of 4.7 per year. However, the overall performance throughout the planning period was not adequate due to long past colonial exploitation.

(iii) Rise in Capital Formation:

According to Simon Kuznets, “Capital formation is necessary condition for economic productivity and growth.” Rise in capital formation leads to increase in the growth of primary, secondary and tertiary sectors. During the planning period the gross domestic capital formation had increased from 8.7% in 1950- 51 to 26.3% in 2003-04.

(iv) Industrial Growth:


In India there are no such uniformity during the plan periods as far as industrial growth is concerned. Indian industries during the Third Five Year Plan observed a decent growth of about 8%), but thereafter industrial stagnancy took place. In 1976-77, the growth was abnormally high, but it decreased steadily during 1979 80. Again, it rose up during 80’s, According to Economic Survey, the average] annual industrial growth rate in India which was 5.6% in First Fiver Year Plan had increased to 8.6% during The Tenth Fiver Year Plan.

(v) Agricultural Progress:

The impact of new agricultural policy, i.e., green revolution, had increased our FoodGrain production substantially from 81.0 million tonnes in the Third Plan (annual average) to 212.0 million tonnes in 2003-14. Wheat production increased from 11.1 million tonnes in 2003-04. The average annual production of rice rose from 35.1 million tonnes in Third Five Year Plan to 87.0 million tonnes in 2003 04.

(vi) Rise of Social Over Head Capital:

Social overhead capital includes transportation, irrigation, energy production, education, medical facilities etc. During the overall planning period these sectors had increased considerably.

(a) The railway’s route length increased by more than 9000 kms and the operation fleet has practically doubled.


(b) India’s road network is now one of the largest in the world. The total road length comprising national highways, state highways and other roads was 24.8 lakh kms in 2001-02. Shipping and civil aviation have also improved equally.

(c) India is still facing an energy crisis, but over the past five decades there has been a massive increase in installed electricity generating capacity. In 2003-04, the installed electricity generating capacity was 1, 21,400 MW against 2,300 MW in 1951. Likewise irrigation facilities in the country have been increased raising irrigated area from 2.26 crore hectares in 1950-51 to 8.47 crore hectares in 1999-2000.

(d) During the planning period the number of educational institutions have increased two times, whereas the number of teachers and students increased more than four times. Medical facilities have also increased during this period along with the number of doctors and number of nurses. The bed population is currently 0.93 bed per 1000 population as against 0.33 bed per 1000 population in 1950-51.