Structural changes in Indian Economy refer to the changes in the sectoral composition of the economy over time. It involves a shift of resources and workforce from one sector to another. In India, there has been a significant shift in the sectoral composition of the economy since independence. The following are the details of structural changes in the Indian economy:
- Pre-Independence Period: Before Independence, the Indian economy was primarily agrarian. Agriculture was the main occupation of people, and more than 80% of the population was engaged in it. The industrial sector was underdeveloped and had limited growth.
- Post-Independence Period: After Independence, the Indian government adopted a mixed economy model, with both public and private sectors playing a significant role in the economy. In the first three decades, the Indian economy was primarily driven by the public sector, and there was an emphasis on import substitution and protectionist policies. The industrial sector expanded, and many public sector undertakings were established.
- Liberalization and Economic Reforms: In 1991, India faced a severe balance of payments crisis, which forced the government to adopt economic reforms and liberalize the economy. The reforms aimed to promote private sector participation and reduce government intervention. As a result, the services sector, particularly information technology, emerged as a significant contributor to the economy. The reforms also led to a surge in foreign investment, which helped in the growth of the economy.
- Recent Years: Since 2008, there have been significant changes in the Indian economy. The services sector, particularly the IT industry, continues to grow rapidly, and it has become the main driver of the economy. Manufacturing has also expanded, with a focus on high-value exports. However, agriculture, which still employs a large section of the population, has seen limited growth, and there are concerns about its sustainability.
In conclusion, the Indian economy has undergone significant structural changes since independence. The shift from an agrarian economy to a mixed economy and then to a service-driven economy has led to many challenges and opportunities. The government’s policies and reforms have played a critical role in shaping the economy’s structural changes, and it will be interesting to see how the economy evolves in the future.