Search in Indianmoney's WealthPedia

Home Articles Indian Economy and Its 7 Challenges

Indian Economy and Its 7 Challenges Research Team | Posted On Tuesday, September 24,2019, 07:47 PM

5.0 / 5 based on 1 User Reviews

Indian Economy and Its 7 Challenges



The Indian economy is one of the largest and fastest-growing economies in the world. But years after independence it has still remained in its under-development stage as the persistent problems of the economy have remained. There are some unique problems of the Indian economy that the government is still struggling to address.

Indian Economy and Its 7 Challenges

Population Growth

The economic issues in India are contributed by several internal factors. Population growth is one of them. The uncontrolled population growth has lead to an increased economic burden on the country.

With the advancement of medical science, the death rates have decreased but the birth rates are still high. India ranks second after China and has a population growth rate of 20% per decade. To accommodate the growing population the administration must take care of the basic necessities. Malnutrition, lack of proper sanitary habits and lack of clean water have impacted the living standards of the poorer people and are the major issues affecting the health of these people.

Deteriorating Infrastructure:

The deteriorating infrastructure is a massive problem affecting the Indian economy. Since independence, India has struggled to make improvements in infrastructure. Lack of proper healthcare facilities, schools, power failures, communication and banking facilities have decreased the pace of the economy. Lack of transportation and proper roads have led to the under-utilization of resources and potential of various regions. Power cuts are rampant in major cities as well. In the budget 2019, the union government has allotted an extra-budgetary expenditure on infrastructure to Rs 5.97 lakh crore.

See Also: What is an Economy?


India is listed as the 78th most corrupt country of the world. A majority of young voters say transparency is one of the major concerns in the Indian economy. Corruption is the reason for unfair regulatory and taxation system prevailing in the country. Corruption is hampering the growth and competitiveness of the country despite the measures implemented by the union government to curb corruption. The worst offenders are the people with power who are responsible for decreasing the freedom of press.


The exponential growth in population has lead to scarcity of job opportunities among the citizens of the county. The slow economic growth coupled with rapid population growth has resulted in massive wastage of manpower and lead to persistent problem unemployment.

Between July 1983 and April 1997, the number of unemployed in India increased from 5.9 million to 7 million while employment in­creased from 283.2 million to 416.4 million.

Not only this, but the Indian economy also exhibits a considerable amount of under­employment and disguised unem­ployment in the agricultural sector. Disguised unemployment is a major problem in urban areas too. The participation of woman in the workforce is also poor leading to a massive wastage of human resources. Unemployment problems have assumed a gigantic proportion.

See Also: How GDP is Calculated in India?

Scarcity of capital:

The per capita income of the country is low. Low per capita income indicates that the standards of living of the vast majority of people are miserable.

Majority of India’s population live in rural areas. Lack of infrastructure and jobs have contributed to the problem of unequal distribution of income. The rural people have a low capacity to save money. Improper banking facilities in rural areas have aggravated the problem as people have to turn to money lenders for credit needs.

Poverty is a big obstacle to India’s economic progress. The scarcity of capital due to improper banking facilities, poverty and lack of opportunities has made India a capital-poor country. To increase the saving capacity of the poor people the government have introduced the Jan Dhan Yojana. Including poor section to mainstream banking facilities may help to remove the overall backwardness of the country.

The Vicious circle of poverty:

The country is caught in a vicious circle of poverty. Poverty has led to a lack of sufficient savings to finance capital formation. Poverty itself leads to other problems like lack of proper sanitary habits and population growth. The poorer section of the population also lacks basic facilities like schooling and health care. There is no surplus capital formation as the people under the poverty level are only consumers with very less means to save or invest money.

Agriculture distress:

A vast majority of Indians carry their livelihood through agriculture. Almost 70% of the Indian population are related to agriculture and extractive industries like mining, animal husbandry; fishing etc. Although agriculture occupies a predominant position its overall contribution to the GDP is low.

The agricultural sector accounts for 17% of the GDP, the manufacturing services consists of 23% of the GDP and the biggest contributor is the services sector that accounts for 60% of the GDP. This data indicates that 70% of the population engaged in agriculture are not making getting enough income from land-related activities. The usage of primitive technology in agriculture and unemployed spells during off-seasons have rendered to the backwardness of the agricultural industry.

Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.

Have a complaint against any company?'s complaint portal can help you resolve the issue. Just visit and lodge your complaint. If you want to post a review on any company you can post it on review and complaint portal

Be Wise, Get Rich.

What is your Credit Score? Get FREE Credit Score in 1 Minute!

Get Start Now!
Get It now!

This is to inform that Suvision Holdings Pvt Ltd ("") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.