India as a Developing Economy

Countries are broadly classified as developed or developing economies based on their level of economic and social advancement. A developed economy is typically marked by high per-capita income, a predominance of industry and services in output and employment, high levels of literacy and health, and advanced infrastructure. A developing economy — the category India falls into — is one that is still in the process of moving toward those levels, and typically shows a recognisable, common set of features across countries as different as India, Bangladesh and many African and Latin American nations.

Key features that mark India as a developing economy:

1. Low per-capita income relative to developed nations. Although India's total national income has grown substantially over the decades, income divided across its very large population still leaves per-capita income well below that of developed countries. Exact current figures change every year and are published periodically by the government's own statistical machinery (the Ministry of Statistics and Programme Implementation, and bodies like the World Bank/IMF for international comparison) — this chapter deliberately does not quote a specific year's number, since the qualitative gap, not the precise figure, is the concept to understand.
2. Heavy dependence of the workforce on agriculture. A developing economy typically has a much larger share of its working population engaged in agriculture and allied activities than a developed economy does, even as that share gradually declines over time as the economy diversifies. India shows exactly this pattern (examined in more depth in the next section).
3. Historically high population growth. Developing economies, including India through much of the twentieth century, have generally experienced higher rates of population growth than developed economies, which places added pressure on resources, employment generation and public services. India's population growth rate has moderated over recent decades, but the historical pattern is a recognised feature of the developing-economy category.
4. Widespread unemployment and underemployment. Open unemployment (no work at all) coexists with substantial underemployment (working fewer hours, or at lower productivity, than a person is capable of) — particularly disguised unemployment in agriculture, where more people are engaged on land than are actually needed to produce the same output. …