India economy conditions

1. Unemployment and Underemployment

India continues to grapple with unemployment, especially among the youth. The informal sector dominates the job market, leading to underemployment and job insecurity. Post-pandemic, unemployment rates surged in 2020, and although the situation has slightly improved since 2021, the formal sector still struggles to absorb a large portion of the labor force.

2. Income Inequality

Income inequality in India has widened, with the wealthiest 10% holding a significant portion of the nation’s wealth. Between 2016 and 2021, the rich-poor divide became more pronounced, fueled by rapid urbanization and economic policies that favored certain sectors over others. The pandemic in 2020 further exacerbated income disparity, as millions of low-income workers lost their livelihoods.

3. Agricultural Distress

Despite employing over 50% of the workforce, agriculture contributes only about 16% to the GDP. Over the past few years, rural distress has worsened due to erratic monsoons, droughts, and insufficient government support. The period between 2018 and 2020 saw a wave of farmer protests demanding better prices and relief measures, underlining the ongoing agricultural crisis.

4. Inflation and Price Stability

India has struggled with inflation over the years, particularly in food and fuel prices. In 2022, inflation rates spiked to over 6%, driven by global supply chain disruptions and the Russia-Ukraine war. Although inflation eased in 2023, price stability remains a concern, especially for the middle and lower-income groups.

5. Infrastructure Deficit

India’s infrastructure development has improved, but it remains inadequate to meet the demands of its rapidly growing population. From 2015 to 2020, the government prioritized investments in roads, railways, and digital infrastructure, yet many rural and remote areas continue to lag behind. The National Infrastructure Pipeline, launched in 2020, aims to address this gap, though progress has been slow.

6. Education and Skill Development

India’s education system faces persistent challenges in quality and access, which hamper economic productivity. Between 2017 and 2021, several initiatives, such as Skill India, were launched to bridge the skills gap, but implementation has been uneven. The shift to online learning during the pandemic in 2020 further exposed the digital divide and the need for education reform.

7. Health Care

The COVID-19 pandemic in 2020-2021 highlighted India’s healthcare vulnerabilities, including underfunded public health infrastructure, shortage of medical professionals, and limited access to healthcare in rural areas. Despite efforts like Ayushman Bharat, India still ranks low in healthcare access, which hampers overall economic resilience.

8. Banking and Financial Sector Stress

India’s banking sector has been weighed down by non-performing assets (NPAs) for several years. Between 2018 and 2020, NPAs surged due to bad loans, particularly in sectors like infrastructure and real estate. Though banking reforms and the Insolvency and Bankruptcy Code have helped reduce NPAs since 2021, financial stress remains a challenge for economic growth.

9. Regulatory and Bureaucratic Hurdles

India’s regulatory environment has been a double-edged sword. While improvements were made in the “Ease of Doing Business” rankings between 2015 and 2020, bureaucratic inefficiencies and outdated regulations still pose obstacles to entrepreneurs and investors. Recent reforms in labor laws and the Goods and Services Tax (GST) have made some progress, but implementation challenges persist.

10. Environmental Degradation

Rapid industrialization and urbanization have led to severe environmental degradation in India. Between 2017 and 2022, pollution levels, especially in major cities, reached critical levels. Deforestation, water scarcity, and air pollution pose significant risks to long-term sustainability, despite the government’s focus on renewable energy and climate action.

11. External Trade and Geopolitical Risks

India’s economy is also vulnerable to external trade shocks and geopolitical tensions. From 2019 to 2023, trade relations with countries like China became more strained, impacting key sectors such as electronics and pharmaceuticals. Global supply chain disruptions, rising oil prices, and currency fluctuations in 2022 further highlighted India’s dependence on imports.

India’s economic challenges are interconnected and require holistic solutions to foster sustainable, inclusive growth in the coming years.

India economy conditions

1. Make in India

Launched: 2014
Objective: To transform India into a global manufacturing hub by encouraging both multinational and domestic companies to manufacture their products in India.
Impact: The initiative focuses on 25 sectors, including automobiles, textiles, chemicals, and electronics, to increase investment, innovation, and skill development. It has contributed to a rise in Foreign Direct Investment (FDI) and the development of industrial corridors.

2. Atmanirbhar Bharat Abhiyan

Launched: 2020
Objective: To make India self-reliant by promoting local products, strengthening domestic industries, and reducing dependence on imports.
Impact: In response to the COVID-19 pandemic, the government announced a stimulus package under Atmanirbhar Bharat, which includes credit guarantees, liquidity support, reforms in agriculture, and measures to boost MSMEs (Micro, Small, and Medium Enterprises).

3. Pradhan Mantri Awas Yojana (PMAY)

Launched: 2015
Objective: To provide affordable housing to all by 2022, both in urban and rural areas.
Impact: PMAY has helped in stimulating the real estate and construction sectors, which are key drivers of economic growth, while also addressing housing shortages. The scheme provides interest subsidies on home loans for economically weaker sections (EWS) and low-income groups (LIG).

4. Pradhan Mantri Jan Dhan Yojana (PMJDY)

Launched: 2014
Objective: To ensure financial inclusion by providing banking services to every household, especially the unbanked population.
Impact: PMJDY has led to a significant increase in bank accounts, helping millions of people to access formal financial services. This has encouraged savings, direct benefit transfers, and improved access to credit for the poor.

5. Production Linked Incentive (PLI) Scheme

Launched: 2020
Objective: To boost domestic manufacturing and attract investment in key sectors by offering financial incentives to companies that increase their production.
Impact: Initially focused on the electronics and pharmaceuticals sectors, the PLI scheme has expanded to include 13 sectors such as textiles, automobiles, and telecom, promoting India as a manufacturing powerhouse and reducing import dependency.

6. Startup India

Launched: 2016
Objective: To foster entrepreneurship and innovation by providing financial assistance, tax benefits, and simplified regulations to startups.
Impact: The initiative has led to the rise of thousands of startups in India, creating employment and driving innovation across various sectors. It also encourages private investments through venture capital and angel investors.

7. Digital India

Launched: 2015
Objective: To transform India into a digitally empowered society and knowledge economy by improving digital infrastructure, digital literacy, and e-governance.
Impact: Digital India has accelerated the use of digital payment systems, enhanced internet penetration, and facilitated the delivery of government services through technology, contributing to economic modernization and efficiency.

8. National Infrastructure Pipeline (NIP)

Launched: 2020
Objective: To boost infrastructure development across sectors such as energy, transportation, water, and urban development by investing ₹111 trillion (approximately $1.5 trillion) by 2025.
Impact: The NIP aims to drive economic growth by creating jobs, improving connectivity, and enhancing the quality of life. It supports both public and private investment in infrastructure.

9. MUDRA (Micro Units Development and Refinance Agency) Yojana

Launched: 2015
Objective: To provide financial assistance to small and micro enterprises in the form of loans.
Impact: The scheme has empowered small businesses by offering them easier access to credit, enabling them to expand operations, generate employment, and contribute to economic growth. It primarily targets non-corporate, non-farm sectors.

10. Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)

Launched: 2019
Objective: To provide income support to small and marginal farmers.
Impact: The scheme offers direct income support of ₹6,000 per year to eligible farmers, helping improve their financial condition, reduce rural distress, and boost agricultural productivity, which in turn strengthens the economy.

11. Pradhan Mantri Garib Kalyan Yojana (PMGKY)

Launched: 2016
Objective: To alleviate poverty and provide relief to the most vulnerable sections of society, especially during crises like the COVID-19 pandemic.
Impact: Under PMGKY, the government provided free food grains, financial assistance, and other relief measures during the pandemic, which helped stabilize the economy by supporting the poor and maintaining demand.

12. Skill India Mission

Launched: 2015
Objective: To train and equip over 400 million people with market-relevant skills by 2022, focusing on enhancing employability.
Impact: The mission aims to bridge the skill gap in the workforce, boosting productivity across industries. By providing vocational training and certifications, it helps create a more skilled labor force, which is crucial for sustaining economic growth.

13. Sagarmala Project

Launched: 2015
Objective: To modernize India’s ports and promote port-led development by optimizing logistics and maritime infrastructure.
Impact: The Sagarmala Project aims to reduce logistics costs, improve port connectivity, and boost coastal shipping, contributing to the growth of trade and industrial sectors.

These schemes collectively aim to drive growth, enhance infrastructure, promote entrepreneurship, and improve the quality of life, ensuring a more resilient and inclusive economy.