Introduction of Economy – 02
These are specialized tertiary activities in the ‘Knowledge Sector’ which demands a separate classification. The quaternary sector is the intellectual aspect of the economy. It is the process which enables entrepreneurs to innovate and improve the quality of services offered in the economy.
Personnel working in office buildings, elementary schools and university classrooms, hospitals and doctors’ offices, theatres, accounting and brokerage firms all belong to this category of services.
Like other tertiary functions, quaternary activities can also be outsourced.
The quinary sector is the part of the economy where the top-level decisions are made. This includes the government which passes legislation. It also comprises the top decision-makers in industry, commerce and also the education sector.
These are services that focus on the creation, re-arrangement and interpretation of new and existing ideas; data interpretation and the use and evaluation of new technologies.
Profession under this category often referred as ‘gold collar’ professions, they represent another subdivision of the tertiary sector representing special and highly paid skills of senior business executives, government officials, research scientists, financial and legal consultants, etc.
DEVELOPED AND DEVELOPING ECONOMIES
A developed economy is typically characteristic of a developed country with a relatively high level of economic growth and security. Standard criteria for evaluating a country’s level of development are income per capita or per capita gross domestic product, the level of industrialization, the general standard of living, and the amount of technological infrastructure.
Noneconomic factors, such as the human development index (HDI), which quantifies a country’s levels of education, literacy, and health into a single figure, can also be used to evaluate an economy or the degree of development.
The most common metric used to determine if an economy is developed or developing is per capita gross domestic product (GDP).
Classification is determined on:
- A country’s GNI per capita, which can change with economic growth, inflation, exchange rates, and population. Revisions to national accounts methods and data can also influence GNI per capita.
- Classification thresholds, which are adjusted for inflation annually using the Special Drawing Rights (SDR) deflator.
The World Bank assigns the world’s economies into four income groups — high, upper-middle, lower-middle, and low. As of July 1 2019, the new thresholds for classification by income are:
|Threshold||Gross National Income Per Capita (current US $)|
|Lower-middle Income||1,026 – 3,995|
|Upper-middle Income||3,996 – 12,375|
Of 218 economies, 80 are in the high-income group, 60 in the upper-middle, 47 in the lower-middle and 31 in the low-income group. The classification is updated on the first day of July every year. India (2020) fall in the lower-middle-income group. Among fellow developing economies—BRICS—India is the only country in the lower-middle-income group. Others are fall in the upper-middle income group.
Major Characteristics of Developing Countries are:
- Low per – capita income
- Low levels of human capital
- High levels of poverty and under-nutrition
- Higher population growth rates
- Predominance of agriculture and low levels of industrialization
- Low level of urbanization but rapid rural – to – urban migration
- Dominance of informal sector
- Underdeveloped labour, financial, and other markets.
- A high volatility of the exchange rate which implies greater risk in trading.
- A reduced opening for accepting foreign investors.
FEATURES OF INDIAN ECONOMY
Let us now list the features of Indian economy as follows:
Heavy population pressure
India is maintaining a very high rate of growth of population since 1950. Thus the pressure of population in our country is very heavy. This has resulted from a very high level of birth rates coupled with a falling level of death rates prevailing in our country.
In India, the rate of growth of population has been gradually increasing from 1.31 per cent annually during 1941-50 to 2.5 per cent annually during 1971-81 to 2.11 per cent annually during 1981-91 and then finally to 1.77 per cent during 2001-2011.
The prime cause behind this rapid growth of population is the steep fall in its death rate from 49 per thousand during 1911-20 to 7.1 per thousand in 2011. On the other hand, compared to its death rate, the birth rate of our population has gradually declined from 49 per thousand during 1911-20 to 21.8 per thousand in 2011.
This imposes a greater economic burden on the economy of our country as to maintain such a rapidly growing population we require food, clothing, housing, schooling, health facilities etc. in greater magnitude. Besides, this fast rate of growth of population is also responsible for rapid increase in the labour force in our country.
Dependence of population on agriculture:
Indian economy is characterised by too much dependence on agriculture and thus it is primary producing. Out of the total working population of our country, a very high proportion of it is engaged in agriculture and allied activities, which contributed a large share in the national income of our country. In 2004, nearly 58 per cent of the total working population of our country was engaged in agriculture and allied activities and was contributing about 21.0 per cent of the total national income.
In most of the countries of Asia, Middle East and Africa, from two-thirds to four- fifths of their total population are solely dependent on agriculture. In most of the developed countries like U.K., U.S.A. and Japan, the percentage of active population engaged in agriculture ranges between 1 to 5 per cent.
In India 58 per cent of its active population is engaged in agriculture but agriculture contributes only about 21 per cent of the national income of our country. Moreover, low agricultural productivity, lack of modernisation and lack of diversification in its output are some of the basic problems from which our agricultural sector is suffering.
Thus our agricultural sector is overburdened as the majority of our active population is depending on agriculture.
Poverty and Inequality income distribution
Unequal asset distribution is the primary cause of inequality in income distribution in rural areas. This inequality also highlights the fact that the resource base of 50 percent of households in India is weak. It is so weak that it can barely provide them with anything above the subsistence level of income.
Poverty goes with inequality in income and wealth distribution. Very few in India posses materials and wealth while majority have control over no or very little wealth in terms of land holding, house, fixed deposits, shares of companies, savings etc. Only top 5 percent of households control about 38 percent of total wealth in India while the bottom 60 percent of household has control over only 13 percent of the wealth. This indicates concentration of economic power in a very few hand.
India is a planned economy. Its development process has been continuing through five year plan since the first plan period during 1951-56. The advantage of planning is very well known. Through planning the country sets its priorities first and provides the financial estimates to achieve the same. Accordingly efforts are made to mobilise resources from various sources at least cost.
India has already completed eleven five year plan periods and the twelfth plan is in progress. After every plan a review is made analysing the achievements and short falls. Accordingly, things are rectified in the next plan. Today India is a growing economy and recognised everywhere as a future economic power. The per capita income of India is growing at a higher rate than before. India is seen as a big market for various products. All these are possible due to planning in India.
Digital economy refers to an economy that is based on digital computing technologies, although we increasingly perceive this as conducting business through markets based on the internet.
The Digital Economy is worth three trillion dollars today. It is widely accepted that the growth of the digital economy has widespread impact on the whole economy. Various attempts at categorizing the size of the impact on traditional sectors have been made.
OPPORTUNITIES IN INDIA
Digital economy has the power to change the lives of millions of people in India. India is developing a “mobile-first” digital culture, with smartphones fuelling a boom in ecommerce and other forms of business. With a rapidly growing middle class, and a young, tech-savvy population, online personal services are about to take a big jump.
International companies are looking to increase their investment in India’s digital economy. Improved telecom infrastructure as well as affordable smart phones now gives the opportunity to benefit from services such as banking and retail. According to industry experts, India has the potential to grow to USD 2 to 3 to 4 trillion digital economies by 2022. Digital economy has the potential to generate huge employment opportunities. Digital skilling has lot of potential as India has rich talent pool that can be used to meet global demand
As the central bank, the RBI has been playing a vital role in promoting payment and settlement of monetary transactions involving the banking system. RBI has developed a well structured payment and settlement system that facilitate the transfer of money all across the country.
In the payment and settlement front, initiatives taken by RBI in the mid-eighties and early-nineties focused on technology-based solutions for the improvement of the payment and settlement system infrastructure, coupled with the introduction of new technologies. One such important development was the introduction of electronic fund transfer.
DIGITAL PAYMENT SYSTEMS
National Electronic Fund Transfer (NEFT)
The initial electronic fund transfer system introduced in the late 1990s enabled an account holder of a bank to electronically transfer funds to another account holder with any other participating bank. Later in 2005, RBI has launched National Electronic Fund Transfer (NEFT) Scheme with advanced and secure features for facilitating one-to-one funds transfer requirements of individuals / corporate.
Individuals, firms or corporate maintaining accounts with a bank branch can receive funds through the NEFT system. It is, therefore, necessary for the beneficiary to have an account with the NEFT enabled destination bank branch in the country.
There is no limit – either minimum or maximum – on the amount of funds that could be transferred using NEFT. However, maximum amount per transaction is limited to Rs.50, 000/- for cash-based remittances within India.