STRUCTURAL CHANGES IN INDIAN ECONOMY BY PROF. SAYYAD I.M. DEPARTMENT OF ECONOMICS, Rayat Shikshan Sanstha’s S.M.JOSHI COLLEGE HADAPSAR, PUNE

STRUCTURAL CHANGES IN INDIAN ECONOMY Since every country thrives for development which is a ‘path dependent’ Process of structural transformation from low productive sectors to high Productive sectors (Rodrik, 2008); thus, studying the structural change in itself becomes the centre of understanding the modern economic growth (Syrquin, 1988).

Although, ‘structure’ of an economy can be defined by the supply of productive factors like natural resources, labour, capital, technology etc and their employment in different uses or Sectors while any proximate causes of change, therein causes ‘structural transformation’, which in itself is a inter-related process of various demand and supply factors. Thus, the Accumulation of physical and human capital and shifts in the composition of demand, trade, production and employment (Chenery et al, 1986; Syrquin 1988) along with initial conditions (Pack, 1988), government policies (Rodrik, 2008) all accompany ‘structural transformation’ from one stage to another

The theories which evolves implicitly in the classical literature (Singh, 2004) to the most pronounced and explicit views in the works of Kuznets (1966), Hoffman (1958), Chenery et al. (1986); all emphasized the dominant role of the structural transformations for achieving economic growth. These studies premise that the development is induced by the way of Shifting the available factors to the more efficient activities. As expected as economies develop the share of agriculture in national GDP drops over time. However, the agriculture GDP continues to grow in absolute terms (unless of course nature or politics go horribly wrong) For example India’s agriculture GDP is currently 18.5% of national GDP down form 42% in 1970.

According to A.G.B.Fisher In every progressive economy there has been a steady shift of employment and investment from the essential primary activities to secondary activities of all kinds and still to a greater extent into tertiary production. Colin Clark in his work argues that there is a close relationship between development of an economy on the one hand, and structural changes on the other and economic progress is generally associated with certain distinct necessary and predictable changes in structure of the economy.  

He writes “ A high average level of real income per head is always associated with high proportion of working population engaged in tertiary industries and low real income per head is always associated with low proportion of working population engaged in tertiary production and a high percentage in primary production.  

SHARE OF GDP BY INDUSTRY ORIGION Year 1950-51 1980-81 2010-11 Agriculture 55.4 38.0 14.3 Industry 15.0 24.0 27.9 Services 29.6 57.8 Total 100

DISTRIBUTION OF WORKING FORCE Year 1950-51 1980-81 2010-11 Agriculture 72.1 68.6 50.2 Industry 10.7 13.7 20.3 Services

RELATIVE EFFICIENCY RATIOS Year 1950-51 1980-81 2010-11 Agriculture 55.1/72.1=0.76 37.9/68.6=0.55 14.3/50.2=0.28 Industry 10.7/10.7=1.40 13.7/24=1.75 27.9/20.3=1.37 Services 29.9/17.2=1.74 38.0/17.7=2.15 20.3/20.3=2.89

Changes in Gini’s Coefficient of operational holdings in 15 Major states 1971-72 1981-82 1991-92 2002-03 Andhra Pradesh 0.603 0.599 0.576 0.543 Assam 0.422 0.519 0.494 0.366 Bihar 0.566 0.606 0.637 0.421 Gujarat 0.54 0.588 0.604 0.605 Haryana 0.464 0.598 0.675 Karnataka 0.527 0.581 0.609 Kerala 0.647 0.649 0.636 0.348 Madhya Pradesh 0.533 0.535 0.558 Maharashtra 0.526 0.571 Orissa 0.501 0.511 0.381 Punjab 0.418 0.702 0.73 0.706 Rajasthan 0.564 0.613 0.61 Tami Nadu 0.516 0.64 0.646 0.508 Uttar Pradesh 0.495 0.565 0.572 0.45 West Bengal 0.49 0.597 0.585 0.313 ALL INDIA 0.586 0.629 0.641 0.557

Distribution of workers by broad groups of industry; rural India Male Female Primary Secondary Tertiary 1980 77.5 10 12.2 87.5 7.4 4.8 1987-88 74.5 12.1 13.4 84.7 5.3 1993-94 74.1 11.2 14.7 86.2 8.3 5.5 1999-2000 74.4 12.6 16.1 85.4 9.0 5.8 2004-05 66.5 15.5 18.0 83.3 10.2 6.6

Private Investment (%) Gross Capital Formation in Agriculture & Allied as percentage of GDP in Agriculture & Allied in India. Year Public Investment (%) Private Investment (%) Total Investment (%) 1999-2000 1.94 9.29 11.23 2000-01 1.81 8.4 10.21 2001-02 2.05 9.99 12.04 2002-03 1.99 10.69 12.68 2003-04 2.24 8.85 11.09 2004-05 2.7 9.28 11.98 2005-06 3.12 9.81 12.93 2006-07 3.53 10.26 13.79 2007-08 3.97 10.27 14.24

STATE % SHARE IN NSDP 2001 PRICES A I S OUTPUT EMPLOYMENT RATIOS A I S PUNJAB 40.5/53.4 22.5/20.1 37.0/26.6 0.76 1.12 1.39 MAHARSHTRA 13.7/56.6 32.8/17.7 53.5/26.4 0.24 1.85 2.08 HARAYANA 33.0/53.8 26.3/19.9 40.726.4 0.61 1.32 1.54 TAMILNADU 18.6/47.2 31.8/26.8 49.6/26 0.39 1.19 1.91 GUJRAT 15.0/60.1 38.1/17.4 46.922.5 0.25 2.19 KARNATAKA 30.3/63.1 23.5/15.7 46.2/21.2 0.48 1.50 2.18 HP 24.4/69.6 33.1/15.2 42.5/15.2 0.35 2.80 KERALA 25.1/40.0 19.7/26.7 55.2/33.2 0.62 0.73 1.66 A.P. 30.0/66.3 23.0/13.4 47.0/20.2 0.45 1.72 2.33 W.B 26.5/46.6 21.2/25.3 52.5/28.1 0.57 0.84 1.88

STATE % SHARE IN NSDP 2001 PRICES A I S OUTPUT EMPLOYMENT RATIOS A I S RAJASTHAN 27.5/67.6 28.6/17.1 52.5/28.1 0.57 0.84 1.88 M.P. 27.6/74.5 29.6/10.5 42.8/15.0 0.37 2.82 2.85 J&K 36.6/62.9 12.2/15.2 51.2/21.9 0.58 0.80 2.33 ASSAM 38.7/60.5 21.08.6 40.3/30.9 0.64 2.44 1.30 ODISSA 34.4/71.6 18.4/14.1 47.2/14.3 0.48 3.30 U.P 35.7/63.7 21.4/16.5 42.9/19.8 0.56 2.17 BIHAR 32.0/74.0 24.7/10.7 43.3/15.3 0.43 2.32 2.83 INDIA 25.5/60.8 24.0/17.1 50.5/22.1 0.42 1.40 2.20