Economic Development and Indian Economy: Classification based on per Capital Income and Indian Economy a Developing Economy

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Classification Based on Per Capital Income

  • World Bank classifieds countries into main two groups such as developing countries and developed countries.

  • In developing countries includes low income and lower middle income.

  • In developed countries includes upper middle income and high income.

  • Some of the problems arise to classifying the economy.

  • Major problem is obtaining the data.

  • World Bank undertakes such an exercise every year and published the data every year in World Development Report.

Classification Based on Per Capita Income (GNP)
Classification based on per capita income (GNP)


Per capita GNP (Gross national Product) limit (in US$)

Developing countries

Low income countries

$725 or less

Lower middle-income countries

$726 to $2895

Developed countries

Upper middle-income countries

$2896 to $8955

High income countries

$8956 or more

Indian Economy a Developing Economy

Various characteristics of Indian Economy a developing economy

Characteristics of Indian Economy a Developing Economy

Various characteristics of Indian Economy a developing economy

Low Level of Income

Low level indicates low standard of living that is low level of consumption.

Predominance of Agriculture

  • Two third of India’s Work force is involved in agriculture.

  • Huge area of agricultural land is still not covered by irrigational facilities.


Low level of income results in low level of savings which results low level of capital formation.

Technological Backwardness

  • Expenditure incurred on research and development is also low.

  • Advanced technology is in use in only a few industries.

Inadequate Infrastructural Facilities

  • Infrastructural facilities include power, transport, communication etc.

  • These facilities are inadequate.

High Rate of Growth of Population

  • It puts additional pressure on resources.

  • In such a situation per capita income will be less than the increase in national income.

High Rate of Literacy

  • It has decline considerably since 1951.

  • Half of the Indian population is illiterate.

  • Illiteracy rate in females is much higher than in males.

Joint Family System

  • It checks mobility of labour.

  • Families prefer to live together even if this may have a low level of living.

Developed by: