16 major problems with Indian economy in 2020

This posts briefly explains the problems with Indian Economy. India’s economy is categorized as a developing economy. India neither has a totally capitalist nor a socialist economic structure. In a mixed economy like India, government policies influence economic performance to a considerable extent. One of the major indicators of the economy is the GDP growth rate of a country. India’s growth rate has been around 8% in the financial year 2015-16. (around 8.2% in the year 2016-17, 7.2% in the year 2017-18, 6.8% in 2018-19, 5% in the first quarter of 2019-20, 4.5% in the second quarter of 2019-20) Indexes listed above are quite self explanatory. Listed below are some of the major problems with the Indian economy :



The huge population of around 1.3 billion needs a huge amount of resources and infrastructure. A considerable amount of public expenditure is thus spent on basic necessities. The excess of population is straining the available resources. Not all the people are economically productive to contribute to national economy. India has huge amount of dependent population below age of 14 and above 60. The birth rate is increasing and the death rate is declining constantly.

Income & Wealth inequalities – Gini Index

Gini Indexes measure the income or wealth inequalities. A comparative study of such indexes proves that income and wealth inequality has increased over a period of time.


The NDA government that came into power for the second term has promised to eradicate the corrupt and eliminate corruption altogether.

But the ground reality tells a completely different tale. The corrupt practices in public institutions and government itself are a major contributor to problems with the Indian economy.

Education & HDI

Even though the illiteracy rate has been at an all-time low, the lack of quality education that leads to human development is evident. HDI the Human Development Index is very low as compared to that of other developing nations across the globe.

Low Per Capita Income

The per capita income of an individual has been rising each year and the same is visible in the indexes.

But when we compare the per capita income with developed nations such as USA and UK or even a few developing nations, we have a considerably low per capita income.

Capital Formation Rate

The low per capita income means lower amount money in the hands of masses. The lower money you’ll have, the less you’ll be able to save. Thus the rate of capital formation is considerably low.


Due to lack of quality education and improper policies of the government, the unemployment has reached all times high today. (Nov 2019)

The higher the unemployment is the lower will be a contribution to the economy. This can be said to be one of the most important problems for the Indian economy

Agricultural Issues

The agricultural sector employees roughly around 54% of the masses of this country. The condition of India’s farmers is miserable.

Industrial Issues

Service Sector Issues

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One comment

  1. Prajwal Shewatkar
    Prajwal Shewatkar

    Any suggestions or feedback are appreciated.

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