Concept of Economic development: Till the 1960’s, the term economic development and economic growth were used synonymously. However, the term economic development is no longer considered as economic growth. Economic development is taken to mean growth plus progressive changes in certain crucial variables which determines the well being of the people. Economic development is much more than growth. It typically refers to improvements in literacy rates, life expectancy, and poverty rates. Whereas, the term economic growth refers to the increase /growth of a specific measure such as real national income, gross domestic product, or per capita income. There are various indicators of economic development which are as follows: •
Literacy rates,
•
Poverty,
•
Life expectancy,
•
Natural resources,
•
Infrastructure, etc.
Literacy and economic development: A simple definition of the literate person is one who can with understanding both read and write a simple statement relevant to everyday life.
Growth of literacy: During the British period, progress of education was rather tardy. Between 1881-82and 1946-47, the numbers of school grew from 82,916 to 134,866 and the number of students grew from 2,061,451 to 10,525,943. Total enrollment at the primary level has increased from 19,200,000 in 1950-51 to 109,800,000 in 2001-02.The number of high schools in 2000-01 was higher than the primary schools at the time of independence. The provision of universal and compulsory education for all children in the age group of 6-14 was a cherished national ideal and had been given overriding priority by incorporation as a directive policy in article 45 of the commission, but it is still to be achieved more than half of the century 1
since the constitution was adopted. Parliament has passed the constitution 86th amendment act, 2002, to make elementary education a fundamental right for children in the age group of 6-14 years
The table below shows the position of literacy in India at various years:
Year
Literacy rate (%)
1881
3.2
1931
7.2
1947
12.2
1951
18.33
1961
28.3
1971
34.45
1981
43.57
1991
52.21
2001
68.84
The diagram below shows the line representation of literacy rate:
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Government schemes to reduce illiteracy: The Sarva Siksha Abhiyan was launched in 2001 to ensure that all children in the age group 6-14 years attend school and complete eight years of schooling by 2010. Important components of this scheme are the Education guarantee scheme and alternative and innovative education meant primarily for children where there is no formal school within a radius of one kilometre. The centrally sponsored District education programme launched in 1994 has so far opened more than 160,000 new schools, including almost 84,000 alternative schools. Of the estimated population of 205 million in the age group 6-14 years on March 1, 2002, nearly 82.5%. The high drop rate has been adopted to attract children to schools is a matter of major concern. One of the most popular schemes adopted to attract children to schools in the mid-day meals program launched in 1995.
Poverty and economic development: Poverty generally refers to failing to reach certain minimum consumption standard. Large numbers of India’s people live in abject poverty. Wealth distributation in India is improving since the liberalization and with the end of the socialist rule termed as the license raj. While poverty in India has reduced significantly, official figures estimate that 27.5% of Indians still lived below the national poverty line in 2004-05. A 2007 report by the state-run national commission for enterprises in the unorganized sector found that 65% of the Indians, or 750 million people, lived on less than 20 rupees per day with most working in informal labor sector no job or social security, living in abject poverty. As per data, 27.5% of Indians still lived below the national poverty line in 2004-05, 75% of the people living below poverty line are in rural areas, and Wealth distribution is fairly uneven in India, with the top 10% of income groups earning 33% of the income.
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Historical trends of poverty statistics: Year
Poverty rate (%)
1951
47.0
1954-55
64.0
1960-61
45.0
1977-78
51.3
1983
44.5
1987-88
38.9
1993-94
36.0
2004-05
27.5
The Line representation of poverty rate table is shown in diagram below as:
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Government strategies to alleviate poverty: Eradication of poverty has always been one of the key objectives of governments in its five-year plan. To reduce poverty, the government has given importance to education, reservation of seats in government jobs, and increasing empowerment of women. After liberalization in 1991, India is adding 60-70 million people in its middle class every year. Some of the important programs that were brought by the government to eradicate poverty were as follows: Rural employment program & Food for work program:
•
Launched in 1980’s, which attempt to use the unemployed people to generate productive assets and build rural infrastructure. •
Rural employment guarantee bill: Passed in august 2005 by Parliament of India, this is the biggest program to alleviate poverty in terms of cost and coverage, which promises 100 days of minimum wage employment to every rural household in 200 of India's 600 districts.
Life expectancy and economic development: According to the Population Reference Bureau’s 2000 World Data Sheets, life expectancy at birth for Indians is between 60 to 61 years. This was also confirmed by recent census of India in 2001. Region
Life Population>65 expectancy years at Birth
World
66 years
7%
India
60-61 years
4%
The life expectancy of various states of India is shown in table below:
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State
Total
Male
Female
Andhra Pradesh
63.1
61.6
64.1
Assam
57.2
57.1
57.6
Bihar
60.2
60.7
58.9
Gujarat
62.8
61.9
63.7
Haryana
64.5
64.1
65.0
Himachal Pradesh
65.6
65.1
65.8
Karnataka
64.0
62.4
65.5
Kerala
73.5
70.6
76.1
Madhya Pradesh
56.4
56.5
56.2
Maharashtra
65.8
64.5
67.0
Orissa
57.7
57.6
57.8
Punjab
68.1
66.9
69.1
Rajasthan
60.5
59.8
60.9
Tamilnadu
58.4
63.7
65.7
Uttar Pradesh
63.4
58.9
57.7
West Bengal
61.7
62.8
64.3
Infrastructure and economic development: At the past, after independence, development of infrastructure was completely in the hands of the public sector and was plagued by corruption, bureaucratic inefficiencies, urban-bias and an ability to scale investment. India’s low spending on power, construction, transportation, telecommunications, and real estate at 6% of GDP of 2002 had prevented India from sustaining higher growth rates. This had promoted the government to partially open up infrastructure to the private sector allowing foreign investment which has helped in sustained growth rate close to 9% for the past six quarters. India holds the second position in the world in roadways construction, more than twice of china. At present, infrastructure has been expanding at a rapid pace to support the economic growth at nearly 9%. The six core infrastructure industries registered a robust increase of 9.6% during March 2008.
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Some of the major infrastructure project government for the future is as follows:
planned by the Indian
•
40,000 MW hydro power generation capacities during the 12th and 13th plan.
•
Constructing freight corridors between Mumbai-Delhi and LudhianaKolkata.
•
Modernization and redevelopment of 21 railway stations.
•
Modernization and redevelopment of 4 metro and 35 non-metro airports.
•
Six laning 6500 km of golden quadrilateral and selected national highways.
•
Constructing 165,244 km of new rural roads.
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Economic planning in India: The pattern of economic development in India is very significantly affected by government planning. The direction of the development pattern of the various sectors and the relative priorities with in each sector are determined by the five year plans. The planning machinery consists of planning commission, National development council and state planning councils.
The planning commission The planning commission was set up in March 1950, by a resolution of the government of India with the following functions: •
To make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate and possibilities of augmenting such of these resources as are found to be deficient in relation to the nations requirements.
•
To formulate a plan for the most effective and balanced utilization of the country’s resources.
•
To indicate those factors to the government whose prove an obstacle in the economic development.
•
To evaluate the from time to time the progress achieved in every stage of plan and also to suggest remedial measures.
•
To advise the centre and the state government from time to time on special matters referred to the commission.
National Development council The national development council is headed by the prime minister and is composed of union cabinet ministers, chief ministers of states and union territories and members of planning commission. The secretary of the planning commission acts as secretary of the NDC, and the commission is expected to provide such administrative and other support as necessary. The major functions of the NDC are as follows: 8
•
To prescribe guidelines for the formulation of the national plan including the assessment of the resources of the plan.
•
To consider the national plan as formulated by the planning commission.
•
To consider important questions of social and economic policy affecting national development.
•
To review the working of the plan from time to time and to recommend such measures as are necessary for achieving the aims and targets set out in the national plan.
State plans State plans account for about one half of the total outlay of the government under a five year plan. The subjects that come under state jurisdiction include such vital sectors of development as agriculture, small industries, irrigation and power, roads and road transport, and education and social services. The successful implementation of the major national policy objectives depends upon the successful implementation of the state level plans.
Major Objectives of the Indian plans: •
Proper utilization of the national resources in accordance of the national priorities and fast development of the economy.
•
Alleviation and ultimate removal of unemployment and poverty.
•
Improvements in the standard of living in general. Reduce inequalities of income and wealth.
• •
Increase production to the maximum possible extent so as to achieve higher level of national and per capita income.
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Five year plans with their emphasis: 5 year plan
Year
Emphasis
First
1951-56
Agricultural sector
Second
1956-61
Basic and heavy industries
Third
1961-66
Export promotion
Fourth
1969-74
Self-reliance
Fifth
1974-79
Growth with social justice
Sixth
1980-85
Seventh
1985-90
Food, work , and productivity
Eighth
1992-97
Human development
Ninth
1997-2002
Tenth
2002-07
Eleventh
2007-12
Growth with equity & distributive justice.
Tenth five year plan (2002-07): The tenth five year plan (2002-2007) approach paper has proposed that the plan should aim at an indicative target of 8.7% GDP growth for 2002-07. The major objectives of the tenth five year plan are as follows:
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•
Reduction of poverty ratio to 20% percent.
•
Universal access to primary education.
•
Increase in literacy to 72 percent.
•
Reduction of IMR to 45 per 1000.
•
Reduction of MMR to 20 per 1000.
•
Increase in forest and tree cover by 25 percent.
•
Clearing of major polluted rivers by 2007
The growth performance of the tenth five year plan is as follows: Target 2002-07
Actual 2002-07
Growth rate
8.00
7.80
Growth in agriculture
4.00
3.42
Growth in industry
8.9
8.74
Domestic savings
23.31
26.62
Average inflation
5.00
5.02
Growth performance of several five year plans: S.N.
5 year plan
Target
Actual
1
First
2.1
3.61
2
Second
4.5
4.27
3
Third
5.6
2.84
4
Fourth
5.7
3.30
5
Fifth
4.4
4.80
6
Sixth
5.2
5.66
7
Seventh
5.0
6.01
8
Eighth
5.6
6.68
9
Ninth
6.5
5.35
10
Tenth
8.0
7.8
11th five year plan(2007-2012): 11
The major objective of the eleventh five year plan is to reduce poverty. Other objectives are as follows: •
Growth rate of 10% p.a.
•
Agriculture growth at 4%per year.
•
Growth of industrial sector to 10% and manufacturing sector to 12% p.a.
•
Double per capita income by 2016-17.
•
Reduce educated unemployment rate to below 5%.
•
Reduce dropout rate of school children to 20% from 52% now.
•
Literacy rate to be increased to 80%clean drinking water to all by 2009.
•
Electricity connection to all by 2009.
•
A telephone in every village by November 2007.
•
Broad band connectivity to all villages by 2011-2012.
•
Achieve WHO standard air quality in major cities by 2011-12.
India-vision 2020: Planning commission has released India vision -2020 on January 23, 2003 which presents pre-assessment of the progress of Indian economy for the Indian economy for the next two decades. This document is prepared by Mr. Shyam Prasad gupta, a member of planning commission. The salient point s of the document are: •
Expected annual growth rate to be 9%.
•
Full elimination of unemployment, illiteracy, & poverty.
•
Per capita income to get doubled by 2020.
•
1.35 billion Population of the country to have better living conditions by 2020.
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•
With 2% annual employment generation rate, 20 crore new employment opportunities to be created by 2020.
•
Cent percent registration of the children (age group 6-14) in schools.
•
Environment situation to be remain as unbalanced as present.
•
Unorganised sector opportunities.
•
Urban population percentage to get increased from existing 25.5% to 40%.
•
Water problem in metropolitan cities to continue as such.
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to
create
more
additional
employment
References: Business Environment-Text and cases, 7th Edition, Francis Cherunilam, Himalaya publishing House. Pratiyogita Darpan, Exam oriented series Managerial Economics, Sixth revised edition, DN Dwivedi, Vikas Publishing House www.wikipedia.org www.worldbank.org www.adb.org www.un.org
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