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Economic Development

Economic development includes the process and policies adopted by a nation with the view to improving the economic, political and the social well-being of its people. It refers to the policies introduced by the government policy makers and communities of people to bring about a sustained increase in the standard of living and promote economic welfare of the people through efforts to reduce poverty, unemployment and inequalities in income distribution. Developments of human capital, infrastructure, health, literacy are some of the areas in which well-defined policies are introduced to improve economic and social conditions of the citizens.


In an economy, people’s wants vary. What constitutes development for one may not be considered as development by another, or it may occur at the cost of some destruction for the other. People seek to increase their income. Apart from desiring a higher income, they also aspire for dignity and freedom from discrimination from the society. Economic growth is considered as the process by which the country’s national income increases over a period of time. Economic development indicates the increase in the national income over a long term associated with the improvement of the employment situation, health situation and income distribution. Development goals of people include all these non-material aspects as well as monetary benefits. The factors to be considered for national development also vary from people to people.


Income is considered as one of the indicators of development of a nation. Countries that have a higher income are considered more developed than the countries with lesser income. One of the ways to measure the income of a nation is to estimate the income of the people of the country. However, since the size of the population varies from country to country, it is not possible to compare a country’s income with another country with differing population. To assess the income of the country, the ‘average income’ of the people is considered. The average income of a country is the total income of the country divided by the total number of people living in the country, and this is also called the per capita income.


According to the World Development Report 2006, published by the World Bank, those countries with a per capita income of `4,53,000 per annum in 2004 were called rich countries. In 2004, those countries with a per capita income of `37,000 or less were classified as low-income countries. India, with a per capita income of `28,000 in 2004, was placed in the category of a low-income country. Rich countries are generally called developed countries, with the exception of small countries such as the oil rich nations of the Middle East. To consider the per capita income as an indicator for development, it is very useful to understand the average income of the people. However, the size of population and income distribution amongst the people can influence the actual income of the average citizen.


The ‘Per Capita Net State Domestic Product’ is a measure of the development of individual states of India. On an average, states like Punjab have a higher income than states like Bihar. This indicator is useful to ascertain the level of development in each state.


Infant mortality rate, literacy rate, net attendance ratio are considered as some of the indicators of development. Infant mortality rate (IMR) indicates the number of children dying before the age of one year as a proportion of 1000 live births in a year. Literacy rate is the proportion of literate population who are in the age group of 7 years and above. Net attendance ratio is the total number of children between 6 to 10 years, who are attending school as a proportion to the total number of children in the same age group in the country.


Availability of public utility facilities indicates the state of development in a country. Availability of a pollution-free environment, good healthcare facilities offered free or at a nominal cost to all people, free and compulsory education to children through schools operated by the government, etc. are some measures to encourage the status of development in a state. To ensure that a state has low infant mortality rate, the government should provide for better health care facility and adequate nutrition to its people. Through the well-developed Public Distribution System (PDS), essential food grains must be distributed to the population. In India, more number of male children is sent to schools in rural areas than girl children. As a result, young boys have a higher literacy rate than girls, in the age group of 10–14 years. One of the scientific ways of measuring the level of nutrition of the adult population is to calculate the ‘body mass index (BMI)’. The ratio between the weight of the adult (in kilograms) to the square of the height (in meters) gives the BMI. In case an adult has BMI of less than 18.5, the person is considered undernourished. If BMI exceeds 25, the person is overweight.


The Human Development Report published by UNDP collects information of all the population-related parameters mentioned here. Similar figures from other countries, related to education, healthcare and per capita income are compared and the Human Development Index is published. Out of 177 countries compared in the HDI, India was ranked 126th in the world in 2004. The HDI compares the Life Expectancy at Birth (meaning average expected length of life of a person at birth), Gross Enrolment Ratio for three levels (which includes the primary school, secondary school and education beyond the secondary school level) and per capita income (which is calculated in dollars) to arrive at the ranking of the countries. In comparison, India’s neighbor Sri Lanka ranks 93rd in the world. Neighbouring countries Myanmar, Pakistan, Nepal and Bangladesh are ranked lower than India.


All development projects and policies need to consider sustainability of the resource provided by the environment. ‘Sustainable development’ indicates development without permanently damaging the present resources available to man, so that the future generations can continue to enjoy these resources. This is not a region-specific concern. Resources need to be utilised in such a manner that they are not exhausted and can continue to satisfy the level of production for the future generation. Development projects like multipurpose river valley projects lead to environmental degradation. Burning of fossil fuels, deforestation, pollution of the natural environment from industrial wastes and effluents, combustion from automobiles, soil erosion, groundwater depletion, pollution of the ground water through chemical fertilizers and pesticides used in modern agriculture are some of the ways in which the environment gets degraded in modern times. A need for sustainable development is necessary to conserve the world resources. Indiscriminate utilisation will leave very less for use in future. Therefore, through better technological innovations, recycling of resources, use of non-conventional sources of power, careful planning and selection at every stage of economic activity is crucial to ensure long-term sustainable use of these precious resources of the world.

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