Growth and development

Growth in simple terms may refer to a progression from simpler to more advanced
forms. It is a gradual change in size and/or maturity, often over a given span of time.
Although growth is seen as an incremental phenomenon, however, in terms of economy
negative growth can also be registered. The most important aspect of growth is its
quantifiability, that is, one can measure it in absolute terms. There are various
aspects of growth that occur across various scales, viz., Economic Growth, Social
Growth, Cultural Growth, Human Growth, and National Growth.
 Development
 Development means “improvement in a country’s economic
and social conditions”. More specifically, it refers to
improvements in the way of managing an area’s natural and
human resources in order to create wealth and improve
people’s lives. Therefore, development is a multidimensional
process involving changes in social structures, popular
attitudes, and national institutions as well as the acceleration
of economic growth, the reduction of inequality and the
eradication of poverty. Development is both a physical reality
and a state of mind for attaining a better life. Three basic core
values pave the way as a practical guideline for understanding
development.
 Development economics is a branch of economics whose goal is
to better the fiscal, economic, and social conditions of
developing countries.
 Areas that development economics focuses on include health,
education, working conditions, and market conditions.
 Development economics seeks to understand and shape macro
and microeconomic policies in order to lift poor countries out
of poverty.
 The application of development economics is complex and
varied as the cultural, social, and economic frameworks of
every nation is different.
Indicators of Economic Development
 Real GDP per capita – gross domestic product. The nation’s
total economic output which is the same as a nation’s
income.
 GDP at purchasing power parity (PPP) takes into account the
local purchasing power of the currency and is a better guide
to actual living standards.
 Levels of absolute poverty, e.g % of population with income
less than minimum necessary to meet basic necessities of
life.
 Malnutrition levels. Percentage of population with
insufficient food – levels of malnutrition.
 Access to safe water. Percentage of population with access
to safe water supply and sanitation
 Literacy rate – The percentage of a population that can read
and write. Also consider gender discrepancy.
 Mean years of education – Length of education gives
indication on deeper education standards.
 Number of doctors per 1,000 of population.
 Average life expectancy. Life expectancy generally rises
with economic development.
 Openness of economy to international trade. Also, levels
of foreign direct investment.
 Quality of nation’s infrastructure – quantity and quality of
roads, railways and airports.
 Share of agriculture in economy. Over 90% indicates an
undeveloped economy. Less than 10% of economy in
agriculture suggests more developed economy.
 Political stability and security.
 Wildlife Diversity
 Objectives of Development
 The three objectives of development are:
 To increase the availability and widen the distribution of
basic life sustaining goods such as food, shelter, health and
protection.
 To raise the standards of living, including higher incomes,
the provision of more jobs, better education and greater
attention to cultural and humanistic values, all of which
will serve not only to enhance material well-being, but also
to generate greater individual and national self-esteem.
 To expand the range of economic and social choices
available to individuals and nations by freeing them from
servitude and dependence, not only in relation to other
people and nation states but also to the forces of ignorance
and human misery
Challenges in the Way of Development
 Corruption
 Over exploitation of natural resources
 Dependence on primary products as raw materials
 Misuse of foreign assistance
 Misguided priorities
 Cultural restrains
 Measuring Development
 Human Development Index (HDI) In 1990, two economists – Prof. Mehbub Al
Haque of Pakistan and Prof. Amartya Sen of India introduced the concept of
Human Development Index (HDI). Since 1993, it has been used by the United
Nations Development Programme (UNDP) each year to calculate the Human
Development Index (HDI), and publish it as a report which is known as Human
Development Report (HDR). The first report was published in 1990. Its goal
was to place people at the centre of the development process in terms of
economic debate, policy and advocacy. “People are the real wealth of a
nation,” was the opening line of the first report in 1990. This report ranks
countries on the basis of the Human Development Index. The rationale behind
the development of Human Development Index (HDI) was to do away with the
inherent weakness of the use of GDP as a measure of development. The HDI is
the geometric mean of normalized indices for each of the three dimensions
such as long and healthy life, knowledge and a decent standard of living. The
health dimension is assessed by life expectancy at birth, the education
dimension is measured by means of years of schooling for adults aged 25 years
and more and expected years of schooling for children of school entering age.
The standard of living dimension is measured by gross national income per
 The above-mentioned dimensions are measured by the
following indicators:
 Life Expectancy Index (LEI): Calculated from Life expectancy at
birth.
 Education Index (EI): Calculated from Mean years of schooling and
Expected years of schooling
 Income Index (II): Calculated from GNI per capita (PPP US$)
Countries fall into four broad human development categories
based on HDI index:
 Very High Human Development,
 High Human Development,
 Medium Human Development, and
 Low Human Development.
India ranks 134 on the global Human Development Index (HDI)
Inequality-adjusted HDI (IHDI)
 The Inequality-adjusted HDI adjusts the Human Development Index (HDI) for
inequality in the distribution of each dimension across the population. The
IHDI accounts for inequalities in HDI dimensions by “discounting” each
dimension’s average value according to its level of inequality. If there is no
inequality across people, HDI is equal to IHDI. However, in the case of
inequalities, the value of IHDI is always less than HDI. This implies that the
IHDI is the actual level of human development (accounting for this
inequality), while the HDI can be viewed as an index of “potential” human
development (or the maximum level of HDI) that could be achieved if there
was no inequality. The “loss” in potential human development due to
inequality is given by the difference between the HDI and the IHDI and can
be expressed as a percentage. Thus, the IHDI is distribution-sensitive
average level of Human Development. Two countries with different
distributions of achievements can have the same average HDI value. Under
perfect equality the IHDI is equal to the HDI, but falls below the HDI when
inequality rises. For example, India’s HDI value in the 2018 report is 0.640
but when inequality is taken into account the IHDI value of India comes
down to 0.468
Index of Human Poverty HPI
 The human poverty index (HPI) was introduced by UN Development
Programme (UNDP)
(HPI-1) It involves combining
1.Probability at birth of not surviving to age 40 (times 100)
2.A.dult illiteracy rate
3.Arithmetic average of these three characteristics:
The percentage of the population without access to safe water.
The percentage of population without access to health services.
The percentage of malnourished children under five.
Global Happiness Index
 Happiness Index is brought by World Happiness Report. It is a
measure of happiness published by the United Nations
Sustainable Development Solutions Network. In July 2011, the UN
General Assembly adopted a resolution “Happiness: Towards a
Holistic Definition of Development”, which ultimately led to the
first World Happiness Report was released on April 1, 2012. The
World Happiness Report aims to draw global attention around the
need to create sound policy for what matters most to people –
their well-being. It maps happiness on the parameters of GDP
per capita, social support, and healthy life expectancy, freedom
to make life choices, generosity and perceptions of corruption.
In 2018 Global Happiness Index (GHI), India was ranked on the
133rd spot, down from 122nd in the 2017 report.
 India ranked 126 out of 143 countries
What are the salient features of ‘inclusive growth’? Has India been
experiencing such a growth process? Analyze and suggest measures
for inclusive growth.( 250 Words, 15 Marks)
 Definition:- Inclusive growth refers to a growth process that benefits all segments of
society, ensuring equitable distribution of opportunities and benefits. It encompasses
measures to uplift marginalized and disadvantaged groups, reduce income inequality, and
promote social cohesion.
India, as a developing economy, has been striving to achieve inclusive growth to address its
socio-economic challenges. Inclusive is economic growth that is distributed fairly across
society and creates opportunity for all. In this inclusive growth marginalized sections,
women, children, SC’s and ST’s. etc. get due share of fruits of economic growth.

Major Components of Inclusive Growth

1) Reduced Poverty- Inclusive growth strives to reduce poverty by improving the
poor’s access to opportunities and resources.
2) Women’s Empowerment- Since women are frequently left out of economic
possibilities, inclusive growth aims to provide them more power through
employment, education, and training.
 3) Good Governance- Transparency, accountability, and efficient institutions that meet
the demands of all citizens are essential for inclusive progress.
 4) Education & Skill Development- Building skills is a crucial component of inclusive
growth because it paves the way for people to engage fully in the economy.
 5) Equal Opportunity- Inclusive growth works to level the playing field for everyone,
regardless of socio-economic position, gender, race, or religion.
 6) Access to Basic Services- Inclusive growth seeks to guarantee that all citizens have
access to basic services including healthcare, education, and sanitation. This access
should include not only the quantity, but also quality, of these basic services.
 7) Employment Creation- To combat poverty and advance economic development,
inclusive growth aims to increase employment, especially for disadvantaged and
marginalized people.

Salient Features of Inclusive Growth in India:

Poverty Alleviation: The percentage of people living below the poverty line in India
declined from 21.9% in 2011-12 to 8.2% in 2021-22, indicating progress in poverty
alleviation efforts (source: World Bank).
Example: The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
provides 100 days of guaranteed wage employment to rural households, benefiting millions
of impoverished individuals.
 Income Equality: India’s Gini coefficient, a measure of income inequality, stood at
around 35.7 as of 2022 (source: World Bank).
Example: Progressive taxation policies, where higher income groups are taxed at higher
rates, contribute to reducing income inequality and redistributing wealth more equitably.
 Social Inclusion: The enrollment rate of girls in elementary education in India
increased from 92.3% in 2014-15 to 95.4% in 2022-23, reflecting improved access to
education for girls (source: Ministry of Education).
Example: Reservation policies in educational institutions and government jobs for
historically marginalized communities, such as Scheduled Castes and Scheduled Tribes,
promote social inclusion.
 Human Development: The literacy rate in India increased from 64.8% in 2001 to
77.7% in 2011, indicating progress in education and human development (source: Census
of India).
Example: The National Health Mission aims to improve healthcare infrastructure and
services, including maternal and child health, to enhance the overall well-being of the
population.
 Sustainable Development: India’s renewable energy capacity reached 114 GW in
2023, contributing to reducing the country’s carbon footprint (source: Ministry of New
and Renewable Energy).
Example: The National Clean Air Program aims to curb air pollution in major cities by
promoting cleaner technologies and sustainable practices.
What are the reasons behind lack of Inclusive
Growth in India?
 Overdependence on Agriculture- A huge proportion of the population is still
dependent on agriculture (~45% of the workforce) but the share of agriculture to the
total GDP is falling

 Jobless Growth- India experienced job growth of 3% p.a in the 70s at a time when
the economy grew at 3-3.5% p.a but over the last 3 decades the economy grew at over 5-
8% p.a but job growth has been close to 1% p.a.

 Large-scale informal employment– 80% of the Indian labour force is

employed in the informal sector. Informal sector jobs are more insecure without regular
pay and social security benefits. This increases the wage gap between formal and
informal sectors.
 Unemployment As per the Periodic Labour Force Survey (PLFS) of NSSO, the
unemployment rate among the urban workforce was 7.8%, while the unemployment rate
for the rural workforce was 5.3% totaling the total unemployment rate at 6.1%.
Conclusion
 Indian government along with the state governments and local governments should
continue to focus on eradicating poverty and achieving sustainable development in order
to improve the lives of India's people. Through innovative partnerships with an
international organization, civil societies, and private companies, inclusive and
equitable growth can be targeted. Inclusive growth will help in the empowerment of
vulnerable and marginalized populations, improve livelihoods, and augment skill-
building for women.
Facts slide
 In the last quarter of FY24, India's
GDP grew by 8.2 percent, ₹47.24
lakh crore, according to the data
released by the Ministry of
Statistics and Programme
Implementation and the National
Statistical Office.
India's Current GDP (FY24): $3.9
trillion
India's GDP Growth Rate (FY24): 8.2%
India’s overall exports in FY25 (April-
June 2024) were estimated at US$
200.33 billion. Overall imports over
the same period were estimated at
US$ 222.89 billion.

The gross GST (Goods and Services

Tax) revenue collection stood at Rs.
1.74 lakh crore (US$ 20.83 billion) in
June 2024.
 The fiscal deficit of the Union Government has been brought down from 6.4% of GDP
in FY23 to 5.6% of GDP in FY24.
 In FY24 total government expenditure (as per the provisional actuals) declined to
15.0% of GDP from 17.7% in FY21.
 Unemployment Rate in India increased to 9.20 percent in June from 7 percent in May
of 2024. Unemployment Rate in India averaged 8.17 percent from 2018 until 2024,
reaching an all time high of 23.50 percent in April of 2020 and a record low of 6.40
percent in September of 2022. source: Centre for Monitoring Indian Economy
 According to research by the State Bank of India, released in February 2024, the
poverty rate in the country fell to 4.5-5 percent in 2022-23.
 74.04% Literacy rate of India (2024), including the literacy rates of all states and
union territories.(The National Literacy Mission defines literacy as acquiring the
skills of reading, writing and arithmetic and the ability to apply them to one's day-
to-day life.)