Chapter 1 - Growth and Development

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GROWTH AND DEVELOPMENT
The change in the economy in one financial year treated as economic growth and this leads
to growth, in National Income.
Growth primarily belongs to economy.
Economic Growth is a narrower concept than Economic Development.
It is an increase in a countrys real level of national output which can be caused by an

increase in the quality of resources (by education etc), increase in quantity of resources and
improvements in technology (or) in another way an increase in the value of goods &
services produced by every sector of the economy.
Economic Growth can be measured by an increase in a countries Gross Domestic Product

(GDP).
Definition:
According to Micheal Ptodaro, economic growth is a steady process by which the

productive capacity of the economy is increased overtime to bring about rising levels of
national output and income.
According to Simon Kuznets economic growth may be defined as a long term process,
where in the substantial and sustained rise in real national income, total population and
real per capita income takes place.
The increasement in production is treated as Growth.
The change in economy in one financial year treated as Growth.

Eg : If 1st financial year - 100 points.
2nd financial year - 105 points then Growth observed as 5.
Though growth is a value neutral term; i.e., it might be positive or negative for an economy
for a period.
We generally use it in the positive sense.
If economists say an economy is growing it means the economy is having a positive growth
otherwise they use the term negative growth.
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The hypothesis which are developed by the economists to get a change in the economy is
treated as Growth Theories.
We should try to follow inductive method with respect to hypothesis to get successes.
Father of Growth Theories - Harrod Domar.
Hypothesis should not implemented totaly is should implement on pilot basis.
The Growth model in India has been concentrated because of economic power, inflation,
inequality, low purchasing power parity, low consumption and high below poverty line.
The words Growth & Development were errupted in 1960s.
It was during the 1960s & in the later decades that economists came across many countries
where the growth was comparatively higher, but the quality of life was comparatively low.
Indian plans are Growth Oriented Plans.
Without inclusion, National Income will increase, with inclusion inequality gets increases
then price also increases.
Growth Rate: The numerical value of the growth treated as Growth Rate.
Formula:
Where,
Qt = Current year production

Qt-1 = Previous year production.
Eg : Qt = 2015 - 16 = 10
Qt-1 = 2014 - 15 = 5
Growth Rate = 100%
Inclusive Growth:
Percolation of economic fruits to each and every concept is named as Inclusive Growth.
Inclusive Growth refers to both the pace and the pattern of the Economic Growth.
The inclusive growth as a strategy of economic development received attention owing to a

rising concern, the benefits of economic growth have not been equitably shared.
Real Growth:
Whenever output exceeds input then real growth rate is realised, which is propounded by
Harrod & Domar.

The best economic system which is added to inclusion is the co-operating system.
In post liberalization period (1990), Growth Rate became more than doubled because of
LPGD.
LPGD wasmeans
L = Liberalization
G = Globalization
P = Privatization
D = Disinvestment
LPGD also known as Rao - Manmohan Model.
LPGD was started in the year 1991.
Liberalization is nothing but elimination of barriers which are presence in the economy
(trade).
Privatisation is nothing but conversion of government firm into private sector.
Free movement of goods and services from one country to other country without barrier
treated as Globalization.
Partial selling of government firm to private sector named as Disinvestment.
Warranted Growth Rate :
Warranted growth rate is the rate of growth at which the econommy does not indefinitely
(or) go into recession.
When total cost equal to total revenue, then Break Even Point (BEP) is normal.
When total cost is greater than total revenue, then Break Even Point is negative.
When total cost is less than total revenue, then Break Even Point is positive.
Natural Growth Rate :
According to Harrod & Domar (H& D) Where producer realise warranted growth then he
enjoy the natural growth.

GW = Ga = Gn
(GW = Warranted growth,
Ga = Achieved growth,
Gn = Natural growth)
Gradual / Steady Growth:
According to Goutham Madhur, in order to get steady growth rate we need to implement
all types of theorems which are in presence.
According to him, growth with absence of inclusion led to glass cotton polity nothing but
inequality.
Growth Rate of National Income :
Whenever output exceeds capital then the Growth Rate of National Income increases.
Real Growth Rate in the country instigate the National Income
Strategies of Growth & Development

1. H&D Growth Model :
According to H&D, the Growth Rate which is recorded in National Income only treated as
Growth.
When National Income increases, development increases By Harrod-Domer.
National Income growth is equal to development of the country.
According to H & D, National Income development nothing but economic development

but National Income development depends up on multiplier and accelerator.
According to R.F.Khan, the change in one economic factor leads to how much change likely
to place in another factor shown by multiplier.
According to keynes, due to change in investment leads how much change taking place in
income shown by investment multiplier.
APC (Average Propensity to Consume): The consumption in income shown by APC.
MPC (Marginal Propensity to Consume): The change in income led the change in
cosumption shown by MPC.
Propensity nothing but Nature, propounded by H& D.

According to H& D, propensity to consume can influence the National Income, which was
explained by keynes ultimately understood that difference in consumption (or) savings
influence the National Income.
2. Balanced Growth Theory :
According to Ragnor Nurkse, country which spend equal amount of expenditure over all
sectors of the economy only realise Balanced Growth.
Actually all subsectors are not having equal importance, basically Nurkse was an classical
economist, since he believed in equilibrium.
The interfearence of the government in economic activities led imperfections of the

economy said by Nurkse.
According to Nurkse, developing countries are having vicious circle of poverty, since a
country is poor because it is poor.
Simultaneous investments is problematic issue for developing countries.
According to Nurkse developing countries are imperfect markets.
According to Nurkse, induced investment needed to be implemented.
Ragnar Nurkse, views are opposite to views of Singer, Hirchman and kurihara.
Besides a induced investment, autonomous investments also needed, henceforth every

country should follow autonomous investments.
According to Nurkse, Supply creates Demand,

but according to J.M. Keynes, Demand creates supply.

3. Imbalanced Growth Theory :
According to Hirchman all sectors are not having equal importance, since simultaneous
investments are not required, only for important sectors we have to give priority. Hence
we need Unbalanced Growth.
According to Hirchman, the production process which is having more linkages needed to
be selected initially.
In his point of view, backward and forward linkages provide inclusive growth.
According to him, development of one active sector can influence remaining sectors
towards development.
In 1st five year plan, importance was given to agriculture, where as in 2nd five year plan
priority was given to industry; hencewe are following Unbalanced Growth.
Iron & Steel is having high linkage than other goods.
Convergent Factors:
In convergent factors, firms get benefited a lot, here income and outcome both are low.
Divergent Factors :
In Divergent Factors, society get benefited alot, here income will be low, but
outcome
will be high.

DPA (Directive Productive Activity) /SOC (Social Overhead Capital):
According to Hirchman, country must install SOC initially, later can move to DPA.
Hirchman suggested that SOC can push the process into DPA, again DPA into SOC,
hence continuity is realised.
Consumer Surplus:
Deduction of paid price from willing price then the residual is treated as consumer
surplus which was propounded by Alferd Marshal.
Both demand and supply influenced by the price, then micro economics named as
Price Theory.
Father of Micro Economics is Alferd Marshal, he wrote a book principles of economics in

1932.
Whenever demand & supply matches then it is said to be equilibrium said by Alferd
Marshal.
If demand & supply matches treated as Effective Demand said by Keynes.
Choice Of Technique (COT):
According to A.K.Sen, every country needed to concentrate on choice of technique,

especially developing countries (or) populous countries should have to give priority to
present generation.
Choice of technique nothing but time series criteria.
According to his point of view, besides faster and steady growth rate, we should also
consider time element in production process.
But with reference to Indian growth strategy, followed capital intensive methods, hence
they realised required National Income but backward towards social development and
also lack of employment.
Due to presence of unemployement, slower growth rate towards social development

ultimately India kept in under developing countries list.
Advantages of labour Intensive Methods are as follows:

a) Employment increases
b) Production will be with low capital
c) Decentralization
d) We can also control inflation
The main problem of developing countries is Consumer Price Index and Inflation, which
can be control with the production of consumer goods, which can be realise with the
help of Small Scale Industries (SSI).
4. Wage - Good Model :
Vakeel & Bhramananda Introduced Wage - Good model in VII plan.

According them, in order to realise steady growth rate every economy needed to start
initially small scale industries, then pushes to large scale industries with the surplus which
was achieved with SSI.
Wage - Good model is opposite theorem to P.C.Mahalanobis who is the father of IInd plan.
P.C. Mahalanobis given priority to large scale industries.
5. Spread & Back wash effects :
Mr. Gunnar Mrydal suggested that to realise balanced regional development, needed to
select spread effects which was written in ASIAN DRAMA was the prominent book of
Mrydal.
He is swedon economist.
6. Stages of Growth:
The theory of evolution in economy, propounded by many economists of which the

prominent personalities were WW Rostov and Karl Marx
I. W.W.Rostov Model:
Stages of Economic Growth a book written by W.W. Rostov.
The following are the 5 stages explained by W.W.Rostov.

1. Traditional stage
2. Pre-condition stage
3. Take off stage
4. Drive to maturity stage
5. High mass consumption stage.

1. Traditional Stage :
In this stage more than 75% of people depends upon agriculture.
It is un-organised economy, i.e, there is no economic activity.
Here priority given to self consumption.
There is no marketable surplus
On un-productive things, there is more expenditure.
2. Pre-condition Stage :
UK crossed this stage i.e, UK was the first country to reach this stage.
U.K is first economic intellectuals in world.
Economic process and dynamism was started in this stage.
Changes in agriculture took place.
EXIM develops
There is an expansion of imports.
Here there is no stagnancy.
3. Take - off Stage :
This is an Important stage
Infrastructure, Institutional & Technical changes occurred.
Concept of faster growth started in this stage.

U.K was the first country to reach this stage in year 1783-1802 (20 years) i.e; 20 years
time for growth
Russia 2nd place - 1890 - 1914

U.S enter in this stage in 1843 - 1860
Germany enters in this stage in 1850 - 1873
Canada reach this stage in 1896 - 1914
China and India in 1952
But according to 2014-15 HDI report, India entered take - off stage inthe year 1991.
4. Drive to Maturity Stage :
If both Human Capital (HC) and Natural Capital (NC) is there, then there will be 100%
employment.
Education, Health, Sanitation, will come under human capital.
Science and Technology use total human capital and natural capital.
There is no trade cycle, nothing but no upswings and no downswings.
U.K was the 1st country to cross this stage in the year 1850.
Russia crossed this stage in the year 1950.
U.S in the year 1900 and Germany in the year 1920, crossed this stage.
5. High -Mass Consumption : (HMC) Stage
OECD (Organization of Economic Co-operation & Development) countries enjoyed high

mass consumption.
Percapita energy is more.
Durable consumer goods nothing but white goods.
Life expectancy decided by consumption, If MPCE is increases then BPL decreases. Life
expectancy is 80 years.

Karl Marx :
* The following are the 6 stages of Karl Marx :
1. Ancient communism
2. Slavery
3. Feudalism
4. Capitalism
5. Socialism and
6. Communism
1. Ancient communism:
* For the sake of hungry, will do hard work, nothing but here perfect equality.
2. Slavery:
* In this stage, all the work is done by human labour like hunting, preparing shelter,
finding skin of animals or bark of a tree to be used as cloths. This made the human
labour the most important resource which can earn income. Those who had maximum
slaves were the most powerful in the society.
3. Feudalism:
* As the population increased, it was not possible to feed huge population with only
hunting. This increased the demand for land to grow food grains to feed growing
population. Mankind also started learning
the art of sowing and harvesting and
invented tools to increase productivity. Shift of the economy from slavery to feudalism
led to shift of strategic resources from human labour to land. Those whose land became
most important and powerful in the society. Fiefs held land with the permission of the
king.
* Fiefs were the warlords who fought among themselves to capture land from each other.
* Sometimes the dispute was settled by kings. Fiefs employed serfs to work on their fields
to grow foodgrains.
* Main source of revenue for the government was land revenue and king was usually
satisfied till the fiefs paid their land revenue obligations.
* In feudal economy, agriculture rather than hunting became the most important human
activity.
4. Capitalism:
* Industrial revolution led to generation and spread of scientific ideas and values among
people.
* French revolution led realization of the need for freedom of expression and speech.
* These developments led to many innovations and introduction of new technology in
many sectors.

* Technological improvements initially benefited agriculture resulting in increasing the
productivity.
* This led to displacement of labour from agriculture. At the same time, textile and
mineral sectors developed, which were able to employ labour displaced from
agriculture.
* Agricultural activity was located in rural areas whereas textile and mineral companies
were located in urban areas.
* This led to shift of population from rural areas to urban areas.
* As the productivity increased in agricultural sector, lesser amount of land was needed
for feeding population.
* This decreased the importance of land. Starting of industrial firms needed capital,
which made the owners of capital the most important and powerful section of the
population.
5. Socialism
* In a socialistic economy, labour will control the state and will own the companies.
* Market mechanism will be substituted by planning by the state. Income of the own
individuals will be decided by their needs and not by market mechanism.
* Ultimately socialism will lead to communism whereby state itself wither away and there
will be no shortage of products.
6. Communism :
* Perfect equality nothing but 100% equality among all.
* No country realised Communism so far
* With regard to growth stages of Marx, many countries reach socialism, but not
communism due to the absence of mine concept.
* According to Marx, the main reason for class war is exploitation of labour which lead to
unemployment and profit.
* When work is greater than wage then it is treated as labour exploitation.
* When capital is more, then there will be less number of labour which is treated as
unemployment.
* When exploitation profits to companies, called as legal exploitation.
* In economic system, three types of production follows, if it is private then it is
capitalistic economy hence there will be no welfare.
* If it is socialistic nothing but government, then there will be no freedom, if it is both
nothing but mixed economy which was propound by J.M.Keynes then there will be both
freedom and welfare.
7. Big push model:

The Big Push Model is a concept in development economics or welfare economics that
emphasizes that a firms decision whether to industrialize or not depends of its expectation
of what other firms will do.
It assumes economies of scale and oligopolistic market structure and explains when
industrialization would happen.
The originator of this theory was Paul Rosentein-Rodan in 1943.
Further contributions were made later on by Marphy, Shleifer and Robert W. Vishny in
1989. Analysis of this economic model ordinarily involves using game theory.
Theory of the model emphasizes that underdeveloped countries require large amounts of
investments to embark on the path of economic development from their present state of
backwardness.
This theory proposes that a bit by bit investment programme will not impact the process
of growth as much as is required for developing countries.
In fact, injections of small quantities of investments will merely lead to wastage of

resources.
Paul Rosenstein-Rodan, approvingly quotes a Massachusetts Institute of Technology study

in this regard, There
is a minimum level of resources that must be devoted to.. a
development programme if it is to have any chance of success.
Launching a country into self sustaining growth is a little like getting an airplane off the
ground. There is a critical ground speed which must be passed before the craft can become
airborne..
Rosenstein Rodan argued that the entire industry which is intended to be created should
be treated and planned as a massive entity(affirm or trust).
He supports this argument by stating that the social marginal product of an investment is
always different from its private marginal produce, so when a group of industries are
planned together according to their social marginal products, the rate of growth of the
economy is greater than it would have other wise been.

The three indivisibilities :
According to Rosenstein Rodan, there exist three indivisibilities in underdeveloped

countries. These indivisibilities are responsible for external economies and thus justify the
need for a big push. The externalities are as followsi. Indivisibility in production function
ii. Indivisibility of demand
iii. Indivisibility in the supply of savings
Indivisibility in production function:
Indivisibilities in the production function may be with respect to any of the following:
* Inputs
* Processes
* Outputs
These lead to increasing returns (i.e., economies of scale), and may require a high optimum
size of a firm.
This can be achieved even in developing countries since at least one optimum scale firm
can be established in many industries.
But investment in social overhead capital comprises investment in all basic industries (like
power, transport or communications) which must necessarily come before directly
productive investment activities. Investment in social overhead capital is lumpyin nature.
Such capital requirements cannot be imported from other nations.
Therefore, heavy initial investment necessarily needs to be made in social overhead capital
(this is approximated to be about 30 to 40 percent of the total investment undertaken by
underdeveloped countries).
Social overhead capital is further characterized by four indivisibilities:
1. Irreversibility in time: It must precede other directly productive investments

2. Minimum durability of equipment: Any lesser level of durability is either impossible due
to technical reasons or much less efficient
3. Long gestation periods: The investment in social overhead capital takes time to generate
returns and its impact in the economy is not immediately or directly visible.
4. Irreducible minimum social overhead capital industry mix: Investment needs to be of a
certain minimum magnitude and spread across a mix of industries, without which it will
not significantly impact the process of growth.
Indivisibility (or complementarily ) of demand:
Developing countries are characterized by low percapita income and purchasing power.

Markets in these countries are therefore small. In a closed economy, modernization and
increased efficiency in a single industry has no impact on the economy as a whole since the
output of that industry will fail to find a market.
A large number of industries need to be set up simultaneously so that people employed in

one industry consume the out put of other industries and thus create complementary
demand.
To illustrate this, Rosenstein Rodan gives the example of a shoe industry.
If a country makes large investments in the shoe industry, all the disguisedly employed
labor from the other industries find work and source of income, leading to a rise in
production of shoes and their own incomes.
This increased income will not be expended only on buying shoes.
It is conceivable that the increased incomes will lead to increased spending on other
products too.
However, there is no corresponding supply of these products to satisfy this increased

demand for the other goods. Following the basic market forces of demand and supply, the
prices of these commodities will irse.
To avoid such a situation, investment must be spread out amongst different industries.
The situation may be different in an open economy as the output of the new industry may
replace former imports or possibly find its market by way of exports.
But even if the world market acts as a substitute for domestic demand, a big push is still
needed (though its required size may now be reduced due to the presence of international
trade).
Indivisibility in the supply of savings:
High levels of investment require a corresponding high level of savings. We cannot always
rely on foreign aid as the huge levels of investments in the different sectors need to be
made not only once, but multiple numbers of times.
Hence domestic savings are a must. But in an under developed economy, this is a challange
due to the low income levels. Marginal needs to be increased following the rise in incomes
due to higher investment.
8. Gandhian Model :
Kalam - PURA : Providing Urban Amenities in Rural Areas.
Mr. Abdul Kalam stressed PURA in his vision 2020 document to realise balance regional
development.
According to 2020 document, India needed to be divide into PURAS.
In the year 2003, Balanced Regional Development (BRD) started i.e., 5000 PURA 100 Cr =
5,00,000Cr out of 80% Central and 20% state.

Based on PURA in the year 2005, Bharat Nirman started.
In order to control migration from rural to urban, Kalam developed PURA concept.
4 types of connectivities to PURA in order to create self sufficiency, they are.

1. Geographical connectivity (Eg: road, rail, etc)
2. Electronic connectivity (Eg: Internet etc)
3. Knowledge (Eg. Education, health etc)
4. Economic connectivity (regulated market)
The remotest PURA was given high priority. PURA model accepted inthe year 2004, Jan 20.
9. Unlimited Labour Supply Theory:
According to Arther lewis, third world countries are having two sectors which are
subsistence & investment sectors, besides that subsistence sector is having more labour
force.
Nothing but, developing countries are subjected to dualism in which unorganised in large
scale and organised sector at small scale.
10. Critical Minimum Effort Theory:
According to leibastain where leakages are overcome by the injections then only faster
growth is expected which needed critical minimum effort.
According to Leibastain, conversion of unorganised sector into organised sector takes extra
effort which is critical minimum effort.
A book by Harvey Leibastain is Economic Backwardness & Economic Growth.
11. Low Level Equilibrium Trap Theory:
According to R.R.Nelson, developing & poor countries subjected to low level trap
theorem since decades, due to some imperfections.
With regard to these countries demand exceeds supply then it leads to stagnancy.
12. Parito Optimality Theory :
Allocation of goods may result in some individuals being made better off with no
individual being made worse off said by Mr. Parito.
According to parito, what are the steps which are taken in efficient production, same
measures are needed to be taken in distribution policy also to realise equi utility.
13. Growth -Population Theories :
According to Dalton, population also one of the development factor, neither over
population nor scarce population needed to realise faster growth rate.
In a country here demand nothing but population and supply is economy both must be
equal, i.e; population must match with economy according to Dalton.
Famous demographer Mr. Malthus developed negative hypothesis towards population.

According to him growing population likely to destruct the economy, every born child will
see the hell.
Mr. Malthus wrote an essay Principles of Over Population in 1798.
According to Malthus, population treated as Geometric Mean and production treated as

Arithmetic Mean.
The person who supports theory of optimum population are Dalton, Sedjiwick, & Edward.
Demographic Theory of population/transition by Mr. Thomson and Notestein:

* He explained 3 stages.
* In Stage-I, birth rate & death rate both are high because of low mental
development and medical facilities.
* In stage-II, birth rate is high & death rate will low because of high medical
facilities.
* In stage III, both birth rate and death rate are low, because of high mental
development and high medical facilities.
Inequality & Growth :
Inequality by Amartya Sen :
* Inequality role is very crucial in economic development which affects
economy negatively.
* Mr. Amartya who got a noble in 1998, stress about the welfare.
* According to him low gap between rich & poor affects the welfare, high gap leads to low
welfare.
* Economic problem, generally errupted from economic itself, hence needed to match
with NI.
Loren -Z-Curve :
* Mr.Loren z, explained inequality with the help of curve.
* Inequality led numerous leakages, since every country needed to lesser the inequalities.
Gini Index :
* Gini Corrado explain inequality on numerical base, which is Gini Index.
* According to Gini Index, as number instigates the intensity of inequality also increases,
with reference to global scenario we are having less inequalities but with inthe country the
intensity of inequality seems more.
* Inequality being measured with the help of Gini Index.
14. Kuznets Inverted U-Theory :
Simon According to Kuznets, inequalities visible more in the initial periods of economic
development, but later the intensity of inequality may go down.

According to Kuznets labour force migrate from primary sector to secondary sector,
secondary to territory sector in the process of evolution, thats why the intensity of
inequality may go down.
Solow Growth Rate :

* Robert Solow is a U.S economist.
* He got Nobel price in 1987
* For economics Nobel Price started in the year 1969, first Nobel Price winner
in
economics is Ragnor frish.

* According to Robert Solow, the role of technical progress is very crucial
which
can
influence the economic growth.

Theory of Profit Innovative :
* According to Schumpeter, the entrepreneur who introduce innovation
in production
process only realise faster growth rate.

* According to him, induced investment is not important, but autonomous
investment is an important element, besides that organiser is the main
pillar of the
production.
15. Secular Stagnancy Growth Theory:
According to Alwin Hanson, whenever a country subjected to secular stagnation, then

the solution is large scale deficit.
Solution for Stagnation according to Keynes is diggout the well and fillout the well.
But Mr. Hanson Suggested, large scale deficit is the solution for prolonged stagnation.
Mr. Hanson was named as American keynes.
Current year debt of government treated as fiscal deficit, and extra minting of money done
by RBI treated as deficit finance, which may used to bring out the economy from
depression.
But Americans kept aside this concept and sold out their weapons to other countries and
earned income.
Accoding to Hanson and keynes, deficit also having influence over growth.
16.Adam smith:
He is a Father of economics
Adam Smith suggested Division Of Labour (DOL) can instigate domestic economy and
Free Trade can instigate foreign economy.
Adam smith mentioned about invisible hand, but government need not interfere in
economic activities.
Growth and Development :

Increasement in production treated as growth, but development consist growth with

factors which are caused to growth can be studied.
The following are the factors, nothing but definitions of growth.
Increasement of production nothing but to Growth.
Increasement of National Income refers to Growth.
Increasement in Productivity refers to Growth
Increasement of advanced technology also refers to Growth
Like
this the following factors refers to Growth :
Less agriculture share in GDP
Gender Equity
More Business Firms
Full Employment
Real Growth Rate
Large Scale Industry
High Scale Economy
High Profits
High Innovations
New Methods
Urbanisation
High Technical Progress
High Mobility Factors
Positive Occupational Change
Scientific Temper
High Rationality
Productivity is enhanced with the help of modernization human capital, natural capital
fully utilized by the technology.
Productive population is visible in these economies, no under utilization, no mall

allocation, these type of countries are having optimum allocation.
These type of countries are having required white goods, they are having second order
wage goods instead of first order wage goods (Jowar), hence efficiency seems more.
When a firm, introduced Division Of Labour (DOL) then it gets internal economies and
whenever all firms developed then treated as external economies.
Both are grabbed by Growth.
Faster growth is realised in these economies due to the presence of division of labour &
specialization.
Growth is having positive structural change hence no trade cycles are visible.
People will think near to fact in growth process.

Development :
Economic Development represents structural changes in various sectors of the country.
In Economic Development there is a decrease in the share of labour force in primary

sector and an increase in the share of labour force in secondary sector.
The following Factors refers to Development:

Development :
Poverty
Economic Inequality
Regional Inequality
Population Policy
Industrial Policy
Longterm Effort
Qualitative Item
Multi Problems
Agriculture Policy
Macro Concept
Forest Policy
Institutional
Malnutrition
Unemployment
Multidimensional Factor
Social Factors are considered
To sum up economic development, economic growth coupled with change.
Here the term change, refers to the qualitative changes in the economy.
These are in the form of improvement in the level of living, reduction in inequalities in
income & wealth, rise in efficiency, improvement in technique faster growth of industral
sector, positive changes in attitudes & other cominent changes in all the economic
spheres.
In order to reach growth from development a country need to match some balances
which are as follows.
(i) X = M (X = Exports; M= Imports)
(ii) D = S (D = Demand, S= Supply)
(iii) AD = AS (AD = Aggregate Demand; AS = Aggregate Supply)
(iv) Consumption = Saving
(v) National Income = Economy
(vi) Population
India is a developing country, to reach growth it need to eliminate some

imbalances which are presence in economy.

I. Per Capita Income:
Some economists have taken per capita income as economic development indicator on the
basis of the increase in PCI.
The increase in PCI of any country shows an increase in economic growth rate of the
country, rather than economic development.
As economic development includes changes in many spheres besides a rise in PCI.

* LIC - Low Income Country
(0 - 1035 US$)
* LMC- Lower Middle Income Country (1036 - 4085 US$)

* UMC- Upper Middle Income Country (4086 - 12615 US$)
* UIC- Upper Income Country (12615 (+) US$)
PCI (Per Capita Income) in the year 1951 was Rs.238
According to 2014-15 data, current year price was 88533 Rs and base year price was 74193.
In india, if population is greater than National Income then PCI decreases, per capita
consumption decreases, monthly per capita expenditure decreases finally below poverty
line increases.
Percapita income of current year price is high in Hyderabad and low in Adilabad.
Base year price of PCI is high in Hyderabad and low in Adilabad.
II. Primary sector :
According to 2014-15 record, labour force has 48.9% and income is 18.1% i.e; No Real
Growth.
India is having developing features in agriculture, hence more labourforce earning lesser
income.
In developed country, primary sector is between 0-5%, in secondary sector 40% (+) and in
territiary sector 55%.
India has less than 30% of GDP in secondary sector, in manufacturing sector it has 15% of
GDP, but it should be 25% of GDP.
Majority of the Indian workforce residing agriculture sector, hence Indian economy named
as Agrobased economy.
In the year 1996-97 AIBP (Accelerated Irrigation Benefit Program) was started.
* 2004 - ACP (Agriculture Credit Program)
* 1996 - 97 - KVK (Krishi Vignan Kendras)
* 2005 - ATMA (Agriculture Technical Management Agency) were started.
III.Population :
India possesses 2.4% of the total land area of the world, whereas its population is nearly
17.5% of the world population.

The last child of 5th billion born on 11-07-1987 was Yugoslavia, so 11th July is known as
World Population Day.
According to 1901 census, Indias population was 236 million and according to 2011 census
the population was 110 million.
During 1991-2001, the annual growth rate of population was 1.93% and during 2001-2011 it
was 1.64%.
The year 1921 is regarded Great Dividing Year (GDY) of population because of decrease in
population and the turning point for the increase in the growth rate of population.
Birth Rate : During 1901-1921, birth rate was 49 per 1000, but the birth rate showed slight
decline initially and due to family planning drive birth rate also declined to 22.1 in 2010 11.
* Birth Rate in 1911 21 was 49/1000
* Birth Rate in 2010 11 was 22.1/1000
Death Rate: The death rate during 1901 - 1921 was 49 per thousand.
After 1921, a clear fall in death rate is noticeable, which was came down to 7.2 per 1000 in
2010 - 11.
* Death Rate in 1911 - 20 was 49/1000
* Death Rate in 2010 11 was 7.2/1000
Thus, the high growth rate of population can be explained in terms of
high
birth rate but a relatively fast declining death rate.
Kerala, Tamil Nadu, Unified Andhra Pradesh, West Bengal, Karnataka,

Maharastra and Punjab, achieved a birth rate below 20 per thousand.
India
dreadly achieved food security, but should have to achieve
nutritional
security.
Average Annual Birth and Death Rates in India

Decade
Birth per 1000 Deaths per 1000

population
Population
1891-1900
45.8
44.4
1901-1910
48.1
42.6
1911-1920
49.2
48.6
1921-1930
46.4
36.3
1931-1940
45.2
31.2
1941-1950
39.9
27.4
1951-1960
40.0
18.0

1961-1970
41.2
19.2
1971-1980
37.2
15.0
1990-1991
29.5
9.8
2000-2001
25.4
8.4
2010-2011
22.1
7.2
IV. Unemployment :
If we deduct workers from labours we get unemployees
The people whose age group is between 18 to 64, considered as labour.

Workers nothing but who has job
V. Inequalities :
Indian economy is having more inequalities.
Whenever an economy subjected to inequalities, will have to face slower growth rate,
inflation, class war, low welfare etc.
Inequalities were explained in different manners by some economists they are as follows.
1. Amartya sen
W=P(1-G)
2. Mr. Lorenz
3. Ginni Index Method
QIR (Quintile Income Rate) with reference to this, inequalities seems lesser in India when
we compare with other country but seems higher with inthe country.
VI. Social Development:
Economic factor is having unidimensional feature but social development having multi
dimensional features, hence it gets with only social development.
(i) IMR (Infant Mortality Rate) :
According to 2011 data U5MR (Under 5 Mortality Rate) is 44 per 1000, compare to world
it is 46 per thousand.
Japan contain 2 per thousand
Siorraleone 107 per thousand
States:
Goa 107 per thousand
Kerala 12 per thousand
Highest infant mortality rate is in Maharashtra is 59 per thousand.
Unified AndhraPradesh is 43 per 1000.
MDG is nothing but Millennium Development Goals and its target is 28 per thousand.
For 2000-2015, it is said as Millennium Development Goals & from 2015-30 it is said as
SDG, nothing but Sustainable Development Goals.

(ii)
MMR (Maternal Mortality Rate)
In India, according to 2007-09 record, it was 212 per 1 lakh, for 2011-12 record it was 178.
The target of MDG is 109 per 1 lakh.
Singapore 3 per 1 lakh
Estonia 3 per 1 lakh
South Sudan 2054 per 1 lakh
12th Plan target of MMR is 100 per one lakh.
Highest Meternal Mortality Rate is in Assam i.e; 390 per one lakh.
Lowest is Kerala i.e, 81 per one lakh
Unified Andhra Pradesh is 134 per one lakh.
(iii) Birth Rate:

In
India birth rate is 22.1 per thousand
Heighest
Lowest
birth rate is in Niger i.e., 46.12 per thousand
birth rate is in Monacco i.e, 6.72 per thousand.
Heighest birth rate in India in Uttar Pradesh i.e., 28.7 and lowest birth rate is in Goa
contains 13.5.
In
Unified Andhra pradesh, in rural areas 17.9 and in Urban area it is 18.3.
(iv) Death Rate :

In
India death rate is 7.4 per thousand.
Highest
death rate is in Orissa contains 8.6 per thousand and lowest death rate is
Nagaland consists 3.6 per thousand.
Highest death rate compare to countries, having in South Africa i.e, 17.49 and lowest is
Qatar consists 1.53 per thousand.
(v) TFR (Total Fertility Rate):
In India it is 2.3 per thousand.
Compare to states highest TFR is in Bihar i.e, 3.4 and lowest in West Bengal i.e., 1.6.
Compare to countries, highest is Niger - 7.27
2nd place for Uganda - 6.53
3rd place for Mali - 6.06
4th place for Somalia - 5.99
(vi) Life expectancy :

According
to 2014 record, life expectancy is 67.8 years.
For male it is 66.68 years
For female it is 69.06 years
Compare to countries, it is highest in Monacco i.e.; 89.52 years, next place for Japan
(84.74 year) and next place to Singapore (84.68 year)

For siyoralia life expectancy is 46 years, out of that for males (45 years) and for females
(46 years) of life expectancy.
Compare to states high life expectancy is in Kerala (74 years) and low life expectancy is
in Madhya Pradesh (58 years).
For Unified Andhra Pradesh it is 64.4 years).
Malnutrition :
1/5th part of Indian population facing poverty.
Children who are facing malnutrition problem in India are 43.7%.
Children who are facing under weight problem in India are 42.5%.
Overall population of India who are facing malnutrition problem is 22%.
Mothers who are facing malnutrition problem in India are 50 to 60%.
Stunted children in India are 48%.
1/4th part of world, who are facing stunted problem are only children.
1/5th part of Indian population are facing Malnutrion problem and 5.6% of population are
unemployees.
National Nutrition policy (NNP) started in the year 1993.
Integrated Child Development Services (ICDS) in the year 1975-76.
Highest Malnutrition concentrated in a state is Madhya Pradesh 74%, next place to

Jharkhand - 56.5%, Bihar - 55.9%
1/5th part of India facing obesity problem.
50% of Assets are having with only top 10 rich people.
Capital Formation :
The strategic role of capital in raising the level of production has traditionally been
acknowledged in economics.
It is now universally admitted that a country, which wants to accelerate the pace of growth,
has no choice but to save a high ratio of its income, with the objective of raising the level of
investment unless otherwise it can attract foreign investment on a large scale.
With reference to capital formation, near about 30% of GDI in GDP.
According to 2014-15 economic survey, near about 30.6% of GDS is in GDP, and GDI is
32.5% in GDP.
According to 1947 record, 8% of GDS was in GDP and 8% of GDI was in GDP.
India is Emerging Marketing Economy (EME).
In GDS, financial assets should be high and physical assets should be low.
According to Collin Clark, in order to observe 1% of population growth rate we need to

procure 4% of capital.
BPL (Below Poverty Line) :

According to 1973-74, BPL was 54%, but according to 2011-12 it was 21.90%.
In urban areas if it is above 1000 Rs, then it is referred as APL (Above poverty Line), if
below 1000 Rs then it is referred as Below Poverty line.
In rural areas if consumption is above 816 Rs then it is referred as APL (Above Poverty
Line) if less than 816 Rs, then referred as BPL.
Development Indexes :
The problems associated with using GNP and per capita GNP as measures of economic
development are well known.
Some economists have taken national product as the indicator of development while other
economists have taken per capita income as indicator of economic development.
The development of indexes are as follows.
1. National Income:
The first measuring rod of economic development is the National Income.
High National Income is the index of higher level of economic development and viceversa.
The division of global economy into developed and developing countries is based on the
National Income.
2. Per capita Income:

Some
economists have taken Per Capita Income as economic development indicator on
the basis of the increase in Per Capita Income.
The Increase in per capita income of any country shows an increase in economic growth
rate of the country, rather than economic development, as economic development
includes changes in many spheres besides a rise in per capita income.
3. Physical Quality of Life Index (PQLI):

This
is a non-income indicator of economic development because this uses physical
quality of life as a indicator.
This method of measuring economic development is based on the following three

things. They are
1. Life Expectancy
2. Infant Mortality and
3. Literacy.
According to David Morrison, developed PQLI is with the help of social indexes.
If in any country PQLI is increasing then it indicates the increase in the physical quality
of life of the people.
PQLI method is taken to be a better indicator than per capita income method.
The following shows different ranks of different countries for PQLI.
Rank
Country

1
Switzerland
10
US
36
India
59
Brazil
4. Gender Related Development Index (GRDI):
It was introduced in 1995 in the Human Development Report written by the United
Nations.
The Gender
Development Index(GDL) is a composite indicator that measures the
development of states according to the standard of living in a country
It is used as one of the five indicators by the United Nations Development Programme
in their annual human development report. It highlights inequalities in the areas of long
and healthy life, knowledge and a decent standard of living between men and women.
The following shows different ranks of different countries for GRDI.

Rank
Country
Slovenia
Switzerland
Germany
Swedon
Denmark
37
China
127
152
India
(last) Yemen
5. Doing Business Index - 2015 (DBI):
DBI shows the healthy environment towards trade.
World Bank Group (WBG) are as follows.

1. International Bank for Re-construction & Development - 1945 IBRD
2. International Finance Corporation (IFC) - 1956
3. International Development Association (IDA) 1960
4. International Centre for Settlement of Investment Disputes (ICSID)-1975
5. Multilateral Investement Guarantee Agency - 1986
Total 189 countries will participate in DBI.
In DBI the following components will considered.
Tax, warehousing, loan, Exim, disputes, insolvency and electricity.
The following shows different ranks of different countries for DBI.

Rank Country

1
Singapore
Newzeland
Honkong
Denmark
South kora
Norway
US
90
China
142 India
187 CAR (Central African Republic)
188 Libiya
189
Eritria
6. Environmental Performance Index (EPI):
Economy must be linked with ecology, was the prime motto of the sustainable
development.
Total countries participated in Environmental Performance Index are 178.
Total 20 components are considered such as air, water, sanitation, forest etc.
According to 2014 record the following table shows different ranks of different
Countries.
Rank
Country
1
Switzerland
2
Luxemburg
3
Australia
4
Singapore
33
US
72
South Africa
118
China
155
India
178
Somalia
7. Gobal Innovation Index (GII):

79
components are considered
Rank
1
2
3
4
5
Country
Switzerland
UK
Swedon
Netherland
US

29
81
139
140
141
China
India
Guina
Togo
Sudan
8. Global Corruption Index (GCI) : According to 2015 record.

Rank
Country
67
South Africa
69
Brazil
85
India
100
China
136
Russia
172
Afganisthan
173
Sudan
174
North korea
175
Somalia

9.
Least corrupted countries are Denmark, Newzeland and Finland.
Gross Happiness Index :

6
Components are considered which are as follows:
1. Real PCI
2. Life expectancy
3. Life choice
4. Corruption
5. Generosity
6. Social Support.
Total 158 countries will participate in GHI.
Rank
Country
Switzerland
Iceland
Denmark
Norway
Canada
81
China
117
India
156
Syria
157
Barundi
158
Togo
10. Millinium Development Report :

1. Poverty in world decreasing from 47% to 14%.
2. Middle class people increasing from 18% to 50%.
3. Under Nourished in world decreasing from 23.3% to 2.9%.
4. Out of School Children (OSC) decreasing from 100 millions to 57 millions.
5. Gross Enrolment Ratio (GER) increased from 83% to 91%.
6. Infant Mortality Rate (IMR) decreased from 90 to 43.
7. Vaccine increased from 73% to 84%
8. HIV affected people decreased from 3.5 million to 2.1 million.
9. Safer Drinking Water (SDW) increased from 76% to 91%.
10. Mobile connections increased from 738 million to 7 billion.
11. Internet users increased from 6% to 43%
11. Human Development Index(HDI)
The United Nations Development Programme (UNDP) introduced the HDI in its first
Human Development Report (HDR) prepared under the stewardship of Mahaboob-ulHaq in 1990.
It is a standard means of measuring well being . HDI measures the average

achievements in a country in three basic dimensions of the human developments, a long
and healthy life, access to knowledge and a decent standard of living.
HDI takes countries in relation to each other on a scale of 0 to 1. The human

development index is based on these three indices and that are as follows.
(i) Life Expectancy Index (LEI):
Because infant mortality is not entering this index as a separate indicator, so here refers
to life expectancy at birth, not at age one.
(ii) Educational Attainment Index(EAI):
It is a combination of adult literacy rate an combined enrolment ratio. The weight

assigned to Adult Literacy Rate (ALR) is two third while that for Combined Enrolment
Ratio(CER) is one third.
Therefore, Educational Attainment Index may be given as

EAI = (2 ALR + 1 CER)/3
(iii) Standard of Living Index (SLI):
It is respresented here by a transformation of per capita income. Percapita income are

coverted into purchasing power parity (PPP) is dollars.
Thus, HDI = 1(LEI+EAI+ SLI)/3
Expected years of schooling is minimum 0, max 18
Real GDP per capita PPP 100$ and 40,000
In India life expectancy is 66.4 years, Mean year of schooling 4.4 years, Expected year of
schooling 11.7 years, PCI 5150$
187 countries will participate in HDI.

out of 187, countries the ranks are as follows.
Rank
Country
Norway
- 0.944
Australia
- 0.933
Switzerland
- 0.917
Netherland
- 0.915
US
- 0.914
135
India
- 0.586
In the year 1990, India HDI was 0.417, According to 2014 data it was 0.586
183
Eretria
185
CAR
186
Congo
187
Niger
Human Development Report - 2015 :
In India Life Expectancy at birth (2014) 68 years, Expected years of schooling (2014) 11.7
years, Mean years of schooling 5.4 years.
188 Countries are consider for HDI.
Out of 188, countries the ranks are as followed:

Rank
Country
Norway
Australia
America
130
India (0.69)
188
Niger (last)
Out of 188, 49 countries are highest development countries.
56 countries are high development countries, 39 middle developed countries, 44 under

development countries.
Inequality adjusted HDI value (India) in 2014 - 0.435.
Inequality in Life expectancy in 2010-15 recorded as 25%.
Inequality in Educaiton (2014) recorded as 42.1%
Inequality in Income (2014) recorded as 16.1%
Gender related inequality index value (India) in 2014 - 0.563% (130th place) , Slovania
(1st Rank), Switzerland (2nd Rank), Germany (3rd rank).
12. Gross National Happiness(GNH)
It attempts to measure quality of life in a more holistic manner than just an economic
indicator like GDP.

The
four pillars of GNH are promotion of sustainable development, preservation and
promotion of cultural values, conservation of natural environments and establishments

of good governance.
The
term GNH was coined in 1972, by Bhutans the then king Jigme Singya Wangchuck.
GNH value is proposed to be an index function of the total average per capita of the
following measures.
Economic Wellness
Environmental Wellness
Physical Wellness
Workplace Wellness
Political Wellness
Mental wellness
Social wellness.
13. Global Hunger Index (GHI):
It is a multidimensional statistical tool used to describe the state of countrys hunger

situation. The index was adopted and further developed by International Food Policy
Research Institute and was first published in 2006. The Bill combines there equally
weighted indicators.
i. The proportion of undernourished as a percentage of the population
ii. The percentage of underweight children under the age of 5..
iii. The mortality rate of children under the age of 5.
14. The Human Poverty Index(HPI)
The UNDP Introduced the Human poverty index. It is a combined measure using the
dimensions of human life already considered in the GDI: life length, knowledge, a
decent living standard.
The index is calculated annually by UNDP for all countries according to the availability
of statistical data.
It is prepared in two forms, depending on whether it is a developing(HPI-I) or an

industrialized economy (HPI-2)
i. The Human Poverty Index for Developing countries(HPI-1)

The
following three dimensions are taken into account are as follows
1. Deprivation of longevity; measured as a percentage of the individuals with a life

expectancy lower than 40 years.
2. Deprivation of knowledge, expressed as a percentage of illiterate adults.
3. Deprivation of decent living standards.
This last indicator is made up by the simple average of three basic variables the
percentage of the population without access to drinking water.

The percentage of population without access to health services and lastly.
The percentage of underweight children ages less than 5.
ii) The Human Poverty Index for Industrialized Countries (HPI-2)
The human poverty index for industrialized countries uses the same dimensions of the
previous index, but the variables and reference values are different
1. Deprivation of longevity is measured by the percentage of individuals whose life

expectancy is below 60 years of age.
2. Deprivation of knowledge is based on the percentage of adults functionally illiterate
according to the OECD definition.
3. Deprivation of decent life standards is the percentage of the population living below the
poverty level, as defined according to the criteria of the international standard of
poverty line, thus being equal to 50% of the per capita average National Income.
15.
National prosperity Index(NPI)
The Prosperity Index goes beyond GDP to measure countries success against a broad set
of metrics covering areas such as health, education, opportunity social capital, personal
freedom and more.
Hence, we have evolved what is called a National Prosperity Index (NPI) which is a
summation of annual growth rate of GDP.
Improvement in quality of life of the people, particularly those living below the poverty
line.
The adoption of a value system derived from out civilisational heritage in every walk of
life which of unique to India.
The NPI is a summation of GDP growth, improvement is quality of life of people living
below the poverty line and adoption of value system derived from our civilisational
heritage in every walk of life.
The prosperity index is the only global index that measures national prosperity based on
both wealth and wellbeing.
The index seeks to redefine the concept of national prosperity to include, as a matter of
fundamental importance, factors such as democratic governance, entrepreneurial
opportunity and social cohesion.
17. Multi-dimensional Poverty Index:

Report
First
will be given by Oxford University
introduced in 2010.
It is an attempt designed to illustrate the many deprivations faced by the most severely
disadvantaged.
The MPI requires a household to be deprived in multiple indicators at the same time.
The MPI is closely linked to the Millennium Development Goals targets

MPI
includes 10 components, which are as follows.

1. Possession of some assets
2. School education
3. School time table
4. Nutrition food
5. Infant mortality
6. Safer drinking water
7. Access to sanitation
8. Access to safe room
9. Access to electricity
10. Access to improved cooking oil.
18. Global Competitiveness Report :

Report by World Economic Forum : 2014 - 15.
If compitive spirit increase then economic development will get increase.
12 components are considered they are:
1. Corporations
2. Basic Facilities
3. Economic Environmental
4. Innovations
5. Trade Efficiency 6. Market Quantity
7. Technology
8. Economic Market Development
9. Health & Primary Education
10. Higher Education & Training
11. Goods Market Efficiency
12. Labour Market Efficiency
Rank
country
1
Switzerland
2.
Singapore
3
US
4.
Finland
5
Germany
28
China
53
Russia
56
South Africa
57
Brazil
71
India
142
Yemen
143
Chad
144
Guinea
World competitive report 2015-16
Top 3 countries
Rank
Country
Score
1
Switzerland
5.76
2
Singapore
5.68
3
America
5.61
Last 3 countries
Rank
Country
Score
138
Mouritania
3.03
139
Chad
2.96

140
Guinea (last)
2.84
th
* 55 Rank - India - 4.31
19. Global Peace Index :

Report
given by Institute for Economics & Peace.
23 components are considered.
According to record the following are the ranks of different countries.

Rank
Country
Iceland
Denmark
Australia
New Zealand
Switzerland
103
Brazil
124
China
136
South Africa
143
India
152
Russia
154
Pakistan
160
Afghanistan
161
Iraq
162
Syria
20. Social Progress Index:

The
SPI measures the extent to which countries provide for the social and environmental
needs of their citizens.
54 indicators in the areas of basic human needs, comforts and opportunities progress to
show the relative performance of nations.
The index is published by social progress imperative, based on the writings of

Amartyasen, Douglass North and Joseph Stiglitz.
The SPI focuses on development indicators beyond Gross Domestic Product utilising the
following indicators.
1. Basic Human Needs :

Under
this water & sanitation, shelter, personal safety, nutrition & basic medical care
considered.
2. Comforts:

Under
this access to basic knowledge, information and communications, health &

wellness and ecosystem sustainability considered.
3. Opportunity:
Personal
rights, personal freedom & choice, tolerance & inclusion and access to
advanced education considered.

Rank
Country
Norway
Swedon
Switzerland
Iceland
Newzealand
42
Brazil
63
South Africa
71
Russia
92
China
101
India
131
Afganisthan
132
Chad
133
CAR
21. Index of Economic Freedom 2015:
Index published by Wall Street Magazine
Following are the components.

* Per Capita Income
* Health
* Education
* Environment
* Poverty
* Well being
* Economic growth
Ranks of different countries are as follows.

Rank
Country
Honkong
Singapore
New Zealand
Australia
Switzerland
72
South Africa
118
Brazil
128
India

139
China
143
Russia
176
Venezuela
177
Cuba
178
North Korea
Index
year
NI (ER)
2015
Organization
1st
last
India Rank
WEO
US
Tuvalu
NI (PPP) 2014-15
WEO
China
Tuvalu
GCI
Transparency
Somalia
Denmark
85
Switzerland
Sudan
81
2015
International
(Corruption)
GII
2015
WIPO
EPI
2015
Yale university Switzerland Somalia
115
Columbia
GHI
2015
UN
Switzerland
Togo
117
HDI
2014-15
UNDP
Norway
Niger
135
DBI
2015
WBG
Singapore Eretria
MPI
2015
Oxford
Niger
142
28.5%
(BPL)
GCR
2014-15
WEF
Switzerland
Guinea
71
GPI
2015
IMF
Iceland
Syria
143
SPI
2015
SPI
Norway
CAR
101
IMF
2015
Wall street
Honkong North Korea 128
Magazine
National Income according to exchange rate of different countries are as follows:

1. US
18125 USB$
2. China
11212 USB$
3. Japan
4210 USB$
4. Germany
3413 USB$
5. UK
2853 USB$
6. France
2470 USB$
7. India
2308 USB$
8. Brazil
1904 USB$
9. Italy
1843 USB$
10. Canada 1615 USB$
Demography / Economic Development :

1. Age Composition:
In the year 1961 age group between 15 to 60 years was 53.3%.
In the year 2001, age group between 15-60 years was 58.2%, hence GDP increased.
With reference to demography, India having Demography Divident (DD), hence labour
needed to be observed.
2. Density:
In the year 1991, the density i.e., 267 per kilometer
In the year 2001 it was 324
In the year 2011 it was 382
Density leads to positive factors and negative factors
Migration may lead to high density, high density lead to regional inequalities ultimately
it leads to inflation.
3. Urbanisation :
In an area if the population is 5000 members then treated as urban
75% of people (men) is in non-agriculture.
Urban population in India according to 2001, recorded 27.8% and according to 2011 it
was 31.2%.
Urban Rural Ratio in different years are as follows.

1901 - 1 : 8.1
1951 - 1 : 4.7
2011 - 1: 3.0
If
urbanisation & PCI increases then BPL decreases.
4. Sex Composition:
If poverty increases then sex ratio decreases.
If economic development takes place, sex ratio becomes positive.
Sex composition i.e; per 1000 males there was 927 females in the year 1991 in India.
In the year 2001, 933 females per thousand males.
According to 2011, 943 females per thousand males.
If we need economic development then the following should be there.

1. Birth Rate & Death Rate should low.
2. Infant Mortality Rate also should be low.
3. Sex Ratio should be thousand per thousand.
4. Total Fertility Rate should be equal
5. Literacy Rate, i.e., higher education should be high.
6. Growth Rate should equal to population growth.
7. Age Composition in between (18-64) year should be high.
8. Access to health should be high.

Obstacles to Growth :
Obstacles
to growth are as follows :
1. Under utilization of human resources

2. Poor governance
4. Diseases
3. Low access to capital

5. Natural disorder
6. Political instability
7. In effective tax structure
8. Poverty
9. Trade benefits
10. Corruption
11. Terrorism
12. Gender issue
13. Social violence
14. Inflation
15. Low agriculture productivity
16. Vicious circle of poverty 17. Lack of enterprises

18. Market imperfections
19. Price rigidity
20. Religious factors
21. Low investment for education
22. Low investment for Health
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GROWTH AND DEVELOPMENT

Growth primarily belongs to economy.

Economic Growth is a narrower concept than Economic Development.

It is an increase in a countrys real level of national output which can be caused by an

Economic Growth can be measured by an increase in a countries Gross Domestic Product

According to Micheal Ptodaro, economic growth is a steady process by which the

The increasement in production is treated as Growth.

The change in economy in one financial year treated as Growth.

We generally use it in the positive sense.

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Father of Growth Theories - Harrod Domar.

Hypothesis should not implemented totaly is should implement on pilot basis.

The words Growth & Development were errupted in 1960s.

Indian plans are Growth Oriented Plans.

Qt = Current year production

The inclusive growth as a strategy of economic development received attention owing to a

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LPGD also known as Rao - Manmohan Model.

LPGD was started in the year 1991.

Privatisation is nothing but conversion of government firm into private sector.

Partial selling of government firm to private sector named as Disinvestment.

Warranted Growth Rate :

Natural Growth Rate :

enjoy the natural growth.

Gradual / Steady Growth:

Growth Rate of National Income :

Real Growth Rate in the country instigate the National Income

Strategies of Growth & Development

When National Income increases, development increases By Harrod-Domer.

National Income growth is equal to development of the country.

According to H & D, National Income development nothing but economic development

APC (Average Propensity to Consume): The consumption in income shown by APC.

Propensity nothing but Nature, propounded by H& D.

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2. Balanced Growth Theory :

The interfearence of the government in economic activities led imperfections of the

Simultaneous investments is problematic issue for developing countries.

According to Nurkse developing countries are imperfect markets.

According to Nurkse, induced investment needed to be implemented.

Besides a induced investment, autonomous investments also needed, henceforth every

According to Nurkse, Supply creates Demand,

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3. Imbalanced Growth Theory :

Iron & Steel is having high linkage than other goods.

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Father of Micro Economics is Alferd Marshal, he wrote a book principles of economics in

If demand & supply matches treated as Effective Demand said by Keynes.

Choice Of Technique (COT):

According to A.K.Sen, every country needed to concentrate on choice of technique,

Choice of technique nothing but time series criteria.

Due to presence of unemployement, slower growth rate towards social development

Advantages of labour Intensive Methods are as follows:

4. Wage - Good Model :

Vakeel & Bhramananda Introduced Wage - Good model in VII plan.

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P.C. Mahalanobis given priority to large scale industries.

5. Spread & Back wash effects :

The theory of evolution in economy, propounded by many economists of which the

Stages of Economic Growth a book written by W.W. Rostov.

The following are the 5 stages explained by W.W.Rostov.

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In this stage more than 75% of people depends upon agriculture.

It is un-organised economy, i.e, there is no economic activity.