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The Indian economy has accumulated development experience spanning a little over six decades. There are some deep changes that have taken place in India, which suggest that the economy’s fundamentals are strong. First, the current rate of savings and investment have reached levels that even ten years ago would have been dismissed as a pipedream for India. On this important dimension, India is now completely a part of the world’s fast-growing economies. Since these indicators are some of the strongest correlates of growth and do not fluctuate wildly, they speak very well for India’s medium-term growth prospects. It also has to be kept in mind that as the demographic dividend begins to pay off in India, with the working age-group population rising disproportionately over the next two decades, the savings rate is likely to rise further. Second, the arrival of India’s corporations in the global market place and informal indicators of the sophisticated corporate culture that many of these companies exhibit also land to the optimistic prognosis for the economy in the medium to long run.
Traditional View
Traditionally, economic development has been considered as synonymous with economic growth. Economic growth has been defined as “an increase in real terms of the output of goods and services that is sustained over a long period of time, measured in terms of value added.”
The modern economists, however, have begin to question this identity between ‘economic growth’ and ‘economic development’; “development is not the same thing as economic growth”. Suppose, by analogy, we were interested in the difference between ‘growth’ and ‘development’ in human beings. Growth involves changes in overall aggregates such as height or weight, while development includes changes in functional capacities, physical coordination, leadership capacity, of ability to adapt to changing circumstances. Growth is an engine, not an end in itself. The end being development
In view of the above considerations, economic development, now, is being defined “as the process of increasing the degree of utilisation and improving the productivity of the available resources of a country which leads to an increase of the economic welfare of the community by stimulating the growth of national income.”country which leads to an increase of the economic welfare of the community by stimulating the growth of national income.”
Economic Growth = Size of output (A Quantitative aspect)
Economic Development = Size of Output + Economic Welfare (A Qualitative aspect)
If follows from this definition that the progress of development has to be assessed by reference to two separate indicators, namely, the indices of ‘production’ or ‘national income’, and of the ‘economic welfare’ of the community.
1) The former covers what may be designed as the ‘growth’ aspect of development.
2) The economic welfare indicator, on the other hand, brings to light the pattern of allocation of resources and of the distribution of income among different groups and classes of the community; in a sense, it combines the ‘equity’ and the ‘growth’ aspects of development.
It follows that in pursuit of economic development, the following five types of
growth processes should be avoided:
i) Jobless growth, implying a growth process which does not create additional
jobs or which reduces the existing job opportunities;
ii) Ruthless growth, implying a growth profile which aggravates inequalities in the
system;
iii) Futureless growth, implying a growth paradigm which creates non-sustainability
through environmental degradation;
iv) Voiceless growth, implying a growth process which does not improve the
income of the deprived sections of the society; and
v) Rootless growth, implying a growth process which destroys the cultural roots
and traditional life styles of the society.
Econometricians have attempted to measure structural changes in economies as development proceeds. Much of the pioneering work was done by Prof. Simon Kuznets on the basis of historical data, and the analysis has been extended and 9 refined using current data, notably under the leadership of Hollis Chenery. Such studies seek to reveal how key economic parameters change as countries develop. We may note the following as important changes:
By: Barka Mirza ProfileResourcesReport error
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