INDIAN-ECONOMY

Introduction:

Charles P Kindleberger rightly asserts that whereas economic growth merely refers to a rise in output, economic development implies changes in technological and institutional organisation of production as well as its distributive pattern of income.

Mahbub Ul Huq (a renowned Pakistani Economist), defines development as reduction of malnutrition, disease, illiteracy, squalor, unemployment and inequalities.

Main Body:

By mobilising large resources and raising their productivity output level can be raised. This rise can be sustained with monetary and fiscal stimulus as well. No development can happen without the support of growth. Amarya Sen states that, growth generates the resources that are needed for development.

However, economic growth in the absence of development is meaningless, as the benefit of this growth is amassed by a privileged few. Robert Clower calls this a “growth without development”. Incidentally, for development to come, growth is an imperative.

While economic growth can be relatively straightforward to achieve through policies like investment incentives or monetary stimulus, achieving holistic development is far more complex. It requires addressing systemic inequalities, promoting inclusive policies, fostering social cohesion, and ensuring environmental sustainability. Thus, while economic growth may be easier to measure and pursue in the short term, genuine development demands a comprehensive and sustained effort across multiple fronts.

Conclusion

If seen closely, development is not only affected by monetary support, but it also calls for socio-cultural change that takes times to come and

as such is not easy to achieve.

Introduction:

Socio-cultural changes are the alterations witnessed in the behaviour, beliefs, and practices of society. Since the genesis of the living, there have been lots of shifts ranging from the thought process, the way of living, to technology and its impact on our lives.

Demographic Dividend:

The cultural emphasis on education and progress of this demographic dividend has contributed to a growing workforce, potentially boosting economic participation and eventually productivity.

Cultural Diversity and Innovation:

India’s rich cultural diversity fosters a wide range of perspectives, ideas, and traditions. This diversity can lead to innovation and creativity in various fields, including science, technology, and the arts.

Changing Social Norms:

Evolving social norms, particularly with regard to gender roles and equality, impact workforce participation and economic growth. Increasing participation of women in the workforce, for instance, can contribute significantly to economic development.

Urbanization and Lifestyle Changes:

Urbanization and changing lifestyles influence consumer behaviour, market trends, and economic activities. This shift often leads to increased demand for goods and services, stimulating economic growth.

Technology Adoption:

Cultural attitudes towards technology and innovation play a role in the adoption of new technologies. In recent years, India has seen a rapid increase in technology adoption, contributing to advancements in various sectors.

Entrepreneurship and Start-up Culture:

A changing socio-cultural mindset, with a growing acceptance of risk-taking and entrepreneurship, has contributed to the rise of a vibrant start-up culture in India. This has a positive impact on economic growth by fostering innovation and job creation.

Social Welfare Programs:

Cultural values emphasizing social welfare have influenced the implementation of various government programs aimed at poverty alleviation, healthcare, and education, which, in turn, contribute to overall societal well-being.

Conclusion

It’s essential to note that the impact of socio-cultural changes on growth is complex and multifaceted. Positive changes can lead to inclusive development, while challenges in areas such as education, healthcare, and social inequality may hinder progress.

Introduction:

Non-economic factors play a crucial role in influencing economic development by shaping the socio-cultural, political, and environmental conditions within a country. These factors can significantly impact a nation’s ability to attract investments, foster innovation, and achieve sustainable economic growth.

Political Stability and Governance:

Political stability and effective governance create an environment conducive to economic activities that can support long-term economic development.

Social Factors:

Social factors, including education, healthcare, and cultural attitudes, impact the quality and productivity of the workforce thereby driving economic growth.

Infrastructure and Technology:

Adequate infrastructure and access to technology facilitate economic activities and support development.

Demographic Trends:

Population demographics, including age distribution and workforce composition, influence labor markets, consumption patterns, and overall economic dynamics.

Environmental Sustainability:

Environmental factors, including natural resource management and climate change considerations, can impact economic activities and development strategies.

Cultural and Social Norms:

Understanding and adapting to the cultural norms like changes in preferences can be supportive for economic development strategies.

Political and Trade Relations:

Favourable political and trade relationships can enhance economic cooperation and open up new markets.

Security and Stability:

Societal safety and stability are prerequisites for economic activities.

Healthcare and Well-being:

A healthy population is more productive and contributes positively to economic development.

Crisis Preparedness:

A country’s ability to respond to crises, whether economic, health-related, or environmental, can affect its resilience and long-term economic development.

Conclusion

The non-economic factors are intertwined with economic development, influencing the overall environment in which economic activities take place. Successful economic development strategies should consider and address these non-economic factors as well to create a sustainable and inclusive path to growth.

Introduction

Mahbub Ul Haq defined Human development as the process of enlarging people’s choice. The choices not only include education, long and healthy life but also choices in political freedom, human rights and various ingredients of self-respect. According to Mahbub ul huq, there are four essential components in human development that include equity, sustainability, productivity and empowerment.

Equity in access demands change in distribution of productive assets like land, distribution of income from rich to poor, overhauling of the credit system, equalisation of political opportunities and undertaking steps to remove social and legal barriers.

Sustainability is a matter of distributional equity among the present and future generations and ensuring intragenerational and intergenerational equity. Sustainability also encompasses efforts to remove the wide disparities among the nations. This is because an unjust world is inherently unsustainable.

Productivity paradigm focuses on people not only as a means of development but also as the ultimate end of development. This implies that people shouldn’t be seem merely as producers of goods and services.

The paradigm of empowerment envisages that people should be in a position to exercise their choices out of their own free will. It cuts across gender inequality and inequality in opportunities of development. It emphasizes on investing in education and upskilling.

Maintenance of values and social and cultural traditions are intrinsic to human development. Unless the societies recognize that their real wealth is their people, an excessive obsession with creating material wealth can obscure the goal of enriching human life.  (247 Words)

Jai Hind

The PHDI is the level of human development adjusted by carbon dioxide emissions per person (production-based) and material footprint per capita to account for the excessive human pressure on the planet.

In an ideal scenario where there are no pressures on the planet, the PHDI equals the HDI. However, as pressures increase, the PHDI falls below the HDI.

It is important to note that countries with high HDI when compared with PHDI their HDI falls down. As per the HDI 2023 report, the PHDI values are close to HDI values for countries with HDI value of 0.7 or lower. Switzerland is the only exception where there was no change in the PHDI and HDI comparisons showcasing its environment friendly development process.

For India the HDI when adjusted with PHDI falls from 0.645 to 0. 626, showcasing reliance on fossil fuels for development leaving carbon footprint.  (145 Words)

Jai Hind

The ultimate objective of human actions is not only to achieve human development but to aim for and achieve human happiness. The Gross National Happiness as a economic model was first introduced in 1972 by Bhutan king Jigme Wangchuk.

The concept of Happiness according to him included the four policy goals

1. Equitable and sustainable social and economic development.
2. Preservation of cultural values
3. Conservation of the natural environment
4. Good Governance

However, the challenge here is that happiness includes a number of things that cannot be measured and are subjective. Here Abraham Maslow explained happiness in terms of hierarchy of needs where starting from physiological needs he graduates to safety and security, belongingness to a community, value for love and lastly self-actualization.

One of the earliest thinkers to have spoken about happiness as an economic value was Aristotle. He defined Happiness as prosperity combined with excellence thereby interlinking happiness with the capacity to produce and make use of this produce for ones enjoyment of the maximum pleasure.

The World Happiness Report 2023 also identifies GDP as one of the key elements that determine well-being including, life expectancy, freedom to make life choices, across countries. The assumption made here is that a more productive economy can provide people with better health, longer lives and more education with which to achieve Aristotle’s excellence.

Whatsoever may be the way of calculating happiness, it is very clear that the idea of happiness travels beyond economic wealth and brings the element of positivity of this notion.

(253 Words)

Jai Hind

In the aftermath of Liberalization the role of centralized planning became redundant and planning became primarily indicative in nature and the role of state as a mere facilitator for trade.  The changed economic scenario forced the government to even come out of the areas that were traditionally regarded as the domains of government like health and education.

In this backdrop planning took the following role and shape.

Setting Economic Goals: Planning helps set clear economic goals for the country. These plans provide a roadmap for achieving long-term objectives.

Resource Allocation: Planning enables the government to allocate resources efficiently. Planning ensure that resources are directed toward areas essential for sustainable economic development.

Social Welfare: In a market economy, Planning allows the government to intervene and implement policies that promote social welfare, poverty alleviation, and inclusive growth. This is crucial for reducing income inequality.

Industrial Policy: identifying strategic industries and providing incentives for innovation and growth, the government can foster a competitive and dynamic business environment.

Infrastructure Development: Long-term planning is vital for infrastructure development to include improving connectivity, reducing logistical costs, and enhancing overall economic efficiency.

Environmental Sustainability: Planning allows the government to incorporate environmental considerations into economic policies.

Foreign Trade: Through Planning the government can use planning to enhance India’s competitiveness in the global market.

Fiscal Policy: Proper planning helps align fiscal policies with broader economic goals, such as controlling inflation, promoting employment, and maintaining macroeconomic stability.

As it can be seen, in the aftermath of liberalization, planning became helpful in the economy by providing ‘indication, coordination and prescription’.

Introduction

While Planning is credited with handholding the economic progress immediately after attaining independence, it is not bereft with its own challenges and shortcomings. Some of them are elucidated below: –

1. Bureaucratic inefficiency: The planning process in India has often been criticized for its bureaucratic red tape, which hampers efficient decision-making and implementation.
2. Lack of flexibility: India’s rigid planning system and lack of flexibility has limited the ability to respond swiftly to market dynamics and technological advancements.
3. Inefficient resource allocation: Centralized planning in India has sometimes resulted in misallocation of resources, as decisions not being driven by market forces.
4. Corruption and rent-seeking: The powerful interest groups influencing policy decisions to serve their own interests rather than the broader public good.
5. Lack of innovation and entrepreneurship: India’s planning approach has often stifled innovation and entrepreneurship by favoring large-scale, state-led initiatives over small and medium-sized enterprises.
6. Dependency on government intervention: Over-reliance on government intervention and regulation has created a climate of dependency.
7. Inadequate infrastructure development: Despite ambitious plans, India has struggled to address its infrastructure deficits that has hindered economic growth and competitiveness, as well as the ability to attract investment.
8. Regional disparities: Economic planning in India has not always effectively addressed regional disparities in development, leading to unequal distribution of resources and opportunities.

Addressing these shortcomings requires reforms aimed at decentralizing decision-making, promoting competition and innovation, reducing bureaucratic barriers, and enhancing transparency and accountability in the planning process. (243 Words)

Jai Hind

Introduction

India’s decision to stop FYPs marks a significant shift in its economic planning paradigm. While the FYPs played a crucial role in India’s developmental trajectory since independence, their discontinuation suggests a recognition of the need for more flexible, adaptive, and market driven approaches to economic planning.

In this context, NITI Aayog, established as a replacement for the Planning Commission, aims to provide a more modern and adaptable framework for policy formulation and implementation.

NITI Aayog’s objectives revolve around fostering cooperative federalism, promoting innovation and entrepreneurship, and ensuring sustainable development. Through its consultative and collaborative approach, NITI Aayog aims to engage with states and stakeholders to identify key priorities, challenges, and opportunities across various sectors.

One of NITI Aayog’s primary functions is to facilitate evidence-based policymaking by conducting research, analysis, and evaluation to inform decision-making processes. NITI Aayog can develop strategic plans and policy recommendations tailored to India’s evolving socio-economic landscape.

Furthermore, NITI Aayog serves as a platform for dialogue and coordination between the central government, state governments, and other stakeholders, fostering synergy and coherence in policy implementation. Its emphasis on cooperative federalism encourages states to take ownership of development initiatives while leveraging national resources and expertise.

In addition, NITI Aayog promotes innovation and experimentation through initiatives like the Atal Innovation Mission, which supports the creation of incubation centers, tinkering labs, and startup ecosystems to nurture entrepreneurial talent and drive technological advancements.

Through a decentralized approach NITI Aayog aims to catalyze inclusive and sustainable development across India, filling the gap left by the discontinuation of five-year plans.

 (256 Words)

Jai Hind

Introduction

The French traveller, Bernier, described seventeenth century Bengal in the following way: “The knowledge I have acquired of Bengal in two visits inclines me to believe that it is richer than Egypt. While much of the economic policies were exploitative and detrimental to the local economy, there were some measures that were implemented to support economic activities locally:

1. Infrastructure Development: The British invested in infrastructure such as railways, telegraph lines, and ports that inadvertently contributed to economic growth though intended for exportation.
2. Legal and Administrative Reforms: The British introduced legal and administrative reforms that helped in creating a conducive environment for trade and commerce.
3. Modernization of Agriculture: Modern agricultural techniques promoted cash crops like tea, coffee, cotton, and indigo for export which also contributed to the growth of commercial agriculture.
4. Financial System: The British introduced modern banking and financial systems in India facilitated capital accumulation and investment, albeit primarily for the benefit of the colonial administration and British commercial interests.
5. Education and Skill Development: The British introduced a modern education system in India that laid the foundation for a skilled workforce that would later contribute to economic development.
6. Industrial Development: Some industries like textile mills and jute factories were established which contributed to employment and some degree of industrial growth.

While these measures did contribute to certain aspects of economic development in India during colonial rule, it’s important to note that they were often implemented with the primary goal of serving British interests.

You can also download the chapter using the link below

https://ncert.nic.in/textbook/pdf/keec101.pdf

 (250 Words)

Jai Hind

Introduction

The scars of colonial past are reflected in India Economic landscape even today. Some of them are as under:

1. Economic Structures: Economic structures created by the British hindered efforts to diversify the economy and foster sustainable growth even after independence. Eg. No Scientific approach etc
2. Deindustrialization: Our efforts to revive domestic industries devasted by the Britishers faced challenges, including inadequate infrastructure and competition from established global players.
3. Dependency on Agriculture: Colonialism entrenched India’s dependency on agriculture, leaving the economy vulnerable to fluctuations in global commodity markets.
4. Foreign Influence: Post-independence, India remained susceptible to external pressures and influences, including foreign aid and investment.
5. Resource Exploitation: Exploitation of natural resources, continued post-independence through policies favouring extraction industries.
6. Unequal Trade Relationships: Unequal trade relationships with former colonial powers and other global actors, limited India’s ability to capture value from its exports and achieve balanced economic growth.

India on its own built its economic strength by investment in human capital, fostering innovation and entrepreneurship.

(160 Words)

Jai Hind