Skip to main content

KPSKV Khalwa Nautan Siwan

Study Material › CBSE › Class 10 › Economics › Notes

Introduction:

  • The idea of development or progress has always been with us.
  • We have aspirations or desires about what we would like to do and how we would like to live.
  • In this chapter, we shall make a beginning for understanding development.
  • It is only through a democratic political process that these hopes and possibilities can be achieved in real life.
  • Different people have different notions of development because life situations of persons are different and therefore their aspirations and desires and goals.
  • Development – “The process, by which economic well being and quality of life are improved as per targeted goals and objectives, is called development.”

    Economic development – All round development of a country is called economic development.

  • Where people earn higher income and can satisfy all their needs, we can say that country is a developed country and it has developed economy.
  • Human development – Development of a person according to his full capacity is called Human development.

    What development promises – different people, different goals:

  • All persons don’t have the same notion of development or progress.
  • Each one of them seeks different things.
  • They seek things that are most important for them, ie, that which can fulfill their aspirations or desires.
  • In fact, at times, two persons or groups of persons may seek things which are conflicting.
  • A girl expects as much freedom and opportunity as her brother and that he also shares in the household work.
  • Her brother may not like this.
  • Similarly, to get more electricity, industrialists may want more dams.
  • But this may submerge the land and disrupt the lives of people who are displaced such as tribals.
  • They might resent this and may prefer small check dams or tanks to irrigate their land.
  • So, two things are quite clear:
    (i) Different persons can have different developmental goals.
    (ii) What may be developed for one may not be developed for the other. It may even be destructive for the other.

    Income and other goals:

  • What people desire are regular work, better wages, and decent price for their crops or other products that they produce.
  • In other words, they want more income.
  • Besides seeking more income, one way or the other, people also seek things like equal treatment, freedom, security, and respect of others.
  • They resent discrimination.
  • All these are important goals.
  • In fact, in some cases, these may be more important than more income or more consumption because material goods are not all that you need to live.
  • Money, or material things that one can buy with it, is one factor on which our life depends.
  • But the quality of our life also depends on non material above.
  • There are many things that are not easily measured things mentioned but they mean a lot to our lives.
  • These are often ignored.
  • However, it will be wrong to conclude that what cannot be measured is not important.
  • Consider this example if you get a job in a far off place, before accepting it you would try to consider many factors, apart from income, such as facilities for your family, working atmosphere, or opportunity to learn.
  • In another case, a job may give you less pay but may offer regular employment that enhances your sense of security.
  • Another job, however, may offer high pay but no job security and also leave no time for your family.
  • This will reduce your sense of security and freedom.
  • Similarly, for development, people look at a mix of goals.
  • It is true that if women are engaged in paid work, their dignity in the household and society increases.
  • However, it is also the case that if there is respect for women there would be more sharing of housework and a greater acceptance of women working outside.
  • A safe and secure environment may allow more women to take up a variety of jobs or run a business.
  • Hence, the developmental goals that people have are not only about better income but also about other important things in life.
  • Different Goals:

  • Different persons can have different developmental goals.
  • What may be development for one may not be development for the other.
  • It may even be destructive for the other.
  • To understand this, let us take the example of a dam under construction.
  • For an industrialist, the dam means development because it will ensure improved supply of electricity to the factory.
  • But for people in nearby villages, it can be disaster because all of them will be evacuated to make way for catchment area of the dam.
  • Different people have different developmental needs.
  • These needs are based on their particular life situations.
  • Let us assume that there are two people, Lotan and Mohan.
  • Lotan is living in a remote village which is not connected to a road, while Mohan is living in a big city where traffic bottleneck is a huge problem.
  • Construction of even a kutcha (un-metalled) road will mean development for Lotan.
  • On the other hand, construction of flyovers to facilitate smooth traffic movement will mean development for Mohan.
  • We can say that there can be hundreds of development goals, catering to different needs of different people.
  • So, we need to focus on those goals which are more important than other goals.
  • National development: The capacity of the country to raise the standard of living of its residence is called national development.

  • It can be achieved by providing individuals with basic livelihood requirements and supplying them with employment, etc. 
  • But, if individuals seek different goals, then their notion of national development is also likely to be different.
  • It is very important to keep in mind that different persons could have different as well as conflicting notions of a country’s development.
  • How to compare different countries or states?

  • You might ask if development can mean different things, how come some countries are generally called developed and others under-developed.
  • For comparing countries, their income is considered to be one of the most important attributes.
  • Countries with higher income are more developed than others with less income.
  • This is based on the understanding that more income means more of all things that human beings need.
  • Whatever people like, and should have, they will be able to get with greater income.
  • So, greater income itself is considered to be one important goal.
  • Now, what is the income of a country? Intuitively, the income of the country is the income of all the residents of the country.
  • This gives us the total income of the country.
  • However, for comparison between countries, total income is not such a useful measure.
  • Since, countries have different populations, comparing total income will not tell us what an average person is likely to earn.
  • Hence, we compare the average income which is the total income of the country divided by its total population.
  • Average income is the total income of the country divided by its total population. It is also called per capita income
  • Average Income = Total Income of Country / Total Population of Country

  • The average income is also called per capita income.
  • In World Development Report 2012, brought out by the World Bank, this criterion is used in classifying countries.
  • Countries with per capita income of US $ 12736 per annum and above in 2013, are called rich countries and those with per capita income of US $ 1,045 or less are called low income countries.
  • India comes in the category of low middle income countries because its per capita income in 2013 was just US $ 1,570 per annum.
  • The rich countries, excluding countries of Middle East and certain other small countries are generally called developed countries.
  • Economic planning – The deliberate action plan on the utilisation of resources of the country for economic development and for providing social justice to all is called Economic planning.

    Per capita income – National income of a country divided by its total population is called Per capita income.

    Developed country – A country in which possesses the characteristics of higher standard of living of the people, fuller utisation of resources and a modern technology is called Developed country.

                                                                            Or

    A country with high gross domestic product per capita can be described as developed country.

    Under developed country – A country in which lacks the use of modem technology, has low per capita income of the people, and underutilisation of the resources is called under developed country.

    Average Income:

  • While averages are useful for comparison, they also hide disparities.
  • For example, let us consider two countries, A and B. For the sake of simplicity, we have assumed that they have only five citizens each.
  • Based on data given calculate the average income for both the countries:

    Capture.JPG

  • Will you be equally happy to live in both these countries? Are both equally developed?
  • Perhaps some of us may like to live in country B if we are assured of being its fifth citizen but if it is a lottery that decides our citizenship number then perhaps most of us will prefer to live in country A.
  • Even though both the countries have identical average income, country A is preferred because it has more equitable distribution.
  • In this country people are neither very rich nor extremely poor.
  • On the other hand most citizens in country B are poor and one person is extremely rich.
  • Hence, while average income is useful for comparison it does not tell us how this income is distributed among people.
  • Income and other criteria:

  • When we looked at individual aspirations and goals, we found that people not only think of better income but also have goals such as security, respect for others, equal treatment, freedom etc. in mind.
  • Similarly, when we think of a nation of a region, we may, besides average income, think of other equally important attributes.
  • Table 2 Per capita income of select states:

    State

    Per Capita Income for 2013-14 (in Rs)

    Maharashtra

    1,17,091

    Kerala

    1,03,820

    Bihar

    31,199

  • Let us examine this through an example.
  • Table 2 gives the per capita income of Maharashtra, Kerala and Bihar.
  • Actually, these figures are of Per Capita Net State Domestic Product at Current Prices for 2013-14.
  • Let us ignore what this complicated term exactly means.
  • Roughly we can take it to be per capita income of the state.
  • We find that of the three, Maharashtra has the highest per capita income and Bihar is at the bottom.
  • This means that, on an average, a person in Maharashtra earned Rs 1, 17,091 in one year whereas, on an average, a person in Bihar earned only around Rs 31.199.
  • So, if per capita income were to be used as the measure of development, Maharashtra will be considered the most developed and Bihar the least developed state of the three.
  • Table-3 Some comparative data on Maharashtra, Kerala and Bihar:

    State

    Infant Mortality Rate per 1,000 (2013)

    Literacy Rate (%) (2011)

    Net Attendance Ratio

    (Per 100 person)

    (age 14-15 years)

    2009-10

    Maharashtra

    24

    82

    64

    Kerala

    12

    94

    78

    Bihar

    42

    62

    35

    Explanation of some of the terms used in this table:

  • Infant Mortality Rate (or IMR) indicates the number of children that die before the age of one year as a proportion of 1000 live children born in that particular year.
  • Literacy Rate measures the proportion of literate population in the 7 and above age group.
  • Net Attendance Ratio is the total number of children of age group 14 and 15 attending school as a percentage of total number of children in the same age group
  • National Income – The total value a country’s final output of all new goods and services produced in one year is called National Income.

    Gross Domestic Product (GDP) – The final value of the goods and services produced within the geographic boundaries of a country during a specified period of time is called Gross Domestic Product.

    Gross National Product (GNP) – The total value of all the goods and services produced by a country in one year, including the total amount of money that comes from foreign countries is called Gross national product.

    Infant Mortality Rate – The death of a child who is come under one year of age is called Infant mortality rate.

  • The lesser figure is a better indicator of development.
  • This is an important parameter as it shows the quality and extent of availability of healthcare in a country. As per 2011 census, the child mortality rate in India is 30.15.
  • Sex Ratio – The number of females per 1,000 males in the population is called sex ratio and also known as Gender Ratio.

  • A lesser figure shows society’s aversion to a girl child and worse condition of women in society. As per 2011 census, the sex ratio in India is 940 per thousand male.
  • Life expectancy – The maximum age up to which an adult lives is called the life expectancy rate.  

  • This also shows the overall quality of life in a country.
  • As per 2011 census, the life expectancy in India for males is 67 years and for females it is 72 years.
  • Literacy Rate – The percentage of the population of a given age group that can read and write is called literacy rate.

  • The adult literacy rate corresponds to ages 15 and above, the youth literacy rate to ages 15 to 24, and the elderly to ages 65 and above.
  • The percentage of literate people is another important indicator of development.
  • Education is a big leveler as it opens newer opportunities for the educated person.
  • As per 2011 census, the literacy rate in India is 74%.
  • Net attendance ratio – Total number of children of age group 14 and 15 attending school as a percentage of total number of children in the same age group is called Net attendance ratio.

    Body mass index (B.M.I) – A Index which is used to measure the under nourishment and over nourishment among the people are called Body mass index.

    Public facilities:

  • How is it that the average person in Maharashtra has more income than the average person in Kerala but lags behind in these crucial areas?
  • The reason is money in your pocket cannot buy all the goods and services that you may need to live well.
  • So, income by itself is not a completely adequate indicator of material goods and services that citizens are able to use.
  • For example, normally, your money cannot buy you a pollution-free environment or ensure that you get unadulterated medicines, unless you can afford to shift to a community that already has all these things.
  • Money may also not be able to protect you from infectious diseases, unless the whole of your community takes preventive steps.
  • Outcome of the study of the two tables:

  • For development per capita income is not the only criteria, other things also matter.
  • Maharashtra leads in per capita income but Kerala is more developed because it excels in other factors.
  • Though income is not the only criteria, but it is one of the most important criteria.
  • Bihar, as it lacks in per capita income it over all lacks in development because for over all development you need education, health etc. for these schools, hospitals are required, and to build them money is required.
  • Actually for many of the important things in life the best way, also the cheapest way, is to provide these goods and services collectively.
  • Kerala has a low Infant Mortality Rate because it has adequate provision of basic health and educational facilities.
  • Similarly, in some states, the Public Distribution System (PDS) functions well.
  • If some PDS shop, ration shop, does not function properly in such places, the people there are able to get the problem rectified.
  • Health and nutritional status of people of such states is certainly likely to be better.
  • Infrastructure: 

  • Roads, railways, airports, ports and power generation are the lifelines of a nation’s economy.
  • A better infrastructure ensures a better economic activity leading to overall prosperity.
  • Human Development Index– Index which indicates all round development of the people in the society is called Human Development Index.

  • Once it is realized that even though the level of income is important, yet it is an inadequate measure of the level of development, we begin to think of other criterion.
  • There could be a long list of such criterion but then it would not be so useful.
  • What we need is a small number of the most important things.
  • Health and education indicators, such as the ones we used in comparison of Kerala and Maharashtra, are among them.
  • Over the past decade or so, health and education indicators have come to be widely used along with income as a measure of development.
  • For instance, Human Development Report published by UNDP compares countries based on the educational levels of the people, their health status and per capita income.
  • It would be interesting to look at certain relevant data regarding India and its neighbours from Human Development Report 2014.
  • Table 4. Some data regarding India and its neighbours for 2014:

    Country

    GNI Per Capita 2014 PPP $

    Life Expectancy 2014

    Literacy Rate 15+ Years 2005-2013

    HDI Rank

    Sri Lanka

    9779

    74.9

    91.2

    73

    India

    5497

    68

    62.8

    130

    Myanmar

    4608

    65.9

    92.6

    148

    Pakistan

    4866

    66.2

    54.1

    147

    Nepal

    2311

    69.6

    57.4

    145

    Bangladesh

    3191

    71.6

    58.8

    142

             
    1. HDI stands for Human Development Index HDI ranks in above table are out of 188 countries in all.
    2. Life Expectancy at birth denotes, as the name suggests, average expected length of life of a person at the time of birth.
    3. Per Capita Income is calculated in dollars for all countries so that it can be compared. It is also done in a way so that every dollar would buy the same amount of goods and services in any country.
  • Isn’t it surprising that a small country in our neighbourhood, Sri Lanka, is much ahead of India in every respect and a big country like ours has such a low rank in the world?
  • Table 1 4 also shows that though Nepal has half the per capita income of India, yet it is not far behind India in life expectancy and literacy levels.
  • Many improvements have been suggested in calculating HDI and many new components have been added to the Human Development Report but, by pre-fixing Human to Development, it has made it very clear that what is important in development is what is happening to citizens of a country.
  • It is people, their health, their well being, that is most important.
  • Sustainable of Development: 

  • Suppose for the present that a particular country is quite developed.
  • We would certainly like this level of development to go up further or at least be maintained for future generations. This is obviously desirable.
  • However, since the second half of the twentieth century, a number of scientists have been warning that the present type, and levels, of development are not sustainable.
  • Groundwater is an example of renewable resources.
  • These resources are replenished by nature as in the case of crops and plants.
  • However, even these resources may be overused.
  • For example, in the case of groundwater, if we use more than what is being replenished by rain then we would be overusing this resource.
  • Non-renewable resources are those which will get exhausted after years of use.
  • We have a fixed stock on earth which cannot be replenished.
  • We do discover new resources that we did not know of earlier.
  • New sources in this way add to the stock. However, over time, even this will get exhausted.
  • The availability of ground water and natural resources can be understood with the help of the following examples.

    Example 1: Groundwater in India

  • Recent evidence suggests that the groundwater is under serious threat of overuse in many parts of the country.
  • About 300 districts have reported a water level decline of over 4 meters during the past 20 years.
  • Nearly one third of the country is overusing their groundwater reserves.
  • In another 25 years, 60 per cent of the country would be doing the same if the present way of using this resource continues.
  • Groundwater overuse is particularly found in the agriculturally prosperous regions of Punjab and Western UP hard rock plateau areas of central and south India, some coastal areas and the rapidly growing urban settlements.
  • Example 2: Exhaustion of Natural Resources Look at the following data for crude oil.

  • The table gives an estimate of reserves of crude oil (column1).
  • More important, it also tells us for how many years the stock of crude oil will last if people continue to extract it at the present rate.
  • The reserves would last only 50 years more.
  • This is for the world as a whole. However, different countries face different situations.
  • Countries like India depend on importing oil from abroad because they do not have enough stocks of their own.
  • If prices of oil increase this becomes a burden for everyone.
  • There are countries like USA which have low reserves and hence want to secure oil through military or economic power.
  • The question of sustainability of development raises many fundamentally new issues about the nature and process of development.
  • (a) Is crude oil essential for the development process in a country? Discuss.

    (b) India has to import crude oil. What problems do you anticipate for the country looking at the above situation?

  • Consequences of environmental degradation do not respect national or state boundaries; this issue is no longer region or nation specific.
  • Our future is linked together.
  • Sustainability of development is comparatively a new area of knowledge in which scientists, economists, philosophers and other social scientists are working together.
  • In general, the question of development or progress is perennial.
  • At all times as a member of society and as individuals we need to ask where we want to go, what we wish to become and what our goals are.
  • So the debate on development continues.
  •