Economy

The Indian Roadmap to ‘Development’

Today, the world stands at 195 countries, with 54 countries in Africa, 48 in Asia, 44 in Europe, 33 in South America, 2 in North America and 14 in Oceania. These countries are divided into different categories based on various criteria. One such division is based on ‘development’. Development is broadly defined as a state of advancement or growth. It covers areas like economic performance, living standards, equality, sustainability, etc, and the aspects covered under the term development continues to grow with time.

Based on the value of their Human Development Index, countries are divided into 3 categories; Developed countries/economies, developing countries and least developed countries. Developing countries are present all over the world in every continent and have their own varied features. However, several common characteristics among developing countries can be seen and perhaps hold the key to enabling these countries to reach the goal of ‘Developed country’ status. India has progressed exponentially since its independence with a rapidly growing GDP and per capita income, falling poverty levels and improving health and education standards. However, the nation continues to remain in the category of developing nation due to several factors and India possesses many characteristics of a ‘developing economy’.

Unbeneficial Growth

One of the most important indicators of a country’s development is its per capita GDP. Countries can also be categorised based on their per capita GDP levels and developing countries tend to report lower levels of income. India’s GDP Per Capita level of $ 2,041.091 as of Mar 2019 placed it in the category of ‘low middle income country’. Despite witnessing extensive economic growth, the living standard of people is still lower that of developed countries and lack of sufficient income leads to unequal access to resources across the country. The general low standards of living can be attributed to numerous reasons with the main cause being the low levels of productivity of the country. India currently ranks 129 in the world based on its HDI level and income inequality and deprivations continue to be rampant in the nation. Another feature related to low incomes is the widespread poverty present in developing countries. In 2011, India had over 20% of its population under the National Poverty Line. This prevalent poverty leads to numerous hardships with people being unable to satisfy even the most basic of needs. The wealth within the nation is distributed highly unequally and economic growth is not reducing the growing economic inequalities in India. The value of India’s GINI coefficient, a statistical measure to gauge the rich-poor divide, has been on a rise over the past few decades, highlighting the alarming widening of the gap between the rich and the poor in India. While there have been many efforts towards reducing the poverty and inequality levels, India still has a long way to go in this respect.

Second Most Populous Country – Boon or Bane?

Every developing country has one major feature which is its rapid population growth rate and fertility. Improvement in medical research and the rise in birth rates combined with falling death rates have contributed to an explosion in population in developing countries. This has put massive pressure on countries in the form of scarcity of resources, unemployment, etc. India is the second-most populous country in the world, set to become first in a few years, throwing light on the extremely high birth rates in the country. A subsequent consequence of such a high population is the invariable high amounts of unemployment. While in some cases unemployment might seem obvious, there are high amounts of disguised unemployment, especially in the agricultural sector. The most recent estimate of the unemployment level in India stands at 6.1%. High population rates also exert pressure on the already inadequate infrastructure and limited resources of the country.

Population control, while a sensitive issue, is the need of the hour, not only with respect to India but also all around the world. Governments all around the world have been actively trying to control the rapid population growth within countries and India is no exception. Measures to control the growth of population can be of the two types- Social and Economic measures. Social measures revolve around the themes of societal norms and involve measures like spread of education, change in social outlook, adoption, setting of a minimum age for marriage, women empowerment, etc. Providing more employment opportunities, urbanisation, improving the standard of living and income levels and further development of industry and agriculture are a few economic measures that will gradually bring down the high birth rates.

Agriculture as an Overburdened Sector

Trends across the world have shown that the dependence on agriculture, especially for employment, has been declining throughout the world as with modern industrial growth came a structural transformation that led to the proportion of working population engaged in agriculture falling drastically and employment in the industrial and services sectors rising enormously. However, developing countries, including India, are predominantly agricultural in nature. Over 70% of rural India is still primarily dependent on agriculture for their livelihood. As structural transformation has not happened fast enough in developing countries, more people than required are employed in the agricultural sector leading to huge amounts of disguised unemployment.

The Social Trap

Education, health and skills are extremely vital to economic development. The economic growth and development of any country not only depends on natural resources, technology and capital but also on the quantity and quality of manpower derived by the efficiency and productivity of workforce. This can only be achieved through education and training. Lower levels of education and literacy rates are witnessed in developing countries. The lower enrolment rate in primary, secondary and tertiary educational institutions provide a clear indicator as to the lower education rates, which further leads to lack of skills, unemployment and low levels of income and this cycle continues. There is also a wide disparity in literacy rates between urban and rural areas, between genders, races and castes within the nation itself. Medical and health care facilities are also undeveloped and mortality rates are high in developing countries. Life expectancy at birth is also comparatively lower than that of developed countries. India’s life expectancy at birth stands at 68. 56 years while developed nations like Japan and USA have life expectancies at 83.98 years and 78.69 years respectively, much higher than that of India. These factors combined contribute to a lower standard of living of humans.

Given the importance of education and health to the productivity of a nation, it is vital to exponentially increase government spending on health, education and social protection. Poverty, being a prevalent feature in the nation, restricts many from accessing the benefits of education and health facilities. Provision of subsidised or even free education coupled with establishing more schools with well-trained teachers will facilitate the expansion of the education system in the country. When it comes to the current state of the public health system, drastic changes are required.

Deficiency of Infrastructure

One reason for lack of development is poor infrastructure or capital formation. Not only is the capital stock less, but the growth of capital formation is also very gradual as well. One of the reasons for this is the lower level of savings and investment due to lower level of incomes, hence leading to lower productivity as well. Poor infrastructure stunts the manufacturing capabilities of the nation and hinders the growth of employment and income. According to some estimates, India’s infrastructure deficit costs up to 5% of the GDP and this deficit can especially be seen in sectors like the transport and power sector. While India has been making progress with regard to scaling up its infrastructure, it still has a long way to go before it can close the rather large deficit and problems like project delays, cost overruns, environmental issues and societal considerations continue to play a role in the infrastructural growth.

Continued efforts are being made by the government towards improving the infrastructural base of the country, be it the building of new airports around the country, new highways projects, or the flagship National Infrastructure Pipeline, a comprehensive scheme as part of the government’s spending push in the infrastructure sector. The Union Budget 2020 proposed numerous plans in this regard with increased importance on infrastructure-focussed skill development given the huge employment potential of the infrastructure sector. Such projects often face the challenge of financing due to the vast quantum of funds required for such ambitious plans. Incentivising investment into the infrastructural sector, especially foreign direct investment, is critical and provides a solution to the problem of expenditure faced by the nation.

While there are many other factors that determine the level of development of the nation, these features are pivotal to India’s mission of acquiring the tag of being a ‘Developed Country’. By understanding the implications and importance of the features of India as a developing nation, it is possible to formulate action plans, policies and programmes that focus on these key areas and propel India on the path of development.

Picture Credits: investopedia.com



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