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DEVELOPMENT POLICIES AND EXPERIENCE
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(1947-90)
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The two chapters in this unit give us an overview

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of the state of the Indian economy as it was at the
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eve of independence till after four decades of

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planned development, which was a path that India
chose. This meant that the Government of India
had to take a series of steps such as the
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establishment of the Planning Commission and
announcement of five year plans. An overview of
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the goals of five year plans and a critical appraisal
of the merits and limitations of planned development
has been covered in this unit.
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INDIAN ECONOMY
ON THE

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EVE OF INDEPENDENCE
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After studying this chapter, the learners will
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become familiar with the state of the Indian economy in 1947, the
year of India’s Independence
understand the factors that led to the underdevelopment and
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stagnation of the Indian economy.
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“India is the pivot of our Empire... If the Empire loses any other part of its
Dominion we can survive, but if we lose India, the sun of our Empire will have
set.”
Victor Alexander Vruce, the Viceroy of British India in 1894

1.1 INTRODUCTION own rapidly expanding modern
industrial base. An understanding of

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The primary objective of this book, the exploitative nature of this
Indian Economic Development, is to relationship is essential for any
familiarise you with the basic features assessment of the kind and level of
of the Indian economy, and its development which the Indian

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development, as it is today, in the economy has been able to attain over
aftermath of Independence. However, it the last six and half decades. 1.2

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is equally important to know something

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about the country’s economic past even 1.2 LOW LEVEL OF ECONOMIC
DEVELOPMENT UNDER THE
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as you learn about its present state and
future prospects. So, let us first look at COLONIAL RULE

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the state of India’s economy prior to the India had an independent economy
country’s independence and form an before the advent of the British rule.
idea of the various considerations that Though agriculture was the main
shaped India’s post-independence source of livelihood for most people,
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development strategy. yet, the country’s economy was
The structure of India’s present- characterised by various kinds of
day economy is not just of current manufacturing activities. India was
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making; it has its roots steeped in particularly well known for its
history, particularly in the period when handicraft industries in the fields of
India was under British rule which cotton and silk textiles, metal and
lasted for almost two centuries before precious stone works etc. These
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India finally won its independence on products enjoyed a worldwide market
15 August 1947. The sole purpose of based on the reputation of the fine
the British colonial rule in India was quality of material used and the high
to reduce the country to being a raw standards of craftsmanship seen in all
material supplier for Great Britain’s imports from India.

Box 1.1: Textile Industry in Bengal
Muslin is a type of cotton textile which had its origin in Bengal, particularly,
places in and around Dhaka (spelled during the pre-independence period as
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Dacca), now the capital city of Bangladesh. ‘Daccai Muslin’ had gained worldwide
fame as an exquisite type of cotton textile. The finest variety of muslin was
called malmal. Sometimes, foreign travellers also used to refer to it as malmal
shahi or malmal khas implying that it was worn by, or fit for, the royalty.
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4 INDIAN ECONOMIC DEVELOPMENT

3 AGRICULTURAL SECTOR pu T Obviously. Rao and population. It exports. Among the notable estimators agriculture. From rajmahal to the sea is an endless number of canals. the colonial govern- is m e n t n e v e r m ad e a n y s i n c e r e India’s economy under the British attempt to estimate India’s national colonial rule remained fundamentally re ER and p er c a p i t a i n co m e . in abundance. ducks and geese.R.2: Agriculture During o N Pre-British India The French traveller. William Digby. However. Such policies brought about twentieth century was less than two a fundamental change in the structure per cent coupled with a meagre half of the Indian economy — transforming per cent growth in per capita output the country into supplier of raw per year. INDIAN ECONOMY ON THE EVE OF INDEPENDENCE 5 . cottons and silks. 1. cut in bygone ages Fig. despite being — Dadabhai Naoroji. Bernier. Desai — it was Rao. the agricultural sector Box 1. It produces amply — for its own consumption — wheat. 1. Contrast it no with agricultural stagnation around the time when the British left India.”  Take note of the agricultural prosperity in our country in the seventeenth century. V. materials and consumer of finished h industrial products from Britain. around 200 years later. fowls. It has immense herds of pigs and flocks of sheep and goats.K. Fish of every kind it has in profusion. S o m e agr arian — abo ut 85 per c ent bl individual attempts which were of the country’s population lived made to measure such incomes mos tly i n vil lage s and deri ved yielded conflicting and inconsistent livelihood directly or indirectly from results. grains. sugar and butter. and promotion of the economic However. vegetables.C. most studies did find that interests of their home country than the country’s growth of aggregate real with the development of the Indian output during the first half of the ed economy. The economic policies pursued by R.1 India’s agricultural stagnation tt from the Ganges by immense labour for under the British colonial rule navigation and irrigation. 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. whose the colonial government in India were estimates during the colonial period concerned more with the protection was considered very significant. the occ upati on of suc h a lar ge be C Findlay Shirras. rice.V.

pu T under the zamindari system which Besides this. no 6 INDIAN ECONOMIC DEVELOPMENT . you may refer to Ramesh Chandra Dutt’s Economic History of India.  What were the various forms of revenue settlement adopted by the British in India? Where did they implement them and to what effect? How far do you think those settlements have a bearing on the current agricultural scenario in India? (In your attempt to find answers to these questions. also in two volumes. a considerable number of some evidence of a relatively higher be C zamindars. Agricultural pro. o N Work These Out  Compare the map of British India with that of independent India and find © out the areas that became parts of Pakistan. However. ductivity became low though. unusual c o l l e c t r e nt r e g ar d l e s s o f t he deterioration. to your advantage. India Divided). Dr Rajendra Prasad’s book. continued to experience stagnation interest of the zamindars was only to and. did nothing to improve are as o f the cou ntry due to the condition of agriculture. and B. For better comprehension of the subject. you can also try and develop an illustrated agrarian map of British India either by hand or with the help of your school computer. Remember. low levels of technology. which comes in three volumes. up to aggravate the plight of the bl t he p r o f i t ac c r u i ng o u t o f t he farmers and contributed to the ag r i cu l t u r e s e ct o r w e nt to t he d i s m al le vel of agric ultu ral zamindars instead of the cultivators. all added re ER Presidency comprising parts of India’s present-day eastern states. There was. productivity. f ai l i ng w h i c h t he h the colonial government. of course. dates for the variou s sys tems o f l an d depositing specified sums of revenue settlement that were introduced by w e r e f i x e d . zamindars were to lose their rights. revenue sett lement were also This stagnation in the agricultural r e s p o n s i b l e f o r t he z am in d ar s sector was caused mainly because of adopting such an attitude. The main commercialisation of agriculture. Baden-Powell’s The Land Systems of British tt India. nothing helps better than an illustrated map to understand the subject at hand). is was implemented in the then Bengal lack of irrigation facilities and negligible use of fertilisers. not infrequently. Why were those parts so important to India from the economic point of view? (Refer. the sector experienced social tension among the latter. Particularly.H. in this caused immense misery and absolute terms. the terms of the ed the aggregate area under cultivation. economic condition of the cultivators. and not just the colonial yie ld of cash cro ps in cert ain government. To a some growth due to the expansion of very great extent.

were located in the western be C As in the case of agriculture. thi s d e ve l op m ent was bl invest in agriculure. used for products of those industries so that producing articles for current their continued expansion could be consumption. intention was.4 INDUSTRIAL SECTOR textile mills. n a m e l y . The Tata Iron and Steel enjoyed by the former. which was now deprived of the India’s agriculture was starved of supply of locally made goods. industrialising India was two-fold. This investment in terracing. India could not Maharashtra and Gujarat. instead of producing food crops. The establishment of a no ensured to the maximum advantage of few manufacturing units here and INDIAN ECONOMY ON THE EVE OF INDEPENDENCE 7 . increasing imports of cheap While a small section of farmers manufactured goods from Britain. paper etc. modern industry is section of tenants. while develop a sound industrial base under the jute mills dominated by the o N the colonial rule. there was hardly any the status of a mere exporter of capital goods industry to help important raw materials for the promote further industrialisation in upcoming modern industries in India. first. to turn India into industries which can produce machine a sprawling market for the finished tools which are. small farmers and began to take root in India but its sharecroppers neither had resources re ER and technology nor had incentive to progress remained very slow. Capital goods industry means tt Britain and. mainly dominated by Indians. second. A few other industries in the behind this policy of systematically de. cement. the as. I ni t ial l y. the iron declined. in manufacturing. flood-control. The came up after the Second World War. to reduce India to However. The primary Company (TISCO) was incorporated motive of the colonial government in 1907. a large nineteenth century. But this could hardly help farmers in their home country — Britain. in turn. demand was profitably met by the drainage and desalinisation of soil. In the improving their economic condition unfolding economic scenario. The cotton 1. no corresponding modern and steel industries began coming up industrial base was allowed to come in the beginning of the twentieth © up to take pride of place so long century. decline of the indigenous handicraft now they were producing cash crops industries created not only massive which were to be ultimately used by unemployment in India but also a new British industries back home. Subsequently. Even as the country’s foreigners were mainly concentrated world famous handicraft industries in Bengal. h changed their cropping pattern from During the second half of the pu T food crops to commercial crops. fields of sugar. Despite demand in the Indian consumer ed some progress made in irrigation. market. confined to the setting up of cotton and jute textile mills. so also p ar t s o f t h e c o u nt r y .

India became an commodities — food grains. But the The most important characteristic restrictive policies of commodity of India’s foreign trade throughout the production. 8 INDIAN ECONOMIC DEVELOPMENT . Work These Out  Prepare a list showing where and when other modern industries of India were first set up. wool. re ER bl there was no substitute to the near exporter of primary products such as wholesale displacement of the raw silk. The opening of the Suez Canal 1. silk and be C rate of the new industrial sector and woollen clothes and capital goods like its contribution to the Gross Domestic light machinery produced in the Product (GDP) remained very small. nation since ancient times. sugar. clothes. Britain maintained a new industrial sector was the very monopoly control over India’s exports limited area of operation of the public and imports. Can you also find out what the basic requirements are for setting up any modern industry? What. Ceylon (Sri Lanka) and Persia (Iran). cotton. restricted to Britain while the rest was communications. trade and tariff pursued colonial period was the generation of tt by the colonial government adversely a large export surplus.5 FOREIGN TRADE further intensified British control over India has been an important trading India’s foreign trade (see Box 1. factories of Britain. jute mills and textile mills that existed at the time of independence. indigo.3). mark the cotton textiles. and an importer of finished industries. how can this be h done? There is an argument that industries which are not strategic in nature pu T should not continue to be in the public sector. As a result. might have been the ed reasons for the setting up of the Tata Iron and Steel Company at Jamshedpur. For all practical o N Another significant drawback of the purposes. Several essential no Consequently. This sector remained confined half of India’s foreign trade was © only to the railways. more than sector. country’s economy. power generation. Furthermore. which is now in the state of Jharkhand?  How many iron and steel factories are there in India at present? Are these iron and steel factories among the best in the world or do you think that these factories need restructuring and upgradation? If yes. for example. What is your view? is  On a map of India. China. the growth consumer goods like cotton. composition and surplus came at a huge cost to the volume of India’s foreign trade. ports and some allowed with a few other countries like other departmental undertakings. But this affected the structure. country’s traditional handicraft jute etc.

Compare these with imports and exports from the pre-independence era. on various items of export from India and its imports.6 DEMOGRAPHIC CONDITION re ER Rather. Furthermore. INDIAN ECONOMY ON THE EVE OF INDEPENDENCE 9 .  Collect information from the Economic Survey for various years published ed by the Ministry of Finance. suffering from certain limitations. Though government in Britain. It connects Port Said on the Mediterranean Sea with the Gulf of Suez. an arm of the Red Sea. Strategically and economically. Government of India.3: Trade Through the Suez Not to to scale Canal Not scale Suez Canal is an artificial waterway running from north to south across the © Isthmus of Suez in north-eastern Egypt. is this export surplus did not result in any flow of gold or silver into India. o N Box 1. expenses on war. it again fought by the British revealed the unevenness in India’s be C government. East Africa and Oceania by doing away with the need to sail around Africa. Also find out the names of prominent ports which now handle the bulk of India’s foreign trade. — were scarcely available items.2 Suez Canal: Used as highway and made access to the Indian market between India and Britain no easier. this was used to make Various details about the population bl payments for the expenses incurred by of British India were first collected an office set up by the colonial through a census in 1881. 1. it is one of the most important tt waterways in the world.1. Subsequently. Indian wealth. and the import of invisible population growth. Work These Out  Prepare a list of items that were exported from and imported into India during the British rule. h kerosene etc. The canal provides a direct trade route for ships operating between European or American ports and ports located in South Asia. Its opening in 1869 reduced the cost of transportation Fig. all of which led to the drain of pu T in the domestic market.

it is difficult to specify the The various social development extent of poverty at that time but there i nd i c at o r s w er e al s o no t qu it e is no doubt that extensive poverty encouraging. occupational structure of India. the highly inadequate. Public health facilities were either unavailable to large chunks of 1. thousand. In the absence of stage was very high. However. i. were During the colonial period.7 OCCUPATIONAL STRUCTURE bl population or. Life expectancy was also neither the total population of India nor very low— 44 years in contrast to the ed the rate of population growth at this present 66 years. when available. India rate was quite alarming— about 218 was in the first stage of demographic per thousand in contrast to the transition. No wonder. The agricultural sector accounted for o N © tt no Fig. period which contributed to the pu T the female literacy level was at a worsening profile of India’s population is negligible low of about seven per of the time. The overall literacy level prevailed in India during the colonial h was less than 16 per cent. water and air-borne diseases were distribution of working persons rampant and took a huge toll on across different industries and be C life.e..3 A large section of India’s population did not have basic needs such as housing 10 INDIAN ECONOMIC DEVELOPMENT . the infant mortality were carried out. The second stage of present infant mortality rate of 63 per transition began after 1921. rate was very high and in that. Out of this. re ER cent. the overall mortality sectors. reliable data. every ten years such census operations particularly. Consequently. Before 1921. 1. showed little sign of change.

telegraphs did develop. However, the
Work These Out real motive behind this development
was not to provide basic amenities to
 Can you find out the the people but to subserve various
reasons behind frequent colonial interests. Roads constructed
occurrence of famines in in India prior to the advent of the

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India before independence? British rule were not fit for modern
You may read from Nobel
transport. The roads that were built
Laureate Amartya Sen’s
book, Poverty and Famines. primarily served the purposes of
mobilising the army within India and
 Prepare a pie chart for
drawing out raw materials from the

h
the occupational structure
in India at the time of countryside to the nearest railway

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independence. station or the port to send these to

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far away England or other lucrative
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the largest share of workforce, which
foreign destinations. There always
remained an acute shortage of all-

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usually remained at a high of 70-75 weather roads to reach out to the
per cent while the manufacturing and rural areas during the rainy season.
the services sectors accounted for only Naturally, therefore, people mostly
10 and 15-20 per cent respectively. living in these areas suffered
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Another striking aspect was the grievously during natural calamities
growing regional variation. Parts and famines.
of the then Madras Presidency The Brit ish i ntrod uced the
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(comprising areas of the present-day railways in India in 1850 and it is
states of Tamil Nadu, Andhra considered as one of their most
Pradesh, Kerala and Karnataka), imp ortant co ntri buti ons. T he
Bombay and Bengal witnessed a railways affected the structure of the
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decline in the dependence of the Indian economy in two important
workforce on the agricultural sector ways. On the one hand it enabled
with a commensurate increase in the people to undertake long distance
manufacturing and the services travel and t hereb y br eak
sectors. However, there had been an
geographical and cultural barriers
increase in the share of workforce in
while, on the other hand, it fostered
agriculture during the same time in
com merc iali satio n of Ind ian
states such as Orissa, Rajasthan and
agriculture which adversely affected
Punjab.
the self-sufficiency of the village
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economies in India. The volume of
1.8 INFRASTRUCTURE
Ind ia’s expo rts undo ubte dly
Under the colonial regime, basic expanded but its benefits rarely
infrastructure such as railways, acc rued to the Indi an p eopl e.
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ports, water transport, posts and The soci al be nefi ts, w hich the

INDIAN ECONOMY ON THE EVE OF INDEPENDENCE 11

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Fig. 1.4 First Railway Bridge linking Bombay with Thane, 1854
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Indian people gained owing to the

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introduction of the railways, were Work This Out
thus outweighed by the country’s
huge economic loss.  There is a perception still
Along with the development of g oi n g a r o u n d t ha t i n
m a n y ways the British
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roads and railways, the colonial
dispensation also took measures for a dmi ni st r at i on in India
was quite beneficial. This
developing the inland trade and sea
perception needs an
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lanes. However, these measures were i nf o r m e d d e b a t e . Ho w
far from satisfactory. The inland w o u l d y o u l ook a t t h i s
waterways, at times, also proved p e r c e p t i o n? A r g u e t hi s
uneconomical as in the case of the out in your class — ‘Was
Coast Canal on the Orissa coast. the British Raj good for
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Though the canal was built at a huge India’?

cost to the government exchequer, yet,
it failed to compete with the railways,
which soon traversed the region
running parallel to the canal, and had
to be ultimately abandoned. The
introduction of the expensive system
of electric telegraph in India, similarly,
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served the purpose of maintaining law
and order. The postal services, on the
Fig.1.5 Tata Airlines, a division of Tata and
Sons, was established in 1932 other hand, despite serving a useful
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inaugurating the aviation sector in India public purpose, remained all through

12 INDIAN ECONOMIC DEVELOPMENT

inadequate. You will learn more about modernisation, diversification, capacity
the present status of various building and increased public
infrastructure in Chapter 8. investment. Foreign trade was oriented
to feed the Industrial Revolution in
1.9 CONCLUSION Britain. Infrastructure facilities,
By the time India won its independence, including the famed railway network,

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the impact of the two-century long needed upgradation, expansion and
British colonial rule was already public orientation. Prevalence of
showing on all aspects of the Indian rampant poverty and unemployment
economy. The agricultural sector was required welfare orientation of public

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already saddled with surplus labour economic policy. In a nutshell, the
and extremely low productivity. The social and economic challenges before

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industrial sector was crying for the country were enormous.

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Recap

 An understanding of the economy before independence is necessary to
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know and appreciate the level of development achieved during the post-
independence period.
 Under the colonial dispensation, the economic policies of the government
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were concerned more with the protection and promotion of British
economic interests than with the need to develop the economic condition
of the colonised country and its people.
 The agricultural sector continued to experience stagnation and
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deterioration despite the fact that the largest section of Indian population
depended on it for sustenance.
 The rule of the British-India government led to the collapse of India’s
world famous handicraft industries without contributing, in any
significant manner, to its replacement by a modern industrial base.
 Lack of adequate public health facilities, occurrence of frequent natural
calamities and famines pauperised the hapless Indian people and
resulted in engendering high mortality rates.
 Some efforts were made by the colonial regime to improve infrastructure
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facilities but these efforts were spiced with selfish motives. However, the
independent Indian government had to built on this base through
planning.
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INDIAN ECONOMY ON THE EVE OF INDEPENDENCE 13

EXERCISES

1. What was the focus of the economic policies pursued by the colonial

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government in India? What were the impacts of these policies?
2. Name some notable economists who estimated India’s per capita
income during the colonial period.
3. What were the main causes of India’s agricultural stagnation during

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the colonial period?

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4. Name some modern industries which were in operation in our country

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at the time of independence.
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5. What was the two-fold moti ve behind the sy stematic de-
industrialisation effected by the British in pre-independent India?

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6. The traditional handicrafts industries were ruined under the British
rule. Do you agree with this view? Give reasons in support of your
answer.
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7. What objectives did the British intend to achieve through their
policies of infrastructure development in India?
8. Critically appraise some of the shortfalls of the industrial policy
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pursued by the British colonial administration.
9. What do you understand by the drain of Indian wealth during the
colonial period?
10. Which is regarded as the defining year to mark the demographic
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transition from its first to the second decisive stage?
11. Give a quantitative appraisal of India’s demographic profile during
the colonial period.
12. Highlight the salient features of India’s pre-independence occupational
structure.
13. Underscore some of India’s most crucial economic challenges at the
time of independence.
14. When was India’s first official census operation undertaken?
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15. Indicate the volume and direction of trade at the time of
independence.
16. Were there any positive contributions made by the British in India?
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Discuss.

14 INDIAN ECONOMIC DEVELOPMENT

D UTT. tt MILL. Cambridge. The Land Systems of British India. New Delhi. RAJENDRA. 1993. SUGGESTED ADDITIONAL ACTIVITIES 1. London. Identify the major occupations followed by the people of our country at the time of independence. Find pictures of towns/villages. 1892. 1983. R.H.). ‘The Colonial Legacy’ in Bimal Jalan (ed. II and III. how would you visualise the occupational scenario in India 15 years from now — say. B.H. Associated Publishing House. 2. PRASAD. © BUCHANAN. INDIAN ECONOMY ON THE EVE OF INDEPENDENCE 15 . BIPAN. Vols I. KUMAR. no SEN. The Indian Economy: Problems and Prospects. New Delhi. Vols. CHANDRA. 2020? be C REFERENCES o N BADEN-POWELL. 1963. then what measures would you think should be taken to banish it and why? bl 4.). 1946. Prepare a list of goods and services that were available to people in pre-independence India in rural and urban areas. Oxford University Press. India Divided.C. D. AMARTYA. Economic History of India. Hind Kitabs. What major occupations do the people follow today? In the light of reform policies. New Delhi. of the pre- independence period and compare these with their present scenario. in your vicinity. Rally around your teacher and organise a group discussion on ‘Has is the zamindari system really been abolished in India’? If the re ER consensus is negative. Oxford. Compare it with the consumption pattern of such goods and services by the people ed today. Oxford Clarendon Press. Bombay. Government of India.1972. Highlight the perceptible difference in the people’s standard of living. 1999. JAMES. h What changes can you mark? Are such changes for better or for worse? Discuss. AND MEGHNAD DESAI (Eds. I and II. Cambridge Economic History of India. Penguin Books. New Delhi. Frank Cass and Co. Cambridge University Press. D. pu T 3. 1966. History of British India. Development of Capitalist Enterprise in India. Ministry of Information and Broadcasting. Poverty and Famines.

2015-16(20/01/2015) . the learners will • come to know the goals of India’s five year plans • know about the development policies in different sectors such as agriculture and industry from 1950-1990 • learn to think about the merits and limitations of a regulated economy.2 Indian Economy 1950-1990 After studying this chapter.

is to initiate a process of development which will raise the living standards and open out to the people new opportunities for a richer and more varied life. In this view. the government now in our own hands. The leaders would plan (see Box 2. the socialist outlook. possible places done in the former Soviet Union. the the government.1 INTRODUCTION answer in an economic system which.e. time democracy like India for the taken. he was not in favour of the kind of socialism established in the former Ø Plan a class trip to an Soviet Union where all the means of agriculture farm. The central objective of Planning in India. There was no private purpose of the visit. were owned by goal. Finally we were drawbacks. and many other leaders and to be asked etc.2) for the of independent India had to decide. for example. There are different types of different types of economic systems prevalent in the economic systems (see Box 2. socialist and Jawaharlal Nehru the most. socialism appealed to as capitalist. It is not possible in a expenditure involved. the type of economic system most suitable for Work These Out our nation. people government to change the ownership accompanying the group pattern of land and other properties and who need to be of its citizens in the way that it was contacted. with the help of your teacher. Now. i. thinkers of the newly independent compile these specific goals India. a system which would promote the welfare of all rather than Ø Prepare a chart on the a few. Basically sympathising with an agricultural farm.. India woke to a features of socialism without its new dawn of freedom. India would masters of our own destiny after be a socialist society with a strong some two hundred years of British public sector but also with private rule. possible questions Nehru. of visit. First Five Year Plan 2. all the factories and each group to plan a specific farms in the country. they found the INDIAN ECONOMY 1950-1990 17 2015-16(20/01/2015) . combined the best On 15 August 1947. However.1) and world. Divide the class into seven groups with production.. sought an alternative to the and compare with long-term extreme versions of capitalism and goals of successful visit to socialism. List out the countries among them. the job of nation building was property and democracy. resources. money property. in their view. among other things. mixed economy.

Strictly. In principle. In a socialist society the government decides what goods are to be produced in accordance with the needs of society. In a mixed economy. for it meant that the great majority of people of the country would be left behind without the chance to improve their quality of life. only those consumer goods will be produced that are in demand. In a capitalist society the goods produced are distributed among people not on the basis of what people need but on the basis of Purchasing Power—the ability to buy goods and services. That is. 18 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . As a result this commodity will not be produced and supplied as per market forces. how to produce and how to distribute what is produced. a socialist nation provides free health care to all its citizens. our first prime minister.e. Such a society did not appeal to Jawaharlal Nehru.. Most economies are mixed economies. for example.1: Types of Economic Systems Every society has to answer three questions Ø What goods and services should be produced in the country? Ø How should the goods and services be produced? Should producers use more human labour or more capital (machines) for producing things? Ø How should the goods and services be distributed among people? One answer to these questions is to depend on the market forces of supply and demand. more labour-intensive methods of production will be used and vice-versa. one has to have the money in the pocket to buy it. distribution under socialism is supposed to be based on what people need and not on what they can afford to purchase. bicycles will be produced. The government decides how goods are to be produced and how they should be distributed. Unlike under capitalism. and the government will provide essential goods and services which the market fails to do. the market will provide whatever goods and services it can produce well. i. If cars are in demand. In Cuba and China. also called capitalism. Box 2.e. It is assumed that the government knows what is good for the people of the country and so the desires of individual consumers are not given much importance. the government and the market together answer the three questions of what to produce. If labour is cheaper than capital. most of the economic activities are governed by the socialistic principles. In a market economy. goods that can be sold profitably either in the domestic or in the foreign markets. a socialist society has no private property since everything is owned by the state. for example. i. Low cost housing for the poor is much needed but will not count as demand in the market sense because the poor do not have the purchasing power to back the demand. cars will be produced and if bicycles are in demand. A socialist society answers the three questions in a totally different manner.

2: What is a Plan? A plan spells out how the resources of a nation should be put to use. for instance. a very difficult job indeed. modernisation. For example. Our plan documents not only specify the objectives to be attained in the five years of a plan but also what is to be achieved over a period of twenty years. It is enough if the plan is specific about the sectors where it plays a commanding role. This is neither possible nor necessary (the former Soviet Union tried to do this and failed). year plans are: growth. a choice has services. the planners The ‘Industrial Policy Resolution’ of have to ensure that. In fact the goals may actually be in conflict. efficiency of productive capital and Due to limited resources. This long-term plan is called ‘perspective plan’. as far as possible. 1948 and the Directive Principles of the policies of the plans do not the Indian Constitution reflected contradict these four goals. It should have some general goals as well as specific objectives which are to be achieved within a specified period of time. Prime Minister as its Chairperson. A good indicator of to be made in each plan about which economic growth. in the language of INDIAN ECONOMY 1950-1990 19 2015-16(20/01/2015) . This does not services like transport and mean that all the plans have given b a n k i n g . It will be unrealistic to expect all the goals of a plan to be given equal importance in all the plans. Growth: It refers to increase in the country’s capacity to produce the 2. The planners have to balance the goals. economy with the private sector being of the goals is to be given primary encouraged to be part of the plan effort. the pioneer in national planning). or a larger size of supporting self-reliance and equity. while leaving the rest to the market. in India plans are of five years duration and are called five year plans (we borrowed this from the former Soviet Union. Box 2. We find dif ferent goals being emphasised in differ ent plans in India. The five year plans are supposed to provide the basis for the perspective plan. Let us now this outlook.2 THE GOALS OF FIVE YEAR PLANS output of goods and services within A plan should have some clearly the country. power generation and irrigation. The era of five year plans had begun. the Planning learn about the goals of planning in Commission was set up with the some detail. importance. It implies either a specified goals. Nevertheless. the goal of introducing modern technology may be in conflict with the goal of increasing employment if the technology reduces the need for labour. The goals of the five larger stock of productive capital. Our five year plans do not spell out how much of each and every good and service is to be produced. or an increase in the equal importance to all these goals. In 1950.

3: Mahalanobis: the Architect of Indian Planning Many distinguished thinkers contributed to the formulation of our five year plans.W. he was willing to listen to what his critics had to say. he can be regarded as the architect of Indian planning. ‘Mahalanobis. which shows that he could identify individuals with talent. During the second plan period. Mahalanobis was born in 1893 in Calcutta. one of the most prestigious organisations of scientists. the mark of a great scholar. Many economists today reject the approach to planning formulated by Mahalanobis but he will always be remembered for playing a vital role in putting India on the road to economic progress. are highly regarded by statisticians and economists all over the world to this day. W. Norton. Prasanta Chandra Mahalanobis.al. Box 2. In 1946 he was made a Fellow (member) of Britain’s Royal Society. Prasanta Chandra’ in John Eatwell et. a landmark contribution to development planning in general. The Second Plan. Mahalanobis established the Indian Statistical Institute (ISI) in Calcutta and started a journal. Planning. began with the Second Five Year Plan. (Eds. His contributions to the subject of statistics brought him international fame. laid down the basic ideas regarding goals of Indian planning.) The New Palgrave Dictionary: Economic Development. Some of these economists became Nobel Prize winners later. the ISI and Sankhya. Among the economists invited by Mahalanobis were those who were very critical of the socialist principles of the second plan. this plan was based on the ideas of Mahalanobis. Among them. Sankhya. which still serves as a respected forum for statisticians to discuss their ideas. In that sense. New York and London. the name of the statistician. Source: Sukhamoy Chakravarty. in the real sense of the term. 20 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . stands out. only the most outstanding scientists are made members of this Society. and statisticians continue to profit from his contribution to statistical theory. Both. He was educated at the Presidency College in Calcutta and at Cambridge University in England. Mahalanobis invited many distinguished economists from India and abroad to advise him on India’s economic development. In other words.

For example. modernisation does not goods and services if the people of refer only to the use of new technology India are to enjoy (in the words of the but also to changes in social outlook First Five Year Plan) a more rich and such as the recognition that women varied life. a factory of the GDP as a cake and growth is can increase output by using a new increase in the size of the cake. Similarly. The technology. A modern society makes sector. Usually. the structural change is peculiar. The GDP of a country is derived In a traditional society. In the case of India. it.59 per cent. In India. women are from the different sectors of the supposed to remain at home while economy. namely the agricultural men work. Box 2.4). with development. In some countries. This phenomenon of growing share of the service sector was accelerated in the post 1991 period (this marked the onset of globalisation in the country which will be discussed in a subsequent chapter). a farmer can GDP is the market value of all the increase the output on the farm by goods and services produced in the using new seed varieties instead of country during a year. At higher levels of development. The first seven five year plans gave importance to self-reliance Modernisation: To increase the which means avoiding imports production of goods and services of those goods which could be INDIAN ECONOMY 1950-1990 21 2015-16(20/01/2015) . the share of agriculture declines and the share of industry becomes dominant. more people can enjoy technology is called modernisation.4: The Service Sector As a country develops. Adoption of new cake is larger. economics. made by each of these sectors makes schools etc. it undergoes ‘structural change’. The contribution work place — in banks. nations. You can think using the old ones. It is necessary to produce more However. should have the same rights as men. while in economic growth and modernisation some countries the growth in the by using its own resources or by service sector contributes more to using resources imported from other GDP growth (see Box 2. the service sector contributes more to the GDP than the other two sectors. growth in agriculture contributes Self-reliance: A nation can promote more to the GDP growth. the share of agriculture in the GDP was more than 50 per cent— as we would expect for a poor country. the industrial sector and the use of the talents of women in the service sector. the economy. is steady increase in the the producers have to adopt new Gross Domestic Product (GDP). factories. more than that of agriculture or industry. If the type of machine. But by 1990 the share of the service sector was 40. like what we find in developed nations. — and such a society in up the structural composition of most occassions is also prosperous.

especially for food. It is important to these issues which they did through ensure that the benefits of economic land reforms and promoting the use prosperity reach the poor sections as of ‘High Yielding Variety’ (HYV) seeds well instead of being enjoyed only by which ushered in a revolution in the rich. modernisation and self-reliance. was considered a necessity in order education and health care and to reduce our dependence on foreign inequality in the distribution of wealth countries. (a) Observe the difference (b) Do you see the impact of self-reliance? Discuss. a decent house. A country can have during the colonial rule there was high growth. attempted to attain these to self-reliance. with supplies. it was feared four goals and the extent to which that dependence on imported food they succeeded in doing so. by themselves. Work These Out Ø Discuss in your class the changes in technology used for (a) Production of food grains (b) Packaging of products (c) Mass communication Ø Find out and prepare a list of major items that India used to import and export during 1990-91 and 2013-14. covering the period domination should give importance 1950-1990. and also have most of its people of independent India had to address living in poverty. So. Land Reforms: At the time of equity is also important. It is should be reduced. Equity: Now growth. the land tenure system should be able to meet his or her basic was characterised by intermediaries 22 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . foreign technology and reference to agriculture. understandable that people who Let us now see how the first seven were recently freed from foreign five year plans. in addition to growth. The policy makers itself. after 1991 in Chapter 3. Indian agriculture. Further. This policy needs such as food. For getting these details you may refer to Economic Survey of the latest year.3 AGRICULTURE and self-reliance. modernisation 2. industry foreign capital may make India’s and trade. may not improve the kind of life which You have learnt in Chapter 1 that people are living. You will study the policies sovereignty vulnerable to foreign and developmental issues taken up interference in our policies. the most modern neither growth nor equity in the technology developed in the country agricultural sector. produced in India itself. Every Indian independence.

) who merely collected rent from the promote equity in the agricultural actual tillers of the soil without sector. there was no incentive on the part of farmers to be efficient. So why did the Soviet farmers do something which would so obviously result in loss for them? The answer lies in the incentives facing the farmers.5: Ownership and Incentives The policy of ‘land to the tiller’ is based on the idea that the cultivators will take more interest — they will have more incentive — in increasing output if they are the owners of the land. steps were taken to freed from being exploited by the abolish intermediaries and to make the zamindars. Equity in agriculture The abolition of intermediaries called for land reforms which primarily meant that some 200 lakh tenants refer to change in the ownership of came into direct contact with the landholdings. America (U. Just a year after g o v e r n m e n t — they were thus independence. However. they neither enjoyed the profits nor suffered the losses.A. Since farmers in the former Soviet Union did not own any land. This will be a loss to the farmer since the fruits cannot be sold. The idea on tenants gave them the incentive to behind this move was that ownership increase output and this contributed of land would give incentives (see Box to growth in agriculture. the 2. Tenants do not have the incentive to make improvements on land since it is the landowner who would benefit more from higher output.5) to the tillers to invest in making goal of equity was not fully served improvements provided sufficient by abolition of intermediaries. Basic Economics: A Citizen’s Guide to the Economy. jagirdars Land ceiling was another policy to etc. Now. New York: Basic Books. The importance of ownership in providing incentives is well illustrated by the carelessness with which farmers in the former Soviet Union used to pack fruits for sale. 2004. The low productivity of an individual. Second Edition. It was not uncommon to see farmers packing rotten fruits along with fresh fruits in the same box. every farmer knows that the rotten fruits will spoil the fresh fruits if they are packed together. Box 2. (variously called zamindars. Source: Thomas Sowell. In capital was made available to them. In the absence of ownership. The purpose of land the agricultural sector forced India to ceiling was to reduce the concentration import food from the United States of of land ownership in a few hands. which also explains the poor performance of the agricultural sector in the Soviet Union despite availability of vast areas of highly fertile land. some areas the former zamindars INDIAN ECONOMY 1950-1990 23 2015-16(20/01/2015) .). This means fixing the maximum contributing towards improvements size of land which could be owned by on the farm.S. The ownership conferred tillers the owners of land. This is because ownership of land enables the tiller to make profit from the increased output.

the use of HYV of land to the tiller. claiming was permanently broken by the green ownership of the land. In the second level of commitment and vast phase of the green revolution inequality in landholding continues (mid-1970s to mid-1980s). agriculture during the colonial rule cultivators (the actual tillers). As a result. we no longer had to be at the Productivity in the agricultural sector mercy of America.continued to own large areas of land monsoon and if the monsoon fell short by making use of some loopholes in the farmers were in trouble unless the legislation. Further. This refers to the large the tillers got ownership of land. The use of these seeds reforms. India’s important but it is not enough. the challenged the legislation in the application of these inputs in correct courts. the increase in production of food grains poorest of the agricultural labourers resulting from the use of high yielding (such as sharecroppers and landless variety (HYV) seeds especially for labourers) did not benefit from land wheat and rice. proportions is vital. grains. in a lot of loopholes which were the first phase of the green revolution exploited by the big landholders to (approximately mid 1960s upto mid retain their land. required the use of fertiliser and The land ceiling legislation also pesticide in the correct quantities as faced hurdles. The spread of green independence. the HYV to this day. If a agriculture vitally depends on the large proportion of this increase is 24 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . was very low because of the use of old for meeting our nation’s food technology and the absence of requirements. The legislation also had fertiliser and pesticide. and even when revolution. the use of HYV seeds was s u c c e s s f u l i n K e r a l a a n d West restricted to the more affluent states Bengal because these states had such as Punjab. reliable irrigation facilities as well as thereby escaping from the the financial resources to purchase legislation. The big landlords well as regular supply of water. or any other nation. there were cases where they had access to irrigation facilities tenants were evicted and the which very few had. The stagnation in landowners claimed to be self. Andhra Pradesh and governments committed to the policy Tamil Nadu. Unfortunately seeds primarily benefited the wheat- other states did not have the same growing regions only. technology spread to a larger number of states and benefited more variety T h e G r e e n R e v o l u t i o n : At of crops. required infrastructure for the vast Growth in agricultural output is majority of farmers. Land reforms were 1970s). delaying its implementation. The farmers who They used this delay to register their could benefit from HYV seeds required lands in the name of close relatives. about 75 per cent of revolution technology enabled India the country’s population was to achieve self-sufficiency in food dependent on agriculture.

As a result. farmers. The green revolution enabled of a difference to the economy as a the government to procure sufficient whole. thereby reaping most surplus) was sold by the farmers in of the benefits of the green revolution. the HYV crops were also more food grains declined relative to other prone to attack by pests and the small items of consumption. If. on the other hand. benefited from this decline in relative the higher output will not make much prices. the higher output can make While the nation had immensely a difference to the economy. who spend a large could lose everything in a pest attack. a amount of food grains to build a stock substantial amount of agricultural which could be used in times of food produce is sold in the market by the shortage. One such risk was the possibility is called marketed surplus.consumed by the farmers themselves percentage of their income on food. the portion of agricultural produce which technology involved was not free from is sold in the market by the farmers risks. The low. The benefited from the green revolution. farmers who adopted this technology income groups. A good that it would increase the disparities proportion of the rice and wheat between small and big farmers—since produced during the green revolution only the big farmers could afford the period (available as marketed required inputs. instead of being sold in the market. the price of Moreover. the market. INDIAN ECONOMY 1950-1990 25 2015-16(20/01/2015) .

it does not benefit of time. by the late 1960s. a hotly fertiliser industry and big farmers. This is an were. it is argued that output on small farms equalled the there is no case for continuing with output on large farms in the course fertiliser subsidies. negative side. These experts argue that if economic justification of subsidies in subsidies are largely benefiting the agriculture is. You should note that risky business. by farmers in general and small Thus. the regions. Indian farmers in particular. Since the small farmers could the farmers in the more prosperous obtain the required inputs. Eliminating subsidies will in ensuring that the small farmer also increase the inequality between rich gains from the new technology. Therefore. It is generally the correct policy is not to abolish agreed that it was necessary to use subsidies but to take steps to ensure subsidies to provide an incentive for that only the poor farmers enjoy the adoption of the new HYV technology benefits. Further. Most farmers are very the green revolution would have poor and they will not be able to favoured the rich farmers only if the afford the required inputs without state did not play an extensive role subsidies. farmers being ruined when pests On the other hand. Economists have found that as 26 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . As a result. the green the target group and it is a huge revolution benefited the small as well burden on the government’s finances as rich farmers. Fortunately. subsidies 1990. by the government. The government subsidies are meant to benefit the provided loans at a low interest rate farmers but a substantial amount of to small farmers and subsidised fertiliser subsidy also benefits the fertilisers so that small farmers could f e r t i l is e r i n d u s t r y . some believe attack their crops was considerably that the government should continue reduced by the services rendered by with agricultural subsidies because research institutes established by the farming in India continues to be a government. and poor farmers and violate the goal The Debate Over Subsidies: The of equity. On the farmers to test the new technology. needed to encourage achievement to be proud of. some 65 per cent of the Some economists believe that once country’s population continued to be the technology is found profitable employed in agriculture even as late as and is widely adopted. at present. The risk of the small (see also Box 2. Subsidies self-sufficient in food grains. a n d a m o n g also have access to the needed farmers.6). these fears did not should be phased out since their come true because of the steps taken purpose has been served. therefore. debated question. the subsidy largely benefits inputs. Any new agricultural productivity had increased technology will be looked upon as sufficiently to enable the country to be being risky by farmers.

Some economists point out that subsidies do not allow prices to indicate the supply of a good. it promotes modernisation proportion of the population engaged and overall prosperity. If water is priced to reflect scarcity. Subsidies provide an incentive for wasteful use of resources. Yo u m i g h t h a v e answer is that the industrial sector and studied in the previous chapter that. It is for this in agriculture although agricultural reason that the five year plans place output could have grown with much a lot of emphasis on industrial less people working in the sector? The d e v e l o p m e n t . Farmers will cultivate water intensive crops if water is supplied free. the service sector did not absorb the at the time of independence. Think about subsidies in terms of incentives and ask yourself whether it is wise from the economic viewpoint to provide free electricity to farmers. But the increase in petrol price reflects greater scarcity and the price rise is a signal that less petrol is available— this provides an incentive to use less petrol or look for alternate fuels.6: Prices as Signals You would have lear nt in an earlier class about how prices of goods are determined in the market. Why was such a large agriculture. We complain whenever the price of petrol increases and blame it on the government. farmers will cultivate crops suitable to the region. for example. 2. its price will rise and those who use this good will have the incentive to make efficient decisions about its use based on the price.4 INDUSTRY AND TRADE between 1950 and 1990. the sector. the Economists have found that poor proportion of GDP contributed by nations can progress only if they have agriculture declined significantly but a good industrial sector.5 per cent in 1950 to 64. Fertiliser and pesticide subsidies result in overuse of resources which can be harmful to the environment. they may stop watering the garden to conserve water. If the price of water goes up because of lower supply. although the water resources in that region may be scarce and such crops will further deplete the already scarce resources. Industry not the population depending on it provides employment which is more (67. Box 2. Many economists call this an proportion of GDP contributed by important failure of our policies agriculture as well as the proportion of followed during 1950-1990.9 per cent stable than the employment in by 1990). In India. people will have the incentive to use it with greater care. If a good becomes scarce. population working in the sector declines considerably. a nation becomes more prosperous. the people working in the agricultural variety of industries was very narrow INDIAN ECONOMY 1950-1990 27 2015-16(20/01/2015) . It is important to understand that prices are signals about the availability of goods. When electricity and water are provided at a subsidised rate or free. they will be used wastefully without any concern for their scarcity.

Inter national Monetary Fund. machines. we needed government and the private sector in to expand the industrial base with a industrial development? At the time of variety of industries if the economy independence. prepare a case study on the method of farming used. World T rade Organisation (and meets of G7. types of seeds.8 Industry 10. Ø Prepare pie charts on the occupational structure of the Indian economy available in the following table.1 66.2 20. cost involved. There were two well. — largely confined to cotton textiles Public and Private Sectors in Indian and jute. are provided with high amount of subsidies and are encouraged to export their produce to other countries. (b) The different groups can then prepare a chart showing variations in cost of production. time taken. Sector 1950–51 1990–91 Agriculture 72. Work These Out Ø A group of students may visit an agricultural farm.5 Ø Study the arguments for and against agricultural subsidies.7 12. Indian industrialists did was to grow. use of seeds. It will be beneficial if the changes in cultivation methods could be collected from an elderly member of the farming family (a) Discuss the findings in your class. fertilisers. obviously. marketable surplus and income of the family. means of irrigation. means of irrigation. Ø Collect newspaper cuttings related to the World Bank. Do you think our farmers will be able to compete with farmers from developed countries? Discuss. G10 countries). G8. fertilisers. marketable surplus and income earned. not have the capital to undertake 28 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . that is. productivity. What is your view on this issue? Ø Some economists argue that farmers in other countries. Discuss the views shared by the developed and developing countries on farm subsidies. particularly developed countries.7 Services 17. Industrial Development: The big managed iron and steel firms — one question facing the policy makers was in Jamshedpur and the other in — what should be the role of the Kolkata — but.

the second category using small-scale industries for consisted of industries in which the promoting rural development. required. The Village and Small-Scale Industries first category comprised industries Committee. the regions. noted the possibility of the state. output or for diversifying production (producing a new variety of goods). sector would have to be complimentary Even an existing industry had to to those of the public sector. It is principally a license was obtained from the for these reasons that the state had to government. such heights of the economy. the plan which tried to of goods. with the reference to the maximum invest- state taking the sole responsibility for ment allowed on the assets of a unit. build the basis for a socialist pattern of society. nor was the market big the sector was kept under state enough to encourage industrialists to control through a system of licenses. the third category This limit has changed over a period consisted of the remaining industries o f t i m e . License to expand the Industrial Policy Resolution of production was given only if the 1956 was adopted. Industrial Policy Resolution 1956 This was meant to ensure that the (IPR 1956): In accordance with the quantity of goods produced was not goal of the state controlling the more than what the economy commanding heights of the economy. This resolution government was convinced that the formed the basis of the Second Five economy required a larger quantity Year Plan. A private sector could supplement the ‘small-scale industry’ is defined with efforts of the state sector. The purpose of this of those industries that were vital for policy was to promote regional the economy. This resolution classified Small-Scale Industry: In 1955. In addition. also called the Karve which would be exclusively owned by Committee. The policies of the private equality. starting new units. This meant that such as tax benefits and electricity the state would have complete control at a lower tariff. This policy was used for play an extensive role in promoting the promoting industry in backward industrial sector. undertake major projects even if they No new industry was allowed unless had the capital to do so. I n 1 9 5 0 a s m a l l-s c a l e which were to be in the private sector. the industries into three categories. economy.investment in industrial ventures Although there was a category of required for the development of our industries left to the private sector. it was easier to obtain a decision to develop the Indian economy license if the industrial unit was on socialist lines led to the policy of the established in an economically state controlling the commanding backward area. with the obtain a license for expanding public sector leading the way. industrial unit was one which invested INDIAN ECONOMY 1950-1990 29 2015-16(20/01/2015) . In addition. as the Second units were given certain concessions Five Year plan put it.

6 per or substituting imports with domestic cent in 1990-91. at imported goods. This policy aimed at replacing 11. in fact.. they use more labour than the restrict imports and.8 per cent in 1950-51 to 24. industries would be The six per cent annual growth rate encouraged to produce them in India of the industrial sector during the itself. country. In the first seven plans. No longer protected the domestic industries was Indian industry restricted largely from foreign competition. the criterion of reservation they will learn to compete in the being the ability of these units to course of time. this contributed by the industrial strategy is called import substi. But these competition. In this policy the government period is commendable. their use. The industries are more ‘labour intensive’ effect of tariffs and quotas is that they i. industries cannot compete with the big The policy of protection is based industrial firms. Our planners also manufacture the goods. trade India’s industrial sector during the was characterised by what is first seven plans are impressive commonly called an inward looking indeed. T h e p r o p o r t i o n o f G D P trade strategy. protect large-scale industries and. It is assumed that if the was reserved for the small-scale domestic industries are protected industry. Technically. instead of industry’s share of GDP is an importing vehicles made in a foreign important indicator of development. they make imported present the maximum investment goods more expensive and discourage allowed is rupees one crore. therefore. the from imports took two forms: tariffs industrial sector became well and quotas. They were also feared the possibility of foreign given concessions such as lower excise exchange being spent on import of duty and bank loans at lower interest luxury goods if no restrictions were rates. For example. The industrial policy that we adopted Effect of Policies on Industrial was closely related to the t r a d e Development: The achievements of policy. sector increased in the period from tution. Tariffs are a tax on diversified by 1990. Quotas specify the quantity It is believed that small-scale of goods which can be imported. it is obvious that on the notion that industries of development of small-scale industry developing countries are not in a requires them to be shielded from the position to compete against the large firms. For this purpose. placed on imports. therefore. largely due to 30 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . the goods produced by more developed production of a number of products economies. Protection to cotton textiles and jute.e. The rise in the production.a maximum of rupees five lakh. Nor was any serious thought given to promote 2. the domestic firms from foreign generate more employment.5 TRADE POLICY: IMPORT SUBSTITUTION exports until the mid-1980s.

The promotion was required in a big way. Protection them) although this was no longer from foreign competition enabled the required. It Another instance could be the was proposed at the beginning of this establishment of Modern Bread. Due to the absence of by the public sector to the growth of competition. Sector 1950-51 1990-91 Agriculture 59. Work These Out Ø Construct a pie chart for the following table on sectoral contribution to GDP and discuss the difference in the contribution of the sectors in the light of effects of development during 1950-91. as if the INDIAN ECONOMY 1950-1990 31 2015-16(20/01/2015) .5 Ø Conduct a debate in your classroom on the usefulness of Public Sector Undertakings (PSUs) by dividing the class into two groups. An example is the provision development of indigenous industries of telecommunication service. realised that private sector firms could In spite of the contribution made also provide it. the public sector. a chapter that initially public sector bread-manufacturing firm. even till the late 1990s.0 34.9 Industry 13. some economists one had to wait for a long time to are critical of the performance of get a telephone connection.6 Services 28.0 40. It is now of s m a l l .s c a l e i n d u s t r i e s g a v e widely held that state enterprises opportunities to those people who did continued to produce certain goods not have the capital to start large and services (often monopolising firms to get into business. This in the areas of electronics and industry continued to be reserved for automobile sectors which otherwise the Public Sector even after it was could not have developed. the Indian economy. One group may speak in favour of PSUs and the other group against the motion (involve as many students as possible and encourage them to give examples).0 24. many public sector enterprises.

And even though the private the ground that it continued even sector can manage hotels well. Regarding protection. they were then to which they contribute to the welfare nationalised to protect the jobs of the of people and not on the profits they workers). a big industrialist for a change in our policy. economists called industrial houses. a loss-making earn. quite a few of the public welfare of the nation. Due to restrictions on imports. More time was spent by development of Indian Economy no industrialists in trying to obtain a distinction was made between (i) license or lobby with the concerned what the public sector alone can do ministries rather than on thinking and (ii) what the private sector can about how to improve their products. also do. This. competition as long as the rich The need to obtain a license to start nations continue to do so. some private firm will not waste resources economists hold that we should by being kept running despite the protect our producers from foreign losses. Why should they think of improving Many public sector firms incurred quality when they could sell low huge losses but continued to quality items at a high price? function because it is difficult to close Competition from imports forces our a government undertaking even if it producers to be more efficient. 32 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . The point is that certain firms from becoming more after four decades of Planned efficient. is a drain on the nation’s limited A few economists also point out resources. Owing to an industry was misused by all these conflicts. has led some scholars to argue that the Indian consumers had to the state should get out of areas purchase whatever the Indian which the private sector can manage producers produced. The producers and the government may concentrate were aware that they had a captive its resources on important services market. The public sector firms were originally private sector firms. on this view. For example. This good. The excessive economic policy in 1991. so they had no incentive to which the private sector cannot improve the quality of their goods. even now only The protection from foreign the public sector supplies national competition is also being criticised on defense. However. yet. should be firms which were on the verge of evaluated on the basis of the extent closure due to losses.private sector could not manufacture regulation of what came to be called bread! In 2001 this firm was sold to the permit license raj prevented the private sector. This does not mean that that the public sector is not meant private firms are always profitable for earning profits but to promote the (indeed. led the new firm but to prevent competitors government to introduce a new from starting new firms. provide. after it proved to do more harm than the government also runs hotels. would get a license not for starting a alongwith other problems.

Ø The proportion of people depending on agriculture did not decline as expected. Land reforms resulted in sector. India envisaged an economic system which combines the best features of socialism and capitalism — this culminated in the mixed economy model. and the new economic policy performance of many public sector was initiated in 1991 to make our enterprises. Ø All the economic planning has been formulated through five year plans. modernisation. many economists context of changing global economic became dissatisfied with t h e scenario. o u r p r o d u c e r s w e r e The progress of the Indian economy protected against foreign competition during the first seven plans was and this did not give them the impressive indeed. Ø Common goals of five year plans are growth. self-sufficiency and equity. g o o d s that they produced. Ø One of the major drawbacks in the industrial sector was the inefficient functioning of the public sector as it started incurring losses leading to drain on the nation’s limited resources. INDIAN ECONOMY 1950-1990 33 2015-16(20/01/2015) . Excessive government economy more efficient.sufficient in food policies were ‘inward oriented’ and so production thanks to the green we failed to develop a strong export revolution. The need for r eform o f abolition of the hated zamindari economic policy was widely felt in the system.2. Ø The major policy initiatives in agriculture sector were land reforms and green revolution. In the name of self- r e l i a n c e. Recap Ø After independence. Our industries became far more diversified compared incentive to improve the quality of to the situation at independence.6 CONCLUSION entrepreneurship. This is the regulation prevented growth of subject of the next chapter. These initiatives helped India to become self-sufficient in food grains production. Our India became self. Ø Policy initiatives in the industrial sector raised its contribution to GDP. However.

34 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . 7. despite the implementation of green revolution. Why did India opt for planning? 3. What is marketable surplus? 6. While subsidies encourage farmers to use new technology. Discuss the usefulness of subsidies in the light of this fact. Explain the need and type of land reforms implemented in the agricultur e sector. 2. Explain ‘growth with equity’ as a planning objective. Why was it necessary for a developing country like India to follow self-reliance as a planning objective? 11. What is Green Revolution? Why was it implemented and how did it benefit the farmers? Explain in brief. What ar e High Yielding Variety (HYV) seeds? 5. 8. 10. 15. Does modernisation as a planning objective create contradiction in the light of employment generation? Explain. Explain the statement that green revolution enabled the government to procure sufficient food grains to build its stocks that could be used during times of shortage. Why was public sector given a leading role in industrial development during the planning period? 13. Define a plan. Why. EXERCISES 1. 12. they are a huge burden on government finances. Why should plans have goals? 4. 9. many public sector undertakings incur huge losses and are a drain on the economy’s resources. Though public sector is very essential for industries. Discuss the usefulness of public sector undertakings in the light of this fact. 65 per cent of our population continued to be engaged in the agriculture sector till 1990? 16. 14. What is sectoral composition of an economy? Is it necessary that the service sector should contribute maximum to GDP of an economy? Comment.

Industrial Policy and Controls. India’s Economic Reforms 1991-2001 . Match the following : 1. INDIAN ECONOMY 1950-1990 35 2015-16(20/01/2015) . in Bimal Jalan. 2004 . 2004. Improvements in the field of agriculture to increase its productivity 6. (Ed. Land Reforms D. 17. The Indian Economy: Problems and Prospects. Gross Domestic B. Delhi. Oxford University Press.M.D. V IJAY. Penguin. Chairperson of the planning commission 4. C. D ANDEKAR . Delhi. Quantity of goods that can be imported Product 3. Prime Minister A. H ANUMANTHA. Explain how import substitution can protect domestic industry. India in T ransition: Fr eeing the Economy. REFERENCES B HAGWATI . 2004. and I. Subsidy F. Seeds that give large proportion of output 2.). in Bimal Jalan. The money value of all the final goods and services produced within the economy in one year 5. 1993 . MOHAN . Forty Years After Independence. RAO . Why and how was private sector regulated under the IPR 1956? 19. RAKESH. V. The monetary assistance given by go v e r n m e n t f o r p r o d u c t i o n activities. 18.M. L ITTLE . Delhi. 1996 . Agriculture: Policy and Performance. The Indian Economy: Problems and Prospects.).) . Oxford University Press.H. Quota C. The Indian Economy: Problems and Prospects. in Bimal Jalan (Ed. Penguin. J. (Ed. Penguin. J OSHI. Delhi. HYV Seeds E. Delhi.

UNIT UNIT II III ECONOMIC REFORMS SINCE 1991 2015-16(20/01/2015) .

After forty years of planned development. Nevertheless. In 1991. India has been able to achieve a strong industrial base and became self-sufficient in the production of food grains. 2015-16(20/01/2015) . This unit is an appraisal of the reform process and its implications for India. a major segment of the population continues to depend on agriculture for its livelihood. a crisis in the balance of payments led to the introduction of economic reforms in the country.

2015-16(20/01/2015) . the learners will • understand the background of the reform policies introduced in India in 1991 • understand the mechanism through which reform policies were introduced • comprehend the process of globalisation and its implications for India • be aware of the impact of the reform process in various sectors. PRIVATISATION AND GLOBALISATION: AN APPRAISAL After studying this chapter.3 LIBERALISATION.

R. w h i c h w e very low. we pay in dollars debt — the government was not which we earn from our exports.2 BACKGROUND that. we will chapter that. The even a fortnight. system with those of the socialist economic system. running of public sector enterprises developed a diversified industrial etc. Narayanan 3. the which started its developmental path government generates funds from from near stagnation. the government borrows to goods and has experienced sustained finance the deficit from banks and expansion of agricultural output also from people within the country which has ensured food security. The crisis was continued spending on development further compounded by rising prices programmes of the government did not of essential goods. since independence. which were aimed at be traced from the inefficient controlling and regulating the management of the Indian economy economy. ended up instead in in the 1980s. Some scholars argue 3. and from international financial In 1991. poverty to levels that were not sufficient for and population explosion. When we import goods economic crisis relating to its external like petroleum. In this chapter. able to achieve growth in savings. foreign even though the revenues were e x c h a n g e r e s e r v e s. We know that for hampering the process of growth and implementing various policies and development. dropped problems like unemployment. India followed the mixed economy measures that the government has framework by combining the adopted and their impact on various advantages of the capitalist economic sectors of the economy. has since been various sources such as taxation. government to introduce a new set of the government was not able to LIBERALISATION. Moreover. India met with an institutions. PRIVATISATION AND GLOBALISATION: AN APPRAISAL 39 2015-16(20/01/2015) . look at the background of the crisis. All these led the generate additional revenue.1 INTRODUCTION policy measures which changed the direction of our developmental You have studied in the previous strategies. There is a consensus in the world today that economic development is not all and the GDP is not necessarily a measure of progress of a society. K. its general administration. over the years. Others state that India. When expenditure is more than sector which produces a variety of income. this policy resulted in the establishment of a variety of The origin of the financial crisis can rules and laws. able to make repayments on its Development policies required that borrowings from abroad. the government had generally maintain to import petrol to overshoot its revenue to meet and other important items.

The NEP consisted of wide was spent on meeting consumption ranging economic reforms. popularly segments of the Indian economy. For availing the government was spending a large loan. efficiency of the economy and increasing India approached the International its international competitiveness by Bank for Reconstruction and removing the rigidities in various Development (IBRD). structural reform policies are long-term Also no country or international funder measures. Stabilisation measures are short- Prices of many essential goods rose term measures. maintain sufficient foreign exchange There was also not sufficient foreign reserves and keep the rising prices exchange to pay the interest that needs under control. When the manage the crisis. aimed at improving the was willing to lend to India. policies which fall under three heads 40 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . On the other hand. (NEP). Neither was an attempt made to thrust of the policies was towards reduce such profligate spending nor creating a more competitive sufficient attention was given to boost environment in the economy and exports to pay for the growing imports. borrowings became unsustainable. Imports grew at a very high some of the weaknesses that have rate without matching growth of developed in the balance of exports. In simple words. these international agencies share of its income on areas which do expected India to liberalise and open not provide immediate returns such as u p t h e e c o n o m y b y removing the social sector and defence. meet the growing expenditure. The m a n y a r e a s a n d r e m o ve t r a d e income from public sector restrictions between India and other undertakings was also not very high to countries. intended to correct sharply. government growth of firms. to be paid to international lenders. foreign payments and to bring inflation exchange reserves declined to a level under control.generate sufficiently from internal and received $7 billion as loan to sources such as taxation. there was restrictions on the private sector. o u r f o r e i g n e x c h a n g e. As pointed out earlier. removing the barriers to entry and In the late 1980s. The known as World Bank and the government initiated a variety of International Monetary Fund (IMF). this that was not adequate to finance means that there was a need to imports for more than two weeks. a need to utilise the rest of its revenue reduce the role of the government in in a highly efficient manner. of World Bank and IMF and borrowed from other countries and announced the New Economic Policy international financial institutions. This set of policies expenditure began to exceed its can broadly be classified into two revenue by such large margins that groups: the stabilisation measures meeting the expenditure through and the structural reform measures. At India agreed to the conditionalities t i m e s . The needs.

Reserve Bank of India (RBI). PRIVATISATION AND GLOBALISATION: AN APPRAISAL 41 2015-16(20/01/2015) . privatisation and The reform policies introduced in globalisation. atomic restrictions and open up various energy generation and railway sectors of the economy. regulatory mechanisms were regulated through various norms and enforced in various ways (i) industrial regulations of the RBI. LIBERALISA TION. investment banks. Liberalisation was are now reserved for the public sector introduced to put an end to these are defence equipments. fiscal policy and foreign investment. determine the prices.. electronics. regulating the economic activities aerospace and drugs and pharma- became major hindrances in growth ceuticals. export-import market has been allowed to policy. hazardous chemicals. rules and laws which were aimed at cigarettes.3 LIBERALISATION licensing was abolished for almost all As pointed out in the beginning. nature of lending or to decide the amount of goods to various sectors etc.viz. In many industries. the industrial licensing. Industrial 3. industrial explosives. Let us study Financial sector includes financial some important areas such as the institutions such as commercial industrial sector. tax banks. Though a few transport. consulting the RBI. close a firm fixes interest rates. The RBI licensing under which every entrepreneur decides the amount of money that had to get permission from government the banks can keep with themselves. Many goods produced by liberalisation measures were small scale industries have now been introduced in 1980s in areas of dereserved. reform policies initiated in 1991 were Financial Sector Reforms: more comprehensive. financial sector. technology upgradation. This means that the financial and (iv) controls on price fixation and sector may be allowed to take distribution of selected industrial decisions on many matters without products. One of the that could be produced (ii) private major aims of financial sector reforms sector was not allowed in many is to reduce the role of RBI from industries (iii) some goods could be regulator to facilitator of financial produced only in small scale industries sector. and after 1991 removed many of these restrictions. You may be aware that all the banks and other Deregulation of Industrial Sector: In financial institutions in India are India. liberalisation. The only industries which and development. stock reforms. but product categories — alcohol. foreign exchange markets exchange operations and foreign and trade and investment sectors exchange market. The financial which received greater attention in sector in India is regulated by the and after 1991. officials to start a firm.

In order to encourage their existing branch networks. in order to was raised to around 50 per cent. Since 1991. certain substantially lowered. more often than not. has been gradually establishment of private sector reduced. It is now foreign investments and technology widely accepted that moderate rates into the economy. It also concerned with the reforms in set the tone to free the determination government’s taxation and public of rupee value in the foreign expenditure policies which are exchange market from government collectively known as its fiscal control. Foreign sector was made in the foreign Institutional Investors (FII) such exchange market. There are two types of taxes: markets determine exchange rates direct and indirect. the rupee to invest in Indian financial markets. Trade and Investment Policy there has been a continuous Reforms: Liberalisation of trade and reduction in the taxes on individual investment regime was initiated to incomes as it was felt that high rates increase international competitiveness of income tax were an important of industrial production and also reason for tax evasion. Direct taxes based on the demand and supply of consist of taxes on incomes of foreign exchange. facilitate the establishment of a Those banks which fulfil certain common national market for conditions have been given freedom goods and commodities. Efforts have also been made banks. Another to set up new branches without the component of reforms in this area is approval of the RBI and rationalise simplification. In 1991. mutual funds immediate measure to resolve the and pension funds are now allowed balance of payments crisis. The industries and the adoption of rate of corporation tax. as an as merchant bankers. to reform the indirect taxes. first important reform in the external holders and the nation. policy. individuals as well as profits of business enterprises. Now. 42 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . The aim was also of income tax encourage savings and to promote the efficiency of the local voluntary disclosure of income. Indian as well as foreign. which was modern technologies. The reform policies led to the very high earlier. was devalued against foreign currencies. This led to an increase in Tax Reforms: Tax reforms are the inflow of foreign exchange. better compliance on the part of Though banks have been given taxpayers many procedures have permission to generate resources been simplified and the rates also from India and abroad. taxes Foreign investment limit in banks levied on commodities. managerial a s p e c t s h a v e b e e n retained with the RBI to safeguard Foreign Exchange Reforms: The the interests of the account.

In order to protect domestic of tariff rates and (iii) removal of industries. Discuss the same with your classmates and prepare a chart on it. custom duties. FII and a mutual fund. Ø Classify the following as direct and indirect taxes: sales tax. Also find the foreign currency of the following countries and its rupee exchange rate Country Currency Value of 1(one) unit of foreign currency in Indian rupee U. why do they do so and how? Ø Do you know that for a very long time countries used to keep silver and gold as reserves to make payments abroad? Find out in what form do we keep our foreign exchange reserves and find out from newspapers. death duties. Observe and find out the functions it performs. Japan China Korea Singapore Germany LIBERALISA TION. Export The trade policy reforms aimed at (i) duties have been removed to increase dismantling of quantitative restrictions the competitive position of Indian on imports and exports (ii) reduction goods in the international markets. regime of quantitative restrictions Import licensing was abolished on imports. removed from April 2001. U.A. magazines and the Economic Survey how much foreign exchange reserves we have today. This was encouraged except in case of hazardous and through tight control over imports environmentally sensitive industries. VAT. Ø Find out from your parents if they pay taxes. private foreign bank. property tax.S. If yes. Work These Out Ø Give an example each of nationalised bank. Ø Visit a bank in your locality with your parents. PRIVATISATION AND GLOBALISATION: AN APPRAISAL 43 2015-16(20/01/2015) . Quantitative restrictions on imports of These policies reduced efficiency and manufactured consumer goods and competitiveness which led to slow agricultural products were also fully growth of the manufacturing sector.K. India was following a licensing procedures for imports. income tax. and by keeping the tariffs very high. private bank.

The granting of status resulted in better performance of these companies.3. (ii) Navratnas – (a) Hindustan Aeronautics Limited. A few examples of public enterprises with their status are as follows: (i) Maharatnas – (a) Indian Oil Corporation Limited. literature and knowledge. (b) Airport Authority of India and (c) Indian Railway Catering and Tourism Corporation Limited.4 PRIVATISATION Privatisation of the public sector It implies shedding of the ownership enterprises by selling off part of the or management of a government equity of PSEs to the public is known o w n e d e n t e r p r i s e. Many of these profitable PSEs were originally formed during the 1950s and 1960s when self-reliance was an important element of public policy. They were given greater managerial and operational autonomy. Greater operational. c o m p a n i e s i n t w o w a y s (i) b y was mainly to improve financial withdrawal of the government from discipline and facilitate modernisation. ownership and management of It was also envisaged that private public sector companies and or (ii) by capital and managerial capabilities outright sale of public sector could be effectively utilised to companies.1: Navratnas and Public Enterprise Policies You must have read in your childhood about the famous Navratnas or Nine Jewels in the Imperial Court of King Vikramaditya who were eminent persons of excellence in the fields of art. the government has decided to retain them in the public sector and enable them to expand themselves in the global markets and raise resources by themselves from financial markets. navratnas and miniratnas. (b) Mahanagar Telephone Nigam Limited. They were set up with the intention of providing infrastructure and direct employment to the public so that quality end-product reaches the masses at a nominal cost and the companies themselves were made accountable to all stakeholders. and (iii) Miniratnas – (a) Bharat Sanchar Nigam Limited. The Central Public Sector Enterprises are designated with different status. 44 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . G o v e r n m e n t as disinvestment. in taking various decisions to run the company efficiently and thus increase their profits. Box 3. In order to improve efficiency. Scholars allege that instead of facilitating public enterprises in their expansion and enabling them to become global players. and (b) Steel Authority of India Limited. the government identifies PSEs and declare them as maharatnas. The purpose of the companies are converted into private sale. according to the government. the government partly privatised them through disinvesment. improve the performance of the PSUs. financial and managerial autonomy has also been granted to profit-making enterprises referred to as miniratnas. infuse professionalism and enable them to compete more effectively in the liberalised global environment. Of late.

Work These Out Ø Some scholars refer to disinvestment as the wave of privatisation spreading all over the world to improve the performance of public sector enterprises whereas others call it as outright sale of public property to the vested interests. some PSUs have been globalisation process. computer Although globalisation is generally service. it is a complex phenomenon. Put these on the notice board and discuss them in the classroom. The government envisaged that links in such a way that the happenings privatisation could provide strong in India can be influenced by events impetus to the inflow of FDI. security — understood to mean integration of the each provided by respective economy of the country with the world departments of the company). Ø Do you think only loss making companies should be privatised? Why? Ø Losses incurred by public sector enterprises are to be met out of the public budget. It growth of Information Technology involves creation of networks and (IT). in recent times. mostly from other Box 3. policies that are aimed at transforming because of the growth of fast modes the world towards greater of communication. PSUs by giving them autonomy Outsourcing: This is one of the in taking managerial decisions. (popularly known as BPO or Globalisation attempts to establish c a l l centres). It is turning the The government has also made world into one whole or creating a attempts to improve the efficiency of borderless world. outsourcing It is an outcome of the set of various has intensified. happening miles away. advertisement. which was previously provided internally or from within the 3. granted special status as maharatnas. social voice-based business processes and geographical boundaries. particularly the interdependence and integration. record keeping. Do you agree with this statement? Discuss. As a economy. a company hires regular service from navratnas and miniratnas (see external sources. LIBERALISA TION.5 GLOBALISATION country (like legal advice.1). For important outcomes of the instance. form of economic activity. What do you think? Ø Prepare a poster which contains 10-15 news clippings which you consider as important and relating to navaratnas from newspapers. Also collect the logos and advertisements of these PSEs. PRIVATISATION AND GLOBALISATION: AN APPRAISAL 45 2015-16(20/01/2015) . countries. In outsourcing. Many of the services such as activities transcending economic.

its Fig.10. Source: www. today has manufacturing plants and research centres across the world.1 Outsourcing: a new employment opportunity in big cities purpose is also to enlarge 46 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . For example. you might find many Indian companies have expanded their wings to many other countries. Box 3.000 persons abroad. Dr Reddy's Laboratories. music be availed at a cheaper cost with recording. one of the top five IT companies in India has offices in 31 countries and employs about 15. voice and visual data in respect of these services is digitised World Trade Organisation (WTO): and transmitted in real time over The WTO was founded in 1995 as continents and national boundaries.2014. With the help of modern global outsourcing in the post-reform telecommunication links including the period. The low wage rates and teaching are being outsourced by availability of skilled manpower in companies in developed countries to India have made it a destination for India. a subsidiary of the Indian public sector enterprise. GATT was established their services to India where they can in 1948 with 23 countries as the global trade organisation to administer all multilateral trade agreements by providing equal opportunities to all countries in the international market for trading purposes. and General Agreement on Trade and even small companies. In addition. a private company established in 1907. accountancy. initially was a small company supplying pharmaceutical goods to big Indian companies. the successor organisation to the Most multinational corporations.rediff.2: Global Footprint! Owing to globalisation. It employs nearly 50. Oil and Natural Gas Corporation engaged in oil and gas exploration and production has projects in 16 countries. Internet.000 persons in other countries. book reasonable degree of skill and transcription. ONGC Videsh. WTO is expected to establish a rule-based trading regime in which nations cannot place arbitrary restrictions on trade. Tata Steel. HCL Technologies. is one of the top ten global steel companies in the world which have operations in 26 countries and sell its products in 50 countries. banking services. are outsourcing Tariff (GATT). clinical advice or even accuracy. the text. 3.com accessed on 14. film editing.

“On a morning. Work These Out Ø Many scholars argue that globalisation is a threat as it reduces the role of the state in many sectors. ensure optimum utilisation of world India has been in the forefront of resources and to protect the framing fair global rules. 13. and a copy of Daniella’s textbook in front of Greeshma. Nothing unusual about this chat except that Greeshma. was in Kochi and her student Daniella. connected by the Internet. Greeshma. a few minutes before 7 A.M. ‘Hello. what will happen to people living in the countries where the companies are located? Discuss. tariff rates. who grew up speaking Malayalam. to facilitate international trade India has kept its commitments (bilateral and multilateral) through towards liberalisation of trade. she guides the teenager through the intricacies of nouns. California. made removal of tariff as well as non-tariff in the WTO. The two chatted excitedly before Greeshma said that ‘we will work on pronouns today’.” ü How has this become possible? Why can’t Daniella get lessons in her own country? Why is she getting English lessons from India. The WTO agreements and safeguards and advocating the cover trade in goods as well as services interests of the developing world.. Using a simulated whiteboard on their computers. she gets the reply. along with their turnover. LIBERALISA TION. where English is not the mother tongue? ü India is benefiting from liberalisation and integration of world markets. Seconds later. 22. by removing quantitative barriers and providing greater market restrictions on imports and reducing access to all member countries. Ø Read this excerpt of a news item from a daily newspaper describing something that is now becoming increasingly common. comprehension and writing. adjectives and verbs. was at her home in Malibu. production and trade of services. regulations environment. Debate in the classroom. Daniella’. was teaching Daniella English grammar. Gr eeshma’. PRIVATISATION AND GLOBALISATION: AN APPRAISAL 47 2015-16(20/01/2015) . Some counter argue that it is an opportunity as it opens up markets to compete in and capture. Greeshma sat in front of her computer with her headset on and said in accented English ‘Hello. Do you agree? Ø Is employment in call centres sustainable? What kinds of skills should people working in call centres acquire to get a regular income? Ø If the multinational companies outsource many services to countries like India because of cheap manpower. to As an important member of WTO. Ø Prepare a chart consisting of a list of five companies that have BPO services in India.

2011.0 10.5 9. The Twelfth Plan (2012-2017) envisages the GDP growth rate at 9 or 9. TABLE 3.6 per cent during given in their countries. 6 IN D I A N EC O N O M Y DURING unsustainable. Gover nment of India. industrial and service sectors have to grow at the rates of 4 to 4. D u r i n g t h e r e f o r m to open up their markets for developed period. Faster.1. the growth of agriculture has countries but are not allowed access to declined.2. some scholars raise Fig.8 10.4 7. reported fluctuation.4 9.2 Industry 7. 3. the growth of service sector has gone up. The opening up of the economy has REFORMS: AN A SSESSMENT led to rapid increase in foreign direct The reform process has completed investment and foreign exchange one and a half decades since its reserves. The foreign investment. 48 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . In economics. Let us now look at the usefulness of India being a member of performance of the Indian economy the WTO as a major volume of during this period. 9.5 Sources: Tenth Five Year Plan.3 3.3 2. They also say that the Gross Domestic Product.2 IT Industry is seen as a major contributor apprehensions over the projection of to India’s exports such high rates of growth as 3 .1 Growth of GDP and Major Sectors (in %) Sector 1980-1991 1992-2001 2002-2007 2007-2012 2012-2017 XII Plan Target I Target II Agriculture 3.9 and 10 percentage points. Planning Commission.2 9.6 3.6 6.0 4.0 Total 5.7 8.8 8.9 Services 6. Look at while developed countries file Table 3. However.2 4. This What do you think? indicates that the growth is mainly driven by the growth in the service sector. international trade occurs among the growth of an economy is measured by developed nations. respectively.6 to 10.0 10. In order to achieve such a high growth rate. the agriculture. developing 1980-91 to 8.6 10. Some scholars question the introduction. sustainable and more inclusive growth: An Appr oach to the 12th Five Year Plan.2 7.1 0 1 2 . While the industrial sectors the markets of developed countries.5 per cent.2 per cent during countries feel cheated as they are forced 2007.4 7.1 6. The growth of GDP complaints over agricultural subsidies increased from 5.0 9.

scholars point out that the Work These Out Ø In the previous chapter. Ø Read the following passage and discuss in class. exchange reserve holders in the world. What could be done to farmers like Mahadeva from incurring losses? Discuss in the class. which was a result of removal of restriction on imports. thus. Mahadeva used to get two quintals of groundnut. but failed.000. Mahadeva. groundnut crop in Anantpur is facing problems due to crop disease. The cost included expenditure on raw materials (seeds. fertilisers) which increased Mahadeva’s cost of cultivation.000. Mahadeva and his friends brought this matter repeatedly to the notice of the government officials entrusted with this responsibility. the local markets were flooded with cheap imported edible oils. On an average. Mahadeva. Rising prices have investment(FDI) and foreign also been kept under control. India is seen as a successful Growth and Employment: Though the exporter of auto parts.which includes foreign direct reform period. PRIVATISATION AND GLOBALISATION: AN APPRAISAL 49 2015-16(20/01/2015) . labour. has On the other hand. institutional investment(FII). Anantpur district is a drought-prone area. was spending Rs 1. Subsidy was reduced on materials (seeds. and each quintal was sold for Rs 1. Groundnut is a major oilseed crop in Andhra Pradesh. LIBERALISA TION. fertilisers etc. the reform increased from about US $ 100 million process has been widely criticised in 1990-91 to US $ 467 billion in for not being able to address some 2012-13. who was a farmer in Anantpur district of Andhra Pradesh. Mahadeva was not able to sell his groundnut in the market as he was not getting the price to cover his cost. Do you agree? If so. bullock power and machinery used. Moreover. you might have studied about subsidies in various sectors including agriculture. engineering GDP growth rate has increased in the goods.500 for growing groundnut on his plot of half an acre.500 and getting an income of Rs 2. used to spend Rs 1. Recently. Some scholars argue that subsidy in agriculture should be removed to make the sector internationally competitive.). industry. infrastructure development and fiscal India is one of the largest foreign management. There has been an increase of the basic problems facing our in the foreign exchange reserves from economy esepecially in the areas of about US $ 6 billion in 1990-91 to employment. IT software and textiles in the reform period. about US $ 304 billion in 2013-14. agriculture. Research and extension work has gone down due to lower government expenditure. the government did not undertake any major irrigation project. how can it be done? Discuss in class. As a result of economic reforms.

Moreover.500 crore through disinvestment. restriction on import of textiles from there has been a shift from production India and China. clothing have been removed in India. in the cost of production. has not removed their quota oriented policy strategies in agriculture. infrastructure etc. these have because of high non-tariff barriers. The infrastructure in the Green Revolution). replaced the demand which includes irrigation. have. which has often seen as creating conditions for severely affected the small and marginal the free movement of goods and farmers.reform-led growth has not generated This is because of decreasing demand sufficient employment opportunities in of industrial products due to the country. the focusing on cash crops in lieu of government fixes a target for production of food grains. This puts disinvestment of PSEs. thus. Globalisation is. Further. thus. including power supply. it was targeted to mobilise Rs 2. power. removal of minimum support price and Moreover. Rs 3. In a globalised world. the removal remained inadequate due to lack of of fertiliser subsidy has led to increase investment. developing countries.A. pressure on prices of food grains. Cheaper imports sector especially in infrastructure. to greater flow of goods and capital where the growth rate has been from developed countries and decelerating. for the domestic market towards production for the export market Disinvestment: Every year. have the reform period. rendering their industries vulnerable Public investment in agriculture to imported goods.S. roads. This sector has been services from foreign countries that experiencing a number of policy adversely affect the local industries changes such as reduction in import and employment opportunities in duties on agricultural products.040 crore more than the target. 50 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . for domestic goods. inadequate investment in and growth in the next unit. Domestic market linkages and research and manufacturers are facing competition extension (which played a crucial role from imports. because of export. Reforms in Industry: Industrial The government was able to mobilise growth has also recorded a slowdown. developing countries are Reforms in Agriculture: Reforms have compelled to open up their economies not been able to benefit agriculture. For adversely affected Indian farmers as example. in 1991-92. You will study the link various reasons such as cheaper between different aspects of employment imports. U. has fallen in facilities. a developing country lifting of quantitative restrictions on like India still does not have the access to developed countries’ markets agricultural products. although all quota they now have to face increased restrictions on exports of textiles and international competition. For instance.

PRIVATISATION AND GLOBALISATION: AN APPRAISAL 51 2015-16(20/01/2015) .7 CONCLUSION the country. have not resulted in in the international arena. the reform policies achievement was about Rs 26. Ø Do you think the power tariff should not be raised? Ø What would be your suggestions to revive small industries affected by reforms? LIBERALISA TION. the target was about increase in tax revenue for the Rs 56. Powerloom textile industry in Andhra Pradesh is an example.000 crore whereas the government. This led to a crisis in the livelihood of the weavers and fifty powerloom workers committed suicide in a small town called ‘Siricilla’ in Andhra Pradesh. Box 3. Some scholars argue Reforms and Fiscal Policies: that globalisation should be seen as Economic reforms have placed limits on an opportunity in terms of greater the growth of public expenditure access to global markets. This has a negative impact used to offset the shortage of on developmental and welfare government revenues rather than expenditures. Critics point out that the assets the scope for raising revenue through of PSEs have been undervalued and customs duties. Also. This means foreign investment.In 2013-14. Do you think selling a part The process of globalisation through of the properties of government liberalisation and privatisation policies companies is the best way to improve has produced positive as well as their efficiency? negative results both for India and other countries. aimed large industries of developing at yielding larger revenue and to curb countries to become important players tax evasion. tax incentives were that there has been a substantial loss provided to foreign investors which to the government. The tax technology and increased possibility of reductions in the reform period. high especially in social sectors. using it for the development of PSEs and building social infrastructure in 3.000 involving tariff reduction have curtailed crore. Moreover.3: Siricilla Tragedy! Power Sector reforms in many Indian states led to do away with the supply of electricity at subsidised rates and steep rise in power tariff. In order to attract sold to the private sector. power-cut means cut in wages of weavers who were already suffering from hike in tariff. Since the wages of the powerloom workers are linked to the production of cloth. This has affected workers engaged in small industries. the further reduced the scope for raising proceeds from disinvestment were tax revenues.

entertainment. 52 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . Ø The objective of the WTO is to establish a rule based trade regime to ensure optimum utilisation of world resources. It has high-income groups and the growth further been pointed out that has been concentrated only in market-driven globalisation has some select areas in the services widened the economic disparities sector such as telecommunication. there was a consensus on reducing its role and opening it up to the private sector. Viewed from the Indian context. it has increased the income welfare and identity of people and quality of consumption of only belonging to poor countries. Ø Industrial sector growth has slowed down due to availability of cheaper imports and lower investment. It means an integration of the economy of the country with the world economy. major reforms were undertaken in the industrial and financial sectors. India changed its economic policies in 1991 due to a financial crisis and pressure from international organisations like the World Bank and IMF. Ø Globalisation is the outcome of the policies of liberalisation and privatisation. Major external sector reforms included foreign exchange deregulations and import liberalisation. Ø During the reforms. Recap Ø The economy was facing problems of declining foreign exchange. crisis that erupted in the early 1990s rather than vital sectors such as was basically an outcome of the agriculture and industry which deep-rooted inequalities in Indian provide livelihoods to millions of society and the economic reform people in the country. to them. the critics argue policies initiated as a response to the that globalisation is a strategy of the crisis by the government. it has compromised the Further. Ø In the domestic economy. among nations and people. finance. Ø Reforms have not benefited the agriculture sector. with developed countries to expand their externally advised policy package. real estate and trade. travel and hospitality some studies have stated that the services. information technology. On the contrary. According further aggravated the inequalities. This was done through disinvestment and liberalisation measures. growing imports without matching rise in exports and high inflation. Ø With a view to improving the performance of the public sector. markets in other countries. growth of agriculture and industry has gone down but the service sector has registered growth. There has also been a decline in public investment in this sector. Ø Outsourcing is an emerging business activity.

What do you understand by devaluation of rupee? 6. Why is it necessary to became a member of WTO? 3. Why were reforms introduced in India? 2. Do you think the navaratna policy of the government helps in improving the performance of public sector undertakings in India? How? 13. Do you agree with this view? Why? 10. EXERCISES 1. Distinguish between the following (i) Strategic and Minority sale (ii) Bilateral and Multi-lateral trade (iii) Tariff and Non-tariff barriers. What is the meaning of quantitative restrictions? 9. Why are tariffs imposed? 8. How is RBI controlling the commercial banks? 5. Those public sector undertakings which are making profits should be privatised. What are these advantages? 12. Why did RBI have to change its role from controller to facilitator of financial sector in India? 4. India has certain advantages which makes it a favourite outsourcing destination. What are the major factors responsible for the high growth of the service sector? 14. Discuss economic reforms in India in the light of social justice and welfare. Do you think outsourcing is good for India? Why are developed countries opposing it? 11. 7. LIBERALISA TION. Why has the industrial sector performed poorly in the reform period? 16. PRIVATISATION AND GLOBALISATION: AN APPRAISAL 53 2015-16(20/01/2015) . Agriculture sector appears to be adversely affected by the reform process. Why? 15.

4 2002-03 3.7 2009-10 8. 54 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) .5 2006-07 9. the country of origin.0 2004-05 7. Observe around you — you will find State Electricity Boards (SEBs). There are private buses on roads along side the goverment bus services and so on (i) What do you think about this dual system of the co-existence of public and private sectors? (ii) What are the merits and demerits of such a dual system? Discuss. 3. Year GDP Growth Rate (%) 2000-01 4.9 2011-12 6. Draw a time series line graph based on the data given in the table and inter- pret the same. Are there any companies whose names have changed? Find out the new names.6 2007-08 9. You have studied about the techniques of presentation of data in your Statistics for Economics course. SUGGESTED ADDITIONAL ACTIVITIES 1.1 2005-06 9.3 2008-09 6.6 2010-11 8.1 2001-02 5.9 2003-04 8. Now put a (ü ) mark against those which are still growing and a (×) against those which do not exist any more.7 2012-13 4. The table given below shows the GDP growth rate at 2004-05 prices. With the help of your parents and grandparents prepare a list of multinational companies that existed in India at the time of independence.5 2. logo and prepare a chart for your class. nature of product. BSES and many public and private organisations sup- plying electricity in a city and states.

The Political Economy of Development in India. I. Penguin. Delhi. J AGDISH . Academic Foundation. 1998. 1998. The Intelligent Person’s Guide to Liberalisation. Delhi. India in T ransition: Freeing the Economy. Oxford University Press . New Delhi. Delhi. PRIVATISATION AND GLOBALISATION: AN APPRAISAL 55 2015-16(20/01/2015) . India’s Economy: Some Issues and Answers. New Delhi. PRANAB. L ITTLE. AHLUW ALIA. Delhi. Oxford University Press. LIBERALISA TION. Alternative Economic Survey. S. India 2004–05. grandparents and shopkeepers. 2003. 2005. Oxfor d University Press. REFERENCES Books ACHARYA. BARDHAN . Disequali sing Growth.J. 6. Was it necessary for India to introduce economic reforms at the behest of World Bank and Inter national Monetary Fund? Was ther e no alternative for the government to solve the balance of pay- ments crisis? Discuss in the classroom. Discuss the issues debated in these meetings and find out how the organisation facilitates world trade.M. and I. parents. 5. 4. take the help of your teacher. Collect a few relevant newspaper cuttings on meetings organised by WTO. Give appropriate examples for the following Nature of Product Name of a Foreign Company Biscuits Shoes Computers Cars TV and Refrigerators Stationery Now find out if these companies which are mentioned above existed in India before 1991 or came after the New Economic Policy. For this. 1996 . AMIT and D EEPAK N AYYAR . ALTERNATIVE SURVEY GROUP. Daanish Books.D. BHADURI. BHAGWATI. 1992 . India’s Economic Refor ms and Development.

M. Oxford University Press. India in the Era of Economic Reforms . Oxford University Press. Gover nment of India. CHELLIAH. J ALAN . J ALAN. Oxford University Press. R AJA J . Oxford University Press. J OSHI. CHADHA . 56 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . Indian Economy. S. D UTT. D EBROY.H. Economic Reforms and Poverty Alleviation in India. JEFFREY D. 1996. New Delhi. Delhi. Delhi. 1994. The State.S. SUNDARAM . India’s Economic Crisis: The Way Ahead . Tenth Five Year Plan 1997 -2002 . New Delhi. A SHUTOSH VARSHNEY and NIRUPAM BAJPAI. KAPILA . RUDDAR AND K . and HANS LINNEMANN . B IMAL. Oxford University Press. Deep & Deep. Chand and Company. LITTLE .M .P. J EAN and A MARTYA SEN. 2005. Policy Perspectives in Indian Economic Development. Vol. Delhi. 1. India’s Economic Reforms 1991-2001 . TERENCE J . Published by Oxford University Press. Delhi. C.K. BYRES .1999 . B. HANUMANTHA. Har -Anand . Delhi. Oxford University Press. 1996. Economic Liberalisation.) . B IMAL . New Delhi. Uma. MAHAJAN . 1996. 1997. 1994.D. Academic Foundation. The Political Economy of Reforms. RAO . Industrial Structure and Growth in India. Viking. and RAHUL M UKHERJI ( Eds. 1996 . Government Reports Economic Survey 20 13-14. Planning Commission. India Development Report 200 1-02.D . G. G UHA. 2004 . 2005. Delhi. S ACHS. Ministry of Finance. Oxford University Press. Indian Economy T owards 2000 A. Bookwell Publication. . Delhi. India: Economic Development and Social Opportunity. India’s Economic Policy: Preparing for the Twenty First Century . Understanding the Problems of Indian Economy.V IJAY and I. Delhi. New Delhi. Delhi. 2002. Oxford University Press. Towards Sustainable Growth: Essays in Fiscal and Financial Sector Reforms in India. 1996. Government of India. Development Planning and Liberalisation in India. Sage Publication. New Delhi. Delhi. V. 1993 . PAREKH . D REZE. KIRIT and RADHAKRISHNA . New Delhi. New Delhi.) 1990 . A SHOK (Ed.

UNIT UNIT III CURRENT C HALLENGES FACING THE INDIAN ECONOMY 2015-16(20/01/2015) .

development of rural India and building infrastructure. We will also look at the implications of development on our environment and call for sustainable development. We are a billion-strong country today and our human capital is the biggest asset. it needs investment in health and education. 2015-16(20/01/2015) . We also need to understand the concept of employment and the need for creating more employment in our country. There is a need to critically assess government initiatives in tackling all these issues each of which has been taken up separately in this unit.Some of the most challenging issues facing India today are poverty.

2015-16(20/01/2015) . 4 POVERTY After studying this chapter. the learners will • understand the various attributes of poverty • comprehend the diverse dimensions relating to the concept of poverty • critically appreciate the way poverty is estimated • appreciate and be able to assess existing poverty alleviation programmes.

In previous chapters. street have been changing from place to cobblers. which Push cart vendors. women who string flowers. “This achievement indicators of vulnerability to risks (Independence) is but a step. who are rich.1 INTRODUCTION place and across time. to the great triumphs and achievements that 4. adequate shelter. but also for the world. Poverty is not only a some of us who are poor and some challenge for India. Providing minimum basic needs to access to education and health. development that the successive five To know what helps to reduce year plans envisaged laid emphasis poverty. and had said. about 300 million people are not able There are also people who belong to to meet their basic needs. Poverty has many faces. it has living for all. and a voice have been the major aims of in what happens in their independent India.2 WHO ARE THE P OOR? await us… the ending of poverty and ignorance and disease and inequality You would have noticed that in all of opportunity. both However we need to know where in rural and urban areas. you have poverty is a situation that people studied the economic policies that want to escape. 60 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . the people and reduction of poverty protection from violence. Read the story of Anu fifth of the world’s poor live in India and Sudha. integrating the has to be defined. what changes over time. Their lives are examples alone. So poverty is a call India has taken in the last six and a to action — for the poor and the half decades and the outcome of wealthy alike — a call to change the these policies with relation to the world so that many more may have various developmental indicators. social indicators. enough to eat. Jawaharlal Nehru consumption. The pattern of communities. the many stages in between.1). as more than one.” localities and neighbourhoods. opening of opportunity. poverty the poor (Antyodaya). of which the far greater part of the members are poor and miserable. measured and poor into the mainstream and studied — and even experienced. what works and what does on the upliftment of the poorest of not. No society can surely be flourishing and happy. there are we stand today. As achieving a minimum standard of poverty has many dimensions. where of the two extremes (see Box 4. an and of socio/political access. to be looked at through a variety of While addressing the Constituent indicators — levels of income and Assembly in 1947. Adam Smith 4. and has been described in many ways. Most often.

Her family and friends celebrated her arrival. She later joined a design school and became a well known painter. She hurried back to work as she was afraid she would lose her job. she was bathed and dressed in clean soft clothes and placed in a crib next to her mother. Whenever she heard music she would improvise. to find shelter in the monsoon and how to play with a piece of string. she would never live in. She had to earn a living with her mother and father. building houses for the rich. how to keep warm during the winter. Sudha was born in one of the best nursing homes in the city. Sudha went to a very good play school where she learnt how to read. and reside in kutcha hutments with The poor lack basic literacy and skills walls made of baked mud and roofs and hence have very limited made of grass. She then went behind the tool shed on the construction site and delivered her baby alone. bamboo and economic opportunities. She later went to a very good school. Houses. vendors and beggars are is only dry or waste land. Anu loved to dance. She loved painting and started getting private lessons from a famous artist. vulnerable groups in urban areas. Anu’s mother worked by carrying head loads of bricks until she went into labour. hugged and kissed her and sang her to sleep. She hoped that Anu would sleep until evening. She knew what hunger and deprivation were. it or serious illness makes them Box 4. The poorest of them do not also face unstable employment. POVER TY 61 2015-16(20/01/2015) . put little Anu in it and hung it from a tree. In rural Malnutrition is alarmingly high areas many of them are landless. She was very beautiful and her movements were graceful and evocative. Anu and Sudha had very different childhoods. She was thoroughly checked by doctors. museum and national parks. Her dream was to dance on a stage some day. made a cradle with a gunny sack. thatch. Many do some examples of poor and not get to have even two meals a day. Anu could not go to school as her parents were migrant workers who kept moving from city to city in search of work. Poor people wood. Anu could have become a great dancer but she had to begin work at the age of 12. She fed her child and then wrapped her in an old sari. Ill health. Anu learnt to look after herself at a very early age. She discovered how to pick food from the dustbin. among the poor.1: Anu and Sudha Anu and Sudha were both born on the same day. write and count. She went on excursions to the planetarium. stones and twigs.rag pickers. disability Even if some of them possess land. Anu’s mother and father were construction labourers and Sudha’s father was a businessman and her mother a designer. Starvation and hunger are the key The poor people possess few assets features of the poorest households. Her mother fed her whenever she was hungry. even have such dwellings.

Most poor households have no access to electricity. They are not able to negotiate their legal wages from employers and are exploited.1 Majority of agricultural labourers are poor activities. non-agricultural jobs and tenant cultivators with small land holdings. Poor women receive cultivators with very small less care on their way to landholdings. They borrow from money lenders who charge high rates of interest that lead them into chronic indebtedness. Their primary cooking fuel is firewood and cow dung cake. They state that participation of gainful employment. 62 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) .2 Many poor families live in kutcha houses section of poor people do not even have access to safe Economists identify the poor on drinking water. The urban poor are largely the overflow of the rural poor who had migrated to urban areas in search of alternative employment and livelihood. 4. 4. within the family. Their children are less who are engaged in a variety of likely to survive or be born healthy. the rural poor work mainly as education and in decision-making landless agricultural labourers. The poor are highly vulnerable. A large Fig. There is evidence of the basis of their occupation and extreme gender inequality in the ownership of assets.physically weak. landless labourers motherhood. labourers who do a variety of casual jobs and the self-emloyed who sell a variety of things on roadsides and are engaged in various Fig.

Poverty is fear for the future. (Full). only adults stay ‘Task Force on Projections of in jail whereas. ‘Expert Groups’ living to arrive at the poverty line.2 : What is Poverty? Two scholars. factor of three-fourths.i n d e p e n d e n t I n d i a . the Planning used appropriate prevailing prices to Commission formed a Study Group. Poverty is not being able to go to school and not knowing how to read. The weighted average of For this there is need to develop a consumption of the three segments scale to measure poverty. This is how he arrived at the to help the poor out of their situation. have been several attempts to work Dadabhai Naoroji was the first to out a mechanism to identify the discuss the concept of a Poverty Line. in 1962. Shaheen Rafi Khan and Damian Killen. Chart 4. having food once in a day. therefore. he assumed that one-third population consisted If India is to solve the problem of o f c h i l d r e n a n d h a l f o f them poverty. another body called the of living’. to be carefully chosen. arrive at what may be called ‘jail cost In 1979. Poverty is not having a job. (1/6)(Nil) + However. it has to find viable and consumed very little while the other sustainable strategies to address the half consumed half of the adult causes of poverty and design schemes diet. He. For He used the menu for a prisoner and instance. Minimum Needs and Effective there are children too.1: Poverty Line POVER TY 63 2015-16(20/01/2015) . However. Poverty is losing a child to illness. Consumption Demand’ was formed. the government needs to be able to identify who the poor are. factors that make up the criteria for which comes out to be three-fourth this measurement or mechanism need of the adult jail cost of living. were constituted for the same purpose. put the conditions of the poor in a nutshell: Poverty is hunger. and the gives the average poverty line.3 HOW ARE POOR PEOPLE IDENTIFIED ? For this adjustment. appropriately adjusted this cost of In 1989 and 2005. brought about by unclear water. Poverty is being sick and not being able to see a doctor. there I n pr e . in an actual society. number of poor in the country. What do you think? 4. Box 4. lack of representation and fr eedom. Poverty is powerlessness. for these schemes to be (1/6)(Half) + (2/3)(Full) = (3/4) implemented. In post-independent India.

those who are usually poor but who Though the government uses may sometimes have a little more Monthly Per Capita Expenditure (MPCE) money (example: casual workers) are as proxy for income of households to grouped together as the chronic poor.Besides Planning Commission. person and 2. the upper middle class. In one such Rs 673 per person a month and for way people who are always poor and urban areas it was Rs 860. the absolutely poor. two. the very rich and the determine it by the monetary value absolutely rich. the poverty line was defined Categorising Poverty: There are many for rural areas as consumption worth ways to categorise poverty. the poverty line. measuring poverty. And then there are categories. One way is to the rich. in 2009-10. Think of this as a line (per capita expenditure) of the or continuum from the very poor to minimum calorie intake that was the absolutely rich with the poverty estimated at 2. there are many kinds of poor. the poor and the non-poor those who are never poor and they are and the poverty line separates the the non-poor (Chart 4.400 calories for a rural line dividing the poor from the non. the very T h e P o v e r t y L i n e : Now let us poor and the poor.100 for a person in poor. Based on this. many poverty (example: small farmers individual economists have also and seasonal workers) and the attempted to develop such a occasionally poor who are rich most mechanism. identify the poor. Similarly there are examine how to determine the various kinds of non-poor. T ransient Poor and Non-Poor 64 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) .2: The Chronic Poor. the urban area. However. of the time but may sometimes have a For the purpose of defining patch of bad luck. do you think this Another group are the churning poor mechanism satisfactorily identifies the who regularly move in and out of poor households in our country? Chart 4. They are called the poverty we divide people into two transient poor.2). There are many ways of middle class.

health in India. for instance. items that are included identify who among the poor need help in the consumption basket. ill health.2). proportion declined over the years or POVER TY 65 2015-16(20/01/2015) .4 THE NUMBER OF POOR IN INDIA range of things that a person could be When the number of poor is and could do. economists raise helpful in identifying the poor as a doubts about the government’s claim. Also agricultural production. The aim of poverty classes. economists in the 1990s have resulted in a decline question its basis. Economists state that a major or lack of civil and political problem with this mechanism is that it freedoms. Yo u m i g h t b e i n t e re s t e d i n development is about removing the knowing the total number of poor obstacles to the things that a person persons residing in India. group to be taken care of by the They point out that the way the data government. providing this mechanism takes into account employment in rural areas and expenditure on food and a few select economic reform packages introduced items as proxy for income. does not take into consideration social noted Nobel Laureate. methodology followed to estimate the There are many factors. has developed factors that trigger and perpetuate an index known as Sen Index. scholars Poverty Line. This mechanism is in poverty levels. The existing mechanism have attempted to find alternative for determining the Poverty Line also methods. Where do can do in life. care. such as to be healthy and estimated as the proportion of well-nourished. community. For instance. but it would be difficult to are collected. You discrimination or lack of civil and will learn about these tools in higher political freedoms. such as illiteracy. drinking water and sanitation. the reduced figures of the number of poor accessibility to basic education. lack of access to resources. which are associated are manipulated to arrive at the with poverty. other than poverty line and the number of poor income and assets. the most. ill they reside and has their number or health. There poverty such as illiteracy. alleviation schemes should be to improve human lives by expanding the 4. to be knowledgeable people below the poverty line. increase in and the other poor (See chart 4. From this point of view. it is and participate in the life of a known as ‘Head Count Ratio’. Due to various limitations in the They need to be considered to develop official estimation of poverty. Index and Squared Poverty Gap. Amartya Sen. are other tools such as Poverty Gap lack of access to resources. groups all the poor together and does Though the government claims that not differentiate between the very poor higher rate of growth.

dhobies and newspaper vendors etc. Discuss how an alternative poverty line could be constructed in such a way that it includes all the other indicators. housing. not? When such a comparative estimated on the basis of consumption analysis of poor people is made expenditure data collected by the in terms of ratios and percentages. this number has Planning Commission. 2012. between states and population in India for the years 1973- over time. find out whether people who work as domestic help. education. Chart 4.3 shows the number levels of poverty of people and of poor and their proportion to the their distribution. 1973–2012 66 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . National Sample Survey Organisation we will have an idea of different (NSSO). Chart 4. in your locality/neighbourhood are above the poverty line or not. In 1973-74. health. In 2011-12. Work These Out Ø In Sections 4. Ø On the basis of the given definition for poverty line.3: Trends in Poverty in India.3. you will notice that the poor are identified not only with income and expenditure related indicators but also with many other items such as access to land. It is come down to about 270 million.2 and 4. more than 320 The official data on poverty is million people were below the poverty made available to the public by the line. sanitation. Also to be considered is discriminatory practices.

you will population was below the poverty line. in 1973-74. it has fallen to 22 per cent. Why do you think this country. 1973-2012 (%) Note: For the year 1973. The 2011-12. Madhya Pradesh includes Chhattisgarh and Bihar includes Jharkhand. the absolute number of poor in rural and urban number of poor in rural areas had areas got reduced whereas in the declined whereas the number of their case of ratio the gap has remained urban counterparts increased the same until 1999-2000 and has marginally.3. From Chart 4.4: Population Below Poverty Line in Some Large States. Uttar Pradesh includes the present Uttarakhand. notice that during 1973-2012. has been a decline in the number of In 1973-74. continuously for both urban and about 55 per cent of the total rural areas. Chart 4. there In 2011-12. This means that more than ratio is declining much slower than three-fourth of the poor in India still the absolute number of poor in the reside in villages.In terms of proportion. The poverty ratio declined widened in 2011-12. You will also notice that is the case? the gap between the absolute In the 1990s. POVER TY 67 2015-16(20/01/2015) . more than 80 per cent poor and their proportion but the of the poor resided in rural areas and nature of decline in the two this situation has not changed even in parameters is not encouraging.

Poverty is also the chart indicate the national poverty explained by general.Tamil Nadu. The moneylenders to become large main victims of caste. economy-wide level. The first line from below indicates problems. Imports national poverty level. exports. to have India service its 68 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . there of poor in 1973-74. Under the British. Madhya Pradesh. the poverty levels in four states . 1973-2012 has come down from 55 to In Chapter 1 you have read 22 per cent. How come they were able to do reverted to being an exporter of much better than other states? cotton yarn. as a result. such as (i) low capital poverty level during 2011-12 and the formation (ii) lack of infrastructure other line indicates the same for the (iii) lack of demand (iv) pressure year 1973-74. Bihar and substantial de-industrialisation in Uttar Pradesh are still far above the India under the British rule. economic and political between 1875 and 1900. Indian economy and standard of Yet. This means.4. The chart also reveals that about the British rule in India. many Indian states reduced the substantial negative impact on the poverty levels to a considerable extent. There was Odisha. is no doubt that there was a 2012.contained a large section standards is still being debated. The two lines in individual poverty. During 1973. and India states. These can be caused as a result million people died in famines of (i) social. The state level trends in poverty are Aggregate poverty is just the sum of shown in Chart 4. religious and landowners. You may notice of manufactured cotton cloth from West Bengal and Tamil Nadu reduced Lancashire in England displaced poverty level much better than other much local production. Also access to that enabled merchants and health care is denied to the poor. Madhya Pradesh. institutional and social factors that the impact on that sector was more mark the life of the poor. inequality (ii) social exclusion (iii) Britain’s main goals from the Raj unemployment (iv) indebtedness (v) were to provide a market for British unequal distribution of wealth. As over 70 per cent of Indians 4. living of the people. the of population (v) lack of social/ proportion of poor in India during welfare nets. India began to export food grains other discriminatory practices are and. Uttar Pradesh. not cloth. as many as 26 poor.5 WHAT CAUSES P OVERTY? w e r e engaged i n a g r i c u l t u r e The causes of poverty lie in the throughout the British Raj period. West Bengal British rule o n I n d i a n l i v i n g and Orissa . British policies unable to acquire skills which involved sharply raising rural taxes fetch better incomes. Although the final impact of the Bihar. The poor are important on living standards than deprived of quality education and anything else. six states .

on livestock. principal means of livelihood and A large section of the rural poor land is the primary asset of rural in India are the small farmers. in general. The British Raj impoverished millions of people in India. not able to farm the small holdings You must have heard about that they now possessed as they did farmers committing suicide due to not have either money (assets) or their inability to pay back the loans skills to make the land productive that they have taken for cultivation POVER TY 69 2015-16(20/01/2015) . but work leading to fragmentation of land on the land as wage labourers. has taken land from those who have the per-head availability of land for large amounts to distribute it to those cultivation has steadily declined who do not have any land. Many died due to famine and hunger. extremely high taxes imposed on peasants. Indian troops to be viable. the government of population and without has attempted to redistribute land and alternative sources of employment. The people. Their survival depends on land have a better chance to improve subsistence crops and sometimes their living conditions. Also most of the Indian commanded by the British. anger at the overthrow of many local leaders. ownership of land is an land that they have is. With the rapid growth Since independence. this move was successful small land holdings is not sufficient only to a limited extent as large to meet the family’s basic sections of agricultural workers were requirements. states failed to implement land Even today agriculture is the redistribution policies. and Fig. 4. important determinant of material less fertile and dependent on well-being and those who own some rains. The income from these However. our industries worked to produce goods at low prices for the British and our food grains were exported. holdings. In 1857-58.debt payments to Britain.4 Low quality self-employment sustains poverty other resentments boiled over in a revolt against British rule and the land holdings were too small by the sepoys. Our natural resources were plundered. and for India to provide manpower for the British imperial armies.

Indebtedness is one of the have the necessary knowledge and skills significant factors of poverty.3). in turn. Unemployment or under Most members of scheduled castes employment and the casual and and scheduled tribes are not able to intermittent nature of work in both participate in the emerging employment rural and urban areas that compels opportunities in different sectors of the indebtedness. therefore. The urban poor are either unemployed or intermittently employed as casual labourers. and other domestic needs as their Poverty is. also crops have failed due to drought or closely related to nature of other natural calamities (see Box 4. reinforces urban and rural economy as they do not poverty. 4. where they live with their family members. employment. number of meals they are able to consume in a day. to do so. A steep rise in the price of food A large section of urban poor grains and other essential goods. Discuss the details that you have collected in the classroom. no assets. Casual labourers are among the most vulnerable in society as they have no job security. 70 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . limited skills. Collect details about what made them to take up this activity. sparse opportunities and no surplus to Fig. Compare the two and discuss in the classroom why the poor are unable to take up such activities. whether they possess any physical assets and why they could not take up a job. at Work These Out Ø You may come across washer men and barbers in your neighbourhood. Ø List the activities of people in rural and urban areas separately. Spare a few moments and speak to a few of them. in India are largely the overflow of the rural poor who migrate to urban areas in search of employment and a livelihood.5 Quality employment is still a dream for the poor sustain them. You may also list the activities of the non-poor. Industrialisation has not been able to absorb all these people.

” Alternative Economic Survey. or borrow. Loss of Livelihoods and Entry into Poverty. Where households have been able to sell assets. Maharashtra exposure of farmers and led to agrarian distress and suicides especially in the cotton belt of Andhra Pradesh and Maharashtra. Alternative Survey Group. Box 4. India 2004-2005. The swelling ‘Register of Deaths’. problems faced. Sainath. or is able to borrow only at exploitative rates of interest and gets into a severe debt trap.000 in Andhra Pradesh alone and is rising. However.000 farmers have committed suicides in the state since 2001. India has the largest area under cotton cultivation in the world covering 8. the Maharashtra government admitted that over 1. and other Shantabai. spurious seeds and pesticides by private agents (iv) crop failure. if the household has no assets to sell or no access to credit. The count reached 3. low and unstable yields. wife of Neelakanta countries. Scholars cite several factors that have led farmers to commit suicides (i) the shift from traditional farming to the farming of high yielding commercial crops without adequate technical support combined with withdrawal of the state in the area of agricultural extension services in providing counselling on farm technologies. Mehta and Sourabh Ghosh assited by Ritu Elwadhi. the impact of such shocks may be transient.A. The Hindu. and opening up of the domestic Sitaram Khoke who committed market due to globalisation have increased the suicide in Yavatma. The worst form of this crisis is suicides.3: Distress Among Cotton Farmers Many small land owning farmers and farming households and weavers are descending into poverty due to globalisation related shock and lack of perceived income earning opportunities in relatively well performing states in India. or generate income from alternative employment opportunities. The low yield of 300 kg per hectare pushes it into third position in production. 29 December 2005.300 hectares in 2002–03.K. Daanish Books. the shocks can have long duration ramification in terms of pushing households below the poverty line. High production costs.S. Delhi 2005 and P. global glut in production due to subsidies by the U. “Globalisation. Sources: Excerpted from A. The issue is not one of profits and higher returns but that of the livelihood and survival of millions of small and marginal farmers who are dependent on agriculture. immediate remedial steps and lack of timely advice to farmers (ii) decline in public investment in agriculture in the last two decades (iii) low rates of germination of seeds provided by large global firms. In December 2005. pest attack and drought (v) debt at very high interest rate of 36 per cent to 120 per cent from private money lenders (vi) cheap imports leading to decline in pricing and profits (vii) lack of access to water for crops which forced the farmers to borrow money at exorbitant rates of interest to sink borewells that failed. POVER TY 71 2015-16(20/01/2015) . decline in world prices.

could be achieved through specific 72 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . gross domestic product and per All this has created two distinct capita income — would spread to all groups in society: those who posses sections of society and will trickle the means of production and earn down to the poor sections also. in the 1950s and early 1960s. incomes and employment for the emphasis being laid on poverty poor could be raised through the alleviation and that various creation of additional assets and by strategies need to be adopted by the means of work generation. in all policy documents. You must have read TOW ARDS POVER TY ALLEVIATION in Chapters 2 and 3 that the overall growth and growth of agriculture The Indian Constitution and five and industry have not been year plans state social justice as impressive.a rate higher than the price of luxury The government’s approach to g o o d s . It is based on the distribution of income and assets has expectation that the effects of also led to the persistence of poverty economic growth — rapid increase in in India. f u r t h e r i n t e n s i fies t h e poverty reduction was of three hardship and deprivation of lower dimensions. “the urge to The Green Revolution exacerbated the bring economic and social change disparities regionally and between under present conditions comes from large and small farmers. Year Plan (1951-56).6 P O L I C I E S A N D P R O G R A M M E S the community. wealth and opportunity”. the gap between the It was felt that rapid industrial rich and the poor in India has widened. benefit the underdeveloped regions and the more backward sections of 4 . Population growth has the primary objective of the resulted in a very low growth in per developmental strategies of the capita incomes. This government for the same. The unequal oriented approach. To quote the First Five poor and rich has actually widened. policy privileged classes of society”. The gap between government. development and transformation Poverty is a multi-dimensional of agriculture through green challenge for India that needs to be revolution in select regions would addressed on a war footing. There was the fact of poverty and inequalities in unwillingness and inability to income. economic development must accrue While looking for alternatives to more and more to the relatively less specifically address the poor. Over the years. This good incomes and those who have was the major focus of planning only their labour to trade for survival. redistribute land. The first one is growth- income groups. One can makers started thinking that find. Economists state The Second Five Year Plan (1956-61) that the benefits of economic growth also pointed out that “the benefits of have not trickled down to the poor.

Under this programme. The first programme This second approach has been aims at creating self-employment initiated from the Third Five Year opportunities in urban areas.6 Wage employment under ‘Food for Work’ programme poverty alleviation programmes. The educated unemployed programmes implemented are based from low-income families in rural and on the perspective of the Five Year urban areas can get financial help to Plans. The Khadi Plan (1961-66) and progressively and Village Industries Commission is enlarged since then. Expanding self-employment set up any kind of enterprise that programmes and wage employment generates employment under PMRY. financial assistance was Swar na Jayanti Shahari Rozgar given to families or individuals. 4. Prime Earlier. form of bank loans to set up small Most poverty alleviation industries. Since POVER TY 73 2015-16(20/01/2015) . programmes initiated in the 1970s one can get financial assistance in the was Food for Work. Yojana (SJSRY). Generation Programme (REGP). One of the noted implementing it. programmes are being considered as SJSRY mainly aims at creating the major ways of addressing poverty. employment opportunities —both self- Examples of self-employment employment and wage employment—in programmes are Rural Employment urban areas. Fig. under self-employment Minister’s Rozgar Yojana (PMRY) and programmes.

This Act is known as Mahatma Yojana. nutrition. encouraged to form self-help groups. expected to supplement the consumption through banks. Later. nearly five of other social security programmes crore households got employment to help a few specific groups. It may be essential to briefly among the poor who are ready to work state that India has achieved at the minimum wage can report for satisfactory progress in many aspects. some money and lend among Programmes under this approach are themselves as small loans. this approach has been expenditure on social consumption changed. National opportunities under this law. the government of the poor. In 2013-14.the 1990s. Now those who wish to needs — provision of food grains at benefit from these programmes are subsidised rates. elderly people who do among the pioneers in the world to not have anyone to take care of them envisage that through public are given pension to sustain 74 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . Integrated Child to every rural household whose adult Development Scheme and Midday Meal volunteer is to do unskilled manual Scheme. “even with expanded Gram Swarozgar Yojana (SGSY) is one employment opportunities. create employment provides partial financial assistance opportunities and bring about to SHGs which then decide whom improvements in health and education. health. housing. Pradhan Mantri Gram Sadak work for a minimum of 100 days in a Yojana. One can trace this approach from the employment activities. India was programme. the poor will such programme. A similar to be supplemented up to at least certain programme called National Urban minimum standards by social Livelihoods Mission has also been in consumption and investment in the place for urban poor. Under this Act all those direction. Pradhan Mantri Gramodaya year. work in areas where this programme is The government also has a variety implemented. the Parliament passed a new Act nutritional status of the poor are Public to provide guaranteed wage employment Distribution System. health. Social Assistance Programme is one The third approach to addressing such programme initiated by the poverty is to provide minimum basic central government. education.” Three major programmes people living in rural areas. The government has a variety of education. In August that aim at improving the food and 2005. communications and employment for the poor unskilled electricity. This has now been not be able to buy for themselves all the restructured as National Rural essential goods and services. drinking programmes to generate wage water. the loan is to be given to for self. Swarnajayanti Fifth Five Year Plan. Valmiki Ambedkar Awas Gandhi National Rural Employment Yojana are also attempts in the same Guarantee Act. Under this amenities to the people. form of essential food grains. They have Livelihoods Mission (NRLM). water supply and sanitation—people’s Initially they are encouraged to save living standard could be improved.

Work These Out

Ø Discuss and then develop a list of three employment opportunities each
that can arise in coastal areas, deserts, hilly tribal areas, tribal areas
under : (i) Food for Work Pr ogramme and (ii) self-employment.
Ø Many policy documents, five year plan documents, economic
surveys are available in the website of Planning Commission
(www.planningcommission.nic.in). Some of them could be available in
your school or public library also. In these documents, the initiatives
taken by the government and their evaluation are available. Read a
few of them and discuss in the classroom.
Ø In your area or neighbourhood, you will find developmental works such
as laying of roads, construction of buildings in government hospitals,
government schools etc. Visit such sites and prepare a two-three page
report on the nature of work, how many people are getting employed,
wages paid to the labourers etc.
Ø Based on the report of the developmental work (NREGA for example),
critically review the government policy document associated with it.

themselves. Poor women who are has evolved in a progressive manner,
destitute and widows are also over the last five and a half decades,
covered under this scheme. The it has not undergone any radical
government has also introduced a few transformation. You can find
schemes to provide health insurance to change in nomenclature, integration
poor people. or mutations of programmes.
H o w e v e r, n o n e re s u l t e d i n a n y
4.7 POVERTY A L L E V I A T I O N
radical change in the ownership of
P R O G R A M M E S — A CR I T I C A L assets, process of production and
AS S E S S M E N T
improvement of basic amenities
Efforts at poverty alleviation have borne to the needy. Scholars, while
fruit in that for the first time since assessing these programmes, state
independence, the percentage of three major areas of concern which
absolute poor in some states is now prevent their successful
well below the national average. implementation. Due to unequal
Despite various strategies to alleviate distribution of land and other assets,
poverty, hunger, malnourishment, the benefits from direct poverty
illiteracy and lack of basic amenities alleviation programmes have been
continue to be a common feature a p p ro p r i a t e d b y t h e n o n - p o o r.
in many parts of India. Though the Compared to the magnitude of
policy towards poverty alleviation poverty, the amount of resources

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Box 4.4: Ramdas Korwa’s Road to Nowhere

Somehow, Ramdas Korwa of Rachketha village was not overjoyed to learn
that he was worth Rs l7.44 lakh to the government. Late in 1993, the
authorities decided to lay a three km road leading to Rachketha village in the
name of tribal development by allocating Rs 17.44 lakh towards the project.
Tribals constitute a 55 per cent majority in Surguja, one of India’s poorest
districts. And the Pahadi or Hill Korwas, who have been listed as a primitive
tribe by the government, fall in the bottom 5 per cent. Special efforts are
underway for their development which often involves large sums of money.
Just one centrally funded scheme, the Pahadi Korwa project, is worth Rs 42
crores over a five-year period.
There are around 15,000 Pahadi Korwas, the largest number of these in
Sur guja. However, for political reasons, the main base of the project is in
Raigad district. There was just one small problem about building the Pahadi
Korwa Marg in Rachketha—the village is almost completely devoid of Pahadi
Korwas. Ramdas’s family is the only real exception.
‘It doesn’t matter if these don’t benefit the Pahadi Korwas in the least and
are completely useless. Out here, even if you put up a swimming pool and a
bungalow, you do it in the name of tribal development,’ says an NGO activist.
‘Nobody bothered to check whether there were really any Pahadi Korwas living
in Rachketha village’ and ‘there was already a kutcha road here,’ says
Ramavatar Korwa, son of Ramdas. ‘They just added lal mitti (red earth) to it.
Even today, after spending Rs 17.44 lakh, it is not a pucca road.’
Ramdas’s own demands ar e touchingly simple. ‘All I want is a little water,’
he says. ‘How can we have agriculture without water?’ When repeatedly
pressed, he adds: ‘Instead of spending Rs 17.44 lakh on that road, if they had
spent a few thousand on improving that damaged well on my land, wouldn’t
that have been better? Some improvement in the land is also necessary, but
let them start by giving us a little water.’
Ramdas’s problems were ignored. The government’s problem was ‘fulfilling
a target’. ‘If the money were simply put into bank fixed deposits, none of these
Pahadi Korwa families would ever have to work again. The interest alone would
make them very well off by Surguja’s standards’, says an official mockingly.
Nobody thought of asking Ramdas what he really needed, what his
problems were, or involving him in their solution. Instead, in his name, they
built a road he does not use, at a cost of Rs17.44 lakh. ‘Please do something
about my water pr oblem, sir,’ says Ramdas Korwa as we set off across the
plain, journeying two km to reach his road to nowhere.

Sour ce: Excerpted from P. Sainath, 1996, Everybody Loves a Good Drought:
Stories from India’s Poorest Districts, Penguin Books, New Delhi.

76 INDIAN ECONOMIC DEVELOPMENT

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just above the poverty line. It also
reveals that high growth alone is not
sufficient to reduce poverty. Without
the active participation of the poor,
successful implementation of any
programme is not possible.
Poverty can effectively be eradicated
only when the poor start contributing
to growth by their active involvement
in the growth process. This is
possible through a process of social
mobilisation, encouraging poor people
to participate and get them empowered.
This will also help create employment
opportunities which may lead to
increase in levels of income, skill
development, health and literacy.
Moreover, it is necessary to identify
poverty stricken areas and provide
infrastructure such as schools, roads,
power, telecom, IT services, training
institutions etc.
Fig. 4.7 Scrap collector: mismangament of
4.8 C ONCLUSION
employment planning forces people to
take up very low paying jobs We have travelled about six decades
since independence. The objective of
allocated for these programmes is not all our policies had been stated as
sufficient. Moreover, these programmes promoting rapid and balanced
depend mainly on government and economic development with equality
bank officials for their implementation. and social justice. Poverty alleviation
Since such officials are ill motivated, has always been accepted as one of
inadequately trained, corruption prone India’s main challenges by the
and vulnerable to pressure from a policy makers, regardless of which
variety of local elites, the resources gover n m e n t w a s i n p o w e r. The
are inefficiently used and wasted. absolute number of poor in the country
There is also non-participation of local has gone down and some states have
level institutions in programme less proportion of poor than even the
implementation. national average. Yet, critics point out
Government policies have also that even though vast resources
failed to address the vast majority of have been allocated and spent, we
vulnerable people who are living on or are still far from reaching the goal.

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There is improvement in terms of per sections of the population. Some
capita income and average standard sections of people, some sectors of
of living; some progress towards the economy, some regions of the
meeting the basic needs has been country can compete even with
made. But when compared to the developed countries in terms of
progress made by many other social and economic development,
countries, our performance has not yet, there are many others who have
been impressive. Moreover, the fruits not been able to come out of the
of development have not reached all vicious circle of poverty.

Recap

Ø Reducing poverty has been one of the major objectives of India’s
developmental strategies.

Ø The per capita consumption expenditure level which meets the average
per capita daily requirement of 2,400 calories in rural areas and 2,100
calories in urban areas, along with a minimum of non-food expenditure,
is called poverty line or absolute poverty.

Ø When the number of poor and their proportion is compared, we will have
an idea of different levels of poverty of people and their distribution between
states and over time.

Ø The number of poor in India and their proportion to total population has
declined substantially. For the first time in the 1990s, the absolute
number of poor has declined.

Ø Majority of poor are residing in rural areas and engage themselves in
casual and unskilled jobs.

Ø Income and expenditure oriented approaches do not take into account
many other attributes of the poor people.

Ø Over the years, the government has been following three approaches to
reduce poverty in India: growth oriented development, specific poverty
alleviation programmes and meeting the minimum needs of the poor.

Ø Government initiatives are yet to transform the ownership of assets,
processes of production and meet the basic amenities of the poor.

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Is there any relationship between unemployment and poverty? Explain. Suppose you are from a poor family and you wish to get help from the government to set up a petty shop. to get the degree of relative poverty. The three dimensional attack on poverty adopted by the govern- ment has not succeded in poverty alleviation in India. POVER TY 79 2015-16(20/01/2015) . Collect data from 30 persons of your locality regarding their daily consumption of various commodities. What is meant by ‘Food for Work’ programme? 3. 10. Suppose you are a resident of a village. How can creation of income earning assets address the problem of poverty? 5. 8. suggest a few measures to tackle the problem of poverty. Is it correct to say that poverty has shifted from rural to urban areas? Use the trends in poverty ratio to support your answer.based norm is not adequate to identify the poor? 2. 6. What programmes has the government adopted to help the elderly people and poor and destitute women? 7. Illustrate the difference between rural and urban poverty. Why are employment generation programmes important in poverty alleviation in India? 4. Then rank the persons on the basis of relatively better off and worse. Under which scheme will you apply for assistance and why? 9. Comment. SUGGESTED ADDITIONAL ACTIVITIES 1. EXERCISES 1. Why calorie .

Analyse the research and f ind out which family is relatively poor in comparison to the other families.3 6. Commodities Family A Family B Family C Family D Wheat/Rice Vegetable Oil Sugar Electricity/ Lighting Ghee Clothes House Rent 2.1 12. 2.1 10.1 9.0 35.1 Other food items 16. Read the table further and answer the questions that follow.8 10.6 Meat. The following table shows the average monthly expenditure per person on items of consumption in India and Delhi slums in terms of percentage.3 Vegetables and fruits 15.7 19. Also find out who are absolutely poor if the poverty line is fixed at an expenditure of Rs 500 per month per person. • Do you think households in slums are depending more on cereals and pulses? • On which item do people living in different areas spend the least? Compare them.9 72. ‘Rice and wheat’ in rural areas at 25 per cent means that for every 100 rupees spent.7 6.9 Milk and milk products 17. fish and eggs 6. Collect information and fill in the following table with the amount of money spent in terms of rupees by four low income families on various commodities.3 13.8 4. Items Rural Urban Delhi Slums Rice and wheat 25.4 Total: All food 100 100 100 Expenditure on food 62. fish and eggs? 80 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) .1 Sugar 3.3 3.2 72.7 Pulses and their products 5. • Do you think that s lum dwellers have given more emphasis to meat. Rs 25 goes towards the purchase of rice and wheat alone.9 28.8 items as a % of all items • Compare the percentage of expenditure on food items among different groups and their priorities.5 11.4 14.8 8.3 5.0 Salt and spices 10.

Twelfth Five Year Plan (2012-17). S UBRAMANIAM. and N ILAKANTHA R ATH.D. Poverty and Famines: An Essay on Entitlement and Deprivation . Oxford University Press. A GGAR WAL . Planning Commission Government of India. Second Edition . 1993. Government of India. 1999. REFERENCES Books D ANDEKAR . Articles KUMAR . Poverty in India . B. N AVEEN and S. 5294-5300. Government of India). Economic Survey 2013-14. T ENDULKAR. Ministry of Information and Broadcasting. Pune. Poverty and Un-British Rule in India.. S. Government of India. New Delhi. ‘Pattern of Consumption and Poverty in Delhi Slums. D REZE. MINHAS .R. Government of India.S. Government Reports Report of the Expert Group of the Estimation of Proportion and Number of Poor. India’s Development Experience: Selected Writings of S. Everybody Loves a Good Drought: Stories from India’s Poorest Districts . 1996 . Clar endon Press. Oxfor d. 1971. ( Ed. New Delhi. Indian School of Political Economy. POVER TY 81 2015-16(20/01/2015) . 1995 . JEAN. P.). New Delhi (for Planning Commission. Vols. Vol. Planning Commission. NAOROJI. I. II and III. New Delhi. AMARTYA . S EN. New Delhi. Sage Publications Pvt. J AIN and S.’ Economic and Political Weekly.M. Guhan . July 6-13. New Delhi. 2003. 1996. S AINATH. Tenth Five Year Plan 2002 -2007. L.). ‘Declining Incidence of Poverty in the 1980 s — Evidence versus Artefacts. D ADABHAI. II: Sectoral Policies and Programmes. Publications Division. 2001.. Perspective Planning Division.’ Economic and Political Weekly . Ministry of Finance. New Delhi. Oxford University Press. Penguin Books. V. pp. AMAR TYA SEN & A KTHAR HUSAIN (Eds. December 13.C. The Political Economy of Hunger. 1991. Ltd.

the learners will understand • the concepts of Human Resource. Human Capital Formation and Human Development • the links between investment in human capital. 82 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . economic growth and human development • the need for government spending on education and health • the state of India’s educational attainment.5 HUMAN CAPITAL FORMATION IN INDIA After studying this chapter.

it also skill of an educated person is more stimulates innovations. mankind. 5.. it deal of training and skill to do things provides knowledge to understand the efficiently. Alfred Marshall 5. We know that the labour changes taking place in society. But man social standing and pride. to give the masses of people much greater opportunities than they can generally avail themselves of. Perhaps it is man’s capacity Education is sought not only as it to store and transmit knowledge confers higher earning capacity on which he has been doing through people but also for its other highly conversation. Moreover. more. great difference in the evolution of consequently. who would have died unknown. through songs and valued benefits: it gives one a better through elaborate lectures. “. the wisdom of expending public and private funds on education is not to be measured by its direct fruits alone. It will be profitable as a mere investment. it enables soon found out that we need a good one to make better choices in life. than that of an uneducated person the availability of educated labour and hence the former is able to generate force facilitates adaptation of new Fig.1 Adequate education and training to farmers can raise productivity in farms HUMAN CAPITAL FORMATION IN INDIA 83 2015-16(20/01/2015) .1 I NTRODUCTION more income than the latter and his Think of one factor that has made a contribution to economic growth is. are enabled to get the start needed for bringing out their latent abilities”.. For by this means many.

the- 5. capital like factories. expenditure on play in human capital formation health is an important source of in India? human capital formation. similarly.. Likewise. Let us understand a little more of individuals invest in education with the what human capital means by posing objective of increasing their future the following questions : income. growth of a country? Who can work better — a sick (iii) Is the formation of human person or a person with sound health? capital linked to man’s all-round A sick labourer without access to development or. migration and information Just as a country can turn physical are the other sources of human capital resources like land into physical formation. as one of the main sources of human capital.). engineers. This means that by individuals is similar to spending we need investment in human capital on capital goods by companies with to produce more human capital out of the objective of increasing future human resources. male and female children. Societies need Work This Out sufficient human capital in the first place — in the form of competent Ø Take three families from different strata (i) very poor people who have themselves been (ii) middle class and (iii) educated and trained as professors affluent. Hence. health is also (i) What are the sources of human considered as an important input for capital? the development of a nation as much (ii) Is there any relation between as it is important for the development human capital and economic of an individual.2 WHAT IS H UMAN C APITAL? job training. as it is now called. 84 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . In other expenditure pattern of the words.3 SOURCES OF H UMAN CAPITAL the need for expanding educational Investment in education is considered opportunities in a nation as it accelerates the development process. we need good human capital families on education of to produce other human capital (say. Economists have stressed 5. Study the and other professionals. doctors. on. Like education. medical facilities is compelled to human development? abstain from work and there is loss of (iv) What role can the government productivity.. Investments in health. There are several other sources as well. profits over a period of time. it can Why do your parents spend money also turn human resources like on education? Spending on education students into human capital like engineers and doctors.technologies.

directly increases the supply of healthy Technically qualified persons. the benefits of the enhanced whether the educational institutions productivity owing to the training. Unemployment is the reason expenditures. Preventive medicine (vaccination). curative medicine (medical intervention during illness). provide the right type of employable Expenditure regarding on-the-job skills and at what cost. a source of engineers and doctors. the workers in the new place outweigh the costs of may be trained migration. higher cost of living their workers. the workers capital formation. migrate to other human capital formation. hence. countries because of higher salaries Firms spend on that they may get in such countries. expenditure on in the firm itself under the supervision migration is also a source of human of a skilled worker. thus. thus. two. may be sent for off-campus training. Health expenditure for the rural-urban migration in India. giving on-the. This information training is a source of human capital is necessary to make decisions formation as the return of such regarding investments in human capital expenditure in the form of enhanced as well as for efficient utilisation of the labour productivity is more than the acquired human capital stock. cost of it. period of time. insist that market and other markets like the workers should work for a specific education and health. Expenditure incurred for acquiring People migrate in search of jobs information relating to the labour that fetch them higher salaries than market and other markets is also a what they may get in their native source of human capital formation. For example. HUMAN CAPITAL FORMATION IN INDIA 85 2015-16(20/01/2015) . Firms will. in the migrated places and psychic This may take costs of living in a strange socio- different forms: cultural setup. like labour force and is. during which it can recover associated with various types of jobs. after their on-the-job people want to know the level of salaries training. The enhanced earnings one. Migration in both these cases involves job-training to cost of transport. People spend to acquire In both these cases firms incur some information relating to the labour expenses. social medi- cine (spread of health literacy) and provision of clean drinking water and good sanitation are the various forms of health places.

Human capital is intangible. Box 5. should be present when the bus is used for transportation of people and materials. depreciation takes place with ageing but can be reduced. stops the spread of contagious diseases and epidemics. Human capital is not perfectly mobile between countries as movement is restricted by nationality and culture. it is endogenously built in the body and mind of its owner. Human capital creates both private and social benefits. Physical capital is completely mobile between countries except for some artificial trade restrictions. by maintaining personal hygiene and sanitation. Continuous use of machine leads to depreciation and change of technology makes a machine obsolete. need not be present in the place where it is used. The entrepreneur possesses knowledge to calculate the expected rates of return to a range of investments and then rationally decides which one of the investments should be made.1: Physical and Human Capital Both the forms of capital formation are outcomes of conscious investment decisions. through continuous investment in education. Children are given different types of school education and health care facilities by their parents and the society. This investment also facilitates the human capital to cope with change in technology which is not the case with physical capital. benefits from a capital good flow to those who pay the price for the product and services produced by it. who possesses the knowledge and ability to drive the bus. that is. An educated person can effectively take part in a democratic process and contribute to the socio-economic progress of a nation. educators and society influence the decisions regarding human capital investments even at the tertiary level. A healthy person. at the college level. Both forms of capital depreciate with time but the nature of depreciation differs between the two. etc. health. Therefore. a bus-driver. whereas human capital formation is to be done through conscious policy formulations in consonance with the nature of the society and economy and expenditure by the state and the individuals. physical capital formation can be built even through imports. Nature of benefits flowing from human capital are different from that of physical capital. there arises the necessity of the owner of the human capital to be present in the place of production. A substantial part of the human capital formation takes place in one’s life when she/he is unable to decide whether it would maximise her/his earnings. Decision regarding investment in physical capital is taken on the basis of one’s knowledge in this regard. Human capital is not sold in the market. You know that the owner of a physical capital. Human capital formation is partly a social process and partly a conscious decision of the possessor of the human capital. human capital is inseparable from its owner. In the case of human capital. The ownership of physical capital is the outcome of the conscious decision of the owner — the physical capital formation is mainly an economic and technical process. The two forms of capital differ in terms of mobility across space. Physical capital is tangible and can be easily sold in the market like any other commodity. This is called external benefit. The physical capital is separable from its owner. Moreover. 86 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . say a bus. whereas physical capital creates only private benefit. whereas. the human capital for mation at this stage is dependent upon the already formed human capital at the school level. Human capital benefits not only the owner but also the society in general. whereas. That is. to a large extent. only the services of the human capital are sold and. hence. The peers.

Thus. job market a healthy person could provide information and migration. The concept of physical capital is the base for conceptualising human capital. uninterrupted labour supply for a Economic growth means the increase longer period of time. There are some similarities Look at Fig. If like on-the-job training. the contribution of the growth. are some striking dissimilarities as (a) What are the advantages of well. an important factor for economic naturally. See Box 5. having proper ‘classroom’? Human Capital and Economic (b) Do you think the children Growth: Who contributes more to going to this schol are national income — a worker in a factory receiving quality education? or a software professional? We know (c) Why these schools do not that the labour skill of an educated have buildings? person is more than that of an uneducated person and that the former generates more income than the latter. 5. then health is also in real national income of a country. both education and educated person to economic growth is health. there and discuss. 5. along with many other factors more than that of an illiterate person.1.2 between the two forms of capital.2 Creating human capital: a school being run in make shift premises in Delhi HUMAN CAPITAL FORMATION IN INDIA 87 2015-16(20/01/2015) . increase an Fig.

Fig. and developed countries shows that Trained and educated on sound lines. life India recognised the importance of expectancy and mortality rates may human capital in economic growth not reflect the true health status of the long ago. The Seventh Five Year Plan people in a country. That is. education directions. measured in monetary terms. thus. Similarly. the human capital in desired directions. 5.individual’s income generating capacity. health services income. Education provides knowledge to understand changes in society and scientific advancements. Using the says. For example. that is. there is convergence in the measures a large population can itself become of human capital but no sign of an asset in accelerating economic convergence of per capita real income. facilitate inventions and innovations.3 Scientific and technical manpower: a rich Empirical evidence to prove that ingredient of human capital increase in human capital causes economic growth is rather nebulous. “Human resources development indicators mentioned above. teacher-pupil ratio and capital and vice versa. human capital (education and health) There are reasons to believe that the to economic growth but we can see in 88 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . the availability of educated labour force facilitates adaptation to new technologies. This enhanced productivity of human beings or human capital contributes substantially not only towards increasing labour productivity but also stimulates innovations and creates ability to absorb new technologies. higher income measured in terms of years of causes building of high level of human schooling. high level enrolment rates may not reflect the of human capital causes growth of quality of education. particularly in per capita income in both developing a country with a large population. an (read human capital) has necessarily analysis of improvement in education to be assigned a key role in any and health sectors and growth in real development strategy.” growth in developing countries has It is difficult to establish a relation been faster but the growth of per capita of cause and effect from the growth of real income has not been that fast. growth and in ensuring social change In other words. causality between human capital and This may be because of measurement economic growth flows in either problems.

7 Literacy Rate (%) 16. It further probably has reinforced the growth of states.67 43. “Our empirical investigation every other sector. identified that India would grow faster Increases in human capital are crucial due to its strength in human capital to achieving increases in GDP.” World Bank.594 11. to just above 7 years.” With formation. Deutsche Bank.7 60.1 Select Indicators of Development in Education and Health Sectors Particulars 1951 1981 1991 2001 2012 Real Per Capita Income (in Rs) 5. in recent times. then the per capita income of India will increase from a Fig.9 67.21 65. TABLE 5.9 64. “Between bank.037 Crude Death 25.535 16. a German reference to India it states. in its report on ‘Global Growth 2005 and 2020 we expect a 40 per cent Centres’ (published on 1.2 54.57 52. Growth in each sector the world by the year 2020..1 that these sectors have grown among four major growth centres in simultaneously.708 8.. have production in today’s economies.6 at Birth (in Years) Female 36.000 Population) Infant Mortality Rate 146 110 80 63 42 Life Expectancy Male 37.9 66.8 8.2 54.1 59.5 9. ‘India and the Knowledge Economy — Leveraging Strengths and Opportunities’. states that India should make a transition to the knowledge economy and if it uses its knowledge as much as Ireland does (it is judged that Ireland uses its knowledge economy very effectively).172 38.1 12.7 63. supports the view that human capital Two independent reports on the is the most important factor of Indian economy.20 74 Table 5.4 Job on hand: transforming India into a knowledge little over US $1000 in economy HUMAN CAPITAL FORMATION IN INDIA 89 2015-16(20/01/2015) .1 7 Rate (Per 1.7.05) rise in the average years of education identified that India will emerge as one in India. in its recent report. 5.

Human development is peon in school has absented based on the idea that education and herself/himself for long due health are integral to human well-being to ill health. In this view.2: India as a Knowledge Economy The Indian software industry has been showing an impressive record over the past decade. democracy and a diversified science Human welfare should be increased and technology infrastructure. India will move its economy to a higher Therefore. Likewise. skilled workers. Thus through investments in education and the two reports point out the fact that health even if such investments do not further human capital formation in result in higher labour productivity. Human capital What could be the possible treats human beings as a means to reasons? an end. the end being the increase in productivity. It further investment in education and health is states that the Indian economy has all unproductive if it does not enhance the key ingredients for making this output of goods and services. 2002 to US $ 3000 in 2020. basic education and basic growth trajectory.based services in rural areas will lead to human development? Discuss. they (ii) wage/salary will be able to make other choices which they value. There have been some instances of villagers using e-mail which are cited as examples of such transformation. The value of IT depends greatly on the existing level of economic development. health are important in themselves. find out how it because only when people have the has affected her/his ability to read and write and the ability (i) job security to lead a long and healthy life. bureaucrats and politicians are now advancing views about how India can transform itself into a knowledge-based economy by using information technology (IT). a critical mass of human development perspective. irrespective of their contribution to 5. DEVELOPMENT The two terms sound similar but there Work This Out is a clear distinction between them. a well-functioning human beings are ends in themselves. Do you think IT . dhobi or a productivity. Box 5. health as a means to increase labour maid-servant. Entrepreneurs. Human capital considers education and Ø If a construction worker. In such a view.4 H U M A N C APITAL AND HUMAN labour productivity. e-governance is being projected as the way of the future. any 90 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . In the transition. such as.

hence. literate and lead a healthy life. living below the poverty line. Similarly. We of damage would have been done. We do understand Council for Medical Research (ICMR) that education and health care services facilitate institutions which come under create both private and social benefits and the health sector. before the decision is taken to shift the child to In this section we are going to analyse another institution.5 S T A T E O F H U M A N C A P I T A L school or health care centre where the FORMATION IN INDIA required services are not provided. many of HUMAN CAPITAL FORMATION IN INDIA 91 2015-16(20/01/2015) . government intervention is essential. the providers of education and health health are very important sources of human capital formation. on-the-job training. The Constitution stipulated by the government and charge of India mentions the functions to the correct price. For instance. In this situation. substantial amount human capital formation in India. hence. once a child is admitted to a 5. that make substantial long-term impact and is. health. Educational Research and Training Analysis of health sector is taken up (NCERT). migration and information about the quality of services information. we will analyse (UGC) and All India Council of only the education sector here. The role of union government. we will look into the need state level. be carried out by each level of In India. the take up the analysis of the education ministries of health at the union and sector in India. education at the union and state level. Municipalities and services adhere to the standards Village Panchayats). Technical Education (AICTE) facilitate Do you know who takes care of institutions which come under the education and health in India? Before we education sector. individual consumers of capital formation is the outcome these services do not have complete of investments in education. tures on both education and health are departments of education and various to be carried out simultaneously by all organisations like National Council of the three tiers of the government. University Grants Commission in Chapter 8. We know services acquire monopoly power and are that ours is a federal country with a involved in exploitation.every individual has a right to get basic Expenditures on education and health education and basic health care. private and public institutions in the with a large section of the population education and health service markets. this is the reason for the existence of both In a developing country like ours. departments of health and for government intervention in education various organisations like Indian and health sectors. have already learnt that human Moreover. state governments government in this situation is to ensure and local governments (Municipal that the private providers of these Corporations. every individual has a right to be they cannot be easily reversed. the ministries of government. Of these education and and their costs. expendi. Accordingly.

Gross Domestic Product (GDP). Throughout this period citizens and those from the socially the increase in education expenditure oppressed classes. Elementary education takes a major share of total education Work This Out expenditure and the share of the higher/tertiary education (institutions Ø Identifythe objectives and of higher learning like colleges. To this if up expenditures in the education we include the private expenditure sector over the years in order to fulfil incurred by individuals and by the objective of attaining cent per cent philanthropic institutions. During 1952-2012. As we expand government is expressed in two ways school education. the total literacy and considerably increase the education expenditure should be average educational attainment of much higher. Both. Furthermore. percentage of ‘education expenditure Moreover.7 and as should provide education and health percentage of GDP increased from services free of cost for the deserving 0. when basic the country. Though. functions of NCER T.92 to 11. Indians. we need more (i) as a percentage of ‘total government teachers who are trained in the higher expenditure’ (ii) as a percentage of educational institutions. ‘expenditure per student’ in 5.64 to 3.6 EDUCATION SECTOR IN INDIA tertiary education is higher than that Growth in Government Expenditure of elementary. the union and has not been uniform and there has state governments. of total government expenditure then it is essential that the government increased from 7. the per capita education expenditure’ indicates the importance expenditure differs considerably across of education in the scheme of states from as high as Rs 12.us cannot afford to access basic things before the government. This does not mean that on Education: Do you know how financial resources should be much the government spends on transferred from tertiary education to education? This expenditure by the elementary education. have been stepping been irregular rise and fall. the government spends less on tertiary education. on an average. expenditure on all levels of education The percentage of ‘education should be increased. UGC.31. least. a substantial section of our of GDP’ expresses how much of people cannot afford to reach super our income is being committed to specialty health care and higher the development of education in education. education and health care is education expenditure as percentage considered as a right of the citizens. The education and health care facilities. therefore. expenditure of total government In 2009-10.500 in 92 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . polytechnics and universities) is the AICTE and ICMR.

estimated an expenditure of around Rs 1. In 2009.5 Investment in educational infrastructure is inevitable level of education expenditure of around 6 per cent of GDP. a goal of 6 per cent needs to attainments across states. be reached—this has been accepted as One can understand the a must for the coming years. The revenues of GDP be spent on education so as to from education cess has been make a noticeable rate of growth in earmarked for spending on elementary Work These Out Ø Prepare case studies of dropouts at different levels of schooling. inadequacy of the expenditure on the Government of India enacted the education if we compare it with the Right of Education Act to make free desired level of education expenditure education a fundamental right of all as recommended by the various children in the age group of 6-14 years. Ø ‘Schooldropouts are giving way to child labour’. About 50 years ago. 5. Himachal Pradesh to as low as Rs 2200 the current level of a little over 4 per in Punjab. say (i) Primary dropouts (ii) Class VIII dropouts (iii) Class X dropouts Find out the causes and discuss in the class. appointed by the Government of India in 1998. HUMAN CAPITAL FORMATION IN INDIA 93 2015-16(20/01/2015) . The Tapas Majumdar Committee.37 lakh crore over 10 years (1998-99 to 2006-07) to bring all Indian children in the age group of 6-14 years under the purview of school education. In educational opportunities and principle. educational achievements. the Government of India has also Education Commission (1964–66) had started levying a 2 per cent ‘education recommended that at least 6 per cent cess’ on all Union taxes. commissions. Discuss how this is a loss to human capital. Compared to this desired Fig. This leads to differences in cent has been quite inadequate.

These statistics for the Constituent Assembly.6 2.6 School dropouts give way to child labour: a loss to human capital 94 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . In addition to this. it was noted in Fig.2 Female 37. TABLE 5.6 79.4 76.7 1. primary independence.2 Female 54.2 64. Adult Literacy Rate (per cent of people aged 15+) 1.2 Educational Attainment in India Sl.3 3.7 FUTURE PROSPECTS new loan schemes for students to pursue higher education. still the absolute number of Generally. the promotion of higher education and 5.6 2.1 Male 61.8 74 education. educational achievements illiterates in India is as much as India’s in a country are indicated in terms population was at the time of of adult literacy level. Primary completion rate (per cent of relevant age group) 2. the last two decades are given above in government sanctions a large outlay for Table 5. when the education completion rate and youth Constitution of India was passed by the literacy rate.9 45.1 Male 76. Youth literacy rate (per cent of people aged 15+ to 24) 3. Education for All — Still a Distant Dream: Though literacy rates for both — adults as well as youth — have Educational Achievements in India: increased. In 1950.2 Female 61 69 96.7 88 3. 5.1 Male 78 85 96.No. Particulars 1990 2000 2008-12 1.9 68.2.4 67.

a large proportion of educated persons are unemployed. so that students are favourable impact on fertility rate and imparted employable skills in such institutions. The union and state governments in India have been earmarking substantial financial outlays for development of education and health sectors. studied graduation and above in rural Had we achieved this.7 Higher Education: few takers scientific and technical manpower in the Higher Education — a Few Takers: world.8 CONCLUSION The economic and social benefits of human capital formation and human development are well known. still the need to promote level educated youth in rural and urban education for women in India is areas were unemployed. 5. India has a rich stock of Fig. in the education for all children up to the age year 2011-12. we cannot be complacent educated.the Directive Principles of the education level. HUMAN CAPITAL FORMATION IN INDIA 95 2015-16(20/01/2015) . When compared to less health care of women and children. Their urban cent per cent literacy by now. the rate of of 14 years within 10 years from the unemployment among youth males who commencement of the Constitution. the level of Constitution that the government unemployment among educated youth should provide free and compulsory is the highest. counterparts had relatively less level of unemployment at 16 per cent. The most Gender Equity — Better than Before: severely affected ones were young rural The differences in literacy rates between female graduates as nearly 30 per cent males and females are narrowing of them are unemployed. Why? about the upward movement in the literacy rates and we have miles to go in achieving cent per cent adult literacy. Therefore. only about 3-6 per cent of primary gender equity. As per NSSO data. we would have areas was 19 per cent. indicating lesser and lesser conditions so that they are utilised in number of people reaching the higher our own country. The spread of education and health services across different sectors of society should be ensured so as to simultaneously attain economic growth and equity. The need of the hour is to better The Indian education pyramid is it qualitatively and provide such steep. Therefore. the imminent for various reasons such as government should increase allocation improving economic independence and for higher education and also improve social status of women and also the standard of higher education because women education makes a institutions. In contrast to signifying a positive development in this. 5. Moreover.

Ø The percentage of expenditure on education of the total government expenditure indicates the importance of education in the scheme of things for the government. migration and information are the sources of human capital formation. on-the-job training. Ø Human development is based on the idea that education and health are integral to human well-being because only when people have the ability to read and write and the ability to lead a long and healthy life. Bring out the differences between human capital and human development. What are the indicators of educational achievement in a country? 3. EXERCISES 1. How is human development a broader term as compared to human capital? 6. health. human capital represents enhanced labour productivity. Why do we observe regional differences in educational attainment in India? 4. Recap Ø Investments in education convert human beings into human capital. Ø Investments in education. There are some similarities as well as dissimilarities between the two forms of capital formation. 5. Ø The concept of physical capital is the base for conceptualising human capital. What factors contribute to human capital formation? 96 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . What are the two major sources of human capital in a country? 2. Ø Investment in human capital formation is considered as efficient and growth enhancing. which is an acquired ability and an outcome of deliberate investment decisions with an expectation that it will increase future income sources. will they be able to make other choices which they value.

How does investment in human capital contribute to growth? 12. what will be your contribution to the cause of education? (Example ‘Each one — teach one’). Education is considered to be an important input for the development of a nation. Explain how investment in education stimulates economic growth. 11. How government organisations facilitate the functioning of schools and hospitals in India? 8. What are the main problems of human capital formation in India? 20. 18. Discuss the need for promoting women’s education in India. ‘There is a downward trend in inequality world-wide with a rise in the average education levels’. Argue in favour of the need for different forms of government intervention in education and health sectors. Interpret the data given in Table 5. Is India going to be a knowledge based economy in the near future? Discuss in the classroom. Trace the relationship between human capital and economic growth. 19. 16. why? SUGGESTED ADDITIONAL ACTIVITIES 1. What is the position of India in the World Human Development Index? 2. 3.2. 17. 13. HUMAN CAPITAL FORMATION IN INDIA 97 2015-16(20/01/2015) . 15. In your view. As an educated person. is it essential for the government to regulate the fee structure in education and health care institutions? If so. 10. Discuss the following as a source of human capital formation (i) Health infrastructure (ii) Expenditure on migration . 7. Bring out the need for on-the-job-training for a person. Identify how Human Development Index is calculated. 4. How? 9. Establish the need for acquiring information relating to health and education expenditure for the effective utilisation of human resources. Comment. Examine the role of education in the economic development of a nation. 14.

Government of India.in www.finmin. New York. Academic Press.in 98 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . Human Capital. health and labour.nic.ncert.in www.in www. REFERENCES Books BECKER. Websites www.mospi.in www. 2nd Edition.nic. 1976.nic. G ARY S.in www. New York. Ministry of Human Resource Development. Annual Reports.ugc. Read the chapter on social sector in the Economic Survey . 6.cbse.in www. Government Reports Education in India.nic. Read the annual reports of Union Ministries of Human Resource Development and Health and make summaries. Enlist the various sources that provide information regarding education. Ministry of Human Resource Development.ac. FREEMAN.ernet. 5.aicte.nic.education. Columbia University Press. 1964. Government of India (for recent years) for various years. The Overeducated American. RICHARD.

6

RURAL
DEVELOPMENT

After studying this chapter, the learners will

• understand rural development and the major issues associated with it
• appreciate how crucial the development of rural areas is for India’s overall
development
• understand the critical role of credit and marketing systems in rural
development
• learn about the importance of diversification of productive activities to
sustain livelihoods
• understand the significance of organic farming in sustainable
development.

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“Only the tillers of the soil live by the right. The rest form their train and eat
only the bread of dependence”.
Thiruvalluvar

6.1 INTRODUCTION lagging behind in the overall
In Chapter 4, we studied how poverty development of the village economy.
was a major challenge facing India. We Some of the areas which are
also came to know that the majority challenging and need fresh initiatives
of the poor live in rural areas where for development in rural India include
• Development of human resources
they do not have access to the basic
necessities of life. including
– literacy, more specifically, female
Agriculture is the major source of
livelihood in the rural sector. Mahatma literacy, education and skill
Gandhi once said that the real progress development
– health, addressing both sanitation
of India did not mean simply the growth
and expansion of industrial urban and public health
• Land reforms
centres but mainly the development of
• Development of the productive
the villages. This idea of village
development being at the centre of the resources of each locality
• Infrastructure development like
overall development of the nation is
relevant even today. Why is this so? electricity, irrigation, credit,
Why should we attach such significance marketing, transport facilities
to rural development when we see including construction of village
around us fast growing cities with large roads and feeder roads to nearby
highways, facilities for agriculture
industries and modern information
technology hubs? It is because more research and extension, and
than two-third of India’s population information dissemination
• Special measures for alleviation
depends on agriculture that is yet to
become productive enough to provide of poverty and bringing about
significant improvement in the living
for them; one-third of rural India still
lives in abject poverty. That is the conditions of the weaker sections
reason why we have to see a developed of the population emphasising
rural India if our nation has to realise access to productive employment
real progress. What, then, does rural opportunities
All this means that people engaged
development imply?
in farm and non-farm activities in
6.2 WHAT IS RURAL D EVELOPMENT? rural areas have to be provided with
various means that help them increase
Rural development is a comprehensive the productivity. They also need to be
term. It essentially focuses on action for given opportunities to diversify
the development of areas that are into various non-farm productive

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activities such as food processing. The impact of this phenomenon can be
Enabling them better and more seen from the growing distress
affordable access to healthcare, witnessed among farmers across
sanitation facilities at workplaces and different parts of India. During 2007-
homes and education for all would also 12, agriculture output has grown at
need to be given top priority for rapid 3.2 per cent. Against this background,
rural development. we will critically look at some of the
It was observed in an earlier chapter crucial aspects of rural India like credit
that although the share of agriculture and marketing systems, agricultural
sector’s contribution to GDP was on a diversification and the role of organic
decline, the population dependent on farming in promoting sustainable
this sector did not show any significant development.
change. Further, after the initiation of
reforms, the growth rate of agriculture 6.3 CREDIT AND MARKETING IN RURAL
sector decelerated to about 3 per cent AREAS
per annum during the 1991-2012,
which was lower than the earlier years. Credit: Growth of rural economy
Scholars identify decline in public depends primarily on infusion of
investment since 1991 as the major capital, from time to time, to realise
reason for this. They also argue that higher productivity in agriculture and
inadequate infrastructure, lack of non-agriculture sectors. As the time
alternate employment opportunities in gestation between crop sowing and
the industry or service sector, realisation of income after production is
increasing casualisation of employment quite long, farmers borrow from various
etc., further impede rural development. sources to meet their initial investment
on seeds, fertilisers, implements and
other family expenses of marriage,
Work These Out death, religious ceremonies etc.
At the time of independence,
Ø On a monthly basis, go through moneylenders and traders exploited
the newspapers of your region small and marginal farmers and
and identify the problems raised
landless labourers by lending to them
by them in relation to rural areas
and the solutions of fered. You
on high interest rates and by
could also visit a nearby village
manipulating the accounts to keep
and identify the problems faced them in a debt-trap. A major change
by people there. Discuss this in occurred after 1969 when India
the classroom. adopted social banking and multi-
Ø Preparea list of recent schemes
agency approach to adequately meet
the needs of rural credit. Later, the
and their objectives from the
government website http:// National Bank for Agriculture and
www.rural.nic.in Rural Development (NABARD) was set
up in 1982 as an apex body to

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Box 6.1: The Poor Women’s Bank
‘Kudumbashree’ is a women-oriented community-based poverty reduction
programme being implemented in Kerala. In 1995, a thrift and credit society
was started as a small savings bank for poor women with the objective to
encourage savings. The thrift and credit society mobilised Rs 1 crore as thrift
savings. These societies have been acclaimed as the largest informal banks in
Asia in terms of participation and savings mobilised.

Source: www.kudumbashree.com. Visit this website and explore various other
initiatives undertaken by this organisation. Can you identify some factors
which contributed to their successes?

coordinate the activities of all the gap in the formal credit system
institutions involved in the rural because the formal credit delivery
financing system. The Green mechanism has not only proven
Revolution was a harbinger of major inadequate but has also not been fully
changes in the credit system as it led to integrated into the overall rural social
the diversification of the portfolio of and community development. Since
rural credit towards production- some kind of collateral is required, vast
oriented lending. proportion of poor rural households
The institutional structure of rural were automatically out of the credit
banking today consists of a set of network. The SHGs promote thrift in
multi-agency institutions, namely, small proportions by a minimum
commercial banks, regional rural contribution from each member. From
banks (RRBs), cooperatives and land the pooled money, credit is given to the
development banks. They are expected needy members to be repayable in
to dispense adequate credit at cheaper small instalments at reasonable interest
rates. Recently, Self-Help Groups rates. By March end 2003, more than
(henceforth SHGs) have emerged to fill seven lakh SHGs had reportedly been

Work These Out

Ø In your locality/ neighbourhood, you might notice self-help groups providing
cr edit. Attend few meetings of such self-help groups. Write a report on the
profile of a self-help group. The profile may include — when it was started,
the number of members, amount of savings and type of credit they provide
and how borrowers use the loan.
Ø You might also find that those who take a loan for starting self-employment
activities but use it for other purposes. Interact with few such borrowers.
Identify the reasons for not starting self employment activities and discuss
in the classroom.

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thrift and efficient utilisation of financial However. the farmers too. their loans should be waived otherwise they may take drastic decisions like committing suicides. interest rates and dues. we have now relationship banking with the achieved food security which is reflected borrowers. They may be primary agricultural cooperative banks. they took such steps. Agriculture borrowers not spending for productive loan default rates have been purposes? chronically high. kinds of collateral used. Collect details such as how many rural households borrowed from them. regional rural banks or district cooperative banks. it is suggested that banks facilities and a variety of loans for need to change their approach from meeting their prodution needs. amount generally borrowed. What could be the banking system had a positive effect on reasons? rural farm and non-farm output. Why farmers failed to pay back loans? It is alleged that Rural Banking — a Critical farmers are deliberately refusing to Appraisal: Rapid expansion of the pay back loans.credit linked. Such credit provisions are With the possible exception of the generally referred to as micro-credit commercial banks. SHGs have helped in the institutions have failed to develop a empowerment of women. It was found that when they were unable to pay back due to crop failure. It is alleged culture of deposit mobilisation — that the borrowings are mainly confined lending to worthwhile borrowers and to consumption purposes. Collect information relating to such cases and discuss in the classroom. Many such farmers had borrowed money for farming and other purposes. land development banks. insufficient income and employment opportunities. Inculcating the habit of in the abundant buffer stocks of grains. Work These Out Ø In the last few years. especially of the rural banking sector has taken a after the green revolution — it helped backseat after reforms. Ø Visit banks that cater to rural areas. all is not well with our resources needs to be enhanced among banking system. you might have taken note — in your neighbourhood if you are living in rural areas or read in the newspapers or seen on TV — of farmers commiting suicides. Thus. Do you agree? RURAL DEVELOPMENT 103 2015-16(20/01/2015) . other formal programmes. To improve the farmers to avail services and credit situation. Why are effective loan recovery. Ø If farmers who borrowed from cooperative banks could not pay back due to crop failure and other reasons. the expansion and promotion income and employment. Famines just being lenders to building up became events of the past.

grading and distribution of farmers as well as consumers. consume daily come from different parts Let us discuss four such measures of the country? The mechanism that were initiated to improve the through which these goods reach marketing aspect. regulated market places to realise the while selling their produce to traders.1 Regulated market yards benefit farmers as well as consumers 104 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . They also did not have proper inadequate to meet the growing demand storage facilities to keep back their and need to be improved. Cooperative produce for selling later at a better marketing. The markets were often forced to sell at low current infrastructure facilities are quite prices. in realising fair prices for price. By and large.6. farmers’ products.4 AGRICULTURAL MARKET SYSTEM lack of storage? Therefore. 27. 6.000 rural periodic markets as Prior to independence. The success of produced in farms are wasted due to milk cooperatives in transforming the Fig. processing. farmers. warehouses. full potential of rural markets. this policy benefited packaging. The first step was different places depends on the market regulation of markets to create orderly channels. is the third aspect of more than 10 per cent of goods government initiative. Second suffered from faulty weighing and component is provision of physical manipulation of accounts. different agricultural commodities there is still a need to develop about across the country. godowns. transportation. storage. Do you know that even today. cold information on prices prevailing in storages and processing units. However. state intervention became necessary to Have you ever asked yourself how food regulate the activities of the private grains. who did not have the required railways. and transparent marketing conditions. Farmers infrastructure facilities like roads. vegetables and fruits that we traders. Agricultural marketing is a process that involves the assembling.

despite government intervention. However cooperatives have scholars argue that commercialisation received a setback during the recent past of agriculture offers tremendous scope due to inadequate coverage of farmer for farmers to earn higher incomes members. it increases their incomes. Observe and identify different characteristics of the market. Farmers can go to these markets and sell their produce. (farmers markets in Tamil Nadu). Hadaspar Mandi (Pune). kind of goods coming to the yard and how prices are fixed. Work These Out Ø Visit a nearby vegetable and fruit market.) of the desired share of agricultural products. private Further. collect the details of its functioning. Haryana and Rajasthan). The alliances with farmers to encourage need for government intervention is them to cultivate farm products imminent particularly when a large (vegetables. social and economic landscape of Agricultural marketing has come Gujarat and some other parts of the a long way with the intervention of the country is testimony to the role of government in various forms. They can also store their goods in the yard. Some cooperatives. is quality by providing them with not only handled by the private sector. big merchants and rich farmers) increasingly entering into contracts/ predominates agricultural markets. What do you think about cooperatives and inefficient financial this view? management. However. several national and trade (by moneylenders. Ø Most small towns have regulated market yards. etc. fruits. Visit one regulated market yard. through PDS. The fourth element is the policy instruments like (i) assurance of Emerging Alternate Marketing minimum support prices (MSP) for Channels: It has been realised that if agricultural products (ii) maintenance farmers directly sell their produce to of buffer stocks of wheat and rice consumers. by Food Corporation of India and Some examples of these channels are (iii) distribution of food grains and sugar Apni Mandi (Punjab. lack of appropriate link provided the government intervention between marketing and processing is restricted. look at the modes of transport and its implication on prices. Further. seeds and other inputs but also assured RURAL DEVELOPMENT 105 2015-16(20/01/2015) . rural political multinational fast food chains are elites. These instruments are Rythu Bazars (vegetable and fruit aimed at protecting the income of the markets in Andhra Pradesh and farmers and providing foodgrains at a Telangana) and Uzhavar Sandies subsidised rate to the poor. Identify the place of origin of at least ten different fruits and vegetables and distance travelled to reach the market.

season. a major proportion of the Discuss.procurement of the produce at pre. employment and in realising higher levels of income for rural people to overcome poverty and other Work This Out tribulations. Non-farm 6. increasing labour force needs to find alternate employment opportunities in other non-farm sectors. But during the Rabi of the farming sector 106 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . Hence. it arrangements will help in reducing the becomes difficult to find gainful price risks of farmers and would also employment. 6. It is argued that such inadequate irrigation facilities. Therefore expansion expand the markets for farm products. use. Much of the agricultural employment activities are concentrated in the Fig. though in your locality. ACTIVITIES Diversification includes two aspects - one relates to change in cropping pattern and the other relates to a shift of workforce from agriculture to other allied activities (livestock. poultry. fisheries etc.) and non-agriculture sector. regulated market yards? Should they be encouraged and supported As agriculture is already by the government? Why and how? overcrowded. Diversification towards new areas is necessary not only to reduce the risk from agriculture sector but also to provide productive sustainable livelihood options to rural people. or in the there are many other options available neighbourhood rural areas. there is a need to focus on allied activities. The need for diversification arises from the fact that there is greater risk in depending exclusively on farming for livelihood. for providing sustainable livelihoods How are they different from in rural areas.5 DIVERSIFICATION INTO PRODUCTIVE economy has several segments in it. non-farm Ø Visit one such alternative employment and other emerging marketing system which farmers alternatives of livelihood. into other sectors is essential to Do you think such arrangements raise provide supplementary gainful incomes of small farmers. in areas where there are decided prices.2 Jaggery making is an allied activity Kharif season.

Box 6.2: Tamil Nadu Women in Agriculture (TANWA)
Tamil Nadu Women in Agricultur e (TANWA) is a project initiated in T amil Nadu
to train women in latest agricultural techniques. It induces women to actively
participate in raising agricultural productivity and family income. At a Farm
Women’s Gr oup in Thiruchirapalli, run by Anthoniammal, trained women are
successfully making and selling vermicompost and earning money from this
venture. Many other Farm Women’s Groups are cr eating savings in their group
by functioning like mini banks through a micro-credit system. With the
accumulated savings, they promote small-scale household activities like
mushroom cultivation, soap manufacture, doll making or other income-
generating activities.

some possess dynamic linkages that production provides increased stability
permit healthy growth while others are in income, food security, transport, fuel
in subsistence, low productivity and nutrition for the family without
propositions. The dynamic sub-sectors disrupting other food-producing
include agro-processing industries, activities. Today, livestock sector alone
food processing industries, leather provides alternate livelihood options to
industry, tourism, etc. Those sectors over 70 million small and marginal
which have the potential but seriously farmers including landless labourers. A
lack infrastructure and other support significant number of women also find
include traditional home-based employment in the livestock sector.
industries like pottery, crafts, Chart 6.1 shows the distribution of
handlooms etc. Majority of rural livestock in India. Poultry accounts for
women find employment in agriculture the largest share with 58 per cent
while men generally
look for non-farm Chart 6.1: Distribution of Poultry and
employment. In recent Livestock in India, 2012
times, women have
also begun looking
for non-farm jobs (see
Box 6.2).

Animal Husbandry: In
India, the farming
community uses the
mixed crop-livestock
farming system —
cattle, goats, fowl
are the widely held
species. Livestock

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important productive sectors for
diversification.

Fisheries: The fishing community
regards the water body as ‘mother’ or
‘provider’. The water bodies consisting
of sea, oceans, rivers, lakes, natural
aquatic ponds, streams etc. are,
therefore, an integral and life-giving
source for the fishing community. In
Fig. 6.3 Sheep rearing — an important income India, after progressive increase in
augmenting activity in rural areas
budgetary allocations and introduction
followed by others. Other animals which of new technologies in fisheries and
include camels, asses, horses, ponies aquaculture, the development of
and mules are in the lowest rung. India fisheries has come a long way.
had about 300 million cattle, including Presently, fish production from inland
108 million buffaloes, in 2012. sources contributes about 64 per cent
Performance of the Indian dairy sector to the total fish production and the
over the last three decades has been balance 36 per cent comes from the
quite impressive. Milk production in marine sector (sea and oceans). Today
the country has increased by more than total fish production accounts for
five times between 1960-2012. This 0.8 per cent of the total GDP. In India,
can be attributed mainly to the West Bengal, Andhra Pradesh, Kerala,
successful implementation of Gujarat, Maharashtra and Tamil Nadu
‘Operation Flood’. It is a system are major fish producing states. A large
whereby all the farmers can pool their share of fishworker families are poor.
milk produced according to different Rampant underemployment, low per
grading (based on quality) and the capita earnings, absence of mobility of
same is processed and marketed to labour to other sectors and a high rate
urban centres through cooperatives. In of illiteracy and indebtedness are some
this system the farmers are assured of of the major problems fishing
a fair price and income from the supply community face today. Even though
of milk to urban markets. As pointed women are not involved in active
out earlier Gujarat state is held as a fishing, about 60 per cent of the
success story in the efficient workforce in export marketing and 40
implementation of milk cooperatives per cent in internal marketing are
which has been emulated by many women. There is a need to increase
states. Meat, eggs, wool and other by- credit facilities through cooperatives
products are also emerging as and SHGs for fisherwomen to meet the

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working capital requirements for
marketing.

Horticulture: Blessed with a varying
climate and soil conditions, India has
adopted growing of diverse horti-
cultural crops such as fruits,
vegetables, tuber crops, flowers,
medicinal and aromatic plants, spices
and plantation crops. These crops play
a vital role in providing food
and nutrition, besides addressing
employment concerns. Horticulture
sector contributes nearly one-third of
Fig. 6.5 Women in rural households take up bee-
the value of agriculture output and six keeping as an entrepreneurial activity
per cent of Gross Domestic Product of
India. India has emerged as a world harvesting, nursery maintenance,
leader in producing a variety of fruits hybrid seed production and tissue
like mangoes, bananas, coconuts, culture, propagation of fruits and
cashew nuts and a number of spices flowers and food processing are highly
and is the second largest producer of remunerative employment options for
fruits and vegetables. Economic women in rural areas.
condition of many farmers engaged in Though, in terms of numbers, our
horticulture has improved and it has livestock population is quite impressive
become a means of improving livelihood but its productivity is quite low as
for many unprivileged classes. Flower compared to other countries. It requires
improved technology and
promotion of good
breeds of animals to
enhance productivity.
Improved veterinary care
and credit facilities to
small and marginal
farmers and landless
labourers would enhance
sustainable livelihood
options through livestock
production. Production
of fisheries has already
increased substantially.
However problems
Fig. 6.4 Poultry has the largest share of total livestock in India related to over- fishing and

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pollution need to be regulated and technologies and its applications,
controlled. Welfare programmes for the prices, weather and soil conditions for
fishing community have to be reoriented growing different crops etc. Though IT
in a manner which can provide long-term is, by itself, no catalyst of change but
gains and sustenance of livelihoods. it can act as a tool for releasing the
Horticulture has emerged as a successful creative potential and knowledge
sustainable livelihood option and needs embedded in the society. It also has
to be encouraged significantly. potential of employment generation in
Enhancing its role requires investment rural areas. Experiments with IT and
in infrastructure like electricity, cold its application to rural development are
storage systems, marketing linkages, carried out in different parts of India
small-scale processing units and (see Box 6.3).
technology improvement and
dissemination. 6.6 SUSTAINABLE DEVELOPMENT AND
ORGANIC FARMING
Other Alternate Livelihood Options:
The IT has revolutionised many sectors In recent years, awareness of the
in the Indian economy. There is broad harmful effect of chemical-based
consensus that IT can play a critical fertilisers and pesticides on our health
role in achieving sustainable is on a rise. Conventional agriculture
development and food security in the relies heavily on chemical fertilisers
twenty-first century. Governments can and toxic pesticides etc., which enter
predict areas of food insecurity and the food supply, penetrate the water
vulnerability using appropriate sources, harm the livestock, deplete the
information and software tools so that soil and devastate natural eco-systems.
action can be taken to prevent or Efforts in evolving technologies which
reduce the likelihood of an emergency. are eco-friendly are essential for
It also has a positive impact on the sustainable development and one
agriculture sector as it can disseminate such technology which is eco-friendly
information regarding emerging is organic farming. In short, organic

Box 6.3: Adoption of Village by Parliamentarians
In October, 2014, The Government of India introduced a new scheme called
Saansad Adarsh Gram Yojana (SAGY). Under this scheme, Members of India's
Parliament need to identify and develop one village from their constituencies. To
begin with, MPs can develop one village as a model village by 2016, and two more
by 2019, covering over 2,500 villages in India. According to the scheme, the village
can have a population of 3,000-5,000 in the plains and 1,000-3,000 in the hills
and should not be MPs' own or their spouse's village. MPs are expected to facilitate
a village development plan, motivate villagers to take up activities and built
infrastructure in the areas of health, nutrition and education.
Source: www.pib.nic.in accessed on 24 October 2014

110 INDIAN ECONOMIC DEVELOPMENT

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maintains and have shown that organically grown food enhances the ecological balance. the biggest user of chemical pesticides. the then Dir ector of the Central Institute for Cotton Research. The produce was later tested by the German Accredited Agency. organic foods command higher price of around 10-100 per cent than conventional ones.4: Organic Food Organic food is growing in popularity across the world. “Do you want India to go naked?” At present. organic agriculture is more profitable in terms of money and soil conservation in the long run.200 hectares of land to grow cotton organically on the International Federation of Organic Agriculture Movement’s standards. Box 6. Source: Lyla Bavadam. There are many retail chains and supermarkets which are accorded with green status to sell organic food. as many as 130 farmers have committed 1. Inadequate infrastructure generates income through exports as and the problem of marketing the the demand for organically grown crops products are major concerns which Box 6. when Kisan Mehta of Prakruti (an NGO) first suggested that cotton. Nagpur. There has more nutritional value than is an increasing demand for chemical farming thus providing us organically grown food to enhance with healthy foods. chemical fertilisers. India will find organic farming an attractive Benefits of Organic Farming: Organic proposition. Studies across countries farming that restores. A Green Alternative.) with locally produced Popularising organic farming organic inputs that are cheaper and requires awareness and willingness on thereby generate good returns on the part of farmers to adapt to new investment.8 hectare but accounting for 20 per cent of India’s cultivable land. Organic agriculture also technology. 29 July 2005. pesticides etc. than conventional farming.5: Organically Produced Cotton in Maharashtra In 1995. Finally. For such farmers. the produce is agriculture offers a means to substitute pesticide-free and produced in an costlier agricultural inputs (such as environmentally sustainable way (see HYV seeds. Frontline. agriculture is a whole system of is on a rise. Many countries have around 10 per cent of their food system under organic farming. and found to be of high quality.5).4). Since organic food safety throughout the world (see farming requires more labour input Box 6. AGRECO. Moreover. could be grown organically. famously remarked. Kisan Mehta feels that about 78 per cent of Indian farmers are marginal farmers owning about less than 0. RURAL DEVELOPMENT 111 2015-16(20/01/2015) . Box 6.

There is need to invent or procure alternate sets of eco- 6. Ø Visit a nearby super market. It has been backward. fisheries. dairying. Therefore. small and marginal farmers vegetables and fruits and linking up may find it difficult to adapt to large.7 CONCLUSION friendly technologies that lead to It is clear that until and unless some sustainable development in different Work These Out Ø Make a list of five popular items that are organically produced in India. shelf life. Prepare a chart comparing a few goods that are produced organically and in the normal way on the basis of their prices. investments for the products. Identify a few products. Do you think of the sector. There is a greater need observed that the yields from organic today to make rural areas more farming are less than modern vibrant through diversification into agricultural farming in the initial years. 112 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . the rural appropriate agriculture policy to sector might continue to remain promote organic farming. infrastructure elements off-season crops is quite limited in like credit and marketing. Organic produce may urban and foreign (export) markets also have more blemishes and a shorter to realise higher returns on the shelf life than sprayed produce. They could have diversified their cropping patterns. quality and the kind of advertisement through which they are popularised. the rural production centres with the scale production. Ø Visit a horticultural farm in the nearby locality. poultry. Moreover choice in production of Moreover. Nevertheless. farmer- organic farming. Discuss with them the merits and demerits of the diversification. Collect the details of goods that they cultivate on the farm. vegetable shop and/or a departmental shop. organic friendly agricultural policies and a farming helps in sustainable constant appraisal and dialogue development of agriculture and India between farmers’ groups and state has a clear advantage in producing agricultural departments are organic products for both domestic and essential to realise the full potential international markets. food and non-food items cultivated Today we cannot look at the using organic farming methods will be environment and rural development as cheaper? two distinct subjects.need to be addressed apart from an spectacular changes occur.

Explain the role of micro-credit in meeting credit requirements of the poor. Ø There is a need for improving the quantity and quality of infrastructure in rural areas such as banking. then. to realise its true potential. we experiments that have already been need to learn from. Ø The importance of organic farming as an environmentally sustainable production process is on a rise and needs to be promoted. EXERCISES 1. Discuss the importance of credit in rural development. 4. Explain the steps taken by the government in developing rural markets. fisheries and other non-agricultural activities is necessary not only to reduce the risk from agriculture sector but also to provide productive sustainable livelihood options to our rural people. 5. Recap Ø Rural development is quite a comprehensive term but it essentially means a plan of action for the development of rural areas which are lagging behind in socio-economic development. 3. marketing. each rural illustrations (which means success community can choose whatever will stories of rural development suit its purpose. What do you mean by rural development? Bring out the key issues in rural development. Ø Diversification towards new areas such as livestock. practices from different parts of India). 2. and also try out carried out in similar conditions in when found relevant. From these. to speed up the available set of ‘best practice’ this process of ‘learning by doing’. First of all. Why is agricultural diversification essential for sustainable livelihoods? RURAL DEVELOPMENT 113 2015-16(20/01/2015) .circumstances. storage. transport and communications etc.

Enlist some problems faced by farmers during the initial years of organic farming. What are the alternative channels available for agricultural marketing? Give some examples. D EHADRAI . M. Fisheries Development. New Delhi. 7. New Delhi.S. BIMAL . Bring out the importance of animal husbandry. a Millennium Study . Animal Husbandry.P. (Ed. State of the Indian Far mer. Identify the benefits and limitations of organic farming.K. Y. 14. a Millennium Study. 17. The Indian Economy: Problems and Perspectives. What do you mean by agricultural marketing? 8. 15.V. 1992. J ALAN . Critically evaluate the role of the rural banking system in the process of rural development in India.G.). What is organic farming and how does it promote sustainable development? 16.K. REFERENCES A CHAR YA . Agricultural Marketing. 2004. Academic Foundation. P. Academic Foundation.S. 10. 2004. S. New Delhi. 12. State of the Indian Farmer. 2004. Do you think various measures taken by the government to improve agricultural marketing are sufficient? Discuss. Penguin Publication.. State of the Indian Farmer. Academic Foundation. 9. N. Mention some obstacles that hinder the mechanism of agricultural marketing. a Millennium Study. SHARMA. P. 2004. a Millennium Study — an Overview. 11. YADAV . 114 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . 6. Explain the role of non-farm employment in promoting rural diversification. Academic Foundation. State of the Indian Farmer. C HAWLA. New Delhi. KURUP and V. Distinguish between ‘Green Revolution’ and ‘Golden Revolution’. New Delhi. and Y. fisheries and horticulture as a source of diversification. A LAGH. ‘Information technology plays a very significant role in achieving sustainable development and food security’ — comment. 13.

Challenges in Rural Development. Organic Vegetable Gardening: Grow Your Own Vegetables. P. Horticulture Development. DUTT A and M. 2002. H. New Delhi. Orient Longman Ltd.K. State of the Indian Farmer. SINHA . Ministry of Rural Development.P. New Delhi. Unit for Labour Studies. Academic Foundation. a Millennium Study. Hyderabad. Discovery Publishing House. E.dahd. Government of India in Coordination with Human Resource Development Centre and UNDP. SINGH. S. Delhi. 2004. TODARO. New Delhi.P. NARAYANAN. Tata Institute of Social Sciences. 2004. MICHAEL P.nic. Economic Development in the Third World. Planning Commission. Government Reports Successful Governance Initiatives and Best Practices: Experiences from Indian States. NABARD Occasional Paper No: 38. Organic Farming in India. Government of India. Mumbai. Agricultural Credit in India: State of the Indian Farmer. SURJIT and VIDYA SAGAR. Mumbai. 2004. 2005. Academic Foundation. V.in RURAL DEVELOPMENT 115 2015-16(20/01/2015) . SINGH. TOPPO. Website www. a Millennium Study. SUDHA. 1987. Annual Reports.. Department of Agriculture and Rural Development. 1998. New Delhi.

the learners will • understand a few basic concepts relating to employment such as economic activity. worker. INFORMALISATION AND OTHER ISSUES After studying this chapter.7 EMPLOYMENT : GROWTH. workforce and unemployment • understand the nature of participation of men and women in various economic activities in various sectors • know the nature and extent of unemployment • assess the initiatives taken by the government in generating employment opportunities in various sectors and regions. 116 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) .

We do not work only the society. it. in factories.1 Multinational companies sell footballs factories located in cities made in the houses of Jalandhar. It also helps us to by engaging in various economic address many social issues such as activities — that is the real meaning of exploitation of marginalised sections of ‘earning’ a living.1 INTRODUCTION People do a variety of work. shops and many other workplaces. Work at home includes not only traditional work like weaving. Some training through a variety of works people get. child labour etc. yet a few others work at home. EMPLOYMENT : GROWTH. Punjab whereas now technology has enabled people to produce those for ourselves. the development of the country national income. Gandhi insisted upon education and People work for ‘earning’ a living.. Having recognised an important role in our lives as the importance of work. not working for it. Men go on ‘saving labour’ till thousands are without work and thrown on the open streets to die of starvation. 7. This does not Studying about working people completely satisfy anybody. INFORMALISATION AND OTHER ISSUES 117 2015-16(20/01/2015) . money by inheriting including craft. the requirements of those who are Why do people work? Work plays dependent on us. not machinery as such. Some work on farms. It helps Every working person is actively us to analyse the contribution made by contributing to national income and different industries and sectors towards hence. Being gives us insights into the quality and employed in work gives us a sense of nature of employment in our country self-worth and enables us to relate and helps in understanding and ourselves meaningfully with others. planning our human resources. or have. lace making or variety of handicrafts but also modern jobs like programming work in the IT industry.. Mahatma individuals and as members of society. we also have a sense of factory-based goods at home in accomplishment when we work to meet villages. Mahatma Gandhi 7. is the ‘craze’ for machinery. Earlier factory work meant working in Fig. The craze is for what they call labour-saving machinery. What I object to. banks.

and also illness. do not the gross national product are called go to work. are discuss in the classroom workers. the proportion of find that there is a net earning for the workforce residing there is higher. You might be that the total money value of all such interested in knowing the number of goods and services produced in a people actively engaged in various country in a year is called its gross economic activities. in work. come across many women who. We generally think of only regarded as contributing to those who are paid by an employer for the gross national product their work as workers. We know included as employed. festivals. and therefore. When India had about a 473 million strong we also consider what we pay for our workforce. and diplomas and also free Those activities which contribute to time to go to work. The country which may be positive (if we have exported more in value terms than imported) or negative (if imports Work This Out exceeded exports in value terms) or zero (if exports and imports were of the same Ø In your house or value). injury or other physical ways by which they could be sent for work. you might or minus) from foreign transactions. Since majority of our people imports and get from our exports we reside in rural areas. workers. During 2011-12. Ask them the economic activities. they are also housewives working at workers. Workers also include all those home without getting paid who help the main workers in these for that work must also be activities. While estimating becomes cloth in textile mills and in the number of workers. bad weather. Cotton wages for their work. Many workers do not get fair materials for industries. even though they what we get is called the country’s gross have technical degrees national product for that year. List all of them and whatever capacity — high or low. all those who powerlooms. When we add this earning (plus neighbourhood.2 WORKERS AND EMPLOYMENT The nature of employment in India is multifaceted. as engaged Those who are self-employed are also in an economic activity. domestic product for that year. he or employed for only a few months in a she produces food grains and raw year. This is not so. social social scientists argue that or religious functions. Some disability.7. Some get employment What is employment? Who is a worker? throughout the year. Would you agr ee? 118 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . some others get When a farmer works on fields. Even if some of them whether they should go for temporarily abstain from work due to work and why. All those who are reasons for not going to engaged in economic activities. Lorries transport goods are engaged in economic activities are from one place to another.

they are just people in economic activities.7 who reside in a particular locality at Total 38. For this difference? People in rural areas have reason. in urban areas.1. it shows one-third of the rural workforce the different levels of participation of whereas in urban areas. You might have already studied. actively contributing to the production people cannot stay at home as their of goods and services of a country.9 24.6 defined as the total number of people Women 21. whereas. In urban areas. you will the rest are women (men and women get the worker-population ratio for include child labourers in respective India. opportunities. the in cash or in the form of grains.6 39. Even if some go.8 14. INFORMALISATION AND OTHER ISSUES 119 2015-16(20/01/2015) . For one-fifth of the workforce. Why is there such a times they are not paid at all. Sex Worker-Population Ratio in lower classes.3 PA R TICIP AT I O N OF PEOPLE IN discontinue in the middle to join the E MPLOYMENT workforce. About workers in India by the population in 70 per cent of the workers are men and India and multiply it by 100. Many do not go also be called workers. They look for the This ratio is useful in knowing the appropriate job to suit their proportion of population that is qualifications and skills. at ratio is about 40. TABLE 7. if the ratio for a country is medium. They are not paid wages is about 36 whereas in rural India. of its population is not involved 2009-2010 directly in economic activities. If economic condition may not allow them the ratio is higher.4 54. Women every 100 persons.6) are workers in water and fuelwood and participate in India. Population is Men 54. Economists income and participate more in the have argued that these women should employment market. Women workers account for If you look at Table 7. fetching rounding off 38. to schools. the proportion farm labour. these women are not limited resources to earn a higher categorised as workers. If you want EMPLOYMENT : GROWTH.3 54. divide the total number of majority of workforce in India. In rural areas. about 39 (by carry out works like cooking. Urban which is used for analysing the people have a variety of employment employment situation in the country.9 35. Men form the for India. or low. they 7. the meaning of the Total Rural Urban term ‘population’. colleges and other training institutions.5 a particular point of time. engagement of people is greater.1 it means that a very high proportion Worker-Population Ratio in India. to know the worker-population ratio fourth of this 473 million. it means that the to do so. sexes).rural workers constitute about three. a considerable section is able to study in Worker-population ratio is an indicator various educational institutions.

4 SELF . not working? It the attachment a worker has with his is common to find that where men are able to earn high incomes. Think Ø Any study of employment of the women actively engaged in many must start with a review activities within the house and at family of the worker -population farms who are not paid for such work. with which a worker is placed in an for every 100 rural women about 25 enterprise. In rural areas. many activi- ties for the household engaged in by women are not recognised as productive work. therefore. they do women workers? not send women to work. Going back to what has already been mentioned above. Why? 7. families discourage female members from taking up jobs. more males WORKERS are found to be working. you maintenance of the household and might have noticed that farms. women’s work and. This narrow defini- tion of work leads to non-recognition of Fig. it may be possible to know participate in the employment market.2 Brick-making: a form of casual work 120 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . in general. do you think that their number even if the males do not should be added to the number of earn a high income. ratios — why? As they certainly contribute to the Ø In some communities. It also enables us to know women. and urban in a country. 7. one dimension — quality of employment Why are women. only about 15 are engaged in conditions? By knowing the status some economic activities.E M P L O Y E D AND HI R E D Compared to females. The difference Does the worker-population ratio say in participation rates is very large in anything about workers’ status in urban areas: for every 100 urban society or about the working females. in particular. to the Work These Out underestimation of the number of women workers in the country.

Such labourers are Chart 7. The construction 42% 9% workers are known as casual wage labourers. When it comes to regular from another. Workers like the civil engineer working in the 29% 56% construction company 51% 31% account for 18 per cent of India’s workforce. this category accounts for more than Let us take three workers from the 50 per cent of the workforce in both construction industry — a cement shop diagrams. Workers who own and Chart 7. Self-employed Regular Salaried Employees they account for 30 per cent of India’s workforce.2 : Distribution of Employment by Region operate an enterprise to Urban Workers Rural Workers earn their livelihood 15% are known as self- 35% employed. About 52 56% per cent workforce in India belongs to this category. Thus the 43% cement shop owner is self-employed. a little more so for the latter the status of each one of them is different (31 per cent). get a remuneration for the work Male Workers Female Workers done.1 : Distribution of Employment casually engaged in others’ by Gender farms and. Look at Chart 7. a construction worker and a civil second major source for both men and engineer of a construction company. in return. Casual Wage Labour ers EMPLOYMENT : GROWTH. Casual wage work is the owner.1: you will notice that self- or her job and the authority she or he employment is a major source of has over the enterprise and over other livelihood for both men and women as co-workers. INFORMALISATION AND OTHER ISSUES 121 2015-16(20/01/2015) . Since women. they are known as regular salaried Casual Wage Labourers employees. they are also called differently. When a 20% 13% worker is engaged by someone or an enterprise and paid his or her wages Self-employed Regular Salaried Employees on a regular basis.

Typist working in a state government office on a daily wage basis but paid monthly 5.salaried employment. Obviously everyone cannot of workforce in rural and urban areas run factories. In the former. One of the reasons majority of those depending on farming could be skill requirement. 122 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . those who work in banks and other offices as assistants and clerks are workers. factory workers. been engaged to a great extent. In the latter. Loading worker in wholesale vegetable shop 7. both self- be so engaged in greater proportion. Worker in a rice mill who is paid on daily basis but employed regularly 3. Work These Out Ø We generally think that only those who are doing paid work regularly or casually such as agricultural labourers. various types. professionals such as lawyers. regular salaried employees and casual wage labourers respectively: 1. shops and offices of in Chart 7. Moreover enterprises in employed and casual wage labourers urban areas require workers on a are found more in rural areas than in regular basis. From the above discussion. Owner of a cool drinks shop which sells Pepsi. Coca Cola and Mirinda 8. men are found to urban areas. A handloom weaver 6. Ø Economists point out that casual wage labourers are the most vulnerable among the three categories. Cashier in State Bank of India 4. Since regular own plots of land and cultivate salaried jobs require skills and a higher independently. doctors and engineers are also workers. (b) and (c) against self-employed. Owner of a saloon 2. Could you locate who these workers are and where they are found and why? Ø Can we say that the self-employed earn more than the casual wage labourers or regular salaried employees? Identify a few other indicators of quality of employment.2 you will notice that the self. since form only 13 per cent. employment and regular wage salaried They form 20 per cent whereas women jobs are greater. The nature of work in urban areas When we compare the distribution is different. Nurse in a private hospital who gets monthly salary and has been working regularly for the past 5 years. women might not have employed is greater. the share of self- level of literacy. Mark (a). you must have understood that those who are self- employed such as pavement vegetable vendors.

(vii) and (viii). Trade (vii) Transport and Storage and Primary sector is the main source (viii) Services.2 (i) Agriculture (ii) Mining and Quarrying shows the distribution of working (iii) Manufacturing (iv) Electricity.0 100. (a) primary sector by looking at the distribution of which includes (i) . Table 7.6 9. all the of employment for majority of workers TABLE 7.5 E M P L O Y M E N T IN FIRMS. Generally.2 Distribution of Workforce by Industry. labour flows from agriculture and other related activities to industry and services.9 Secondary Sector 16..0 43.0 100.3 Garment workers: upcoming factory employment for women at a much later stage. Gas persons in different industries during and Water Supply (v) Construction (vi) the year 2011-12.0 30. Eventually.6 62. (b) secondary sector workers by industry.0 25.8 Total 100.0 EMPLOYMENT : GROWTH. F ACTORIES AND OFFICES In the course of economic development of a country. the industrial sector begins to lose its share of total employment as the service working persons engaged in these sector enters a period of rapid divisions can be clubbed into three expansion. INFORMALISATION AND OTHER ISSUES 123 2015-16(20/01/2015) .9 20. workers migrate from rural to urban areas.2 26.0 100.8 48. For simplicity.3 Tertiary/ Service Sector 17. Fig.4 60.0 31. we which includes (ii).5 17.7. In this process.0 100. 7. They are divisions (vi). (iv) and (v) and divide all economic activities into eight (c) service sector which includes different industrial divisions. (iii). 2011-2012 Industrial Category Place of Residence Sex Total Rural Urban Men Women Primary Sector 66.0 24. This shift can be understood major sectors viz.

name of the post. About stages of planning. Analyse the table in the classroom about jobs advertised in the newspapers. Table studied about the planning strategies 7. less than half of males work in that This means that in the Indian economy. employment and GDP. in the service sector. However. of rural workers. Work This Out Ø All newspapers have one section meant for job opportunities. During these years. About 27 per cent of In Chapters 2 and 3. have been able to produce more goods 124 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . we secondary and service sectors.3 also points at another urban workforce. Some also devote an entire supplement in a day or every week like Opportunities in The Hindu or Ascent in The T imes of India . sector. During this period. you might have workers are in the service sector. secondary or tertiary — and qualification required. 63 per cent of the female workforce is we also find a widening gap between employed in the primary sector whereas the growth of GDP and employment. Men get opportunities in both without generating employment. About 60 per cent there was always fluctuation in the of urban workers are in the service growth of GDP. Agriculture is not a Gross Domestic Product (GDP) of India major source of employment in urban grew positively and was higher than areas where people are mainly engaged the employment growth. employment to about 30 per cent of Chart 7. Sixty years of About 16 per cent of rural workers are planned development have been aimed working in manufacturing industries. Develop a table which contains four columns: whether the company is private or public. Secondary sector provides 7. Service sector provides employment. in India. at expansion of the economy through construction and other industrial increase in national output and activities. sector. Here we will look at two of the workforce in rural India depends developmental indicators — growth of on agriculture. employment to only about 17 per cent During the period 1950–2010. Many companies advertise vacancies for various positions.2 also shows that about 67 per cent in detail. women workers’ growth that India had in the early concentration is very high there. forestry and fishing. number of posts.6 GROWTH AND CHANGING STRUCTURE employment to only about 24 per cent OF E MPLOYMENT of workforce. The secondary sector gives employment grew at the rate of not more than 2 per cent. sector — primary. disheartening development in the late Though both men and women 1990s: employment growth started workers are concentrated in the declining and reached the level of primary sector. Cut those sections.

to GDP.3: Growth of Employment and Gross Domestic Product. have aimed So far we have seen how at reducing the proportion of people employment has grown in comparison depending on agriculture. We know notice that the shares of these sectors that India is an agrarian nation. proportion has declined to about Let us look at two indicators that 50 per cent. Scholars refer to this Developmental strategies in many phenomenon as jobless growth. Secondary and service we have seen in the preceding sections sectors are showing promising future — employment of people in various for the Indian workforce. Now it is necessary to know Distribution of workforce by how the growth pattern of employment industrial sectors shows substantial and GDP affected different sections of shift from farm work to non-farm work workforce. different status indicates that over the Chart 7. rural areas and is dependent on The distribution of workforce in agriculture as their main livelihood. You may industries and their status. a have increased from 11 to 24 per cent major section of population lives in and 15 to 27 per cent. 1951–2012 (%) EMPLOYMENT : GROWTH. From this we will also be (see Table 7. this country.3).and services. including India. countries. respectively. about 74 able to understand what types of per cent of workforce was engaged in employment are generated in our primary sector and in 2011-12. INFORMALISATION AND OTHER ISSUES 125 2015-16(20/01/2015) . In 1972-73.

9 11.3 Trends in Employment Pattern (Sector-wise and Status-wise).0 Status Self-employed 61. even if his or her overall earnings increase? Discuss in the classroom.0 100.3 54. Suppose a marginal farmer becomes a full-time agricultural labourer.6 52. self-employment and regular people have moved from self.0 last four decades (1972-2012) .8 24.0 100. Yet This makes the workers highly self-employment continues to be the vulnerable.9 20 23. Scholars study of Ahmedabad in the preceding call the process of moving from section.5 16 15.3 Services 14. do you think he will be happy even if he earns more in his daily wage work? Or will a permanent and regular worker of the pharmaceutical industry be happy if he becomes a daily wage labourer.0 100.0 100.9 31.0 Regular Salaried Employees 15. 1972-2012 (in %) Item 1972-73 1983 1993-94 1999-2000 2011-2012 Sector Primary 74.4 13.8 13. Work These Out Ø Do you know that maintaining employment growth at 2 per cent for a country like India is not an easy thing? Why? Ø What will happen if there is no additional employment generated in the economy even though we are able to produce goods and services in the economy? How could jobless growth happen? Ø Economists say that if casualisation increases the earning of the people.0 100.0 100. salaried employment to casual wage employment and regular salaried work as casualisation of workforce.0 Casual Wage Labourers 23.6 18. such phenomenon should be welcomed.6 52.4 48.2 28. employment to casual wage work.0 100.8 26. 126 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) .8 16.3 68.0 Total 100.8 32.0 100.6 14.6 64 60. TABLE 7.4 57.8 Total 100. How? Look at the case major employment provider.8 30.9 Secondary 10.

This section of the workforce forms trade In the previous section we have found unions. over the those enterprises form the informal years. since we classify workforce into two India’s independence. as women constitute only about one-sixth of the formal sector workforce. We have seen in 10 hired workers or more are called the preceding section. through its sector enjoy social security benefits.7 I N F O R M A L I S A T I O N OF INDIAN labour laws.7 . agricultural more than 10-20 years. Here also men for m the majority. All other farming as the major source of livelihood. Who are they? To know this of development planning in India. that even after 55 formal sector establishments and those years of planned development. INFORMALISATION AND OTHER ISSUES 127 2015-16(20/01/2015) . enterprises and workers working in Economists argue that. Box 7. why do some labourers. of Indian workforce is getting regular Those who are working in the formal income. bargains with employers for that the proportion of casual labourers better wages and other social security has been increasing. It also includes sector get a lower salary as compared to all non-farm casual wage labourers another person doing the same work but who work for more than one employer in the public sector? such as construction workers and You may find that a small section headload workers. What do you think? EMPLOYMENT : GROWTH. more than who work in such establishments are half of the Indian workforce depends on formal sector workers. and people working in those enterprises provident fund. owners of small enterprises workers not get maternity benefit. Even after working for millions of farmers. Do you know who is the major employer in the formal sector in India? In 2012. The government. It informal sectors.1: Formal Sector Employment The information relating to employment in the formal sector is collected by the Union Ministry of Labour through employment exchanges located in different parts of the country. informal sector includes been deteriorating. gratuity and pension? as also the self-employed who do not Why does a person working in the private have any hired workers. Thus. the quality of employment has sector. which are also referred has been envisaged that the to as organised and unorganised industrialisation strategy would bring sectors. out of about 30 million formal sector workers. Economists point out that the reform process initiated in the early 1990s resulted in a decline in the number of workers employed in the formal sector. enable them to protect WORKFORCE their rights in various ways. One of the objectives measures. has been to categories: workers in formal and provide decent livelihood to its people. All the public sector surplus workers from agriculture to establishments and those private industry with better standard of living as sector establishments which employ in developed countries. about 18 million workers were employed by the public sector.

male workers account for 69 per But what has happened in India? cent of the workforce. sector. 100 There are about 30 50 million workers in the 0 formal sector. Fig. Look at the following chart which gives Chart 7. only become formal sector workers and the 6 million. Out of grows.2. that is. Developmental (30/473×100)! Thus.4: Workers in Formal / Informal Sector. Can you estimate the percentage of people employed in Male Female the formal sectors in 128 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . 300 Number of Workers In Section 7. 2009-2012 the distribution of workforce in formal 350 310 and informal sectors. In the informal informal sector would dwindle. more and more workers would 30 million formal sector workers. 7. we 250 (in million) learnt that there are 200 24 6 133 about 473 million 150 workers in the country.4 Road side vending: an increasing variety of informal sector employment They earn more than those in the the country? About only six per cent informal sector. the rest 94 per planning envisaged that as the economy cent are in the informal sector. only about 21 per cent proportion of workers engaged in the (30/6×100) are women.

children were withdrawn from school and sent to work. textile mills all over the country began to close down. They had a strong trade union which not only represented them in disputes but also ran activities for the welfare of workers and their families. Sudarshan and Jeemol Unni (Ed. informal sector do not get regular income. Ratna M. are dismissed without any compensation. such as Mumbai. Workers of this growing.) Informal Economy at Centre Stage: New Structures of Employment. In the early 1980s.50. Box 7. the mills closed rapidly.000 non-permanent workers lost their jobs and were driven to the informal sector. New Delhi. Workers developing countries. In Ahmedabad. Of late. started paying attention to enterprises Technology used in the informal sector and workers in the informal sector as enterprises is outdated. Source: Renana Jhabvala. A whole class of workers was thrown back from the middle class into the infor mal sector.000 workers employed in them. over the course of the century. INFORMALISATION AND OTHER ISSUES 129 2015-16(20/01/2015) . approximately over 80.000 permanent workers and over 50. They had secure jobs with a living wage. EMPLOYMENT : GROWTH. These workers had. 2003. owing to the efforts of the they do not have any protection or International Labour Organisation (ILO).265. Since the late 1970s. Over this period. acquired a certain degree of income security. Workers and enterprises in the sector live in slums and are squatters. the process of Change in the balance of power in a house: an closure was long drawn out unemployed mill worker peeling garlic whereas his wife and spread over 10 years. In some places. many regulation from the government. they also do not employment in the formal sector is not maintain any accounts.2: Informalisation in Ahmedabad Ahmedabad is a prosperous city with its wealth based on the produce of more than 60 textile mills with a labour force of 1. has a new job of beedi rolling. into poverty. especially communal riots. pp. Sage Publications. including India. There was widespread alcoholism and suicides. The city experienced an economic recession and public disturbances. they were covered by social security schemes protecting their health and old age.

Many in enterprises and provision of social security the rural areas do not go out and measures to informal sector workers.5 Unemployed mill workers waiting for casual jobs and give their bio-data 130 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . you might find people standing in some select areas looking for people to employ them for that day’s work. 7. 7. In many cities. the Indian government has initiated the and ask whether there is any vacancy modernisation of informal sector in their factory or office. Some go to factories and offices Fig. conductors and other workers Ø Civil engineer working in a construction company which has 10 workers Ø Computer operator in the state government office working on a temporary basis ØA clerk in the electricity office. Some look for a job through friends and relatives.8 UNEMPLOYMENT You might have seen people looking for jobs in newspapers. Work These Out Tick (ü) mark against those which are in the infor mal sector Ø Worker in a hotel which has seven hired workers and three family workers Ø A private school teacher in a school which has 25 teachers Ø A police constable Ø Nurse in a government hospital Ø Cycle-rickshaw puller Ø The owner of a textile shop employing nine workers Ø Driver of a bus company which has more than 10 buses with 20 drivers.

6 Sugar cane cutters: disguised unemployment is common in our economy? The in farm works situation described in the ask for a job but stay home when first paragraph of this section is called there is no work. but come back to their home villages There are three sources of data on as soon as the rainy season begins. they do provide us with the attributes of the unemployed and the variety of unemployment prevailing in our country. When EMPLOYMENT : GROWTH. intermediaries. National Sample Survey work in agriculture is seasonal. Though they provide different estimates of unemployment. There are a variety third of agriculture workers in India as of ways by which an unemployed disguisedly unemployed. prospective employers or express their this situation is known as disguised willingness or availability for work unemployment. friends or he employs five workers and his family relatives or by making applications to members such as his wife and children. 7. person is identified. INFORMALISATION AND OTHER ISSUES 131 2015-16(20/01/2015) . through employment exchanges. NSSO What is disguised unemployment? defines unemployment as a situation Suppose a farmer has four acres of land in which all those who. Do we have different types of unemployment Fig. hour in half a day. Economists define You may have noticed that many unemployed person as one who is not people migrate to an urban area. Directorate General of Employment and Training Data of Registration with Employment Exchanges. unemployment : Reports of Census of Why do they do so? This is because India. are not working but and himself to carry out various either seek work through employment operations on his farm in a year. Some go to open unemployment. Economists call employment exchanges and register unemployment prevailing in Indian themselves for vacancies notified farms as disguised unemployment. owing to lack and he actually needs only two workers of work. but if exchanges. there Organisation’s Reports of Employment are no employment opportunities in the and Unemployment Situation and village for all months in the year. One study conducted under the prevailing condition of work in the late 1950s showed about one- and remunerations. pick able to get employment of even one up a job and stay there for some time.

people scheme is one of the many measures go to urban areas and look for jobs. governments implement to generate This kind of unemployment is known employment for those who are in need as seasonal unemployment. a common form of unemployment Since independence. This there is no work to do on farms. government employs not allow them to be so. state governments have played Though we have witnessed slow an important role in generating growth of employment. In the first unemployed for very long because their category. The employment directly to workers. employment to facilitate a decent living for low income families through various measures. have you seen employment or creating opportunities people being unemployed over a very for employment generation. Their long time? Scholars says that in India. industries. When central and state governments take output of goods and services from many initiatives and generate government enterprises increases. It also runs jobs that nobody else would do.7 Dam construction work is a direct way of employment rural households who generation by the government volunteer to do unskilled manual work. You will rather people in various departments for find them being forced to accept administrative purposes. as you have seen in the desperate economic condition would preceding section. then 132 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . unhealthy surroundings. This is also of jobs in rural areas.9 GOVERNMENT AND EMPLOYMENT GENERATION You may recall about the National Rural Employment Guarantee Act 2005. hotels and transport unpleasant or even dangerous jobs in companies and hence provides unclean. the Union and prevailing in India. 7. These will be discussed in the following section. It promises 100 days of guaranteed wage employment to all Fig. efforts can be broadly categorised into people cannot remain completely two — direct and indirect. 7.

This is the indirect down some of its specialist generation of employment opportunities departments (for example. Outsourcing of work is becoming a which purchase steel from it. employment. sometimes situated even in employment generation. will also common practice. All of areas such as primary health. INFORMALISATION AND OTHER ISSUES 133 2015-16(20/01/2015) . The expansion of the will also raise their output and hence service sector and the advent of high increase the number of employment technology now frequently permit a opportunities in the economy. are through individuals. It means that a increase their output and thus big firm finds it profitable to close employment. Simultaneously. of the individual worker. aimed at alleviating poverty.10 C ONCLUSION government to take up initiatives in There has been a change in the generating employment opportunities structure of workforce in India. has been altering in such programmes aim at providing not a manner that for many the home only employment but also services in is becoming the workplace. primary this change has not gone in favour education. but without degraded lands. They are other countries. side with the multinationals. rural drinking water. there constructing houses. it will small scale and often individual result in direct increase in employment enterprises or specialist workers side by in that government company. This has forced the 7. All these result. For highly competitive existence for efficient example. you would have number of small piecemeal jobs to very noticed that many programmes that small enterprises or specialist the governments implement. The traditional notion also known as employment of the modern factory or office. simultaneous increase in employment opportunities. development of community of social security measures to the assets by generating wage workers. construction of houses and sanitation. as a generation programmes. The nature nutrition. when a government owned steel company increases its output. service sections) and hand over a large In Chapter 4.private enterprises which receive raw emerging jobs are found mostly in the materials from government enterprises service sector. assistance for people to buy of employment has become more income and employment generating informal with only limited availability assets. private companies. Newly particularly in the rural areas. laying of rural has been rapid growth in the gross roads. development of wastelands/ domestic product. assistance for In the last two decades. legal or by the government initiatives in the computer programming or customer economy. EMPLOYMENT : GROWTH.

Ø About two-fifth of the total population in the country is engaged in various economic activities. Ø About three-fifth of India’s workforce depends on agriculture and other allied activities as the major source of livelihood. India has been witness to employment opportunities in the service sector. Define worker -population ratio. These new jobs are found mostly in the informal sector and the nature of jobs is also mostly casual. a smuggler. Ø In recent years. Recap Ø Allthose persons who are engaged in various economic activities and hence contribute to gross national product are workers. 3. a gambler? Why? 134 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . Ø Through various schemes and policies. Ø Government is the major formal sector employer in the country. the growth of employment has decelerated. Ø Majority of workers in India are self-employed. Who is a worker? 2. EXERCISES 1. Ø Men particularly rural men. Ø During post-reform period. Ø Disguised unemployment is a common form of unemployment in rural India. Casual wage labourers and regular salaried employees together account for less than half the proportion of India’s workforce. a thief. the government takes initiatives to generate employment directly and indirectly. Are the following workers — a beggar. Ø There has been a change in the structure of the workforce in India. form the major section of workforce in India.

Meena is a housewife. Analyse it and give reasons for the nature of workforce distribution.40 39. INFORMALISATION AND OTHER ISSUES 135 2015-16(20/01/2015) . The newly emerging jobs are found mostly in the sector (service/manufacturing). Can you estimate the workforce (urban and total) for India? Region Estimates of Worker Estimated Population Population No.88 41. 5. Find the odd man out (i) owner of a saloon (ii) a cobbler (iii) a cashier in Mother Dairy (iv) a tuition master (v) transport operator (vi) construction worker. 11. you will find him working in his farm. Raj is going to school. An establishement with four hired workers is known as (formal/informal) sector establishment.52 33.7 ? Total 100. more rural women are found working. 4. Why? 9. Compared to urban women. When he is not in school. she works in the cloth shop which is owned and operated by her husband.9 = 30. Can you consider him as a worker? Why? 8. of Workers (in crores) Ratio (in crores) Rural 71. Can she be considered as a worker? Why? 10. You will notice that the data is pertaining to the situation in India 30 years ago! Place of Residence Workforce (in millions) Male Female Total Rural 125 69 195 Urban 32 7 39 12.12 100 Urban 28. Besides taking care of household chores. The following table shows distribution of workforce in India for the year 1972-73. Find the odd man out (i) rickshaw puller who works under a rick- shaw owner (ii) mason (iii) mechanic shop worker (iv) shoeshine boy.9 71. 6.5 ? EMPLOYMENT : GROWTH. 7. The following table shows the population and worker population ratio for India in 1999-2000.88 × 41.

Interpret the results for differences in worker-population ratio for the different sub-regions. 2. Do you think that in the last 50 years. Victor is able to get work only for two hours in a day. Suppose 3-4 groups of students are given different regions of a state. Ask all the four groups to develop a report on what kind of employment could be generated in the four regions. Why are regular salaried employees more in urban areas than in rural areas? 14. say a street or colony. Comment. Select a region. Rest of the day. 3. Select 25 advertisements and 136 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . there has hardly been any change in the distribution of workforce across various industries. he is looking for work. Is he unemployed? Why? What kind of jobs could persons like Victor be doing? 20. If you are asked to advice the village panchayat. Compared to the 1970s. 16. Visit the local library and ask for Employment News. The fourth region has a river nearby with a lot of livestock rearing activities. Why are less women found in regular salaried employment? 15. One region is mainly engaged in cultivation of paddy. There will be seven issues. employment generated in the country is commensurate with the growth of GDP in India? How? 18. Conduct a survey by which you can collect the details of activity each person living there is engaged in. and divide it into 3. Analyse the recent trends in sectoral distribution of workforce in India. Who is a casual wage labourer? 22. The third region is a coastal region where fishing is the main activity.4 sub-regions. Is it necessary to generate employment in the formal sector rather than in the informal sector? Why? 19. 21. a weekly published by the Government of India. 17. Go through each issue for the last two months. coconut is the main plantation. what kinds of activities would you suggest for the improvement of your village which would also generate employment. How will you know whether a worker is working in the informal sector? SUGGESTED ADDITIONAL ACTIVITIES 1. In another region. Derive the worker -population ratio for all the regions. 13. You are residing in a village.

Number of posts/vacancies 7. ‘Employment and Unemployment Situation in 1990s: How Good are NSS Data. 1999. ‘Current Issues of Employment Policy in India. 2004. fill in the following table (expand the table as needed). and P. SAHU. 2027-2036. In recent years. S and M.1998-2026. REFERENCES CHADHA. Department/company 3. The issues covered could be the following (i) how the work was identified (ii) amount sanctioned (iii) contribution of local people. Prepare a critical assessment report on one such activity. pp. Name of the post 5. If you find such initiatives in your locality. 2002. Economic and Political Weekly.P. H IRWAY .’ Economic and Political Weekly. in your locality. Private/public/joint venture 4. construction of school buildings. you may have noticed that many voluntary organisations also take initiatives to generate employment in hilly and dry land regions. ‘Is Employment Driving India’s Growth Surge’. ‘Post-reform Setbacks in Rural Employment: Issues that need further scrutiny. INFORMALISATION AND OTHER ISSUES 137 2015-16(20/01/2015) . construction of check dams and houses for the poor etc. You might notice. D ESAI. 2592-2608.K. EMPLOYMENT : GROWTH. pp. May 25. Discuss the nature of jobs in the classroom. 3045-3051. visit and prepare a report. pp.DAS. Name of Office 2. G. September 4. pp. Sector—primary/seconday/ service 6. G HOSE. desilting of tanks.’ Economic and Political Weekly. if any (iv) number of persons involved — both men and women (v) wages paid (vi) is it really required in that area and other critical comments on the implementation of the scheme under which the work is being carried out. July 3. Qualification required 4. a variety of works being done by the government. 5. hospital and other government offices. May 25.B. Items Advertisement 1 Advertisement 2 1.’ Economic and Political Weekly. INDIRA. 2002. for example laying of roads. AJIT K.

‘Workforce in the Indian National Accounts Statistics.C. J ACOB . Economic and Political Weekly. ALOK KAR and R. Ministry of Labour. ‘Structure of the Indian Workforce. S UNDARAM.2. 2001.censusofindia. Websites www. pp.’ Economic and Political Weekly. No. 1996. Government of India. 3-39. G ULAB SINGH. Vol. Ministry of Statistics and Planning. 931-940. Primary Census Abstract. ‘Concept of ‘work’ and estimates of ‘workforce’ — An appraisal of the treatment of activities relating to non-marketed output. Vol.4. pp.in www. 1961-1994.39. K. 1999-2000. Census of India 2011.28. Government Reports Annual Reports. PAUL. 2081-2087. Number 4. MISHRA . Mar ch 17.mospi. ‘Labour Statistics in India: A Review. Government of India. 1996. Registrar General of Census Operations.R. A. Unemployment and Education: Wher e to go fr om here?’ Economic and Political Weekly. 2000. Economic Survey . 2001. pp. 1986.’ Sarvekshana. pp. Ministry of Home Affairs.nic. July. ‘Employment and Poverty in 1990s: Further Results from NSS 55th Round Employment-Unemployment Survey.4. PRA VIN. Delhi. 725-740.’ Margin. and M.22. NILAKANTHA. pp. B. pp. Vol. ‘Data on Employment.SALUJA.IX. Gover nment of India. 3039-3049. Reports on Employment and Unemployment Situation in India. Government of India.September. July. August 11.in 138 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . Ministry of Finance. 319-347. No. ‘Employment-Unemployment Situation in the Nineties: Some Results from NSS 55th Round Survey’. RATH. PRADHAN .K. April.. No. Vol. V ISARIA . 2001.L. S UNDARAM. June 9. Delhi.’ The Indian Jour nal of Labour Economics.nic.’ The Journal of Income and Wealth. K. KULSHRESHTHA.

2015-16(20/01/2015) . the learners will • understand the main challenges India faces in the areas of social and economic infrastructure • know the role of infrastructure in economic development • understand the role of energy as a critical component of infrastructure • understand the problems and prospects of the energy and health sectors • understand the health infrastructure of India. 8 INFRASTRUCTURE After studying this chapter.

oil and excel than other states of India. ‘tomorrow’.2 WHAT IS INFRASTRUCTURE? care and sanitation and also attracts tourists in such large numbers? Why Infrastructure provides supporting does Karnataka’s information services in the main areas of industrial technology industry attracts world and agricultural production. dams. or system including schools and colleges. has excelled in literacy. To him. “Many things we need can wait.1 Roads are the missing link with growth sector of the economy. 8. are located near ports which makes raw health system including hospitals. the child cannot. health 8. 140 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . How and Gujarat industrially more then does infrastructure facilitate advanced than others? How come development? Kerala. power stations. Others facilities. do Punjab. horticulture? Why are Maharashtra constitute its infrastructure. the country’s educational have better transportation facilities. telecommunication have better irrigation facilities. insurance and other financial institu- tions. Haryana and Himachal All these support structures.” Gabrriella Mistra l— Chilean poet So is the Infrastructure. materials required for various sanitary system including clean drinking water facili- ties and the monetary system including banks. which Pradesh prosper in agriculture and facilitate development of a country. better infrastructure in the areas they airports. Some of these facilities have a direct impact on production of goods and services while others give indirect support by building the social Fig. railways. These It is all because these states have services include roads. we cannot say. domestic attention? and foreign trade and commerce. popularly known as ‘God’s own country’. Cities like Bengaluru in Have you ever thought of why some Karnataka attract many multinational states in India are performing much companies because they provide better than others in certain areas? Why world-class communication facilities. ports. 8. Some gas pipelines.1 INTRODUCTION manufacturing industries easily accessible. His name is today.

and safety hazards connected to transportation also affect morbidity. both by increasing the productivity of Infrastructure associated with energy. speedy and large-scale transport of seeds. Your locality may also communication infrastructure can be requiring a few more. Fig. health and housing are included in Improvements in water supply and the latter. the government has been agriculture also largely depends on it for solely responsible for developing the INFRASTRUCUTRE 141 2015-16(20/01/2015) . infrastructure. Modern Traditionally.3 RELEVANCE OF INFRASTRUCTURE 8. the factors of production and improving transportation and communication the quality of life of its people. agriculture also depends on insurance and banking facilities because of its need to operate on a very large scale. particularly in densely populated areas. sanitation have a large impact by reducing morbidity (meaning proneness to fall ill) from major Work This Out waterborne diseases and reducing the severity of disease when it occurs.4 THE STATE OF INFRASTRUCTURE IN Infrastructure is the support system on INDIA which depends the efficient working of a modern industrial economy. In recent times. multiple adverse effects on health. fertilisers and the produce using modern roadways. affect access to health care. Air pollution List those separately. 8. are included in the former category Inadequate infrastructure can have whereas those related to education. pesticides. railways and shipping facilities. In Ø In your locality or addition to the obvious linkage between neighbourhood you might be using a variety of water and sanitation and health.2 Schools: an important infrastructure for a nation Infrastructure contributes to Some divide infrastructure into economic development of a country two categories — economic and social. 8. List all of the quality of transport and those.

3 Dams: temples of development water from open country’s infrastructure. 8. The census 2001 shows that in rural India only 56 per cent households have an electricity connection and 43 Fig. About 76 per cent of the population drinks Fig. to the call. ponds. has started playing a very state of some infrastructure in India in important role in infrastructure comparison to a few other countries. About 90 per cent of the rural households use bio-fuels for cooking. canals. per cent still use kerosene. rivers. etc. the private sector by itself and only 20 per cent. also in joint partnership with the public Look at Table 8. Despite so much development. development. tanks.1 which shows the sector. They walk long dis- tances to fetch fuel. found that the government’s investment lakes. India is yet to wake up technical progress in the world. 8. improved sanitation in rural areas was Today. But it was sources such as wells. Access to in infrastructure was inadequate. Though it is widely understood that A majority of our people live infrastructure is the foundation of in rural areas. India invests only 5 per cent rural women are still using bio-fuels such as crop residues. Tap water availability is limited to only 24 per cent rural households.4 Safe drinking water with pucca house: still a dream 142 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . dung and fuel wood to meet their energy requirement. water and other basic needs.

irrigation. Private and most of their basic consumption Public Partnership (PPP) demands are met. as the income rises. Build Operate Transfer (BOT). Obviously. Special basic infrastructure services like Purpose Vehicle (SPV). Industrial progress depends far below that of China and Indonesia. India will of infrastructure. on the adequate expansion and development of irrigation of its GDP on infrastructure. transport and power are Special Economic Zones more important. Make a scrapbook of agriculture in the economy shrinks and news items containing more service related infrastructure is these terms. TABLE 8. Agriculture depends. transport and that India will become the third biggest communications. on the development of power and Some economists have projected electricity generation.1 Some Infrastructure in India and other Countries Country Investment* in Access to Access to Mobile Power Infrastructure Improved Improved Subscribers/100 Generation as a % GDP Water Source Sanitation (%) People (billion kwh) (2013) (2012) (%) 2012 (2013) 2011 China 49 92 65 89 4715 Hong Kong 24 92 100 239 39 India 30 84 35 71 1052 South Korea 29 98 100 111 520 Pakistan 14 91 47 70 95 Singapore 29 100 100 156 46 Indonesia 34 84 59 122 182 Source: World Development Indicators. considerable extent. collect and economic development go hand in the details of other infras. the share of etc. How are these required. to a tructure. hand. For low-income countries. if proper economy in the world a few decades attention is not paid to the development from now./ ( * ) refers to Gross Capital Formation. which is facilities. the composition of Ø While reading newspapers infrastructure requirements changes you will come across terms significantly. This is why the share of power terms related to infras. it is likely to act as a INFRASTRUCUTRE 143 2015-16(20/01/2015) . Ø Using the references at the Thus. In any country. like Bharat nirman. world bank website: www. For that to happen. and telecommunication infrastructure tructure? is greater in high-income countries.org. As economies mature (SEZ). development of infrastructure end of the chapter.worldbank. have to boost its infrastructure Work These Out investment.

144 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . These are non- commercial as they are found in nature/forests. Fig. household lighting and electricity as they are bought and heating. 8.5 Fuel wood is the major source of energy needs. It is. non- commercial sources are generally renewable. While commercial sources of energy are generally exhaustible (with the exception of hydropower). pesticides and farm sources of energy. Can you think of producing a sold. 8. Non-commercial sources of commodity or service without using energy are firewood. transportation market Now it is used on a large scale in agriculture and related areas Sources of Energy: There are like production and transportation of commercial and non-commercial fertilisers. More than 60 per cent of Indian households depend on traditional sources of energy for meeting their regular cooking and heating Fig. It is required in houses for sources are coal.6 Bullock carts still play a crucial role in rural essential for industries. agricultural energy? waste and dried dung. 8.5 ENERGY Why do we need energy? In what forms is it available? Energy is a critical aspect of the development process of a nation. Commercial equipment. In this chapter the focus will be on only two kinds of infrastructure —those associated with energy and health. petroleum and cooking.severe constraint on economic development. of course.

and its linkages to the economy.2. There are three other sources of energy which are commonly termed as non-conventional sources — solar energy. This includes coal with the largest share of 54 per cent. 8. India has almost unlimited potential for producing all three types of Fig. consumption makes up about 74 per cent of the total energy consumed in India. Non-commercial energy sources consisting of firewood. The transport sector was the largest consumer of commercial energy in 1953-54. which is likely to grow rapidly in the near future. agriculture and industrial power sector have been increasing. natural gas at 10 per cent and hydro energy at 2 per cent. cow dung and agricultural wastes account for over 26 per cent of the total energy consumption. commercial energy technologies can be developed.Non-conventional Sources of Energy: Both commercial and non-commercial sources of energy are known as conventional sources of energy. 8. is the import dependence on crude and petroleum products. followed by oil at 32 per cent. The critical feature of India’s energy sector. The share INFRASTRUCUTRE 145 2015-16(20/01/2015) . Even cheaper Energy: In India. Being a tropical country.8 Solar energy has great prospects energy if some appropriate cost effective technologies that are already Consumption Pattern of Commercial available are used. However. wind energy and tidal power. there has been continuous fall in the share of the transport sector while the shares of the Fig. The sectoral pattern of consumption of commercial energy is given in Table 8.7 Wind mill : another source of generating household.

2013 2 per cent. is sources accounted for 70 per cent power. 16% hence. commonly called electricity. Vol. which is often identified In India. a critical component of infrastructure Hydel and wind power accounted for that determines the economic 16 per cent while nuclear power accounted only for Chart 8. has been a corresponding increase in Studies point that in order to have 8 the use of energy. form of energy. 146 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . Government of India. Planning Commission.1: Different Sources of Electricity Generated in India. II.2 Trends in Sectoral Share of Commercial Energy Consumption (in %) Sector 1953-54 1970-71 1990-91 2012-13 Household 10 12 12 22 Agriculture 01 03 08 18 Industries 40 50 45 45 Transport 44 28 22 2 Others 5 07 13 13 Total 100 100 100 100 Source: Ninth Five year Plan. Chapter 6. there higher than the GDP growth rate. With rate of demand for power is generally the rapid rate of economic growth. in 2012-13. avoid carbon 70% emissions. New Delhi and Growth of Electricty Sector in India from 1947–2013. per cent GDP growth per annum. Ministry of Power. It is of the power generation capacity. TABLE 8. thermal with progress in modern civilization. The growth commercial energy consumption. India’s energy policy encourages two energy sources— 12 2% hydel and wind —as % they do not rely on fossil fuel and. Gover nment of India. Yet. of oil and gas is highest among all development of a country. power supply needs to grow around 12 per Power/Electricity: The most visible cent annually. Central Electricity Authority. this has not resulted in faster growth of electricity produced from these two sources.

sources of energy. India’s commercial energy Atomic energy is an important supply needs to grow at about 7 per source of electric power. is not sufficient to feed an annual economic growth of 7-8 per cent. Outlook. a part power. and power produced from What we get in our houses. nuclear energy only 20. a portion is lost in transmission.000 MW a year. It is being applied to heat water. from the view point of environment and sustainable Work These Out development. 01 August 2005). Large-scale use of solar energy. some scholars suggest which distribute electricity. incur to generate more electricity through losses which exceed Rs 500 billion. power traffic lights and advertising hoardings. it has economic cent.1: Making a Difference Thane city is acquiring a brand new image — an environment friendly make over. And leading this unique experiment is the Thane Municipal Corporation. which was considered a somewhat far - fetched concept. This is far (ii) State Electricity Boards (SEBs). What are Some of the challenges that India’s their comparative merits power sector faces today are (i) India’s and demerits? Discuss in installed capacity to generate electricity the class. At present. What do you think? Ø Among other sources of Some Challenges in the Power energy. (Appeared in the column. offices and tides are going to be future factories is the net availability. has brought in real benefits and results in cost and energy saving. Hence. Why? is consumed by power station auxiliaries. India is able to add advantages. wind power power. Also. others object about this. you would have Sector: Electricity generated by noticed that a marginal share various power stations is not consumed of energy comes from nuclear entirely by ultimate consumers. against a global because plants are not run properly average of 13 per cent. Making a Difference. Ø Can you suggest such other ideas to use non-conventional energy in a better way? INFRASTRUCUTRE 147 2015-16(20/01/2015) . while transmitting Ø Solar energy. too low. atmoic (nuclear) sources and yet a few This is due to transmission and Box 8. In order to meet the growing demand for electricity. It has made compulsory for all new buildings in the city to install solar water heating system. At present. Even the accounts for only 2 per cent of total installed capacity is under-utilised energy consumption.

Box 8. This was succeeded by the Delhi Electric Supply Undertaking (DESU) in 1958. The Delhi Vidyut Board (DVB) came into existence as SEB in February 1997.2: Power Distribution: The Case of Delhi Since independence. The Delhi State Electricity Board (DSEB) was set up in 1951. continued economic woes of SEBs (iii) private sector power development and population growth generators are yet to play their role in a are driving the demand for energy faster major way. 148 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . wrong pricing of and prolonged power cuts in different electricity and other inefficiencies. Some parts of the country (v) thermal power scholars also say that distribution of plants which are the mainstay of India’s electricity to farmers is the main reason power sector are facing shortage of raw for the losses. Box 8. replacement of one million 100-watt bulbs with 20 watt CFLs can save 80 megawatt in power generation. power management in the capital has changed hands four times. same is the case with than what India is producing currently. The tariff structure and other regulatory issues are monitored by the Delhi Electricity Regulatory Commission (DERC). Though it was expected that there will be greater improvement in power distribution and the consumers will benefit in a major way. exploration. Now the distribution of electricity vests with two leading Private sector companies .Reliance Energy Limited (BSES Rajdhani Power Limited and BSES Yamuna Power Limited) and Tata . Source: Use Common Sense to Solve Power Crisis.Power Limited (NDPL). electricity is also stolen material and coal supplies. foreign investors (iv) there is general More public investment. As put by a CFL manufacturer. better research public unrest due to high power tariffs and development efforts.3: Saving Energy : Promoting the Case of Compact Fluorescent Lamps (CFL) According to the Bureau of Energy Efficiency (BEE). They supply electricity to approximately 43 lakh customers in Delhi. Indo-Asian. distribution losses. in different areas which also adds to the Thus. CFLs consume 80 per cent less power as compared to ordinary bulbs. This amounts to saving Rs 400 crore. 01 October 2005. experience shows unsatisfactory results. by Naresh Minocha in Tehelka.

Discuss them with your parents and the elderly. Do you think energy consumption is an effective indicator of development? Country Per Capita Income Per Capita Consumption of (in US dollars) in Energy (KWh) in 2011 2012 (ppp) India 3. Ø Who supplies power to you and where is it generated? Can you think of other cheaper alternative sources which could help in lighting your house or cooking food or for travelling to far away places? Ø Look at the following table.3). Do you think it is a of investing in the power sector by right policy? adding to installed capacity. Also find out the total electricity demand of your city and how it is being met.6 HEALTH of the power sector and particularly the Health is not only absence of disease distribution (see Box 8.880 5.K.290 7.810 680 Egypt 6. 50. technological innovation and use of much higher prices for electricity that renewable energy sources can ensure have impacted certain sectors very additional supply of electricity. Ø You might notice people using variety of methods to save electricity and other energy.worldbank.840 684 Indonesia 4. note down the points and discuss them in class. Instead badly (see Box 3. while using the gas stove.610 13.A. For instance.848 U. the government has gone for privatisation 8. Work These Out Ø What kind of energy do you use in your house? Find out from your parents the amount they spend in a month on different types of energy.org Ø Find out how power is distributed in your area/state. some suggestions are made by gas agencies for using the gas efficiently and economically. 36.2) and allowed but also the ability to realise one’s INFRASTRUCUTRE 149 2015-16(20/01/2015) . www.S.248 Source: World Development Indicators.640 1743 U.472 Japan 36.

for production of goods and services. related to the overall growth and doctors. In recent times. Since. curative and preventive. let us ensures a country of healthy manpower discuss the status of health in India. to achieve this vision? Before we discuss Development of health infrastructure various health infrastructure. Health being. life expectancy individual should fail to secure medical and nutrition levels. 8. because of incidence of communicable and non. It is a yardstick of one’s well ensure the right to healthy living. Generally scholars assess accessible to all the people. along with the care. the people’s health by taking into account initial stages of planned development.9 Health infrastructure is still lacking in large parts of the country 150 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . It is government has the constitutional the responsibility of the government to obligation to guide and regulate all Fig. But are we able communicable diseases. equipment required twentieth century has seen a global in hospitals and a well-developed transformation in human health pharmaceutical industry. the inability to pay for it. scholars argue that people State of Health Infrastructure: The are entitled to health care facilities. it may be that mere presence of health difficult to define the health status of a infrastructure is not sufficient to have nation in terms of a single set of healthy people: the same should be measures. beds. It is also true unmatched in history. Though the professionals. indicators like infant mortality and policy-makers envisaged that no maternal mortality rates. nurses and other para-medical development of the nation. Health is the holistic process infrastructure includes hospitals.potential.

Over the years. Item 1951 1981 2000 2013-14 medical profession. vital statistics.5) have been set up by the will study more in the next section. mental deficiency and Hospitals 2. 60 per cent of dispensaries are run by Since independence. while the public health variety of hospitals technically known as sector has not been so successful in Primary Health Centres (PHCs) (see also delivering the goods about which we Box 8. More than 70 per cent of the agencies and the private sector. 1951-2010 of food. These hospitals in India are run by the private hospitals are manned by professionals sector.3 lakh.300 to 44. Expansion of health medical services. 761 3. New Delhi. there has been the same private sector.817 lunacy. India has built up a vast health infrastructure and manpower Private Sector Health Infrastructure: at different levels. government. guinea worms enterprises employing 22 lakh people.684 financial and technical assistance CHCs . person owned.44 and sale of pharmaceuticals. medical beds from 1.708 evolves broad policies and plans Dispensaries 6.000 5. hospital lakh and allopathic doctors from 0.2 to 6. drugs and poisons.000 and hospital education and training.in country.043 5.04.448 Health and Family Welfare.3 medical education. 84. At the village level.694 6. They control nearly two-fifth of and para-medical professionals trained in beds available in the hospitals. and the near eradication of polio and more than 80 per cent of them are single leprosy.37. the number of government In recent times. private sector has hospitals and dispensaries increased been playing a dominant role in medical from 9.115 22.51.187 to state governments. 1951-2013. They provide a significant expansion in the physical healthcare for 80 per cent of out- provision of health services.745 23.805 15. It collects information and renders Subcentres .861 6.19.736 1.600 16.nic. In 2001-02. Government of India.065 24.888 19.17. During patients and 46 per cent of in-patients.18 to 23.2 lakh.538 7. Also nursing technology and diagnostics.842 24.28. The Union Government Beds 1. a In recent times. Nearly medical. Ministry of Health and Family Welfare.311 1. 2005 and National health programmes in the Health Profile 2010. there infrastructure has resulted in the were more than 13 lakh medical eradication of smallpox. www.health related issues such as TABLE 8.392 through the Central Council of PHCs 725 9. India also has a large private sector has grown by leaps and number of hospitals run by voluntary bounds. union territories and other bodies for Sources: National Commission on Macroeconomics and implementation of important Health. adulteration Public Health Infrastructure in India.62 construction and the provision of to 9.cbhidghs. pharmacy and nursing colleges. and operated by one INFRASTRUCUTRE 151 2015-16(20/01/2015) . manufacture personnel increased from 0.

X-ray. Auxiliary Nursing Midwife (ANM) is the first person who provides primary healthcare in rural areas. Bangalore and All India Institute of Hygiene and Public Health. promotion of mental health and provision of essential drugs. a nurse and a limited quantity of medicines. promotion of food supply and proper nutrition and adequate supply of water and basic sanitation. Source: Report of the National Commission on Macroeconomics and Health. Chandigarh. National Institute of Mental Health and Neuro Sciences. Primary health care includes education concerning prevailing health problems and methods of identifying. maternal and child health care. Hospitals which have better facilities for surgery. Electro Cardio Gram (ECG) are called secondary health care institutions. The tertiary sector also includes many premier institutes which not only impart quality medical Polio drops being given to an infant education and conduct research but also provide specialised health care. All those hospitals which have advanced level equipment and medicines and undertake all the complicated health problems. In order to provide primary health care. secondary and tertiary. Box 8. Pondicherry. immunisation against major infectious diseases and injuries. hospitals have been set up in villages and small towns which are generally manned by a single doctor. come under the tertiary sector. Post Graduate Institute. they are referred to secondary or tertiary hospitals. Jawaharlal Institute of Postgraduate Medical Education and Research. New Delhi. which could not be managed by primary and secondary hospitals. They function both as primary health care provider and also provide better healthcare facilities. They are mostly located in district headquarters and in big towns. Some of them are — All India Institute of Medical Science. Kolkata.5: Health System in India India’s health infrastructure and health care is made up of a three-tier system — primary. preventing and controlling them. 2005. When the condition of a patient is not A health awareness meeting in progress managed by PHCs. They are known as Primary Health Centres (PHC). Community Health Centres (CHC) and sub-centres. 152 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) .

Do you think most people But little has been done to set up a Box 8. dental and even cosmetic care. It functions with the idea that the people can be trained and involved in primary healthcare system. Kashtakari Sangathan. Maharashtra. trains women health workers at the village level to treat simple illnesses at minimal cost.50. Madhya Pradesh. Indian Systems of Medicine (ISM): Since the 1990s. where in the context of a tribal people’s organisation.7: Community and Non-Profit Organisations in Healthcare One of the important aspects of a good healthcare system is community participation. liberalisation measures. Scholars point out that the specialty hospitals? Why not? What private sector in India has grown could be done so that every person in independently without any major India access a decent quality health regulation. INFRASTRUCUTRE 153 2015-16(20/01/2015) . Yoga. Experts predict that by 2012 India could earn more than 100 billion rupees through such ‘medical tourism’. This method is already being used in some parts of our country. 26. person occasionally employing a hired in India can get access to such super- worker. built in 1983 and sustained by the workers of CMSS (Chhattisgarh Mines Shramik Sangh) in Durg. Why? Because our health services combine latest medical technologies with qualified professionals and is cheaper for foreigners as compared to costs of similar health care services in their own countries. Health infrastructure can be upgraded to attract more foreigners to India. as many as 1.000 state-of-the-art super-specialty hospitals dispensaries and as many as 7 lakh to attract India’s rich and medical tourists registered practitioners in India. Siddha.6: Medical Tourism — A great opportunity You might have seen and heard on TV news or read in newspapers about foreigners flocking to India for surgeries. some private practitioners care? are not even registered doctors and are known as quacks.000 foreigners visited India for medical treatment. And this figure is likely to increase by 15 per cent each year. (see Box 8. The most well-known and pioneering initiative in this regard has been Shahid Hospital. Trade unions have built alternative health care services for their members and also to give low-cost health care to people from nearby villages.6). SEWA in Ahmedabad and ACCORD in Nilgiris could be the examples of some such NGOs working in India. In the year 2004-05. Box 8. owing to It includes six systems — Ayurveda. Unani. One example is in Thane. many non. Naturopathy and resident Indians and industrial and Homeopathy (AYUSH). liver transplants. At present there pharmaceutical companies have set up are 3167 ISM hospitals. A few attempts have also been made by rural organisations to build alternative healthcare initiatives.

5 total government spending (%) Out of pocket expenditure as a % of 86 79 22 83 private expenditure on health Sources: World Health Statistics 2013 and www.000 live-births 56 14 7 10 Birth by skilled attendants (% of total) 67 96 99 99 Fully immunised 72 99 99 99 Health expenditure as % of GDP 3. Some of the children die of water-borne diseases.2 per cent of total the population utilises public health GDP. Every year around five lakh communicable diseases.4 Indicators of Health in India in Comparison with other Countries. ISM has huge has about 17 per cent of the world’s potential and can solve a large part of population but it bears a frightening 20 our health care problems because they per cent of the global burden of diseases are effective. Scholars argue Malnutrition and inadequate supply of that there is greater scope for the role vaccines lead to the death of 2.000 live births 44 12 6 8 Under-5 mortality /1. the health status spent by them in a state of ‘disability’ of a country can be assessed through owing to the disease. GBD is an indicator used by experts to gauge the number of people Indicators of Health and Health dying prematurely due to a particular Infrastructure—A Critical Appraisal: disease as well as the number of years As pointed out earlier. malaria and incidence of communicable and non.org framework to standardise education or One study points out that India to promote research. One study has pointed out compared to other countries.2 12. the required number of doctors and 154 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . tuberculosis. danger of AIDS is also looming large. both that only 38 per cent of the PHCs have developed and developing.5 20. This is abysmally low as facilities. and India’s position.1 17. (GBD).9 5. For children every year. life expectancy accounted for by communicable diseases and nutrition levels. 2012 Indicators India China USA Sri Lanka Infant Mortality Rate/1. along with the such as diarrhoea. more than half of GBD is maternal mortality rates.worldbank.3 6. TABLE 8. instance. indicators such as infant mortality and In India.3 Government health spending to 8.2 million of government in the health sector.4. safe and inexpensive.7 3. are given in Table 8. less than 20 per cent of on health sector as 8. the table shows expenditure At present. The health indicators.

Ø Find out NGOs working in your area in the field of healthcare.3 lakh beds in government sufficient stock of medicines. roughly 30 per cent are available in rural areas. there are only 0. This population lives in rural areas.6 INFRASTRUCUTRE 155 2015-16(20/01/2015) .36 areas. Rural India has only about half hospitals for every one lakh people in the number of dispensaries. Discuss the details in class. Collect information about their activities and discuss in the classroom. Also collect the details of the number of private hospitals. Ø Debate in the class on the topic — ‘Should we build an army of tais (mid- wives) to take care of the poor. Yojana. medical shops and other such facilities in your locality. Find out the number of children receiving immunisation from them.2 per cent of the population below the poverty line each year. September 2005). Thus. Their experiment has been successful (Shodh Yatra (innovation). Out of rural areas while urban areas have 3. scan centres. If you know anyone whose innovative methods improve the health status of people or if you know someone who has a knowledge of medicinal plants and heals the ailments of people. Ø Do you think Indian cities could be provided with world-class health infrastructure so that they will become attractive for medical tourists? Or should the government concentrate on providing health infrastructure for people in rural areas? What should be the priority of the government? Debate. As far as hospitals are private hospitals) are located in rural concerned. You can also write to local newspapers or magazines. Ø Two students — Leena Talukdar (16) and Sushanta Mahanta (16) of Assam — have developed a herbal mosquito repellent ‘jag’ using a few locally available medicinal plants — paddy straw. hospitals. people Urban-Rural and Poor-Rich Divide: living in rural areas do not have Though 70 per cent of India’s sufficient medical infrastructure. who cannot afford the services of the thou- sands of medical graduates who pass out of our medical colleges every year?’ ØA study estimates that medical costs alone push down 2. only 30 per cent of the PHCs have about 6. Work These Out Ø Visit a primary health centre located in your area or neighbourhood. How? Ø Visit a few hospitals in your locality. Ask the hospital staff about the number of children immunised 5 years ago. husk and dried garbage. only has led to differences in the health one-fifth of its hospitals (including status of people. speak to them and bring them to class or collect information about why and how they treat ailments. Share this with your class. medical laboratories.

What happens when the poor any specialised medical care like fall sick? Many have to sell their land paediatrics. In the The poorest 20 per cent of Indians rural areas. Small pox has been eradicated and the goal to eradicate leprosy and polio looks achievable. 8. the percentage of people living in both urban and rural areas who have no access to proper care has spend 12 per cent of their income on increased over the last few years. many Bihar. Compare these with the rest of the world. Work These Out Ø The overall health status of the country has certainly improved through the years. infant mortality rate has come down. Collect the details of the problem.000 medical graduates every people. doctor graduates leave the country for constitutes basic healthcare. the nature of treatment they took and the amount of money their parents spent on their treatment.10 Despite availing of various healthcare measures. The PHCs located in rural areas year. Madhya Pradesh. behind in health care facilities. Discuss the information in class. But these statistics seem good only when you look at them in isolation. gynaecology. healthcare while the rich spend only 2 Villagers have no access to per cent. the shortage of doctors in rural do not offer even X-ray or blood testing areas persists. maternal health is cause for concern 156 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . anaesthesia or even pledge their children to afford and obstetrics. hospitals for the same number of about 44. While one-fifth of these facilities which. Life expectancy has gone up. If it is due to health problems then find out what kind of medical problem they had. Even though 380 treatment. States like better monetary prospects. You can get these details from World Health Report brought out by World Health Organisation What do you find? Ø Observe your class for a month and find out why some students remain absent. for a city dweller. Rajasthan and others opt for private hospitals which Uttar Pradesh are relatively lagging are mostly located in urban areas. Since government-run recognised medical colleges produce hospitals do not provide sufficient Fig.

infrastructure.7 CONCLUSION points to the growing incidence of female foeticide in the country. its cause of maternal morbidity and distribution is uneven. The ultimate goal should infrastructure for all. 8. If we continue to Women’s Health: Women constitute ignore this deepening divide. It is. Health is a vital public good and a telecommunication facilities. both economic and to 3.00. is essential for the development are not only married but have already of a country. electricity. The effectiveness of healthcare — energy and health — it is clear that programmes also rests on primary there is scope for equal access to healthcare. rural India are yet to get good roads. as revealed by the census of 2011. As India moves better health facilities if public health towards modernisation. INFRASTRUCUTRE 157 2015-16(20/01/2015) . reform policies by providing various critical to create awareness on health concessions and incentives. Or else they opt to die. Close Infrastructure. The health infrastructure. will have to be addressed. the long-term battle against diseases keeping in view their environmental depends on education and efficient impact. The role of telecom and IT and foreign investors in particular. sectors cannot be neglected in this While assessing the two infrastructure process. They suffer many disadvantages economic fabric of our country. Many parts of mortality in India. the increase in services are decentralised. In as compared to men in the areas of order to provide basic healthcare to all. India has contributed to 19 per cent of maternal made considerable progress in building deaths. As a support system. aim at and hygiene and provide efficient attracting the private sector in general systems. basic human right. education. therefore.000 girls under the age of 15 social. The accessibility and affordability need to deterioration in the child sex ratio in be integrated in our basic health the country from 927 in 2001 to 914. the poor are driven to private be to help people move towards a hospitals which makes them indebted better quality of life. Success in demand for quality infrastrucutre. participation in economic activities and health care. In the last caused by iron deficiency.facilities. it borne children at least once. There is a sharp forever. we run about half the total population in the risk of destabilising the socio- India. All citizens can get schools and hospitals. More than directly influences all economic 50 per cent of married women between activities by increasing the productivity the age group of 15 and 49 have of the factors of production and anaemia and nutritional anaemia improving the quality of life. which has six decades of independence. Abortions are also a major infrastructure. nevertheless. divide between the urban and rural healthcare in India.

Ø Public and private partnership is required to bring in huge funds for infrastructural development. at the same time. Ø Infrastructureneeds to be upgraded from time to time to maintain high economic growth rate. Ø Health is a yardstick of human well-being. Ø Women’s health across the country has become a matter of great concern with reports of increasing cases of female foeticide and mortality. NGOs and community participation are very important in providing health care facilities and spreading health awareness. transmission and distribution levels. It is an important base for economic development of the country. Ø Non-conventional sources of energy can be of great support to meet shortage of energy. 158 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . Ø The power sector is facing a number of problems at generation. Better infrastructural facilities have attracted more foreign investments and tourists to India recently. There is a big gap between consumer demand and supply of electricity in India. Recap Ø Infrastructure is a network of physical facilities and public services and with this social infrastructure is equally important to support it. There is a great scope of advancement of medical tourism in India. Ø Regulated private sector health services can improve the situation and. Ø Natural systems of medicine have to be explored and used to support public health. Ø There has been significant expansion in physical provision of health services and improvements in health indicators since independence. Ø There is a wide gap between rural-urban areas and between poor and rich in utilising health care facilities. physical as well as mental. Ø Energy is very vital for rapid economic growth. Ø It is important to develop rural infrastructural facilities. Ø Public health system and facilities are not sufficient for the bulk of the population.

How are both interdependent? 3. Discuss the reforms which have been initiated recently to meet the energy crisis in India. 18. Describe the meaning of public health. How has women’s health become a matter of great concern? 19. What problems are being faced by the power sector in India? 14. What is the significance of ‘energy’? Differentiate between commercial and non-commercial sources of energy. EXERCISES 1. How has the consumption pattern of energy changed over the years? 12. Explain the term ‘infrastructure’. Do you agree? Explain. Explain the two categories into which infrastructure is divided. Differentiate the six systems of Indian medicine. 5. How do infrastructure facilities boost production? 4. What are the various non-commercial sources of energy? 10. 7. 15. How are the rates of consumption of energy and economic growth connected? 13. 11. What do you mean by transmission and distribution losses? How can they be reduced? 9. What are the main characteristics of health of the people of our country? 16. 20. Discuss the major public health measures undertaken by the state in recent years to control diseases. 2. Justify that energy crisis can be overcome with the use of renewable sources of energy. What is a ‘global burden of disease’? 17. What are the three basic sources of generating power? 8. What is the state of rural infrastructure in India? 6. Discuss the main drawbacks of our health care system. How can we increase the effectiveness of health care programmes? INFRASTRUCUTRE 159 2015-16(20/01/2015) . Infrastructure contributes to the economic development of a country. 21.

The class can be divided into groups to make a survey of energy use in their neighbourhood. All you have to do is be slightly more alert and careful. 3. 5. Did you know that to bring a megawatt of electricity to your homes. 4. 160 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . you can start right away. (iii) How much employment will it generate? (iv) What will be the overall benefits after its completion? (v) How long will it take to be completed? (vi) Company/companies engaged in the project. And the best thing is. Penguin Books. SUGGESTED ADDITIONAL ACTIVITIES 1. Note down the monthly consumption of electricity in your house.). the architect of modern India’s energy establishments. so do warped attitudes and closed minds make for mental ill-health’. (ii) The sources of its financing. find out (i) The budget allotted for the project. Involve the rest of your family in this effort and see the difference. Hold a classroom discussion or debate on — ‘warring nations make for an unhealthy world. 1993. Visit any nearby thermal power station/hydro-power station/nuclear power plant. in fact. See the difference in the bill amount after you apply energy saving tactics. Isn’t this reason enough for you to begin conserving energy in your house? Electricity saved is money saved. Delhi. REFERENCES Books J ALAN. Graphs can be made by the different groups and compared to find out possible reason for preference of one particular fuel. Observe how these plants work. you realise there is no need for so many lights and fans around you. Then. Study the life and work of Dr Homi Bhaba. BIMAL (Ed. 2. it is worth much more than electricity generated. The Indian Economy — Problems and Prospects. The aim of the survey should be to find out which particular fuel is most used in the neighbourhood and the quantity in which it is used. Every time your electricity bill reaches home. 6. 30-40 million rupees are spent? Building a new power plant would cost millions. Find out what infrastructure projects are in progress in your area.

Government of India. Promoting Healthy Life. Reducing Risks. New Delhi. India 2020: A Vision for the New Millennium. K IRIT S. PARIKH. Geneva.com www. 2005. World Development Indicators. Washington DC. 2005. Tenth Five Year Plan.nic. 2002.J. Vols. Government of In- dia.P.com www. Expert Group on the Commercialisaton of Infrastructure Projects.in http://powermin.cbhidghs.org http://mohfw. Oxford University Press.). Oxford University Press. National Health Profile (NHP) of India for various years. The India Infrastructure Report: Policy Imperatives for Growth and Welfare 1996. Penguin Books. New Delhi.in On health related issues: http://www. Report of the National Commission on Macroeconomics and Health. World Health Organisation. Vol.res.apollohospitalsgroup. India Development Report 2004-05.S.org www. Delhi.1. A. World Health Statistics 2014. AND RADHAKRISHNA (Eds. New Delhi. KALAM. Ministry of Health and Family Welfare.teri.nic.nic. India Infrastructure Report 2004.worldbank. Government of India.edu http://www.whoindia. The World Bank.pcra.in INFRASTRUCUTRE 161 2015-16(20/01/2015) . New Delhi. World Development Report 2004. RAJAN. Planning Commission. Delhi. Central Bureau of Health Intelligence.bee-india. The World Bank. 2013.org www.edugreen. Government Reports The World Health Report 2002. Ministry of Finance. New Delhi. 2 and 3 Ministry of Finance. Government of India.2. ABDUL WITH Y. Geneva.aiims. Washington. Goverment of India. Websites On energy related issues: www.in www. Economic Survey 2004-2005. World Health Organisation.

the learners will • understand the concept of environment • analyse the causes and effects of ‘environmental degradation’ and ‘resource depletion’ • understand the nature of environmental challenges facing India • relate environmental issues to the larger context of sustainable development.9 ENVIRONMENT AND SUSTAINABLE DEVELOPMENT After studying this chapter. 162 INDIAN ECONOMIC DEVELOPMENT .

fossil fuel (ii) it to achieve sustainable development. are those India’s environment and the third which get exhausted with extraction section deals with steps and strategies and use. forests. we have to bear in abiotic components of the environment. While all living elements — the In the earlier chapters we have birds. Non-renewable second section discusses the state of resources. — are biotic elements. we have to first can be used without the possibility of understand the significance and the resource becoming depleted or contribution of environment to exhausted.2 ENVIRONMENT — DEFINITION AND (iv) it also provides aesthetic services FUNCTIONS like scenery etc. The environment. left to itself. That is. Examples of renewable sections. with modern technology. for example. The single most unstable and potentially disruptive element in the scheme is the human species. intentionally or unintentionally. discussed the main economic issues fisheries etc. assimilates waste (iii) it sustains life by providing genetic and bio diversity and 9. The abiotic elements include air. As we step into an era of then calls for a study of the inter- globalisation that promises higher relationship between these biotic and economic growth.1 INTRODUCTION and abiotic factors that influence each other. animals and plants. The the fishes in the ocean. on the other hand. can continue to support life for millions of years. Rocks and sunlight are all achieved so far has come at a very heavy examples of abiotic elements of the price — at the cost of environmental environment. a continuous economic development. faced by the Indian economy. Human beings. Environment is defined as the total The environment is able to perform planetary inheritance and the totality these functions without any interruption of all resources. land economic development that we have etc. It includes all the biotic as long as the demand on these ENVIRONMENT AND SUSTAINABLE DEVELOPMENT 163 . Anonymous 9. far-reaching and irreversible changes in the enviornment. The first part deals with the resources are the trees in the forests and functions and role of environment. have the capacity to bring about. With this in supply of the resource remains mind. To functions (i) it supplies resources: understand the unsustainable path of resources here include both renewable development that we have taken and and non-renewable resources. water. the challenges of sustainable Renewable resources are those which development. this chapter is divided into three available. mind the adverse consequences of the past development path on our Functions of the Environment: The environment and consciously choose a environment performs four vital path of sustainable development. A study of the environment quality.

Absorptive Fig. The result — we capacity. ¾ Fill in the following table with some common types of diseases and illnesses that are caused due to air. The past regeneration of the resource and the development has polluted and dried up wastes generated are within the rivers and other aquifers making water assimilating capacity of the an economic good. Besides. The rising population of the developing countries and the affluent consumption and production standards of the developed world have placed a huge stress on the environment in terms of its first two functions.1 Water bodies: small. Many resources have become extinct and the wastes generated are beyond the absorptive capacity of the environment. Air Pollution Water Pollution Noise Pollution Asthma Cholera 164 INDIAN ECONOMIC DEVELOPMENT . the intensive and extensive extraction of environment fails to perform its third both renewable and non-renewable and vital function of life sustenance and resources has exhausted some of these Work These Out ¾ Why has water become an economic commodity? Discuss. water and noise pollution. When this is not so. 9. snow-fed Himalayan streams are capacity means the ability the few fresh-water sources that remain unpolluted. of the environment to functions is within its carrying absorb degradation. the environment. this results in an environmental crisis. This implies that the resource are today at the threshold of extraction is not above the rate of environmental crisis. This is the situation today all over the world.

1: Global Warming Global warming is a gradual increase in the average temperature of the earth’s lower atmosphere as a result of the increase in greenhouse gases since the Industrial Revolution.wikipedia. Some of the longer-term results of global warming are melting of polar ice with a resulting rise in sea level and coastal flooding. During the past century. methane production. ozone). methane gas released in animal waste. Much of the recent observed and projected global warming is human-induced. deforestation. Source: www. methane. impacts are high. In have resulted in increased incidence of the early days when civilisation just respiratory and water-borne diseases. disruption of drinking water supplies dependent on snow melts. and an increased incidence of tropical diseases. began. within the absorptive capacity of the ENVIRONMENT AND SUSTAINABLE DEVELOPMENT 165 . more frequent tropical storms. The atmospheric concentrations of carbon dioxide and CH4 have increased by 31 per cent and 149 per cent respectively above pre-industrial levels since 1750. in 1997. or before this phenomenal Hence the expenditure on health is also increase in population. the environmental issues such as global demand for environmental resources warming and ozone depletion also and services was much less than their contribute to increased financial supply. Japan. extinction of species as ecological niches disappear. the atmospheric temperature has risen by 1. and use of fossil fuels. Box 9.1°F (0. This meant that pollution was commitments for the government. why? The answer to this per cent of water in India is polluted) question requires some elaboration. and before rising. global countries took to industrialisation.org vital resources and we are compelled Thus. which increases the amount of carbon dioxide in the atmosphere. and increased cattle production. A UN Conference on Climate Change. Adding carbon dioxide. Added to these are the health costs of The biggest question that arises is: degraded environmental quality — are environmental problems new to this decline in air and water quality (seventy century? If so. resulted in an international agreement to fight global warming which called for reductions in emissions of greenhouse gases by industrialised nations. held in Kyoto. nitrous oxide. which contributes to deforestation. It is caused by man-made increases in carbon dioxide and other greenhouse gases through the burning of fossil fuels and deforestation. it is clear that the opportunity to spend huge amounts on technology costs of negative environmental and research to explore new resources. methane and such other gases (that have the potential to absorb heat) to the atmosphere with no other changes will make our planet’s surface warmer.6°C) and sea level has risen several inches. Among factors that may be contributing to global warming are the burning of coal and petroleum products (sources of carbon dioxide. To make matters worse.

This led to the adoption of the Montreal Protocol banning the use of chlorofluorocarbon (CFC) compounds. it also lowers production of phytoplankton and thus affects other aquatic organisms. trichloroethane (also known as methyl chloroform). Box 9.ceu. and bromofluorocarbons (halons). It can also influence the growth of terrestrial plants. The problem of ozone depletion is caused by high levels of chlorine and bromine compounds in the stratosphere. Hence to meet the growing needs of the environmental problems did not arise. and bromine compounds known as halons. used in fire extinguishers.2: Ozone Depletion Ozone depletion refers to the phenomenon of reductions in the amount of ozone in the stratosphere. things changed. as well as other ozone depleting chemicals such as carbon tetrachloride. UV radiation seems responsible for skin cancer in humans. the pressure on the absorptive capacity of the environment increased tremendously — this trend continues even today. Source: www. 9. observed and projected decreases in ozone have generated worldwide concern. expanding population. A reduction of approximately 5 per cent in the ozone layer was detected from 1979 to 1990. Pollutants from the heavy resources and services but their industries along the banks of the Damodar river are converting it into an ecological disaster supply is limited due to overuse 166 INDIAN ECONOMIC DEVELOPMENT . used as cooling substances in air- conditioners and refrigerators. Thus what has happened is a reversal of supply-demand relationship for environmental quality — we are now faced with increased Fig.hu environment and the rate of resource But with population explosion and with extraction was less than the rate of the advent of industrial revolution regeneration of these resources.2 Damodar Valley is one of India’s most demand for environmental industrialised regions. The result was that the demand for resources for both production and consumption went beyond the rate of regeneration of the resources. or as aerosol propellants. The origins of these compounds are chlorofluorocarbons (CFC). more ultraviolet (UV) radiation comes to Earth and causes damage to living organisms. Since the ozone layer prevents most harmful wavelengths of ultraviolet light from passing through the Earth’s atmosphere. As a result of depletion of the ozone layer.

hundreds of rivers and tributaries. air pollution plenty of mineral deposits beneath the land surface. ranges of resources. gold. the developmental unstable use and inappropriate activities in India have resulted in management practices. threat of pollution from spread from the Arabian Sea to the Bay affluence and a rapidly growing of Bengal — are one of the most fertile. Land in India manganese. Hence the environmental issues of waste generation and pollution have become critical today. intensively cultivated and densely water contamination. though unevenly distributed.and misuse. lead. populated regions in the world. The Indo-Gangetic plains — same time. soil erosion. 9. India’s deforestation and wildlife extinction forests. The black soil of the human health and well-being. at the region. zinc. However. The Deccan Plateau is particularly suitable threat to India’s environment poses a for cultivation of cotton. 9. industrial sector. etc. biodiversity loss and lush green forests. waste management. Fig. The population and natural cover for its priority issues identified are (i) land wildlife. India alone accounts for nearly 20 per cent of the world’s total vehicular pollution in urban cities (iv) iron-ore reserves. Bauxite. copper. ENVIRONMENT AND SUSTAINABLE DEVELOPMENT 167 . management of fresh water and (v) solid chromate. are some of the most pressing provide green cover for a majority of its environmental concerns of India.3 STATE OF INDIA’S ENVIRONMENT India has abundant natural resources in terms of rich quality of soil. vast pressure on its finite natural stretch of the Indian Ocean. diamonds. Air pollution. etc. are also suffers from varying degrees and types available in different parts of the of degradation stemming mainly from country. lignite. coal degradation (ii) biodiversity loss (iii) air and natural gas are found in the pollution with special reference to country. besides creating impacts on mountains. leading to dichotomy —threat of poverty-induced concentration of textile industries in this environmental degradation and.3 Deforestation leads to land degradation. uranium. Large deposits of iron-ore.

the idea of hugging the trees gave the people hope and confidence that they can protect the forests. 9. Now nothing grows but a weed”. local people should be consulted when trees are marked for felling and trees within 100 metres of a water source and on a slope of 30 degrees or above should not be felled. 168 INDIAN ECONOMIC DEVELOPMENT . They kept vigil in the forest over the next six weeks. which means to hug. New Delhi. Only after the forest officials assured the volunteers that the trees will be cut scientifically and in accordance with the working plan of the district. When commercial felling by contractors damaged a large number of natural forests. Twelve years after setting up of a paper mill in Uttar Kanara area. 160 men. this movement spread to many adjoining districts.3: Chipko or Appiko — What’s in a Name? You may be aware of the Chipko Movement. bamboo has been wiped out from that area. On that particular incident. 1996. Farmers also complain that rivers and rivulets dry up quicker. and that rainfall is becoming erratic. Within months. is it acceptable? What do you think? Source: Excerpts from ‘State of India’s Environment 2: The Second Citizens’ Report 1984-85’. with the felling discontinued. Do you know that the government allocates forestlands to industries to use forest materials as industrial raw material? Even if a paper mill employs 10. For instance. Centre for Science and Environment. which aimed at protecting forests in the Himalayas. On 8 September 1983. Appiko volunteers want the contractors and forest officials to follow certain rules and restrictions. the soil washed away. Box. women and children hugged the trees and forced the woodcutters to leave. Indiscriminate felling of trees for fuelwood and for industrial use has led to many environmental problems. In Karnataka.000 workers and a plywood factory employs 800 people but if they deprive the daily needs of a million people. a similar movement took a different name. when the felling of trees was started in Salkani forest in Sirsi district. “Broad-leaved trees which protected the soil from the direct onslaught of rain have been removed.000 trees. ‘Appiko’. says a farmer. Diseases and insects earlier unknown are now attacking the crops. did they leave the trees. and bare laterite soil left behind. the people saved 12.

000 as challan as his truck was emitting black soot.3 (x) extraction of ground water in billion tonnes a year for the entire Work These Out ¾ In order to enable the students to appreciate the contribution of environment to economic development.8 million tonnes of of the agriculture-dependent people. pastures. Some of the factors responsible the competing uses of land for for land degradation are (i) loss forestry. pesticides (ix) improper planning and Estimates of soil erosion show that management of irrigation systems soil is being eroded at a rate of 5. The high density year ranges from 5.5 per cent of the world’s of nutrients lost due to erosion each geographical area.3 million tonnes per cent of the world’s human and 20 of potassium every year.47 hectare to meet conservation measures (vii) improper basic needs.4 million of population and livestock and tonnes. ENVIRONMENT AND SUSTAINABLE DEVELOPMENT 169 . cultivation (iv) encroachment into forest The per capita forest land in the lands (v) forest fires and over grazing country is only 0. nitrogen. resulting in an excess crop rotation (viii) indiscriminate use of felling of about 15 million cubic metre agro-chemicals such as fertilisers and forests over the permissible limit. human of vegetation occuring due to settlements and industries exert an deforestation (ii) unsustainable fuel enormous pressure on the country’s wood and fodder extraction (iii) shifting finite land resources. the following game can be introduced. trucks steel and rubber steel iron mineral earth rubber trees forests earth books paper trees forest earth cloth cotton plant nature petrol earth machinery iron mineral earth ¾A truck driver had to pay Rs 1. 1. agriculture.08 hectare against (vi) non-adoption of adequate soil the requirement of 0. According to per cent of livestock population on a the Government of India.8 to 8. excess of the recharge capacity (xi) country as a result of which the open access resource and (xii) poverty country loses 0. Why do you think he was penalised? Was it justified? Discuss.8 million tonnes of India supports approximately 17 phosphorus and 26. the quantity mere 2. One student may name a product used by any enterprise and the other student may trace out its roots to nature and earth.

codes and guidelines relating to treatment and disposal of sewage and trade effluents. collect and disseminate information relating to water. The CPCB (Central Pollution 170 INDIAN ECONOMIC DEVELOPMENT . control and abatement of water pollution. control or abate air pollution in the country. the government set up the Central Pollution Control Board (CPCB) in 1974. air pollution load. air pollution is widespread vehicles (two-wheeled vehicles and cars in urban areas where vehicles are the only) constituted about 80 per cent of major contributors and in a few other the total number of registered vehicles areas which have a high concentration thus contributing significantly to total of industries and thermal power plants. These boards also carry out and sponsor investigation and research relating to problems of water and air pollution and for their prevention. viz. air and land pollution. ¾ Visit a nearby factory/irrigation department and collect the details of measures that they adopt to control water and air pollution. Box 9. They monitor the quality of water in 125 rivers (including the tributaries). ¾ You might be seeing advertisements in newspapers. Vehicular emissions are of particular India is one of the ten most concern since these are ground level industrialised nations of the world. lay down standards for sewage/trade effluent and emissions. periodically inspect every industry under their jurisdiction to assess the adequacy of treatment measures provided to treat the effluent and gaseous emissions. wells. ponds. tanks. radio and television or billboards in your locality on awareness programmes relating to water and air pollution. Collect a few news-clippings. These boards provide technical assistance to governments in promoting cleanliness of streams and wells by prevention. have the maximum But this status has brought with impact on the general population. control or abatement. The it unwanted and unanticipated number of motor vehicles has increased consequences such as unplanned from about 3 lakh in 1951 to 67 crores urbanisation. water and air pollution. In India. pamphlets and other information and discuss them in the classroom. drains and canals. personal transport accidents. a comprehensive mass awareness programme for the same. They assess the air quality through regulation of industries. creeks. and improve the quality of air and to prevent. They investigate. sources and. The pollution control boards collect.4 : Pollution Control Boards In order to address two major environmental concerns in India. through their district level officials. collate and disseminate technical and statistical data relating to water pollution. through mass media. The PCBs prepare manuals. In 2003. It also provides background air quality data needed for industrial siting and town planning. pollution and the risk of in 2003. thus. lakes. state boards. This was followed by states establishing their own state level boards to address all the environmental concerns. They also organise. In fact.

The concept of sustainable development Work This Out was emphasised by the United Nations Conference on Environment and ¾ You can see a column on the Development (UNCED). Meeting the needs of development last forever. In more Hence. real income. Do you observe a significant Read the definition again. sustainable development repercussions on the environment will aims at decreasing the absolute poverty destroy the environment that sustains of the poor by providing lasting and life forms. The definition is linked to distribution of various measures adopted by the resources. Cut out of the present generation without the news item a week before compromising the ability of the future Diwali. phrase ‘future generations’ in the definition are the catch phrases. water supply etc. environmental ENVIRONMENT AND SUSTAINABLE DEVELOPMENT 171 . will Edward Barbier defined sustainable deplete resources and degrade development as one which is directly environment at a pace that is bound to concerned with increasing the material result in both environmental and standard of living of the poor at economic crisis.Control Board) has identified seventeen allow all future generations to have a categories of industries (large potential average quality of life that is and medium scale) as significantly at least as high as that which is being polluting. The seminal report — Our Ministry of Environment and the Common Future — that gave the above central and state pollution control definition explained sustainable boards may not yield reward unless development as ‘meeting the basic we consciously adopt a path of needs of all and extending to all the sustainable development. The concern opportunity to satisfy their aspirations for future generations alone can make for a better life’.4. interdependent and need each other. health care. the grass root level — this can be quantitatively measured in terms of 9. and is hence a moral issue. Development all requires redistributing resources to enhance our current living styles. on the day of Diwali generation to meet their own needs’. enjoyed by the current generation. What is needed is sustainable secure livelihoods that minimise development: development that will resource depletion. You will difference in the value? notice that the term ‘need’ and the Discuss in your class. sanitation. without concern for posterity. and two days after Diwali. SUSTAINABLE DEVELOPMENT increased income. which defined measure of air pollution in it as: ‘Development that meets the need any national daily. Environment and economy are educational services. The The above points highlight the use of the concept ‘needs’ in the challenges to India’s environment. development that ignores its specific terms.

Thermal power promote development that enhances plants emit large quantities of carbon the natural and built environment in dioxide which is a green house gas.5 S TRATEGIES FOR S USTAINABLE that is. It ways that are compatible with also produces fly ash which. in this sense. In the absence of the plimsoll wood. dung cake or other biomass as 172 INDIAN ECONOMIC DEVELOPMENT . rate of extraction should services to meet these needs. At least we should Energy: India. power and basis. This is in line with the of renewable substitutes and argument of the environmentalists who (v) inefficiencies arising from pollution emphasise that we have a moral should be corrected. Both of these have adverse The present generation can environmental impacts. that is. to achieve conventional but cleaner and greener sustainable development.degradation. particularly the poor majority. areas and the river basins. needs. as you know. food. cultural disruption and line for the economy. a leading and solar rays are good examples of environmental economist. the following energy sources but are not yet been needs to be done (i) limiting the human explored on a large scale due to lack of population to a level within the carrying technological devices. can cause pollution of water (ii) preservation of the regenerative bodies. the present generation should DEVELOPMENT bequeath a better environment to the Use of Non-conventional Sources of future generation. if not used (i) conservation of natural assets properly. not exceed rate of regeneration (iv) for The Brundtland Commission non-renewable resources rate of depletion emphasises on protecting the future should not exceed the rate of creation generation. Hydroelectric projects ecological system (iii) avoiding the inundate forests and interfere with the imposition of added costs or risks on natural flow of water in catchment future generations. land and other components of capacity of the world’s natural the environment. human scale grows social instability. The carrying capacity of the environment is like a LPG. for should be input efficient and not input employment. consuming (iii) renewable resources housing. is hugely leave to the next generation a stock of dependent on thermal and hydro ‘quality of life’ assets no less than what power plants to meet its power we have inherited. Sustainable beyond the carrying capacity of the earth development is. 9. Gobar Gas in Rural Areas: ‘plimsoll line’ of the ship which is its load Households in rural areas generally use limit mark. a and deviates from sustainable development that meets the basic needs development (ii) technological progress of all. Wind power According to Herman Daly. water. obligation to hand over the planet earth in good order to the future generation. energy. and ensures growth of should be extracted on a sustainable agriculture. manufacturing. capacity of the environment.

the public transport system has significantly initial cost is high. Also. To rectify ¾ In Delhi buses and other the situation. solar energy is petroleum gas (LPG) is concerned. As far as liquefied engines. This practice has several adverse implications like deforestation. Wind CNG in Urban Areas: In Delhi. What do you think pollution to a large extent. For the gobar Organise a debate in class gas plant to function. subsidised LPG is being public transport vehicles provided. wastage of cattle dung and air pollution.9. Fig.4 Gobar Gas Plant uses cattle dung to produce energy ENVIRONMENT AND SUSTAINABLE DEVELOPMENT 173 . energy about these changes? wastage is minimised. absorbed. it is being used to light up the a clean fuel — it reduces household streets. some are being provided through easy loans vehicles use convertible and subsidy.fuel. wind mills can fertiliser and soil conditioner. is used as fuel while the slurry which Wind Power: In areas where speed of is left over is a very good organic wind is usually high. provide electricity without any adverse impact on the environment. No doubt. the use of turbines move with the wind and Compressed Natural Gas (CNG) as fuel in electricity is generated. Work This Out reduction in green cover. But the benefits are lowered air pollution and the air has such that the high cost gets easily become cleaner in the last few years. In addition. cattle dung is fed on the need for sustainable to the plant and gas is produced which development in India. gobar gas plants use CNG as fuel instead of petrol or diesel.

other agricultural products as have been environment friendly. streams are perennial. Indian people including ground water system have have been close to their environment.. India is very much cells use special kind of materials to privileged to have about 15. These healthcare systems are Mini-hydel Plants: In mountainous in great demand again for treating regions. increase agricultural production This means that they can also do away during the last five decades or so. face cream and plants use the energy of such streams what not — is herbal in composition. it is time help of photovoltaic cells. with the also our rural heritage. This properties. Unani. a large quantity of solar energy in the If we look back at our agriculture form of sunlight. to move small turbines. For example. Now a days everywhere.Solar Power through Photovoltaic They have been more a component of Cells: India is naturally endowed with the environment and not its controller. we dry our clothes. One apt example is in can be converted into electricity. Now. Mini-hydel toothpaste. change the land use pattern in areas where they are located. The turbines Not only are these products environment generate electricity which can be used friendly. Only well as various items made for daily use. ways. recently have we drifted away from the We also use sunlight to warm ourselves traditional systems and caused large in winter. to chemical fertilisers. we with the need for large scale almost totally neglected the use of transmission towers and cables and compost and completely switched over avoid transmission loss. we were This technique is also totally free from ignoring our traditional systems such pollution. they generate Biocomposting: In our quest to enough power to meet local demands. The result is that large tracts of productive land have Traditional Knowledge and been adversely affected. as Ayurveda. we find that all practices grains. Such power plants are more or effects and do not involve large-scale less environment-friendly as they do not industrial and chemical processing. About 8. housing. solar energy to go back. Plants use solar energy to scale damage to the environment and perform photosynthesis.000 of these are in technology is extremely useful for remote regular use in various systems of areas and for places where supply of treatment including the folk tradition.000 species capture solar energy and then convert of plants which have medicinal the energy into electricity. Now. they are relatively free from side locally. healthcare system. A large percentage of such every cosmetic produce — hair oil. power through grid or power lines is With the sudden onslaught of the either not possible or proves very costly. transport etc. We use it in different system. These healthcare. suffered due to chemical contamination 174 INDIAN ECONOMIC DEVELOPMENT . Tibetan and folk systems. streams can be found almost chronic health problems. water bodies Practices: Traditionally. western system of treatment. body lotion.

Similarly. normal composting process. have again started using various other pests. country. generation without compromising the In addition. in large numbers all over animals which prey upon rats. Several types of pest controlling supply is limited due to overuse and chemicals have been isolated from neem misuse. Even milk. going up year after year. efforts are of development. awareness is spreading ability of the future generation to meet about various animals and birds which their own needs. adherence to this path ensures lasting Biopest Control: With the advent of development and non-declining welfare green revolution. the civic authorities are ‘indeed’ a paradigm shift in benefited too as they have to dispose development thinking. puts greater pressure on were found to be contaminated. Lizards are also important in this Earthworms can convert organic regard. One such step is the use of that of supply. prey upon vermin and pests. the environment. they can clear large an important fertiliser and soil varieties of pests including insects. soil. food products were Economic development. been interpreted in a number of ways. Sustainable development aims and these are being used. We need to know their value and matter into compost faster than the save them.and demand for irrigation has been help in controlling pests. Though it has reduced quantity of waste. It is Indirectly. owls and different types. For example. which aimed at contaminated. Mixed at promoting the kind of development cropping and growing different crops that minimises environmental problems in consecutive years on the same land and meets the needs of the present have also helped farmers. become a catch phrase today. Soon. cattle are maintained only If these are allowed to dwell around the because they produce dung which is agricultural areas. large compost made from organic wastes of varieties of birds. Now the world is pesticides based on plant products. conditioner. ENVIRONMENT AND SUSTAINABLE DEVELOPMENT 175 . the adverse impacts began to show.6 CONCLUSION yield. the entire country for all. This Sustainable development has process is now being widely used. water bodies and increasing the production of goods and even ground water were polluted with services to meet the needs of a rising pesticides. faced with increased demand for Neem trees are proving to be quite environmental resources but their useful. for example. snakes are one of the prime group of Farmers. In the initial stages To meet this challenge. In certain parts of the peacocks. meat and fishes population. entered into a frenzy to use more and more chemical pesticides for higher 9. the demand for on to bring in better methods of pest environmental resources was less than control. mice and the country.

it is also necessary to adopt a path of sustainable development. preserving regenerative capacity of ecological system and avoiding the imposition of environmental risks on future generations would lead to sustainable development. ¾ Sustainable development is development that meets the need of the present generation without compromising the ability of the future generation to meet their own needs. ¾ The threat to India’s environment is of two dimensions — threat of poverty induced environmental degradation and the threat of pollution from affluence and a rapidly growing industrial sector. Two major environmental issues facing the world today are ____________ and _____________. assimilates wastes. affluent consumption and production have placed a huge stress on the environment. Classify the following into renewable and non-renewable resources (i) trees (ii) fish (iii) petroleum (iv) coal (v) iron-ore (vi) water. EXERCISES 1. through various measures. 5. Recap ¾ Environment performs four functions: supplies resources. What is meant by environment? 2. sustains life by providing genetic and bio diversity and provides aesthetic services. ¾ Developmental activities in India have put immense pressure on its finite natural resources. ¾ Population explosion. besides creating impact on human health and well-being. attempts to safeguard the environment. 4. How do the following factors contribute to the environmental crisis in India? What problem do they pose for the government? (i) Rising population (ii) Air pollution 176 INDIAN ECONOMIC DEVELOPMENT . ¾ Promotion of natural resources. conservation. What happens when the rate of resource extraction exceeds that of their regeneration? 3. ¾ Though the government.

6. 2. What are the functions of the environment? 7. due to affluence in living standards — is this true? 17. Give two instances of (a) Overuse of environmental resources (b) Misuse of environmental resources. (iii) Water contamination (iv) Affluent consumption standards (v) Illiteracy (vi) Industrialisation (vii) Urbanisation (viii) Reduction of forest coverage (ix) Poaching (x) Global warming. Highlight any two serious adverse environmental consequences of development in India. describe any four strategies of sustainable development. India has abundant natural resources — substantiate the statement. 10. Identify six factors contributing to land degradation in India. Account for the current environmental crisis. Which type of resources do you think are undergoing depletion? Discuss. Correction for environmental damages involves opportunity costs — explain. Explain the supply-demand reversal of environmental resources. at the same time. why? 12. Make a list of items that can be recycled. Explain how the opportunity costs of negative environmental impact are high. 13. 15. State any four pressing environmental concerns of India. 14. 16. 8. ENVIRONMENT AND SUSTAINABLE DEVELOPMENT 177 . Keeping in view your locality. 11. SUGGESTED ADDITIONAL ACTIVITIES 1. Suppose 70 lakh cars are added every year to the roads of metropolitans. India’s environmental problems pose a dichotomy — they are poverty induced and. Explain the relevance of intergenerational equity in the definition of sustainable development. What is sustainable development? 18. Outline the steps involved in attaining sustainable development in India. 9. Is environmental crisis a recent phenomenon? If so. 19.

cseindia. CENTRE FOR SCIENCE AND ENVIRONMENT. Oxford University Press. E. Reprint Edition. E.nic. Websites http://envfor. an industrialist and a group of villagers. New Delhi. 1996. KARPAGAM.Environmental Economics: A Textbook. 1996. ANIL and SUNITA NARAIN. Reprint Edition. A paper factory is to be set up in your village. CENTRE FOR SCIENCE AND ENVIRONMENT. 6. 2001. B HARUCHA. M. Environmental Studies: From Crisis to Cure. SCHUMACHER. State of India’s Environment 2: The Second Citizens’ Report 1985. Textbook of Environmental Studies for Undergraduate Courses.in http://www. 4. Global Warming in an Unequal World. State of India’s Environment 1: The First Citizens’ Report 1982. Sterling Publishers. Centre for Science and Environment.F. The nation has to pay heavily for correcting environmental damages — discuss. Arrange a role play consisting of an activist. Universities Press (India) Pvt Ltd. REFERENCES BOOKS AGARWAL. September 2005 Down to Earth. Abacus Publishers. RAJAGOPALAN.nic. 2005. Prepare a chart on the causes and remedies of soil erosion in India. Centre for Science and Environment. New York. Special Issue. New Delhi. India. How does population explosion contribute to the environmental crisis? Debate in the classroom.in http://cpcb. 1996. R. Reprint Edition. 3.org 178 INDIAN ECONOMIC DEVELOPMENT . Journals Scientific American. New Delhi. 5. New Delhi. Small is Beautiful. 2005. New Delhi. New Delhi.

UNIT UNIT IV III DEVELOPMENT EXPERIENCES OF INDIA: A COMPARISON WITH NEIGHBOURS 2015-16(20/01/2015) .

This is more so because they share the relatively limited economic space in world markets. where geographical boundaries are slowly becoming meaningless. 2015-16(20/01/2015) . it is important for neighbouring countries in the developing world to understand the development strategies being pursued by their neighbours. we will compare India’s developmental experiences with two of its important and strategic neighbours — Pakistan and China.In today’s globalised world. In this unit.

2015-16(20/01/2015) . the learners will • figure out comparative trends in various economic and human development indicators of India and its neighbours. China and Pakistan • assess the strategies that these countries have adopted to reach their present state of development. 10 COMPARATIVE DEVELOPMENT EXPERIENCES OF INDIA AND ITS NEIGHBOURS After studying this chapter.

History has made us friends. Besides. In a speech at that time. G-20.the largest democracy various means which will strengthen of the world which is wedded to a their own domestic economies. there is also an increasing started moving towards a democratic eagerness on the parts of various system and more liberal economic nations to try and understand the restructuring respectively. the developmental strategies pursued by economic transformation that is taking India and the largest two of its place in different countries across the neighbouring economies—Pakistan world. there is little each country. Pakistan and unfolding process of globalisation. We also studied the kind of overall human development in a policies India adopted. which had shared environment. China have many similarities in their this is particularly considered developmental strategies? All the three essential by developing countries as nations have started towards their they face competition not only from developmental path at the same time. BRICS etc. Those whom God has so joined together. People’s economic space enjoyed by the Republic of China was established in developing world. they are forming regional and for over half a century. In the Do you know that India. and the global economic groupings such as militarist political power structure of the S A A R C . varying impacts in different sectors. Pakistan or the command economy ASEAN. partly because of the process and China. let no man put asunder. In this chapter we will compare the Over the last two decades or so. Economics has made us partners. developed nations but also amongst While India and Pakistan became themselves in the relatively limited independent nations in 1947. has both short as that despite being endowed with vast well as long-term implications for natural resources. developmental processes pursued by their neighbouring nations as it 10. Nations similarity between the political power have been primarily trying to adopt setup of India .2 DE V E L O P M E N T A L P A T H — A allows them to better comprehend SNAPSHOT VIEW their own strengths and weaknesses vis-à-vis their neighbours. John F. It has to be remembered of globalisation. 182 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . In of China that has only recently addition.1 INTRODUCTION understanding of the other economies in our neighbourhood is also required In the preceding units we studied the as all major common economic developmental experience of India in activities in the region impinge on detail. Kennedy 10. including India. E u r o p e a n U n i o n . and necessity has made us allies. an 1949. G-8. To this secular and deeply liberal Constitution effect. Geography has made us neighbours.

India (1966-76) under which students and and Pakistan adopted similar professionals were sent to work and strategies such as creating a large learn from the countryside. foreign trade and the historical path of developmental investment sectors. After instance.000 communes in similar ways. Mao introduced the Great current planning in India is based on Proletarian Cultural Revolution Twelfth Five Year Plan (2012-17). all the three countries growth in China can be traced back to the reforms introduced in 1978. Till the 1980s. havoc in China killing about 30 million China announced its First Five Year people. communes were expression in the countries in Asia. we into small plots which were allocated already know what policies India has (for use not ownership) to individual been adopting since its independence. commune lands were divided studying the last three units. Where do they stand today introduced reforms in phases. All the three countries had started people collectively cultivated lands. A severe drought caused Term Development Plan. Under the Commune system. for policies in China and Pakistan. The In 1965. While India covering almost all the farm announced its first Five Year Plan for population.Jawaharlal Nehru had said. Asia and new vitality which is finding In rural areas. China had similar growth rates and per capita incomes.e. in The Great Leap Forward (GLF) particular. public sector and raising public The present-day fast industrial expenditure on social development. were allowed to produce COMPARATIVE DEVELOPMENT EXPERIENCES OF INDIA AND ITS NEIGHBOURS 183 2015-16(20/01/2015) . Private sector firms. reforms were initiated in we answer this question let us trace agriculture. enterprises and lands owned and township and village enterprises. Pakistan announced its first GLF campaign met with many five year plan. In planning their development strategies 1958. Pakistan began China. it withdrew its professionals working on 11th Five Year Development who had earlier been sent to China to Plan (2013-18) whereas China’s twelfth help in the industrialisation process. In the in comparison to one another? Before initial phase. and operated by local collectives. When Russia had conflicts with Plan in 1953. reforms were initiated in the industrial party rule. economy. symbolise the new spirit of to set up industries in their backyards. five year period is 2011-15. “these new campaign initiated in 1958 aimed at and revolutionary changes in China industrialising the country on a and India. in 1956. and operated by individuals were i. In the later phase. households. They were allowed to keep all income from the land after paying China: After the establishment of stipulated taxes. In agriculture. In 2013. all the critical sectors of the sector. now called the Medium problems. People’s Republic of China under one.” started. there were 26. in general. those enterprises which were owned brought under government control. 1951-56. even though they differ in massive scale. People were encouraged content.

In the 1970s. Pakistan then economic zones were set up. the proportion of foodgrains. 10. which we. This means fixing the prices in manufacturing of consumer goods two ways. Fig. you will notice many During this period. Over the years. Pakistan also similarities with India. farmers and industrial units together with direct import controls on were required to buy and sell fixed competing imports. regulated policy framework (for import were made to face competition. which at market prices. Pakistan also received financial support from western follows the mixed economy model with nations and remittances from 184 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . enterprises owned co-existence of public and private by government (known as State Owned sectors. as finally led to a rise in the production of production increased. market also increased. In the late 1950s and 1960s. Enterprises—SOEs). This changed the agrarian goods or inputs transacted in the structure dramatically. The reform process also involved dual policy combined tariff protection for pricing. The introduction of quantities of inputs and outputs on the Green Revolution led to mechanisation basis of prices fixed by the government and increase in public investment in and the rest were purchased and sold infrastructure in select areas. call public sector enterprises. In order to nationalisation of capital goods attract foreign investors. At this stage. shifted its policy orientation in the late 1970s and 1980s when the major Pakistan: While looking at various thrust areas were denationalisation economic policies that Pakistan and encouragement to private sector. The substitution industrialisation).1 Wagah Border is not only a tourist place but also used for trade between India and Pakistan goods. adopted. special industries took place. in Pakistan introduced a variety of India.

org COMPARATIVE DEVELOPMENT EXPERIENCES OF INDIA AND ITS NEIGHBOURS 185 2015-16(20/01/2015) . there will be more China and Pakistan. 1000 males. after a few demographic indicators of India. TABLE 10. Table 10.49 145 929 1. Scholars cite son- some of the developmental indicators preference prevailing in all these of India. Though China is the largest nation The fertility rate is also low in and geographically occupies the largest China and very high in Pakistan. km) Ratio Rate (in million) Population (2001-2010) India 1252 1. We shall compare some implications. the proportion of females per reforms were initiated in the country. one is an Indian and another population also have other Chinese.24 421 934 2. its Urbanisation is high in both Pakistan density is the lowest. area among the three nations. In recent times. out situation. let us now compare three countries. followed by India emigrants to the Middle-east. They also state that sector.continuously increasing outflow of highest in Pakistan. all the three countries are adopting 10. in China.3 38 Source: World Development Indicators.3 DEMOGRAPHIC INDICATORS various measures to improve the If we look at the global population.6 32 China 1357 0. However. The then government late 1970s as the major reason for low also offered incentives to the private population growth. 2013 Country Estimated Annual Density Sex Fertility Urbanisation Population Growth of (per sq. www. Scholars point out the one- helped the country in stimulating child norm introduced in China in the economic growth. China and Pakistan.1 also and China with India having 32 per shows the population growth as being cent of its people living in urban areas. For instance. All this created a conducive this measure led to a decline in the sex climate for new investments.6 53 Pakistan 182 1. decades. This will force China to take for roughly about one-tenth of China steps to provide social security or India.1 Select Demographic Indicators. from the table.worldbank. countries as the reason. In 1988.65 236 947 3. measures with fewer workers. ratio. This and China. The population elderly people in proportion to young of Pakistan is very small and accounts people. Having studied a brief outline of you will notice that the sex ratio is low the developmental strategies of China and biased against females in all the and Pakistan. One-child norm and the of every six persons living in this resultant arrest in the growth of world.

2 Land use and agriculture in India. there is a marginal decline in India and Asian Development Bank. 186 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) .6 trillion whereas India’s GDP (PPP) is $6.2.6 Pakistan was ahead of India. 10.10.2 cent.in). China and Pakistan. Do you find this phenomenon in your family or neighbourhood? Why do people practice discrimination between male and female children? What do you think about it? Discuss in the classroom.3 10. roughly about 13 per cent of India’s GDP.83 trillion.7 7. Ø Scholars find son-preference as a common phenomenon in many developing countries including India. China was able to maintain near Annual Growth of Gross Domestic double-digit growth for more than two Product (%).4 G ROSS DOMESTIC (Not to scale) P RODUCT AND S ECTORS One of the much-talked issues around the world about China is its growth of Gross Domestic Product. China has the second largest GDP (PPP) of $15.2 was having double-digit growth and Pakistan 6. China China 10.4 India was at the bottom. In 2005-13. Work These Out Ø Does India follow any population stabilisation measures? If so. annual reports or websites of Ministry of Health and Family Welfare (http://mohfw. When many developed countries Fig. China and Pakistan were finding it difficult to maintain a growth rate of even 5 per TABLE 10. Phillipines. 1980-2013 decades as can be seen from Table Country 1980-90 2005-2013 10.6 trillion and Pakistan’s GDP is $ 0. Source: Key Indicators for Asia and Pacific 2011. Also notice that in the 1980s India 5.3 4. You may refer to the latest Economic Survey. collect the details and discuss in the classroom.nic.

commerce and transport. the government encouraged people to leave their fields and pursue other activities such as handicrafts. 10. China and Pakistan.3). more than 80 per cent of the people in China were dependent on farming as their sole source of livelihood. In contributed to this trend in these Pakistan. cent (see Table 10.4 per cent. work in agriculture whereas in India it First. Some scholars hold the reform In both India and Pakistan. with 30 per cent of Fig. look at how people engaged in is 47 per cent. the the previous section that China and industry and service sectors have less Pakistan have more proportion of proportion of workforce but contribute urban people than India. its workforce engaged in agriculture. We will the proportion of workforce that works study in a later section which sector in this sector is more in India. the processes introduced in 1988 in contribution of agriculture to GDP were Pakistan and political instability as at 18 and 25 per cent. Until the 1980s. but reasons behind this trend. In China. more in terms of output. its China’s growth rates whereas Pakistan contribution to GDP in China is 10 per met with drastic decline at 4. The sectoral share of different sectors contribute to Gross output and employment also shows Domestic Product. COMPARATIVE DEVELOPMENT EXPERIENCES OF INDIA AND ITS NEIGHBOURS 187 2015-16(20/01/2015) . about 44 per cent of people countries. respectively. the area suitable for cultivation is relatively small — only about 10 per cent of its total land area. due to topographic and (Not to scale) climatic conditions.3 Industry in India. It was pointed out in that in all the three economies. Since then. In China. In 2013. The total cultivable area in China accounts for 40 per cent of the cultivable area in India.

If we look at the proportion share of output mainly in of workforce in the1980s. has declined. India. respectively whereas sector respectively. Pakistan this sector only. The contribution Work These Out of industries to GDP is also just equal to or with a small difference in output Ø Do you think it is necessary from agriculture. the growth In the normal course of of agriculture sector. in both India and Pakistan. It service sector should not be contributes more to GDP and. This is what is happening a double-digit growth rate whereas for in China as can be seen from Table India and Pakistan growth rate 10. In India and for India and Pakistan to concentrate on the manu- Pakistan.3 Sectoral Share of Employment and GDP (%) in 2013 Sector Contribution to GDP Distribution of Workforce India China Pakistan India China Pakistan Agriculture 18 10 25 47 31 44 Industry 25 44 21 25 30 14 Services 57 46 54 28 39 42 Total 100 100 100 100 100 100 manufacturing and service sectors Pakistan employed 17. the shift is taking place facturing sector as China directly to the service sector. What do was faster in shifting its workforce to you think? service sector than India and China. respectively. China and 188 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . In the agriculture to manufacturing and then industrial sector. it is the service reached the level of 28. emerges as a prospective Pakistan have raised their employer. does? Why? Thus. it has in India and Pakistan. the service sector is emerging as a Ø Scholars argue that the major player of development. countries first shift their largest proportion of workforce in all the employment and output from three countries. by more than 50 per cent of GDP. which employs the development. China has maintained to services. at the considered as an engine of growth whereas India and same time. In 2013. 12 and 27 per contribute the highest to GDP at 44 cent of its workforce in the service and 46 per cent. TABLE 10. In the 1980s. 39 and 42 per sector which contributes the highest cent. In the last two decades.4. The proportion of workforce engaged in manufacturing in India and Pakistan were low at 25 and 14 per cent respectively.

9 9. 2012-13 Item India China Pakistan Human Development Index (Value) 0.4 31 Source: Human Development Report 2014 and World Development Indicators (www.5 4. China’s position of many developed and growth is mainly contributed by the developing countries.2 66.9 10. China and Pakistan have growth by service sector.3 4.586 0.8 95. Thus. China and India were able to You might have studied about the raise its rate of growth during 1980- importance of human development 2013 while Pakistan stagnated with its indicators in the lower classes and the service sector growth.1 China 5. In the case of service 10.9 4. Let us look how manufacturing sector and India’s India.4 Adult Literacy Rate (% aged 15 and above) 62.8 3.2 75.8 has declined.0 6.org) COMPARATIVE DEVELOPMENT EXPERIENCES OF INDIA AND ITS NEIGHBOURS 189 2015-16(20/01/2015) . 1980-2013 Country 1980-90 2005-2013 Agriculture Industry Service Agriculture Industry Service India 3.5 INDICATORS OF HUMAN DEVELOPMENT sector.5. TABLE 10. Look at Table 10.9 Pakistan 4 7. During this performed in some of the select period.5 3.5 11. deceleration in all the three sectors.5 Some Selected Indicators of Human Development.8 13.719 0.4 Trends in Output Growth in Different Sectors. TABLE 10.7 GDP per capita (PPP US$) 5238 11524 4549 People below poverty line (at $2 a day ppp)(%) 61 19 51 Infant Mortality Rate (per 1000 live births) 41 11 69 Maternal Mortality Rate (per 1 lakh births) 190 32 170 Population using improved sanitation (%) 36 65 48 Population with sustainable access to improved 93 92 91 water source (%) Percentage of Children Malnourished (underweight) (<5) 43.1 54. Pakistan has shown indicators of human development.4 4.worldbank.0 10.1 7.7 6.537 Rank (based on HDI) 135 91 146 Life Expectancy at birth (years) 66.4 6.

It is also judgements on such questions. we should also note a problem contrast. In order to learn from economic day. life the Rule of Law’ have not even expectancy or malnourishment. understanding of the roots of their In dealing with or making successes and failures. it is necessary to have an for yourself how these differences occur. Find out countries. Without Pakistan is ahead of India in including these (and perhaps some reducing proportion of people below more) and giving them overriding the poverty line and also its importance in the list. Pakistan in 1988 and has actually been added as a measure India in 1991.5 shows that China is decision-making’ but it has not been moving ahead of India and Pakistan. Some obvious This is true for many indicators — ‘liberty indicators’ like measures of ‘the income indicator such as GDP per extent of Constitutional protection capita. about 190 and 170 women It is common to find developmental die respectively. Along with these. We these are not sufficient. only 32 APPRAISAL women die whereas in India and Pakistan. for one lakh births.6 DEVELOPMENT STRATEGIES — AN China. through their development phases This occurs because these are all differently. let us take the initiation of extremely important indicators. the construction performance in education. Though countries go indicators given above with conviction. Table 10. Let us briefly assess their of ‘the extent of democratic achievements and failures in pre. You will notice evident after the introduction of the that for the proportion of people below reform process in different parts of the the international poverty rate of $ 2 a world. In 10. One such indicator China in 1978. necessary to distinguish between. India has the largest share of poor performance of our neighbouring among the three countries. countries have been able to save women from maternal mortality.and participation in social and political post-reform periods. But neither of these two usefulness limited. and however. we also need what may be called know that reforms were initiated in ‘liberty indicators’. literacy. the different phases of their while using the human development strategies. sanitation of a human development index may and access to water is better than be said to be incomplete and its I ndia. been introduced so far. given any extra weight. Surprisingly all the strategies of a country as a model to three countries report providing others for lessons and guidance for improved drinking water sources for their own development. the Independence of the Judiciary and access to sanitation. It is particularly most of its population. or proportion of population given to rights of citizens’ or ‘the extent below poverty line or health of constitutional protection of indicators such as mortality rates. but reforms as a point of reference. 190 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) .

economic development based on Scholars argue that in Pakistan decentralisation. Pakistan’s economy. social set right its balance of payments and political costs of success or failure. and re-emergence of poverty in Before the introduction of reforms. poverty there. in 1978 was the same as it was in the Though the data on international mid-1950s. Experts When there was a good harvest. land reforms. Despite seen in an earlier section that extensive land reforms. They felt that Maoist vision of growth in China. distribution of food grains. are agricultural growth and food extension of basic health services in supply situation were based not on rural areas. It created conditions for the India and Pakistan. the also point out that each reform economy was in good condition. Through the commune an institutionalised process of system. The experimentation You will recall that India had to borrow under decentralised government from the IMF and World Bank to enabled to assess the economic. the per capita grain output have fallen in the 1990s. foreign exchange is an essential For instance. crisis. it brought reforms as dictated by the World Bank prosperity to a vast number of poor and International Monetary Fund to people. there was more equitable technical change but on good harvest. and lack of modernisation in the Scholars quote many such examples Chinese economy under the Maoist on how reform measures led to rapid rule. collectivisation. goods all the economic indicators. Why did China introduce in agriculture. The new subsequent phenomenal growth in leadership at that time in China was rural industries and built up a strong not happy with the slow pace of growth support base for more reforms. self sufficiency and the reform process led to worsening of shunning of foreign technology. the economic indicators smaller level and then extended on a showed stagnation or negative trends. when reforms were made component for any country and it is COMPARATIVE DEVELOPMENT EXPERIENCES OF INDIA AND ITS NEIGHBOURS 191 2015-16(20/01/2015) . compared to 1980s. as pointed out earlier structural reforms in 1978? China did by handing over plots of land to not have any compulsion to introduce individuals for cultivation. massive scale. We have and capital had failed. when measure was first implemented at a it was not. The improving the social and income reasons for the slow-down of growth indicators in the post reform period. as scholars put there had already been massive it. the growth rate the Great Leap Forward and other of GDP and its sectoral constituents initiatives. scholars using the official infrastructure in the areas of data of Pakistan indicate rising education and health. poverty line for Pakistan is quite It was found that establishment of healthy. The proportion of poor long existence of decentralised in 1960s was more than 40 per cent planning and existence of small which declined to 25 per cent in 1980s enterprises had helped positively in and started rising again in 1990s.

in.944 589 China 25. Ø There is a general perception going around in India that there is sudden increase in dumping of Chinese goods into India which will have implications for manufacturing sector in India and also that we do not engage ourselves in trading with our neighbouring nations. Work These Out Ø While India has perfromed relatively well vis-a-vis other developing countries (including its Asian neighbours) in terms of economic growth.84.232 73. you can log on to the website: http: //dgft.341 11. In order to get detailed information relating to international trade. From newspapers and websites and listening to news.233 380 427 2. which shows exports from India to.why did we not take care of our human resources? Discuss in the classroom. collect the details of goods and services transacted in trading with our neighbours.gov. Pakistan and China.892 2.733 192 31. Interpret the results and discuss in the classroom. and imports from. Country Exports from India ( Rs in crore) Imports to India (Rs in crore) 2004-2005 2012-2013 Rate of 2004-2005 2012-2013 Rate of Growth (%) Growth (%) Pakistan 2. India’s human development indicators are among the worst in the world. Where India went wrong .385 792 192 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . Look at the following table.

China has used the reduce poverty. it need not institutions. business activity during 2010-11.4 per cent during commitment’ and succeeded in raising 2010-11 over previous year against the the level of growth alongwith alleviation target of 4. are hampering growth in all major which took the lives of nearly 75. in the last three decades.000 sectors. developmental experiences of our China has ensured social security in neighbours? India. It is yet to the exports of highly volatile agricultural raise the level of living of more than one- products. yet. but worry. By 10. Infrastructure is lacking in Pakistani workers in the Middle-east and many parts of the country.5 per cent. over- back the loans on the other. which are the government is increasing the attempting to privatise their public expenditure on various areas that can sector enterprises. unlike India and Pakistan. Pakistan economy. all of them results in human development indicators were maintaining the same level of low in China. You will also notice that rates of inflation and rapid privatisation. India. performed moderately. dependence on remittances and foreign As reported in the Pakistan Annual aid along with volatile performance of Plan for the year 2011-12. In China. there was also growing fourth of its population that lives below dependence on foreign loans on the one the poverty line. Till the late 1970s. with democratic of manufactured goods.7 CONCLUSION retaining collective ownership of land and What are we learning from the allowing individuals to cultivate lands. it is hoping to improve economy is under stress as the floods. COMPARATIVE DEVELOPMENT EXPERIENCES OF INDIA AND ITS NEIGHBOURS 193 2015-16(20/01/2015) . dilapidated security situation challenge for Pakistan to recover from and low foreign direct investment inflows the devastating earthquake in 2005. China and Pakistan rural areas. Yet. Scholars are of the hand and increasing difficulty in paying opinion that political instability. The last three decades If a country is able to build up its foreign have taken these countries to different exchange earnings by sustainable export levels. the situation by maintaining high rates delays in implementation of economic of GDP growth. To quote. development. “the in the recent past. the lack of energy crisis coupled with steep decline political freedom and its implications for in foreign direct investment is soaking up human rights are major concerns. Public intervention in have travelled more than five decades providing social infrastructure even prior of developmental path with varied to reforms has brought about positive results. market mechanism to ‘create additional social and economic opportunities’. various agriculture sector are the reasons for the factors contribute to slow growth of the slowdown of the Pakistan economy.important to know how it can be earned.” Besides facing high of poverty. It was also a great reforms. it used the Pakistan's economy is provisionally ‘market system without losing political expected to grow by 2. In Pakistan most foreign exchange a majority of its people still depend on earnings came from remittances from agriculture. Massive floods took a heavy toll people and also resulted in enormous on agriculture and infrastructure while loss to property.

the structures established to implement developmental policies are quite different. in 1988 in Pakistan and in 1991 in India. the developmental indicators of all the three countries. Ø Even after fifty years of planned development. Ø India. Ø Though China has followed the classical development pattern of gradual shift from agriculture to manufacturing and then to services. Ø While assessing the developmental indicators. Ø China introduced structural reforms on its own initiative while they were forced upon India and Pakistan by international agencies. one-child norm has arrested the population growth in China whereas in India and Pakistan. Ø All the three countries follow the five-year plan pattern of development. Ø China is ahead of India and Pakistan on many human development indicators. majority of the workforce in all the countries depends on agriculture. The dependency is greater in India. India and Pakistan’s shift has been directly from agriculture to service sector. developing countries are keen to understand the developmental processes pursued by their neighbours as they face competition from developed nations as also amongst themselves. Ø T illthe early 1980s. Ø Reforms were introduced in 1978 in China. one also has to consider the liberty indicators. However. 194 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . such as growth rates and sectoral contribution towards national income. However these improvements were attributed not to the reform process but the strategies that China adopted in the pre-reform period. Recap Ø With the unfolding of the globalisation process. Ø China’s industrial sector has maintained a high growth rate while it is not so in both India and Pakistan. were similar. Pakistan and China have similar physical endowments but totally different political systems. a major change is yet to take place. Ø The impact of policy measures were different in these countries — for instance.

Give some examples of liberty indicators. 6. Evaluate the various factors that led to the rapid growth in economic development in China. Mention the various indicators of human development. COMPARATIVE DEVELOPMENT EXPERIENCES OF INDIA AND ITS NEIGHBOURS 195 2015-16(20/01/2015) . EXERCISES 1. What are the various means by which countries are trying to strengthen their own domestic economies? 3. Why are regional and economic groupings formed? 2. 11. Mention the salient demographic indicators of China. Group the following features pertaining to the economies of India. 13. What is the important implication of the ‘one child norm’ in China? 8. What does it indicate? 10. 12. China’s rapid industrial growth can be traced back to its reforms in 1978. China and Pakistan under three heads • One-child norm • Low fertility rate • High degree of urbanisation • Mixed economy • Very high fertility rate • Large population • High density of population • Growth due to manufacturing sector • Growth due to service sector. Compare and contrast India and China’s sectoral contribution towards GDP in 2003. 5. Define the liberty indicator. What similar developmental strategies have India and Pakistan followed for their respective developmental paths? 4. 9. Do you agree? Elucidate. Pakistan and India. Explain the Great Leap Forward campaign of China as initiated in 1958. 7. Describe the path of developmental initiatives taken by Pakistan for its economic development.

2. (India/Pakistan) (d) Reforms in ______________ were introduced in 1978. Compare and contrast the development of India. toys. China’s growth is mainly contributed by the manufacturing sector and India’s growth by the service secto r— prepare a chart showing the relevance of this statement with respect to the structural changes in the last decade in the respective countries. How is China able to lead in all the Human Development Indicators? Discuss in the classroom. Fill in the blanks (a) First Five Year Plan of ________________ commenced in the year 1956. 196 INDIAN ECONOMIC DEVELOPMENT 2015-16(20/01/2015) . 17. 5. 3. Use Human Development Report of the latest year. China and Pakistan with respect to some salient human development indicators. (China/ Pakistan) (c) Proportion of people below poverty line is more in __________. electronic goods. (China/ Pakistan) SUGGESTED ADDITIONAL ACTIVITIES 1. for example. You are aware that cheap Chinese goods are available in the market. (Pakistan/China) (b) Maternal mortality rate is high in _____________. Do you think that these products are comparable in quality and price with their Indian counterparts? Do they create a threat to our domestic producers? Discuss. Do you think India can introduce the one-child norm like China to reduce population growth? Organise a debate on the policies that India can follow to reduce population growth. 14. 16. Give reasons for the slow growth and re-emergence of poverty in Pakistan. Organise a class debate on the issue of free trade between India and China and India and Pakistan. 15. 4. clothes. batteries etc. Comment on the growth rate trends witnessed in China and India in the last two decades.

‘The Chinese Economic Miracle: Lessons to be Learnt. Webs ites www. 2013-14. International Labour Organisation.dgft. 3rd Edition. Government Reports Human Development Report 2005. ZAIDI. United Nations Development Programme. October 9. Articles RAY.gov. Oxford University Press. 1996. A LOK.planningcommission.statpak.nic. 2002. Second Impression 2004.delhi. Labour Market Indicators. Geneva.org www.ilo. S. REFERENCES Books D REZE. 1999.in www. World Development Report 2005. Ministry of Finance. The World Bank. AKBAR . New York. pp. JEAN AND AMARTYA SEN.stats. Oxford. Delhi. India: Economic Development and Social Opportunity. Economic Survey. United Nations Development Programme. ‘Is Poverty now a Permanent Phenomenon in Pakistan?’ Economic and Political Weekly.pk www. September 14.un.nic. Pakistan: National Human Development Report 2003.org www. 2943-2951. 3835-3848.gov. published by Oxford University Press. pp. Oxford University Press.cn www.’ Economic and Political Weekly. Government of India.in COMPARATIVE DEVELOPMENT EXPERIENCES OF INDIA AND ITS NEIGHBOURS 197 2015-16(20/01/2015) .

INDIAN E CONOMIC D EVELOPMENT TEXTBOOK FOR CLASS XI 2015-16(20/01/2015) .

Officer New Delhi 110 016 and printed at New Bharat Offset Printers. recording or otherwise without the prior October 2006 Kartika 1928 permission of the publisher. re-sold. in any form or by any means. March 2012 Phalguna 1933 q The correct price of this publication is the price printed on this page. NCERT NCERT Campus Sri Aurobindo Marg PD 115T RNB New Delhi 110 016 Phone : 011-26562708 108. Publication : Ashok Srivastava Division Chief Production : Kalyan Banerjee Officer Chief Business : Gautam Ganguly Manager Printed on 80 GSM paper with Chief Editor : Naresh Yadav NCERT water mark (Contractual Service) Published at the Publication Editor : R. electronic. be lent. photocopying. Cover and Illustrations Sector -6. in any form of binding or cover other than January 2011 Pausa 1932 that in which it is published. Bhardwaj Division by the Secretary. by way of December 2008 Pausa 1930 trade. Dhankal Bus Stop Panihati Kolkata 700 114 Phone : 033-25530454 CWC Complex Maligaon Guwahati 781 021 Phone : 0361-2674869 ` 70.O. B-16. stored in a retrieval Reprinted system or transmitted. ISBN 81-7450-551-2 First Edition ALL RIGHTS RESERVED February 2006 Phalguna 1927 q No part of this publication may be reproduced. mechanical. January 2014 Pausa 1935 OFFICES OF THE PUBLICATION DIVISION.00 Publication Team Head. National (Contractual Service) Council of Educational Research Assistant Production : Rajender Chauhan and Training. N. December 2007 Pausa 1929 q This book is sold subject to the condition that it shall not. 2006 Banashankari III Stage Bangaluru 560 085 Phone : 080-26725740 Navjivan Trust Building P. hired out or otherwise disposed of without January 2010 Pausa 1931 the publisher’s consent. Sri Aurobindo Marg.Navjivan Ahmedabad 380 014 Phone : 079-27541446 CWC Campus Opp. 100 Feet Road © National Council of Educational Hosdakere Halli Extension Research and Training. Any revised price indicated by a rubber stamp or by a sticker January 2013 Pausa 1934 or by any other means is incorrect and should be unacceptable. Noida 201 301 (UP) Sarita Verma Mathur 2015-16(20/01/2015) .

given space. discussion in small groups. The textbook attempts to enhance this endeavour by giving higher priority and space to opportunities for contemplation and wondering. home and community. We must recognise that. and activities requiring hands-on experience. They also attempt to discourage rote learning and the maintenance of sharp boundaries between different subject areas. 2015-16(20/01/2015) . Flexibility in the daily time-table is as necessary as rigour in implementing the annual calendar so that the required number of teaching days are actually devoted to teaching. Syllabus designers have tried to address the problem of curricular burden by restructuring and reorienting knowledge at different stages with greater consideration for child psychology and the time available for teaching. These aims imply considerable change in school routines and mode of functioning. This principle marks a departure from the legacy of bookish learning which continues to shape our system and causes a gap between the school. not as receivers of a fixed body of knowledge. We hope these measures will take us significantly further in the direction of a child-centred system of education outlined in the National Policy on Education (1986). Inculcating creativity and initiative is possible if we perceive and treat children as participants in learning. The syllabi and textbooks developed on the basis of NCF signify an attempt to implement this basic idea. The success of this effort depends on the steps that school principals and teachers will take to encourage children to reflect on their own learning and to pursue imaginative activities and questions. recommends that children’s life at school must be linked to their life outside the school. time and freedom. rather than a source of stress or boredom. Treating the prescribed textbook as the sole basis of examination is one of the key reasons why other resources and sites of learning are ignored. The methods used for teaching and evaluation will also determine how effective this textbook proves for making children’s life at school a happy experience. children generate new knowledge by engaging with the information passed on to them by adults. FOREWORD The National Curriculum Framework (NCF) 2005.

NCERT welcomes comments and suggestions which will enable us to undertake further revision and refinement. As an organisation committed to systemic reform and continuous improvement in the quality of its products. Deshpande. The National Council of Educational Research and Training (NCERT) appreciates the hard work done by the textbook development committee responsible for this book. Professor Hari Vasudevan and the Chief Advisor for this book. We wish to thank the Chairperson of the advisory group in Social Sciences. We are indebted to the institutions and organisations which have generously permitted us to draw upon their resources. Several teachers contributed to the development of this textbook. Ministry of Human Resource Development under the Chairpersonship of Professor Mrinal Miri and Professor G. for their valuable time and contribution. we are grateful to their principals for making this possible. Director New Delhi National Council of Educational 20 December 2005 Research and Training iv 2015-16(20/01/2015) . Professor Tapas Majumdar for guiding the work of this committee.P. We are especially grateful to the members of the National Monitoring Committee. material and personnel. appointed by the Department of Secondary and Higher Education.

Professor. S. New Delhi Nishit Ranjan Das. PGT. Regional Institute of Education. PGT. Tamil Nadu Sabitha Patnaik. Annamalai Nagar. Senior Lecturer. Government Pratibha Vikas Vidyalaya. NCERT. University of Calcutta. Department of Economics. Lecturer. Professor. Lecturer. DESS. Kolkata Naushad Ali Azad. Lecturer. Department of History.V. Punjab University. Delhi Gopinath Perumula. Headmistress. New Delhi Poonam Bakshi. Tata Institute of Social Sciences. Behala. New Alipore Multipurpose School. Tamil Nadu Pratima Kumari. Srinivasan. Jawaharlal Nehru University. Reader. DESS. Jamia Milia Islamia. Department of Economics. NCERT. Villupuram. Lecturer. Department of Economics. New Delhi 2015-16(20/01/2015) . TEXTBOOK DEVELOPMENT COMMITTEE CHAIRPERSON. Sachivalaya Marg. Department of Economics. Mumbai Jaya Singh. Surajmal Vihar. Kolkata CHIEF A DVISOR Tapas Majumdar. Lecturer. Arignar Anna Government Arts College. New Delhi Neeraja Rashmi. Srinivasan. Professor. Bidya Bharti Girls High School. Annamalai University. DESS. NCERT. ADVISORY COMMITTEE FOR TEXTBOOKS IN SOCIAL SCIENCES AT HIGHER SECONDARY LEVEL Hari Vasudevan. Bhubaneswar Sharmista Banerjee. New Delhi MEMBERS Bharat C. Kolkata MEMBER–COORDINATOR M.G. Demonstration School. Thakur. Emeritus Professor. New Delhi Rama Gopal. Chandigarh R. NCERT. DERPP. PGT.

A few photographs and text materials on environmental issues have been used from the State of India’s Environment 1 and 2 published by the Centre for Science and Environment. New Delhi. Centre for Education and Communication. Inchar ge Computer Station in shaping this book. Pratyusa K. New Delhi. New Delhi. DTP Operators. New Delhi. 2015-16(20/01/2015) . R. Ministry of Information and Broadcasting. Research Scholar. Jawaharlal Nehru University. Copy Editor. Thirumal Murugan. DTEA Senior Secondary School. Nandana Reddy. New Delhi. ACKNOWLEDGEMENTS Many friends and colleagues have helped in preparing this textbook. A photo relating to farmers committing suicides has been used from The Hindu. Janakpuri. Modern School. Synodical Board of Social Service. Delhi. Priya Vaidya. Chennai. Proof Reader. Director. The Council also gratefully acknowledges the contributions of Mamta and Arvind Sharma. New Delhi. Professor and Head. National Rail Museum. The National Council of Educational Research and Training acknowledges M. New Delhi for allowing to use photographs available in their photo library. authored by P. and Nalini Padmanabhan. Bangalore. Department of Education in Social Sciences and Humanities for her support. C. Dillip Kumar Agasti. Meenakshi College. New Delhi. Centr e for Economic Studies and Planning. John Suresh Kumar. New Delhi. New Delhi for providing their feedback and inputs. Special thanks are due to Savita Sinha. and Dinesh Kumar. V. Department of Economics. Working in the mill no more. John. J. Pr ofessor. Das of CIET. The Council also acknowledges the Press Information Bureau. Lecturer. Everybody Loves a Good Drought. Director (Development). Adhiyaman Matriculation School. The Council acknowledges their contribution as well. NCER T. Uthangarai. DESS. Renuka of National Institute of Health and Family Welfare. copyright holders and publishers of these reference materials. Mandal. The Council expresses its gratitude to Jan Breman and Parthiv Shah for using photographs from their book. Centre for Study of Regional Development and Satish Jain. Principal. Reader. Some stories were taken from the book. published by Oxford University Press. The Council thanks the authors. New Delhi. Tamil Nadu. Pooja Kapoor. New Delhi. NCER T are also duly acknowledged. Karpagam. Sindhu Menon of Labour File. Some photographs were given by S. Sardar Patel Vidyalaya. Sainath and published by Penguin Books. Lodhi Estate. Concern for Working Children. The efforts of the Publication Department. Barakhamba Road. New Delhi. Selvam. Neena Chandra.

collecting information from government documents such as Economic Survey. conscious effort has been made not to burden the learner with concepts and data. they are expected to be sensitised about these issues. the role of the teacher in enriching the understanding of the Indian economy is greater in this course. Indian Economic Development. allocation of funds to various sectors like agriculture. Indian Economic Development. In this process. HOW TO USE THIS BOOK The main objective of this book. and to critically evaluate and interpret the relevant information provided by the media. services and for specific causes such as poverty and employment. In fact. At the beginning of the academic year. the learners are expected to acquire skills to understand macroeconomic events which occur around them. interpret the economic events and visualise the economic future of India. On completion of the course. industry. They are expected to develop analytical skills. The book also provides opportunities for knowing what economic resources are and how these resources are being utilised in different sectors. key issues of rural development. environment. The learners are also exposed to numerical information relating to various aspects of Indian economy and India’s economic policies. Nevertheless. the teachers have to initiate the process by taking some steps before starting the course. For all this to happen. television and others sources. The activities include classroom discussions. is to expose the learners to some of the key issues facing the Indian economy. from newspapers. With regard to various economic issues and trends. Learners should also be encouraged to read the works of scholars on various topics. The students have to carry out such activities under the guidance of their teachers. various 2015-16(20/01/2015) . this book attempts to bring out alternative views on every issue so that students can engage themselves in well-informed debates. as young adults. students may be asked to collect clippings from newspapers and magazines relating to different topics under the course — five year plans. This course comprises of many activities with each chapter. archival materials. appreciate and learn to critically assess the role of the government in various economic spheres.

education and energy. Understandably. when we talk of growth rates — overall growth rates and growth of different sectors — though it may be necessary for the learners to have a rough idea about the trends in growth rates. they may also be encouraged to learn the process involved in reaching the level of growth and factors contributing to the trend rather than mere reproduction of tabular data of growth rate. bring the issue under discussion closer to real life.infrastructures. it is important to take note that various information relating to the Indian economy are available on the Internet. Information Technology facilities may not be available in all the schools. which they have collected from the beginning of the course. The statistical tables available as Appendix in the Economic Survey would be immensely helpful in understanding various issues. and display/use them in the classroom. These boxes supplement the information given in the text. are not meant for examination/evaluation purposes. Students need to be introduced to the Internet and encouraged viii 2015-16(20/01/2015) . they can cull out those news items. Teachers need to encourage the learners to explore beyond the text while attempting these activities. They have to maintain these clippings. While discussing a particular issue. as also ‘Work These Out’ activities. However. an attempt has been made to lend a humane touch and. health. thus. the more elaborate of these can be treated as projects. The schools will have to buy a hard copy of the Economic Survey for the latest year. discussion of the numerical information about the issue is inevitable. each chapter has ‘Suggested Additional Activities’ at the end and ‘Work This/ These Out’ as part of the text. these boxes. It is necessary for learners to build this collection right from the beginning of the course so that the relevent information is at hand as and when needed. however. this habit will also come in handy during later stages of education. You will notice numbered boxes in all chapters. For instance. and when the teacher starts teaching a particular topic. It is necessary for the students to familiarise themselves with such reports and work on relevant activities. and economic events in China and Pakistan. Through these boxes. You will notice that information relating to the Indian Economy is updated in the Economic Survey. Besides the relatively conventional ‘Exercises’.

We wish to reiterate the fact that the prime objective of this course on Indian economy is to introduce the basic macro issues of the Indian economy to the student community and to initiate a well-informed debate on our economy.google. kindly search those websites through search engines such as GOOGLE (www.budgetindia. Programme Coordinator (Economics) Department of Education in Social Sciences National Council of Educational Research and Training Sri Aurobindo Marg New Delhi 110 016 Email : classtenecons2007@hotmail.co. In case a website given in this book is not accessible. including poverty. the details relating to poverty are published by the Planning Commission. are available in the form of reports.nic. You can send your queries and feedback relating to any part of this book to the following address. For the first time. We also stress that collaborative learning is an important aspect of this course. The reports such as Economic Surveys of the last 10 years are available o n the website: http://www.in). Many organisations change their website addresses.com ix 2015-16(20/01/2015) . Also.in. For instance. each chapter has been briefly summed up in the ‘Recap’ to facilitate learning. students and teachers may attempt to download such reports from websites and use them in the classroom. Since it may not always be possible to procure such reports in hard copy. Students should know that the Planning Commission of the Government of India has a website in which various reports relating to different aspects of India.to access the websites of the various government departments to get the required information. please take note that sources for all tables have not been given with the table as these tables were sourced from various research materials which have been covered under ‘References’ for each chapter. hence the involvement of students as well as teachers in collecting information on the Indian economy from other sources is necessary and such collected information should be used as important inputs for both teaching as well as learning about the Indian economy.

social. EQUALITY of status and of opportunity and to promote among them all. THE CONSTITUTION OF INDIA PREAMBLE WE.f.2. ENACT AND GIVE TO OURSELVES THIS CONSTITUTION.e. economic and political. for "Unity of the Nation" (w. Sec. 3. having solemnly resolved to constitute India into a 1 [SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC] and to secure to all its citizens : JUSTICE. by the Constitution (Forty-second Amendment) Act. expression. Sec.1. 3. THE PEOPLE OF INDIA. LIBERTY of thought.f.e. FRATERNITY assuring the dignity of the individual and the 2[unity and integrity of the Nation]. IN OUR CONSTITUENT ASSEMBLY this twenty-sixth day of November. by the Constitution (Forty-second Amendment) Act. for "Sovereign Democratic Republic" (w. Subs. Subs.2.1. 1976.1977) 2015-16(20/01/2015) . 1. 1949 do HEREBY ADOPT.1977) 2. belief. 1976. faith and worship.

PRIVATISATION AND G LOBALISATION : AN APPRAISAL 38 – BACKGROUND 39 – LIBERALISATION 41 – P RIVATISATION 44 – GLOBALISATION 45 – I NDIAN ECONOMY DURING REFORMS: AN ASSESSMENT 48 UNIT III: CURRENT CHALLENGES FACING THE INDIAN ECONOMY 57-178 CHAPTER 4 : POVERTY 59 – WHO ARE THE POOR? 60 – HOW ARE POOR PEOPLE I DENTIFIED? 63 – T HE NUMBER OF POOR IN INDIA 66 2015-16(20/01/2015) . CONTENTS FOREWORD iii UNIT I : DEVELOPMENT POLICIES AND EXPERIENCE (1947-1990) 1-35 CHAPTER 1: I NDIAN ECONOMY ON THE EVE OF INDEPENDENCE 3 – LOW LEVEL OF E CONOMIC DEVELOPMENT UNDER THE COLONIAL R ULE 4 – AGRICULTURAL S ECTOR 5 – I NDUSTRIAL S ECTOR 7 – FOREIGN TRADE 8 – DEMOGRAPHIC CONDITION 9 – OCCUPATIONAL STRUCTURE 10 – I NFRASTRUCTURE 11 CHAPTER 2 : I NDIAN ECONOMY 1950-1990 16 – T HE GOALS OF FIVE YEAR PLANS 19 – AGRICULTURE 22 – I NDUSTRY AND TRADE 27 – T RADE POLICY: IMPORT SUBSTITUTION 30 UNIT II : ECONOMIC REFORMS SINCE 1991 36-56 CHAPTER 3 : LIBERALISATION.

INFORMALISATION AND OTHER ISSUES 116 – WORKERS AND E MPLOYMENT 118 – PAR TICIPATION OF PEOPLE IN EMPLOYMENT 119 – SELF. FACTORIES AND OFFICES 123 – GROWTH AND CHANGING STRUCTURE OF E MPLOYMENT 124 – I NFORMALISATION OF INDIAN WORKFORCE 127 – UNEMPLOYMENT 130 – GOVERNMENT AND EMPLOYMENT GENERATION 132 CHAPTER 8 : I NFRASTRUCTURE 139 – WHAT IS INFRASTRUCTURE ? 140 – R ELEVANCE OF INFRASTRUCTURE 141 – THE STATE OF INFRASTRUCTURE IN INDIA 141 – ENERGY 144 – HEALTH 149 xii 2015-16(20/01/2015) .EMPLOYED AND HIRED WORKERS 120 – E MPLOYMENT IN FIRMS. – WHAT CAUSES POVERTY ? 68 – POLICIES AND PROGRAMMES T OWARDS POVERTY ALLEVIATION 72 – POVER TY ALLEVIATION PROGRAMMES — A CRITICAL ASSESSMENT 75 CHAPTER 5 : HUMAN CAPITAL FORMATION IN INDIA 82 – WHAT IS HUMAN CAPITAL? 84 – SOURCES OF HUMAN CAPITAL 84 – HUMAN CAPITAL AND H UMAN DEVELOPMENT 90 – STATE OF HUMAN CAPITAL FORMATION IN INDIA 91 – E DUCATION SECTOR IN INDIA 92 – FUTURE PROSPECTS 94 CHAPTER 6 : R URAL DEVELOPMENT 99 – WHAT IS RURAL DEVELOPMENT? 100 – CREDIT AND MARKETING IN RURAL AREAS 101 – AGRICULTURAL MARKET SYSTEM 104 – DIVERSIFICATION INTO PRODUCTIVE ACTIVITIES 106 – SUSTAINABLE DEVELOPMENT AND O RGANIC FARMING 110 CHAPTER 7 : EMPLOYMENT: GROWTH.

CHAPTER 9 : E NVIRONMENT AND SUSTAINABLE DEVELOPMENT 162 – E NVIRONMENT — DEFINITION AND FUNCTIONS 163 – STATE OF INDIA’S ENVIRONMENT 167 – SUSTAINABLE D EVELOPMENT 171 – STRATEGIES FOR SUSTAINABLE D EVELOPMENT 172 UNIT IV : D EVELOPMENT EXPERIENCES OF INDIA : A COMPARISON 179-197 WITH NEIGHBOURS CHAPTER 10 : COMPARATIVE DEVELOPMENT EXPERIENCES OF 181 INDIA AND ITS NEIGHBOURS – DEVELOPMENTAL PATH — A SNAPSHOT VIEW 182 – DEMOGRAPHIC INDICATORS 185 – GROSS DOMESTIC PRODUCT AND S ECTORS 186 – I NDICATORS OF H UMAN D EVELOPMENT 189 – DEVELOPMENT STRATEGIES — AN APPRAISAL 190 GLOSSARY 198-206 xiii 2015-16(20/01/2015) .

wildlife and to have compassion for living creatures. (d) to defend the country and render national service when called upon to do so. rivers. to provide opportunities for education to his child or. Constitution of India Part IV A (Article 51 A) Fundamental Duties It shall be the duty of every citizen of India — (a) to abide by the Constitution and respect its ideals and institutions. (e) to promote harmony and the spirit of common brotherhood amongst all the people of India transcending religious. (j) to strive towards excellence in all spheres of individual and collective activity so that the nation constantly rises to higher levels of endeavour and achievement. lakes. 1976 (with effect from 3 January 1977). 2015-16(20/01/2015) . (g) to protect and improve the natural environment including forests. to renounce practices derogatory to the dignity of women. humanism and the spirit of inquiry and reform. (c) to uphold and protect the sovereignty. *(k) was inserted by the Constitution (86th Amendment) Act. (h) to develop the scientific temper. Note: The Article 51A containing Fundamental Duties was inserted by the Constitution (42nd Amendment) Act. 2002 (with effect from 1 April 2010). unity and integrity of India. linguistic and regional or sectional diversities. (b) to cherish and follow the noble ideals which inspired our national struggle for freedom. *(k) who is a parent or guardian. the National Flag and the National Anthem. (i) to safeguard public property and to abjure violence. (f) to value and preserve the rich heritage of our composite culture. ward between the age of six and fourteen years. as the case may be.