INDIAN ECONOMY- ECONOMIC GROWTH

TRINITY INSTITUTE OF PROFESSIONAL STUDIES

Sector – 9, Dwarka Institutional Area, New Delhi-75Affiliated Institution of G.G.S.IP.U, Delhi

BBA(G)INDIAN ECONOMY

17203

ByReena yadav

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

ECONOMIC GROWTH• Economic growth is defined as the rate of

expansion that can move an underdeveloped country from near subsistence mode of living to substantially higher level over a long period of time.

• It is the increase in output or production.• It’s a process of sustained increase in the real

national income over a long period of time.• It is an increase in aggregate output of goods and

services in a country during a given period of time.


ECONOMIC DEVELOPMENT• Economic development is a normative concept i.e. it

applies in context of people’s sense of morality (right and wrong ; good and bad) . It is defined as increase in living standards, improvement in self esteem needs and freedom from oppression as well as a greater choice.

• It means both more output or production and changes in the technical and institutional arrangements by which factors of production are produced and distributed.

• Economic development includes only those changes which gather momentum and continuously lead the hole country to higher levels of economic activity.


ECONOMIC GROWTH VS ECONOMIC DEVELOPMENT

BASIS ECONOMIC GROWTH ECONOMIC DEVELOPMENT

Concept It is a narrow concept which refers to an increase in a country's real output of goods and services over a specific period of time.

It is a comprehensive concept which includes economic growth and progressive changes in social, economic, political, cultural and historical levels.

Attainment It can be easily attained by mobilizing larger resources and raising their productivity.

It is difficult to realize because it also involves such changes in the composition of output which will ensure social justice.

Significance It attaches less significance to equitable distribution of income, reduction in employment and poverty level.

It attaches greater significance to equitable distribution of income, reduction in employment and poverty levels.




Measurement It is measurable as it includes only economic factors like supply of capital stock, capital-output ratio, agricultural surplus etc.

It cannot be easily measured because non-economic factors are also included like quality of human resources i.e., social organization etc.,

Indicators The indicators of economic growth are real national income and real per capita income i.e., if national income rises, economic growth increases and vice versa .

The indicators of economic development are physical quality of life index and human development index i.e., if literacy rate or/and life expectancy rate rises then economic development rises and vice versa.




Relationship It is possible for an economy to have economic growth without economic development.

It is not possible to have economic development without economic growth.

Concern It is a concern of advanced countries.

It is a major issue with underdeveloped countries.

Examples of countries like China and India that have huge GDP but not labeled developed because of their lower ranks on other parameters such as health, education and life expectancy is enough to demonstrate the difference between economic growth and economic development.


INDICATORS OF ECONOMIC GROWTH

• Real National Income National income is the sum total of values of all final goods and services

produced in a country during one year, calculated after making necessary adjustments.

National Income at constant prices is called real national income.• Real Per Capita Income Per Capita Income is defined as the income per head of population in an

economy. It is estimated by dividing national income with the total population.

Per Capita Income calculated at constant prices is called Real Per Capita Income.

Real Per Capita Income = National income at constant prices --------------------------------------------------- Mid- Year population


INDICATORS OF ECONOMIC DEVELOPMENT

• PHYSICAL QUALITY OF LIFE INDEX(PQLI) PQLI was developed by Hager and Morris. It

includes three indicators of economic development.

1. Life Expectancy at age one, i.e., how long a newly born can hope to live in this world.

2. Infant mortality rate, i.e., average number of deaths per thousand children born within the age of one year.



3. Literacy rate, i.e., percentage of population to the total population which is literate.



• HUMAN DEVELOPMENT INDEX AND INEQUALITY ADJUSTED HDI (IHDI) Three indicators of HDI are1. Life expectancy at birth : it is measured in terms of years.2. Knowledge or educational attainment : it is measured by adult

literacy rate (two-third weight) and combined gross enrolment rate (GER) of primary, secondary and tertiary levels( one- third weight).

3. Standard of living : it is measured by GDP per capita (PPP). PPP stands for purchasing power parity in terms of US dollars. PPP GDP is calculated after eliminating price differences among the countries.


FACTORS IN ECONOMIC DEVELOPMENT

1. Economic factors


FACTORS IN ECONOMIC DEVELOPMENT

2. Non- economic factors

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