ECONOMICS CHAPTER-1.
DEVELOPMENT
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IMPORTANT TERMS AND CONCEPTS
1. Traditional Notion of Development. Different persons depending on their present
status and situation have different views/expectations (and sometimes conflicting
also) about development.
2. National Income. Total value of all goods and services produced within a country
plus income coming from abroad.
3. Per Capita Income (Average Income). It is obtained by the population of the
county, i.e.,
Per Capita Income = National Income / Population
Other factors like equitable distribution of income should also be taken into consideration
while comparing per capita income of different countries.
4. Factors Important for Development (other than Money Income). Freedom, Equal
treatment, Security, Peace, Respect for others, Hygienic environment, Best Medical
Facilities, etc.
5. Literacy Rate. Literacy rate measures the proportion of literate population in the 7
and above age group.
6. Low-income Countries. Countries which have per capita income of US $ 2400 or
less in 2023 (According to WDR 2023 ).
7. Infant Mortality Rate (IMR). In a year, number of children that die before the age of
one year per 1000 children born live.
8. Rich Countries. Countries which have per capita income of $63,400 per annum and
above in 2023 (According to World Development report 2023).
9. Public Distribution System (PDS) or Ration Shops. PDS ensures availability of
essential commodities like wheat, rice, sugar, edible oils and kerosene, etc. to the
consumers through a network of outlets or fair price shops. It checks the forces of
supply and demand. The prices are fixed by the government.
10. Life Expectancy at Birth. It indicates the number of years a newborn is expected to
live.
11. Gross enrolment Ratio. It refers to enrolment ratio for primary schools and higher
education beyond secondary schools.
12. Sustainable Economy Development. It means that development should take place
without damaging the environment, and development in the present should not
compromise with the needs of the future generations.
13. Economic Development. A sustained increase in real per capita income that
promotes economic welfare by reducing poverty, unemployment and in qualities in
distribution of income.
14. Ranks given to Punjab, Kerala and Bihar are 1, 2 and 20 respectively under the
category of Best States in India to live (as per India today Issue).
Topics in the Chapter
• Overview
• What Development Promises —Different People, Different Goals.
• Income and Other Goals.
• National Development.
• How to Compare Different Countries or States?
• Income and Other Criteria.
• Public Facilities.
• Sustainability of Development.
Overview
(i) Perspectives on development.
(ii) Common indicators for development.
(iii) Method for measuring development.
(iv)Concept of purchasing power parity.
What Development Promises - Different People, Different Goals
→ Development promises a real growth by enhancing total income and
standard of living of a person.
→ Different people have different development goals. The development
goals are varying from people to people.
→ For example, a girl from a rich urban family gets as much freedom as
her brother and is able to decide what she wants to do in life. She is able
to pursue her studies abroad.
Income and Other Goals
→ People prefer to earn more income for fulfilling their daily requirements
of life. Companies provide material thing like, money. But people also
want non-material thing like, freedom, security, and respect of others.
→ Some companies provide less salary but offer regular employment
which enhances sense of securities.
→ In other case, some companies provide high salary but offer no job
securities. They reduce sense of securities.
National Development
→ National development refers to ability of a nation to improve standard
of living of its citizens.
→ Standards of living of citizens depend upon per capital income, Gross
Domestic Product, literacy rate and availability of health etc. These factors
also consider as measure of improvement.
How to Compare Different Countries or States?
→ We can compare different countries or state on the basis of per capital
income.
→ We cannot take national income to compare different countries because
each country has different population rate.
→ Per capita income is calculated by dividing total income of a country to
total population of that particular country.
→ Per capita income of a country shows the standard of living of the
citizens of that particular company.
→ A country with higher per capita income is more developed than others
with less per capita income.
Income and Other Criteria
→ For achieving development goal of people, people not only want better
income, they also want non-material thing like, freedom, security, and
respect of others.
→ For development of a nation average income or per capital income is
needed. For development of a nation average income or per
capital income is needed.
Draw the table
Per capita income of selected States
If per capita income were to be used as the measure of development,
Haryana will be considered the most developed and Bihar the least
developed state of the three. However, this is not true, if we look at the
other criteria.
Comparative data on Haryana, Kerala and Bihar
• Literacy Rate: It is the number of people above 7 years of age who are
able to read and write with understanding. Higher the literacy rate, more
developed a state will be. India has a literacy rate of 64%. Kerala has the
highest literacy rate and Bihar has the lowest.
• Infant Mortality Rate: It is the number of children that die before
attaining one year of age as a proportion of 1000 live births in a year. It
indicates the development of health facilities in a country. In India, Kerala
has the lowest IMR while Bihar has the highest.
• Net Attendance Ratio: It is the total number of children of age group 14
and 15 years attending school as a percentage of total number of children
in the same age group.
• In this table: draw the table
→ The first columns shows that in Kerala, out of 1000 children born, 12
died before completing one year of age but in Haryana, the proportion of
children dying within one year of birth was 36, which is two times more
than that of Kerala. This number is 44 in Bihar.
→ Literacy rate in Kerala is 94 percent which is higher than Haryana (82%)
and Bihar (62%).
→ The last columns shows that in Kerala, 83 children out of 100 aged 14-
15 are not attending school beyond Class 8 which is greater than Haryana
(61) and Bihar (43).
Public Facilities
→ Facilities which are provided by the government considered as public
facility like schools, hospitals, community halls, transport, electricity etc.
→ As we know that Punjab has more income than the average person in
Kerala but Kerala has a low infant Mortality Rate because of better public
system like, Public Distribution System which provide Health and
nutritional status to the state.
→ We need public facility because we are not able to purchase all things
by money. We cannot able to buy a pollution free environment with the
help of money.
Sustainability of Development
→ Sustainable Development refers to development of human with at the
same time sustaining the ability of natural system.
→ It is helpful to fulfils the needs of the human being without harming the
ability of the future generation.
→ For sustainable development, we have to use non-renewable resources
like carbon based originally designed fuel for the quantity how much we
needed.
→ Some renewable resources like groundwater will take long time for
replenished. So, we should use that resource in finite quantity.
• Infant Mortality Ratio: Infant Mortality Ratio indicates the number of
children who die before the age of one year, as a proportion of 1000 live
children born in that particular year.
• Literacy Rate: Literacy Rate measures the proportion of literate
population in the 7 and above age group.
• Net Attendance Ratio: It is the total number of children of age group
14 and 15 years who attending school as a percentage of total number of
children in the same age group.