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Introduction to the chapter Economic Development: Economic growth, economic development, and human development are not synonymous; these concepts are distinct from one another. In 1990, the first Human Development Report was published. To promote economic well-being, India has chosen democratic planning. The public sector was the leading sector in India during the first phase of planning, which lasted from 1951-52 to 1990-91. Liberalisation, privatisation, and globalisation have grown in importance since the second phase of planning began in 1991-92 and continues to this day. NITI Aayog has taken the place of the Planning Commission of India. A set of important objectives guides Assam’s Twelfth Five Year Plan.
Answer in one sentence
1. Economic growth
2. Economic development
3. Human development
4. Economic planning
5. Democratic planning
6. Liberalisation
7. Privatisation
8. Globalisation
Answers:
1. Economic Growth: Economic growth is a quantitative concept that refers to output growth, specifically growth in Per Capita Income, which is the average income earned per person in a given area.
2. Economic Development: Economic development is both a quantitative concept that evaluates economic growth and a qualitative concept that measures the rise in a country’s standard of living. When the local quality of life improves, economic development increases.
3. Human Development: Human Development is the expansion of collective choice of the people and has three indicators namely – Life Expectancy, Literacy and Standard of living.
4. Economic Planning: Economic planning is an instrument to attain a set of well-defined objectives within a defined time period as determined by a central planning agency. In India, the plan is formulated for a period of five years.
5. Democratic Planning: When people are involved in different stages of planning, it shows that decisions aren’t being forced on them. In this way, India’s federal structure allows for the decentralisation of power.
6. Liberalisation: The term “liberalisation” refers to the “removal of controls” in order to promote economic development. Economic liberalisation is the reduction of government regulations and restrictions in an economy in exchange for increased private sector participation.
7. Privatisation: Privatisation refers to the transfer of ownership, management, and control of public-sector enterprises to the private sector, which implies total or partial disinvestment.
8. Globalisation: Globalisation refers to the integration of a country’s economy with the economies of the rest of the world, and it can also refer to a cultural, social, and political preference for developed countries.
Short answer type questions of the chapter Economic Development
1. Mention two important points of difference between economic growth and economic development.
Answer:
| Economic Growth | Economic Development |
| Increase in the monetary growth of a nation in a particular period. | It refers to the overall development of the quality of life in a nation which includes economic growth. |
| It is a quantitative measure that shows the possible increase in the number of commercial transactions in an economy. | It is a quantitative as well as qualitative improvement in the life of citizens of a country and is most appropriately determined by Human Development Index. |
2. What are the three indices of human development?
Answer: There are three indicators of Human Development as specified by the UNDP are:
i. Life expectancy: Life expectancy is the number of years that a child is expected to survive at the time of birth.
ii. Literacy: The levels of literacy include adult literacy and the gross enrolment ratio of primary and secondary education and other branches.
iii. Standard of living: This basically refers to accessibility to pure drinking water and sanitation.
3. What is meant by extension of collective choice?
Answer: The primary foundation of human development is the extension or expansion of collective choice. Collective Choice Theory is the study of how a rule is chosen to transition from a set of individual preference orders over alternatives available to a society of those individuals to a collective or social preference order over those same alternatives.
4. Mention four important objectives of India’s Five Year Plans.
Answer: The main objectives of planning in India are –
i. To raise the rate of growth of the economy
ii. To remove socio-economic inequalities
iii. To remove poverty, to expand employment opportunities
iv. To remove regional inequalities, to ensure sustainable economic development without causing damage to the environment.
5. Who are the members of NITI Aayog?
Answer: The National Institution for Transforming India is abbreviated as NITI. The Prime Minister of India serves as the Chairman of NITI Aayog. The Vice-Chairman, Chief Ministers of states, Lieutenant Governors of Union Territories, four Central Ministers, the Chief Executive Officer, and experts from various fields are the other members.
Structure of NITI Aayog Committee-
Chairman: Prime Minister.
Vice-Chairman: Appointed by Prime Minister.
Full-time members: Three experts.
Part-time members: Two numbers.
Ex Officio members: Maximum four Cabinet Ministers.
Chief Executive Officer: One IAS officer.
Executive Council: All Chief Ministers and Lt. Governor of Union Territory.
6. Explain one of the main points of difference between the first phase of planning in India (1951-52 to 1990-91) and the second phase (1991-92 to the present day).
Answer: Because the industrial policy accepted the goal of the socialistic pattern of society, the public sector was the leading sector in the economy during the first period of planning (1951-52 to 1990-91), and the role of the private sector was secondary. However, the Indian economy’s growth rate was unsatisfactory during this time period.
In India, the second phase of planning spans the years 1991-1992 to the present. Because of the economic policies implemented in 1991 emphasising liberalisation, privatisation, and globalisation, the importance of the private sector grew during this period, while the emphasis on the public sector declined.
7. Briefly explain the three main causes of the introduction of economic reform measures in India.
Answer: There are three important factors that have brought a significant change in the Indian economy.
i. Firstly, the aggregate public expenditure exceeded the aggregate public revenue which resulted in a huge fiscal deficit. Public expenditure in the public sector was rising over the years but the vast majority of public sector undertakings incurred heavy losses and hence, the returns to public expenditure were low.
ii. Secondly, the high rate of inflation had an unfavourable impact on the Indian economy. Socially and economically backward people with limited income were badly hit by the price rise.
iii. Thirdly, India’s balance of payments position. was highly disturbing. The inflow of funds into India was on the decline. On the contrary, there was an outflow of capital from India. Consequently, the foreign trade deficit was rising alarmingly.
8. Mention three benefits of economic reforms in India.
Answer: Three benefits of the economic reforms in India are:
i. Firstly, there has been a rise in the rate of growth of the economy. The annual rate of growth in 2005-06, 2006-07 and 2007-08 was 9.5 per cent, 9.7 per cent and 9.2 per cent respectively which was much higher than the growth rate achieved earlier. During the period 2009-10 to 2012-13, the average rate of growth of the Indian economy was 6.7 per cent.
ii. Secondly, the wholesale price index has shown a downward trend. However, the retail prices have not registered the same trend.
iii. Thirdly, the foreign currency reserves with the Reserve Bank of India have increased considerably. This amount was $328.7 billion (1 billion = 100 crore or 1000 million) in 2015 (march). This reserve could finance seven months of imports into India. In 1990-91, the amount of foreign exchange reserve was so small that it could cover only 15 days of import.
9. Briefly explain two problems of economic reforms in India.
Answer: The two problems of economic reforms in India are:
i. Firstly, new economic reforms failed to control inflation. Although the Government had a plan to contain the rate of inflation 9 per cent in 1991-92 (as mentioned in the Memorandum to IMF) the actual rate of inflation successfully declined to 6.5 per cent in April 1993 but then the same rate again increased to the level of 11.0 per cent in 1994-95.
ii. Secondly, the new economic reforms are a complete surrender to the World Bank-IMF precepts and the Government has surrendered its sovereignty in order to procure a huge amount of loans from such international agencies.
10. Mention five important objectives of Assam’s Twelfth Five Year Plan.
Answer: The important objectives of Assam’s Twelfth Plan are:
i. to raise the rate of growth of the Assam economy’ to 10 per cent in the next two to three decades in order to remove the gap between Assam’s economy and the economies of the developed states in India
ii. to tackle the’ problem’ of flood and erosion with the latest technology and scientific management
iii. to achieve self-sufficiency in power generation and to apply modem technology in power supply and distribution
iv. to raise the value of Assam’s human development index and accordingly increase the amount of investment in health and education
v. to lay emphasis on skill formation in order to expand opportunities for self-employment and promote the growth of micro, small and medium industries including the traditional cottage industries.
Additional/extra questions and answers/solutions
1. When was the first Human Development Report published?
Answer: The first Human Development Report was published in 1990.
2. Write the new concepts of Human Development introduced in 2010.
Answer: The new concepts of Human Development introduced in 2010 include:
i. The inequality-adjusted human development Index.
ii. Gender inequality index and
iii. multidimensional poverty index.
3. What do you understand by life expectancy?
Answer: The number of years a child is expected to live at the time of birth is referred to as his or her life expectancy.
4. What is the average life expectancy in developed and underdeveloped countries?
Answer: The average life expectancy in developed countries is higher because public health services are better. On the contrary, in developing countries life expectancy is low because public health services are rather poor.
5. Who is the Chairman of NITI Aayog?
Answer: Narendra Modi, the Prime Minister of India is the Chairman of NITI Aayog.
31. Discuss the main functions of the North Eastern Council.
Answer: Functions of the NE Council are as follows:
i. To prepare integrated regional planning for the development of the entire NE region and to reduce economic disparity.
ii. To establish economic cooperation and coordination among all the northeastern states.
iii. To prepare projects on transport and communication, electricity, and flood control.
iv. To maintain effective coordination among the north-eastern states regarding the distribution of benefits derived from the execution and maintenance of the development project.
v. To assess the progress of investment made for project execution and to make recommendations to the central government.
vi. To take the necessary steps for a systematic survey and research on projects related to regional planning.
vii. To discuss matters relating to the security, law and order situation of the NE states and to provide necessary suggestions in this regard.
32. What are the advantages of economic development?
Answer: Changes occur in social organisational patterns, traditional outlooks, and national institutions. It accelerates economic development, narrows income disparities, and eradicates absolute poverty.
33. Why is five-year planning necessary?
Answer: Five-year planning is necessary for the reconstruction of the national economy and for economic development.
34. What was the objective of the tenth year plan?
Answer: The objective of the tenth year plan was (a) power (b) Social service and (c) Agriculture and rural development.
35. What do you understand by the vicious cycle of poverty?
Answer: Developing countries are densely populated. These countries have extremely low levels of income. These countries rely primarily on traditional agricultural systems. This is the primary cause of the poverty cycle.
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