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Part B: Indian Economic Development

1st Chapter
Indian Economy On The Eve Of Independence

The traditional handicrafts industries were ruined under the British rule. Do you agree with this view?
Give reasons in support of your answer. (NCERT) (4)
India was well-known for its handcraft industries in the fields of cotton and silk textiles, metal and precious
stone works etc. These products enjoyed a world wide market because of
1. Reputation of the fine quality of material used and;
2. High standards of craftsmanship seen in all imports from India.
However, during the British rule, the country's world famous handicraft industries were ruined, which not only
created massive unemployment in India but also a new demand in the Indian consumer market — increasing
imports of cheap manufactured goods for Britain.
.
What was the focus of the economic policies pursued by the colonial government in India? What were the
impacts of these policies? (NCERT) (3)
Or
What was the two-fold motive behind the systematic deindustrialisation effected by the British in pre-
independent India?

Answer:-
1. Own Economic interest:- To protect and promotion of economic interests of Britain’s rather than the
development of the Indian economy
2. Feeder economy:- British government changed the whole structure of the Indian economy and transformed
it into a supplier of raw materials and consumer of finished product of British industries

Impact Of
Sectors

Agricultural Industrial Occupational Demographic

Sector Foreign Trade
Sector Structure Profile

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AGRICULTURE SECTOR
“During the British colonial rule, despite being the occupation of about 85% of India's population, the
agriculture sector continued to experience stagnation and, not infrequently, unusual deterioration.
Agricultural productivity became low." Do you agree with the above statement? Give valid reasons in
support of your answer.
Nearly 85 % of the country’s population lived mostly in villages and derived livelihood, directly or indirectly
from agriculture
• But the Agriculture sector was stagnant
• During the pre-British period, the condition of Indian agriculture was not at all satisfactory

1. Land revenue system: -

• Under the Zamindari system the Zamindars exploit the cultivator by imposing lagan irrespective
of their Poor economic condition
• Zamidars took the land of farmers when they were not able to deposit the Lagan on fixed dates
• Profit accruing out of the agriculture sector went to the Zamindars instead of the cultivators did
nothing to improve the condition of agriculture.
2. Force Commercialization of agriculture: -
• British transformed Indian agriculture into a raw material for their industries
• They forced the commercialization of agriculture in which they encouraged the production of cash
crops instead of food crops
• Due to shortage of food crops country had to suffered from frequent famines
3. Low level of Productivity:
• Dependence on rain/lack of modern technology
• No means or incentives to invest in agriculture
• Low levels of technology,
• Lack of irrigation facilities
• Negligible use of fertilizers

INDUSTRIAL SECTOR ( (LIGHT)

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India could not develop a sound industrial base under the British colonial rule. Even as the country’s
world famous handicraft industries declined, no corresponding modern industrial base was allowed to
come up to take pride of place so long enjoyed by the former. ”

India could not develop a sound industrial base under the British rule and was in poor state. Followings are the
reason for the downfall
1. Limited contribution of industries to GDP
• Growth rate of the new modern industrial sector and its contribution to the country’s GDP was very
small.
• Only one sixth (about17%) of the GDP
Slow and limited industrial development
o Cotton textile mill by Indians in Maharashtra and Gujarat,
o Jute mills dominated by the foreigners in Bengal.
o Tata Iron and Steel Company (TISCO) were incorporated in 1907.
2. Inadequate role of Public Sector
• Very limited operation of public sector
• Only restricted to the railways, power generation, communication, ports etc
3. Got Shortage of Capital Goods Industry
• During the British rule, there was hardly any capital goods industry to promote further
industrialization process.
• They always wanted Indians to be dependent on them, for the supply of capital goods and heavy
equipments.
4. Huge Competition from machine-made goods
• Machine-made products from Britain were low cost products and gave a hard competition to the
handicraft products in India.
• It forced the Indian craftsmen to shut-down their enterprises and leads to massive unemployment
5. Two fold De-Industrialization policy
• Reduce India to exporter of raw materials for rapid industrialization in Britain
• Convert India to importer for the cheap finished products
Impact
o Decline in Indian handicraft industries leads to massive unemployment
o Demand for cheap imported manufactured goods from Britain rises

FOREIGN TRADE (DIM)

How did the restrictive policies of commodity production, trade and tariff pursued by the British colonial
government affect the structure, composition and volume of foreign trade?
India has been an important trading nation since ancient times. But the restrictive policies of commodity
production, trade and tariff follow by the colonial government adversely affected the structure and volume of
India’s foreign trade
1. Drain of Indian wealth:
• Export surplus from foreign trade did not result in any flow of gold or silver into India
• This Export surplus was used make to payments for expenses incurred on war fought by the
British government
2. Importer of finished goods and Exporter of primary products

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 •
India became an exporter of primary products such as raw silk, cotton, silk and woolen clothes
and capital goods like light machinery, produced in the British Industries.
• As a result there was a shortage of essential commodities in domestic market. Large export
surplus created.
3. Monopoly control of British:
• More than half of India’s foreign trade was restricted to Britain while the rest was allowed with
few other countries like China, Ceylon (Sri lanka) and Persia (Iran).
• The opening of the Suez Canal in 1869 served as a direct route for the ships operating
between India and Britain.

DEMOGRAPHIC PROFILE
▪ Study of various aspects of population like birth rate, death rate, sex ratio etc.
▪ Demographic conditions during the British Rule exhibited all features of a stagnant and backward Indian
economy.
▪ 1st official Census: The first official census was conducted in the year 1881. Though suffering from
certain limitations, the census revealed unevenness in India’s population growth. From 1881 onwards,
census operations were carried out after every ten years.
▪ 1921: Year of Great Divide: before 1921, India was in the first stage of demographic transition. The
second stage of transition began after 1921. So, the year 1921 is described as the ‘year of the Great
Divide’.

STATE OF DEMOGRAPHIC PROFILE (SLIP)

Que. Give a quantitative appraisal of India's demographic profile during the colonial period.
1. Slow population growth Life expectancy was as low as 44 years which shows the lack of health care
facilities water and air-borne diseases, as well as lack of means for health care. Infant mortality rate was as
high as 218.
2. Lack of Public health facilities Health facilities were either unavailable to large portion of population or,
when available, were highly insufficient
3. Illiteracy rate:-Literacy rate was as low as which reflects the social and economic backwardness of the
country. The average literacy rate was 16 % and woman literacy rate was only 7%.
4. Poverty Wide poverty prevailed in India during the colonial period worsening profile of India’s population
of the time

Particulars DATA Present

Literacy rate 16%. 74%
Female literacy 7% 48%
Infant mortality rate 218 Per thousand 40 per thousand
Life expectancy 44 years 68 years

Infant (Child) Mortality (Death) Rate (IMR):- is the number of deaths per 1,000 live births of children under
one year of age

OCCUPATIONAL STRUCTURE

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Que. Highlight the salient features of India's preindependence occupational structure. (NCERT) (4)
Ans. Occupational structure includes distribution of labor force in the three main sectors of the economy-
agriculture, industry and services
Salient features of India's pre-independence occupational structure are:
1. Agriculture was the principal source of occupation
• Agriculture sector 70-75%
• Manufacturing sector 10%
• Service sector 15-20 %
2. Unbalanced growth/ Regional variation:
• Decrease in the share of workforce in the agriculture sector in Tamil Nadu, Andhra Pradesh,
Kerala, Karnataka, Maharashtra and West Bengal.
• Increase in the share of workforce in the agriculture sector in Orissa, Rajasthan and Punjab.

INFRASTRUCTURE (CARE)
Infrastructure:-Capital invested in the country that helps in production distribution and consumption.
• Economic infrastructure such as transport, irrigation, banking and credit, power
• Social infrastructure includes water supply, sanitation , health , education etc

“Under the colonial regime, basic infrastructure such as railways, ports, water transport, posts and
telegraph develop. However, the real motive behind infrastructure development was not to provide basic
amenities to the people but to subserve various colonial interests. “What objectives did the British intend to
achieve through their policies of infrastructure development in India? (4)
1. Communication:
• Posts and telegraphs were the most popular means of communication.
• The introduction of the expensive system of electric telegraph in India served the purpose of
maintaining law and order.
2. Air and Water Transport:
• Construction of the inland trade and sea lanes was not satisfactory and was costly.
• Indian waterways proved to be uneconomical, as in the case of the Coast Canal on the Orissa
coast.
• This canal was built at a huge cost, but it failed to complete with the railways, and finally, canal
had to be abandoned
3. Roads
• The colonial administration could not construct large roads due to shortage of funds.
• The roads that were built to
o Mobilizing the army
o Shifting raw materials.
• There was shortage of roads to reach out to rural areas during the rainy season.
• As a result, people living in these areas suffered badly during natural calamities and famines.

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 4. Encourage Railways
• British introduced the railways in India in 1850 and it is considered as one of their most
important contributions.
• Affected the structure of the Indian economy two important ways
o Helped them take long distance travel and thus break geographical and cultural barriers.
o It improved commercialization of Indian agriculture.

Positive impact of british rule in India (BASIC)

1. Barter system to monetary system:- Barter transactions was replaced by monetary exchange system
which increase the size of trade.
2. Administration system:- Indian economy got the system of efficient administration from Britishers
who bring all the independent states into common frame
3. Spread of railways:-British introduced the railways in India in 1850. The railways enabled people to
undertake long distance travel and thereby break geographical and cultural barriers.
4. Increasing Commercialization of agriculture:- Promote commercialization of Indian agriculture and
volume of the India’s export trade undoubtedly expanded.
5. Check on famines:- Expanding means of transportation help to check the famine hit areas as they rush
to the drought hit areas

The social and economic challenges before India at the time of independence were enormous. Do you
agree with the statement? Give reasons.
Ans. The given statement is correct.
By the time India won its independence, the impact of the two- century long British colonial rule was already
showing on all aspects of the Indian economy. Some of the most crucial social and economic challenges before
the country were:
1. Low level of economic growth and development — The country's growth of aggregate real output was less
than 2% p.a coupled with about 0.5% p.a. growth in per capital output.
2. The agricultural sector was already saddled with surplus labour and extremely low productivity. About 75%
of the country's population derived livelihood directly or indirectly from agriculture. Agricultural productivity
was extremely low due to low levels of technology, lack of irrigation facilities, negligible use of fertilisers, etc.
3. The industrial sector was crying for modernisation, diversification. capacity building and increased public
investment.
• There were only a few industries in the fields of cotton and jute textile, iron and steel, sugar, cement, paper,
etc.
• There was hardly any capital goods industry to help promote industrialisation in India.
• The industrial growth rate was very low.
• The public sector remained confined only to the railways, power generation, communication, ports and some
other departmental undertakings.
4. Foreign trade was oriented to feed the industrial revolution in Britain. British maintained a monopoly control
over India's exports and imports. A large export surplus generated from India's foreign trade was used to make
payments for the expenses incurred by an office set up the colonial government in Britain, import of invisible

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items, etc.; all of which led to the drain of Indian wealth.
5. Infrastructure facilities such as railway network, roads, water transport, posts and telegraphs, etc. needed
uparadation expansion and public-orientation.
6. Prevalence of rampant poverty and unemployment required welfare orientation of public economic policy.

Sequence of Events
I Introduction of the railways in India by the British 1850
II Opening of the Suez Canal 1869
III Various details about the population of British India were first collected 1881
through a census
IV The Tata Iron and Steel Company (TISCO) was incorporated 1907
V Second stage of demographic transition in India 1921

2ND CHAPTER
Planning in India

INDIAN ECONOMY (1950-1990)

• After two hundred years of British rule India finally got freedom on 15 August, 1947.
• It was necessary to rebuild the backward and stagnant Indian economy into a developed economy.
• the most important task before the Government of independent India was to decide the type of ‘Economic
System’, which would be most suitable for India.

TYPES OF ECONOMIC SYSTEMS

1. Capitalist Economy: A capitalist economy is the one in which the means of production are owned,
controlled and operated by the private sector. Production is done mainly for earning profits.
2. Socialist Economy: A social economy is the one in which the means of production are owned, controlled
and operated by the government.
3. Mixed Economy: A mixed economic system refers to a system in which he public sector and the private
sector are allotted their respective roles for solving the central problems of the economy

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Solution of Central problems are solved in the following manner
Economy What to produce How to produce For whom to produce
Capitalistic goods are produced that Using cheaper Basis of their consumer
economy can be sold profitably techniques of income or purchasing
production power.
Socialistic The government decides Government decides Based on what people
economy what to produce in how the goods are to need and not on what
accordance with needs of be produced they can afford to
the society. purchase.

India adopted the Mixed Economy

After the freedom, leaders of independent India (like Jawaharlal Nehru) were confused with regard to economic
system, to be followed in India.
▪ Some leaders were in favor of Socialist Economy. However, in a democratic country like India,
complete dilution of private ownership was not possible
▪ Capitalist Economic System did not appeal to Jawaharlal Nehru, our first Prime Minister, as under this
system, there would be less chances for improvement in quality of life of majority of people.
▪ As a result, Mixed Economy (with best features of both Socialist and Capitalist Economy) was adopted
by the Indian Economy. In this view, India would be a socialist society, with a strong public sector, but
also with private property and democracy.

PLAN:-Meaning
• How the resources of a nation should be put to use.
• It should have some general goals as well as specific objectives which are to be achieved within a
specified period of time.

PLAN Duration:- Five years- known as “Five Year Plans (Borrowed from former Soviet Union).
Economic Planning.- Defined as making major economic decisions on the basis of a comprehensive survey of
the economy as a whole.
Implementation:-Government of India set up Planning Commission in 1950, with the Prime Minister as the
Chairman.
GOALS OF FIVE YEAR PLANS (GEMS)
1. Growth:
• Growth Refers to increase in country GDP from different sectors (agricultural , industrial , service )
• GDP can be increase by
• Increase in the country’s capacity to produce the output of goods and services
• Increasing the supporting services like transport and banking, power, communication etc
2. Equity
• Benefits of economic prosperity reach the poor sections as well instead only by the rich.
• This can be done by reducing inequality in the distribution of wealth.
• Every Indian should be able to meet his or her basic needs such as food, housing, education and
health care etc.
3. Modernization: -
• Adoption of new technology is called modernization to increase the production of goods and
services.

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 • It can be new seed varieties in agriculture or using a new type of machine in factory
• It also includes changes in social outlook such as the recognition women empowerment by giving
them same rights as men
4. Self-reliance:
• Self-reliance means avoiding imports of those goods which could be produced in India itself to
promote economic growth and modernization
• Main areas covered were food supplies, foreign technology and foreign capital
• It can be done by reducing our dependence on foreign countries to avoid foreign interference in
economic and nation policies
Land reforms: - Land Reforms refer to change in the ownership of landholdings. It ensure that land in actually
passed on to people who actually cultivate it (this is known as providing 'land to tiller of the soil

Agrarian Reforms
1. Institutional Reforms (Land Reforms)
2. Technical Reforms (Green Revolution)

Agrarian
Reforms

Technical Reforms Institutional Reforms

(Green Revolution) (Land Reforms)

Abolition of Ownership Rights for Redistribution of Land ( Land

intermediaries Tenants ceiling)

TYPES OF LAND REFORMS IMPLEMENTED IN THE AGRICULTURE (RAT)

1. Redistribution of Land ( Land ceiling)

• This means fixing the maximamize of land which could be owned by an individual.
• The purpose of land ceiling was to reduce the concentration of land ownership in a few hands.
2. Abolition of intermediaries
• In India, middlemen (Zamindars) who collected rent from the actual cultivators and deposited a
part of it to the government as land revenue was abolished before 1951
• As a result almost 200 lakh tenants into direct contact with the government and were thus freed
from being exploited by the (ZAMindars)
3. Tenants Ownership Rights
• Legislations have been passed to transfer ownership rights on tenant-cultivators. In some states,
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 tenants were made the owners and asked to pay compensation to previous owners.
• It gave tenants the incentive to increase output and this contributed to growth in agriculture.

DRAWBACKS IN LAND REFORMS (FILE)

1. Fault in Legislations
• In some areas the former zamindars continued to own large areas of land by making use of some
loopholes in the legislation.
• The intermediaries were allowed to retain substantial areas of land for personal cultivation
2. Implementation delay
• The big landlords challenged the legislation in the courts, delaying its implementation.
• They used this delay to register their lands in the name of close relatives, thereby escaping from
the legislation.
3. Lack of Political Will
• Land reforms were successful in Kerala and West Bengal because these states had governments
committed to the policy of land to the tiller.
• Unfortunately other states did not have the same level of commitment and vast inequality in
landholding continued
4. Exploitation
• Landlords often forced their tenants to voluntarily surrender the land being cultivated by them.
• There were cases where tenants were expelled and the Landowners claimed to be self cultivators
(the actual tillers)
GREEN REVOLUTION:

Green revolution meaning:- Refers to the large increase in production of food grains resulting from the use of
high yielding variety (HYV) seeds especially for wheat and rice.

Origin of Green Revolution:- In the Kharif season (1966), India adopted High Yielding Varieties Programme
for the first time. The programme was successful due to:

• High Yielding Varieties (HYV) of seeds;

• Adequate irrigation facilities;
• Application of fertilizers, pesticides, insecticides, etc

REASONS REQUIRE FOR GREEN REVOLUTION (CAP)

1. Country’s 75 % of the population was dependent on agriculture.
2. Agriculture in India depends on the monsoon and if the monsoon fell short the farmers were in trouble
3. Productivity in the agricultural sector was very low because of the use of old technology.

PHASES IN GREEN REVOLUTION

1. First phase (Approximately mid 1960s upto mid1970s), the use of HYV seeds was restricted to the more
rich states such as Punjab, Andhra Pradesh and Tamil Nadu. Further, the use of HYV seeds primarily

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 benefited the wheat growing regions only.
2. Second phase (mid-1970s to mid-1980s), the HYV technology spread to a larger number of states and
benefited more variety of crops.
BENEFITS OF GREEN REVOLUTION (SIDE)
1. Self reliance:- The spread of green revolution technology enabled India to achieve self-sufficiency in food
grains; we no longer had to be at the mercy of America, or any other nation, for meeting our nation’s food
requirements
2. Increase in the market surplus:- Marketable Surplus refers to that part of agricultural produce which is
sold in the market by the farmers after meeting their own consumption requirement As a result of this
income of the farmers increased
3. Decrease in price of good grains:-The price of food grains declined relative to other items of
consumption. The low income groups, who spend a large percentage of their income on food, benefited
from this decline in relative prices.
4. Enables Buffer stock:- The green revolution enabled the government to secure sufficient amount of food
grains to build a stock which could be used in times of food shortage

CONCERN IN IMPLEMENTING THE GREEN REVOLUTION

1. Risk of Increase in Income Inequalities:- Possibility that it would increase the disparities between small
and big farmers—since only the big farmers could afford the required inputs.
2. Risk of Pest Attack:- Moreover, the HYV crops were also more prone to attack by pests and the small
farmers who adopted this technology could lose everything in a pest attack

STEPS TAKEN BY THE GOVERNMENT.(GOVERNMENT ROLE)

1. Financial help:- The government provided loans at a low interest rate to small farmers and subsidized
fertilizers so that small farmers could also have access to the needed inputs.
2. Role of research institutes: - The risk of the small farmers being ruined when pests attack their crops was
greatly reduced by the services provided by research institutes established by the government.

Debate over Subsidies to Agriculture:-Subsidy, in context of agriculture, means that the farmers get inputs at
prices lower than the market prices.

ECONOMISTS IN FAVOR OF SUBSIDIES (RIP)

1. Risky Business: - The government should continue with agricultural subsidies as farming in India
continues to be a risky business.
2. Income inequality: - Eliminating subsidies will increase the income inequality between rich and poor
farmers and will violate the ultimate goal of equity.
3. Poverty:-Majority of the farmers is very poor and they will not be able to afford the required inputs without
the subsidies.

ECONOMISTS -AGAINST THE SUBSIDIES

1. Burden on Govt. Subsidies were granted by the Government to provide an incentive for adoption of the
new HYV technology. It is a huge burden on the government’s finances. It should withdraw as their purpose

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 has been served
2. Benefit to rich farmers: - Subsidies do not benefit the poor and small farmers (target group) as benefits of
large amount of subsidy go to fertilizer industry and prosperous farmers.

INDUSTRIAL DEVELOPMENT
At the time of independence, the variety of industries was very limited. The cotton textile and jute industries
were mostly developed in India. There was only two well-managed iron and steel firms; one in Jamshedpur and
the other in Kolkata.

ROLE OF PUBLIC SECTOR IN INDUSTRIAL DEVELOPMENT.(LOSE)

1. Lack of Incentive for Private Sector:
• The Indian market was not big enough to encourage private industrialists to undertake major project
• Due to limited size of the market, there was low level of demand for the industrial goods.
2. Objectives of Social Welfare:
• State had complete control over those industries, that were vital for the economy
• The objective of equity and social welfare of the Government could be achieved only through direct
participation of the state in the process of industrialization.
3. Shortage of Capital with Private Sector:
• Private entrepreneurs did not have the capital to undertake investment in industrial ventures.
• Government had to make industrial investment through Public Sector Undertakings (PSU’s)
4. Employment generation:-
• Industry provides employment, which is more stable than the employment in agriculture.
Industrialization promotes modernization and overall prosperity

INDUSTRIAL POLICY RESOLUTION 1956

• Industrial Policy Resolution of 1956 was adopted to build the foundation for a socialist pattern of society in
2nd five year plan
• Industries were reclassified into three categories,.
1. Schedule A: This first category comprised industries which would be exclusively owned by the
state.like arms and ammunitions; atomic energy; aircraft; oil; railways etc
2. Schedule B: In this schedule, state would take the initiative of setting up industries and private sector
will supplement efforts of the state. Includes industries like aluminum, mining industries, fertilizers, etc.
3. Schedule C: This schedule consists of the remaining industries which were to be in the private sector.
These industries were controlled by the state through a system of license.
Private sector will join hand with state sector, with the state taking the sole responsibility for starting
new units

SMALL-SCALE INDUSTRIES (SSI)

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 In 1955, the village and small-scale Industries Committee (Karve Committee) recommended growth small-
scale industries
o Promote rural development.
o Generate more employment
• In 1950 a small scale industry unit was one which invested a maximum of rupees five lakh.
• At present the maximum investment allowed is rupees one crore

IMPORTANT POINTS ABOUT SMALL-SCALE INDUSTRIES

1. Need for Protection from Big Firms: Small-scale industries cannot complete with the big industrial
firms so, various steps were taken by the government for their growth.
▪ Reservation of Products: Government reserved production of a number of products for the small-
scale industry.
▪ Various Concessions: Small-scale industries were also given concessions, such as lower excise duty
and bank loans at lower interest rates.

TRADE POLICY
Import substitution
▪ In the first seven plans, foreign trade policy was “inward looking Trade Strategy called “Import
Substitution’.
▪ Import Substitution refers to a policy of replacement or substitution of imports by domestic product.
Protection from Imports used.
1. Tariffs:- refer to taxes levied on imported goods. The basic aim for imposing heavy duty on imported
goods was to make them more expensive and discourage their use.
2. Quotas: refer to fixing the maximum limit on the imports of a commodity by a domestic producer.

REASONS FOR IMPORT SUBSTITUTION

1. Avoid foreign competition: - industries of developing countries, like India, are not in a position to
compete against the goods produced by more developed economies. With protection, they will be able to
compete in the due course of time.
2. Saving foreign exchange:- Restriction on imports was necessary as there was a risk of drain of foreign
exchange reserves on the import of luxury goods.
EFFECT OF POLICIES ON INDUSTRIAL DEVELOPMENT (1950 -1990)(PICK)

1. Protection from foreign competition (through Import Substitution) enabled the development of local
industries in the areas of electronics and automobile sectors, which otherwise could not have developed
2. Industry diversification-The industrial sector became well diversified by 1990, largely due to public
sector. It was no longer restricted to cotton textiles and jute. It also included engineering goods and a wide
range of consumer goods
3. Contribution in GDP contributed by the industrial sector increased in the period from 11.8 % in 1950- 51
to 24.6 in 1990 – 91. This rise in industry’s share of GDP is an important indicator of development.
4. Key Role in Promoting of small-scale industries: Gave opportunities to people with small capital to get
into business. New investment opportunities helped in generating more employment. It promoted growth
with equity.

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CRITICAL VIEW OF POLICIES ON INDUSTRIAL DEVELOPMENT (1950) (TIME)

1. Trade Inward looking trade strategy:

• Due to restrictions on imports, some domestic producers made no sincere efforts to improve the quality
of their goods and it forced the Indian consumers to purchase low quality produced by them.
• The domestic industry failed to achieve international standards of product quality.
2. Inefficient Public Sector.
• Many public sector firms incurred huge losses but continued to function because it is difficult to close a
government undertaking ( unemployment problem) even if it is a drain on the nation’s limited
resources
• Public sector continued to monopolies in certain non-essential areas, which is not required and private
sector can also handle. For example, telecommunications, hotel industry etc
• Role of private and public sector and private sector was not clear
3. Misuse of Licensing:
• Some big industrialists who got a license not to start a new firm, but to prevent competitors from starting
new firms.
• A lot of time was spent by industrialists in trying to obtain a license instead to improving the quality of
the product.
4. Evaluation of Public sector:-
▪ Public sector firms should be evaluated on the basis of the extent to which they contribute to the welfare
of people and not on the profits they earn.
▪ Public sector is not meant for earning profits but to promote the welfare of the nation

CONCLUSION

In Agriculture Sector:
▪ India became self-sufficient in food production due to the green revolution.
▪ Land reforms resulted in abolition of zamindari system.
In Industrial Sector:
▪ The industries became diversified compared to the situation at independence. However, excessive
government regulation prevented their growth.
▪ Many economists were dissatisfied with the performance of public sector enterprises.
In Trade Sector:
▪ Our policies were ‘inward oriented’ and so we failed to develop a strong export sector.
▪ The domestic producers were protected against foreign competition in order to gain self-reliance.
However, this did not give them the incentive to improve the quality of goods that they produced.

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3RD CHAPTER
ECONOMIC REFORMS SINCE 1991
INTRODUCTION

• Since independence, India followed the mixed economic system, by combining the advantages of capitalist
economy with those of the socialist economy.
• But, in reality, the public sector dominated the control and regulation of our economy and private sector was
ignored.
• There was a huge investment in the public sector and very low investment in the private sector.
• The dominance of public sector for about 4 decades led to establishment of various rules and laws, which
hampered the process of growth and development.

REASONS FOR ECONOMIC REFORMS (SIDE)

1. Shortage of foreign exchange reserves
• Imports grew at a very high rate without matching growth of exports
• As a result foreign exchange reserves fell to the lowest level there were not sufficient reserves for
even a fortnight to finance imports
2. Inefficient Management
• The constant spending on development programmes of the government did not generate additional
revenue
• The government was not able to generate sufficient revenue from internal sources such as taxation,
revenue from public sector enterprises, etc.
3. Debts burden
• To meet its consumption expenditure government borrows from other country and international
financial institutions.
• Due financial crisis foreign exchange reserve was not sufficient to pay the interest to international
lenders.
• Further no country or international funder was willing to lend to India
4. Effect of Inflationary Pressure
• Prices of many essential goods rose sharply
• The rise in prices was mainly due to increase in money supply and shortage of essential goods.

Economic Reforms
• To manage the crisis, Indian Government borrowed a loan of $7 billion from World Bank and
International Monetary Fund (IMF).

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 • To avail this loan, Indian Government also agreed to the conditions of World Bank and IMF and
announced the New Economic Policy by creating a more competitive environment in the economy an
removing the barriers to entry and growth of firms
• emoving trader restrictions between India and other countries.
• Eliminate restrictions on the private sector
• Decrease the role of the government in many areas

THIS SET OF POLICIES CAN BROADLY BE CLASSIFIED INTO TWO GROUPS:

1. Stabilization measures:- Short term measures, to correct to
• Correct the weaknesses in the balance of payments
• Bring inflation under control by maintaining sufficient foreign exchange reserves.
2. Structural reform policies are long-term measures, aimed at
• Improving the efficiency of the economy
• Increasing its international competitiveness by removing the rigidity in various sectors.

LIBERALISATION
• The term 'liberalisation' means removal of entry and growth restrictions on the private sector enterprise..
• The purpose was to unlock the economic potential of the country by encouraging private sector and
multinational corporations, to invest and expand.
ECONOMIC REFORMS UNDER LIBERALIZATION INCLUDES (FFITT)

1. Financial Sector Reforms

2. Foreign Exchange Reforms
3. Industrial Sector Reforms
4. Tax Reforms
5. Trade and Investment Policy Reforms

FINANCIAL SECTOR REFORMS ( FARE)

Includes financial institutions, such as commercial banks, investment banks, stock exchange operations and foreign
exchange market. The financial sector in India is regulated by the Reserve Bank of India (RBI)

The reforms introduced under financial sector are:

1. Foreign investment limit in banks was raised to around 51 per cent. Foreign Institutional Investors (FII) such as
merchant bankers, mutual funds and pension funds were now allowed to invest in Indian financial markets
2. Autonomy to Bank to set up new branches (after fulfillment of certain conditions) without the
approval of the RBI.
3. Role of RBI. Central bank reduced from regulator to facilitator of financial sector. As a result, financial sector was
allowed to take decisions on many matters, without consulting the RBI.
4. Establishment of private sector banks in India like ICICI Bank or HDFC Bank. This increased the competition

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 and benefitted the consumers through lower interest rates and better services.

FOREIGN EXCHANGE REFORMS

In 1991, as an immediate measure to solve the balance of payments crisis Foreign exchange reforms were made
1. Devaluation of Rupee: Devaluation refers to reduction in the value of domestic currency by the government.
To overcome Balance of Payments crisis, the rupee was devalued against foreign currencies. This led to an
increase in the inflow of foreign exchange.
2. Market Determination of Exchange Rate: The Government allowed rupee value to be free from its control.
As a result, market forces of demand and supply determine the exchange value of the Indian rupee in terms of
foreign currency.

INDUSTRIAL SECTOR REFORMS (DRIP)

In order to make necessary reforms in the industrial sector, the Government introduced is new industrial
policy on July 24, 1991
1. De-reservation under small-scale industries Many goods produced by small scale industries have now
been dereserved.
2. Reduction in role of Public Sector: Reduction in the role of the public sector in the future industrial
development of the country (reduced from 17 to 3).(i) Defense equipments; (ii) Atomic energy generation;
(iii) Railway Transport
3. Industrial Licensing Abolishing No licenses were needed to set up new units, expand or diversify,
except in certain are like Defense equipments;, Atomic energy generation, Railway Transport.
4. Price regulation:- In many industries, the market has been allowed to determine the prices through forces of
the market

TAX REFORMS
Tax reforms refer to reforms in government’s taxation and public expenditure policies, which are collectively
known as its ‘Fiscal Policy
Taxes are of two types:
• Direct Taxes consist of taxes on income of individuals as well as profits of business enterprises. For
example, Income tax and corporate tax.
• Indirect Taxes refer to those which affect the income and property of persons. Indirect taxes are generally
imposed on goods and services. For example, GST

THE MAJOR TAX REFORM (SIR)

1. Simplification of Process: In order to encourage better compliance on the part of taxpayers, many
procedures have been simplified.
2. Indirect Taxes Reform: huge reform has been made in indirect taxes to facilitate establishment of common
national market for goods and commodities.

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3. Reduction in Taxes: Since 1991, there has been a continuous reduction in income and corporate tax as
high tax rates were an important reason for tax evasion. It is now widely accepted that moderate rates of
income tax encourage savings and voluntary disclosure of income,

TRADE AND INVESTMENT POLICY REFORMS (FIRE)

Liberalization of trade and investment management was initiated to increase international competitiveness of industrial
production and to promote foreign investments and technology into the economy.
1. Fast Removal of Quantitative restrictions on Imports and Exports: Under the New Economic Policy,
quantitative restrictions on imports and exports were greatly reduced. For example, quantitative restrictions on
imports of manufactured consumer goods and agricultural products were fully removed from April 2001.
2. Import Duties Reduction: Import duties were reduced to improve the position of domestic goods in the foreign
market.
3. Relaxation in Import Licensing System: The Import licensing was abolished, except in case of hazardous
and environmentally sensitive industries. This encouraged domestic industries to import raw materials at better
prices, which raised their efficiency and made them more competitive
4. Export Duties Removal Export duties were removed to increase the competitive position of Indian goods in the
international markets.

PRIVATISATION
• Transfer of ownership, management and control of public sector enterprises to the private sector.
Privatisation can be done in two ways;
1. Transfer of ownership and management of public sector companies from the government to the Private
Sector.
2. Privatisation of the public sector undertakings (PSU) by selling off part of the equity of PSUs to the
public. This process is known as disinvestment.

Objective: -
• Performance improvement of the PSUs though private management
• Encourage Inflow of FDI: - The government predicts that privatisation could lead to inflow of FDI.
• Autonomy:-To improve the efficiency of PSUs by giving them autonomy in taking managerial decisions.
• Key To improve financial discipline and facilitate modernization.

GLOBALIZATION
• Globalisation means integrating the national economy with the world economy through removal of
barriers on international trade and capital movements.
• Globalisation offers opportunity for an organization to expand globally, i.e., in worldwide market.
Improving technologies, better transportation and communication have enabled companies to expand
into worldwide markets.
• Purpose is to Turn the world into one whole or creating a borderless world

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Outsourcing:
• This is one of the important outcomes of the globalization process. In outsourcing, a company hires
regular service from external sources, mostly from other countries, which was previously provided
internally or from within the country (like legal advice, computer service, advertisement)
• Most multinational corporations, and even small companies, are outsourcing their services to India
where they can be availed at a cheaper cost with reasonable degree of skill and accuracy.

World Trade Organisation (WTO): The WTO was founded in 1995 as the successor organisation to the
General Agreement on Trade and Tariff (GATT). GATT was established in 1948 with 23 countries as the
global trade organisation
Objective
• The WTO agreements cover trade in goods as well as services to facilitate international trade (bilateral
and multilateral) through removal of tariff as well as non-tariff barriers and providing greater market
access to all member countries.
• Administer all multilateral trade agreements by providing equal opportunities to all countries in the
international market for trading purposes.
• Enlarge production and trade of services, to ensure optimum utilization of world resources and to
protect the environment.
• Move to establish a rule-based trading regime in which nations cannot place restrictions on trade.

ARGUMENTS IN FAVOUR OF ECONOMIC REFORMS (CIRCUS)

1. Control on Inflation: Increase in production, tax reforms and other reforms helped in controlling the
inflation. The annual rate of inflation reduced from the peak level of 17 % in 1991 to around 7,6 % in 2012-
13.
2. Inflow of foreign Investment: The opening up of the company has led to the rapid increase in foreign
direct investment (FDI). The foreign investment (FDI and foreign institutional investment) increased from
about US 100 million dollar in 1990-91 to US 150 billion dollar in 2003-04.
3. Rise in Foreign Exchange Reserves:
• The foreign investment, which includes foreign direct investment (FDI) and foreign institutional
investment (FII), has increased from about US $100 million in 1990-91 to US $ 73.5 billion in2014-15.
• There has been an increase in the foreign exchange reserves from about US $ 6 billion in 1990-91 to
about US $ 321 billion in 2014-15.India is one of the largest foreign exchange reserve holders in the
world
4. Concern for Increase in role of private Sector: Abolition of licensing system and removal of restrictions
on entry of the private sector, in areas earlier reserved for the public sector, have enlarged the area of
operation of the private sector
5. Up rise in rate of Economic Growth: The growth of GDP increased from 5.6 percent during 1980–91 to
8.2 % during 2007–12. This shows that there has been an increase in the overall GDP growth in the reform
period.
▪ During the reform period, the growth of agriculture and industrial sectors has declined, whereas the
growth of service sector has gone up. This indicates that the growth is mainly driven by the growth in
the service sector.

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6. Surge in Exports: During the reform period, India experienced considerable increase in exports of auto
parts, engineering goods, IT software and textiles.

CRITICISM OF ECONOMIC REFORMS

1. Growth in Agriculture The new economic policy has neglected the agricultural sector as compared to
industry, trade and services sector.
1) Policy changes :-
• Reduction in import duties on agricultural products;
• Removal of minimum support price;
• Lifting of quantitative restrictions on agricultural products.
Effect
• Adversely affected the Indian farmers as they have to face increased international
competition.
2) Reduction of public investment: Public investment in agriculture sector, especially in infrastructure,
which includes irrigation, power, roads market linkages and research and extension (which played a
crucial role in the Green Revolution), has been reduced in the reform period.
3) Export-oriented policy: Due to Export-oriented policy strategies in agriculture, the production shifted
from food grains to cash crops for the export market. It led to rise in the prices of food grains.
4) Subsidy Removal of subsidy: Removal of fertilizer subsidy increased the cost of production, which
adversely affected the small and marginal farmers.

2. Reform in Industry: Industrial growth recorded a slowdown due to the following reasons:
1) Cheaper Imported Goods: Due to globalisation, there was a greater flow of goods and capital from
developed countries and as a result, domestic industries were exposed to imported goods. Cheaper
imports replaced the demand for domestic goods and domestic manufacturers started facing
competition from imports.
2) Lack of infrastructure facilities: The infrastructure facilities, including power supply, have
remained inadequate due to lack of investment
3) Non-tariff Barriers by Developed countries: All quota restrictions on exports of textiles and
clothing have been removed from India. But some developed countries, like USA have not removed
their quota restrictions on import of textiles from India.

3. Employment and Growth

Though the GDP growth rate has increased in the reform period, but such growth failed to generate
sufficient employment opportunities in the country.

4. Economic Reform and Fiscal Policy The tax reduction in the reform period was done to generate larger
revenue and to curb tax evasion. But, it did not result in increase in tax revenue for the government. Reason
▪ Tariff reduction decreased the scope for raising revenue through customs duties.
▪ Tax incentives provided to foreign investors to attract foreign investment further reduced the scope for
raising tax revenues.

5. Disinvestment:- According to some scholars, the disinvestment polic was not successful because:
1) The assets of public sector undertakings (PSUs) were under-valued and sold to the private sector.
2) Such proceeds from disinvestments were used to compensate shortage of government revenues rather
than using it for the development of PSUs and building social infrastructure in the country.

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DEMONITIZATION AND GST
What is Goods and Services Tax (GST)? State its aim and features. (4)
Ans. The Parliament passed a law, Goods and Services Tax Act, 2016, to simplify and introduce a unified
indirect tax system in India. This law came into effect from 1 July 2017.It aims to generate additional
revenue for the government; to reduce tax evasion; and to create 'one nation, one tax and one market’.
Features:
1. Single comprehensive indirect tax on supply of goods and services, right from the manufacturer/service
provider to the consumer.
2. Applicable throughout the country with one rate for one type of goods/service. Under GST, there are 5
(five) standard rates applied, i.e. 0%, 5%, 12%, 18% and 28% on supply of all goods and services across
the country.
3. It has replaced large number of taxes on goods and services levied on production/sale of goods or
provision of service, e.g. Central Excise Duty, Service Tax, VAT/Sales Tax, Entertainment Tax, etc.
4. Some of the major taxes levied by the Central Government which have been subsumed in GST are:
Central Excise Duty, Service Tax, Central Sales Tax, etc.

State the benefits of Goods and Services Tax (GST) on the Indian economy. (4)
Benefits of GST on the Indian Economy:
1. Boost in GDP: - It has resulted into higher economic growth as GDP is expected to rise by about 2%.
2. Ease in filing:- Compliance will also be easier as all tax payment related services like registration, returns,
and payments are available online
3. Advantages to consumers It has facilitated the freedom of movement of goods and services and created a
common market in the country. It is aimed at reducing cascading effect of various taxes on consumers
4. Transparency: - It has expanded the tax base, introduced higher transparency in the taxation system,
reduced human interface between Taxpayer and Government and as increase ease of doing business.

Write a short on demonetization

• The Government of India, made an announcement on November 8, 2016 with thoughtful implications for
the Indian economy.
• The two largest denomination notes, Rs 500 Rs 1,000, were ‘demonetized’ with immediate effect, ceasing
to be legal tender except for a few specified purposes such as paying utility bills.
• This led to 86%% of the money in circulation invalid
• The people of India had to deposit the invalid currency in the banks which came along with the restrictions
placed on cash withdrawals.

“The demonetisation of currency undertaken by the Government of India on November 8, 2016 had an
adverse impact on the economic activities. ”Do you agree with the statement? Give reason in support of
your answer. (4)
1. Form a less-cash or cash-lite economy: - Channeling more savings through the formal financial system
and improving tax compliance.

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2. Adding savings into the formal financial system. Though, much of the cash that has been deposited in the
banking system is bound to be withdrawn but some of the new deposits schemes offered by the banks will
continue to provide a base loan, at lower interest rates.
3. Check on tax evasion: -Government indicating that tax evasion will no longer be tolerated or accepted.
4. Tax administration measure. Cash holdings arising from declared income was deposited in banks and
exchanged for new notes. But those with black money had to declare their unaccounted wealth and pay
taxes at a penalty rate.
5. Solving corruption:- the problem of corruption was solved due to demonetization

Que State the impact of demonetization

Impact of demonetization
1 Money/Interest rates • Decline in cash transactions
• Bank deposits increased
• Increase in financial savings
2 Private wealth Declined since some high demonetized notes were not returned
and real estate prices fell
3 Public sector wealth No effect
4 Digitization Digital transactions amongst new users (RuPay/AEPS) increased
5 Real estate Prices declined
6 Tax collection Rise in income tax collection because of increased disclosure
adapted from Economic Survey, 2016–17

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5th CHAPTER
RURAL DEVELOPMENT

What is ‘Rural Development? Bring out the key issues in rural development.
Process of improving the quality of life and economic well-being of people living in rural areas
Key issues in rural development.
• Rural people account for about 3/4th of total population
• Share of agriculture sector to GDP was on a decline
• Inadequate infrastructure,
• Lack of alternate employment opportunities in the industry or service sector

What are the various areas covered in rural development

1. Human Resources development
– literacy, more specifically, female literacy, education and skill development
– health, addressing both sanitation and public health
2. Expansion of the productive resources of each locality to improve opportunities of employment
(particularity other than farming).
3. Land reforms
– Abolition of exploitation in hand relations; Increasing agricultural productivity and production.
4. Poverty reduction:
– Alleviation of poverty and bringing significant improvement in living conditions of weaker
sections. Around 30 % of total population is still below the poverty line
– By providing employment opportunities
5. Development of Infrastructure
– Electricity, irrigation, credit, marketing, transport facilities including construction of village
roads and feeder roads to nearby highways,
– Facilities for agriculture research and extension

Discuss the importance of credit in rural development.

1. Exploitation by middlemen:-,
• Moneylenders and traders exploited small and marginal farmer’s and landless laborers by
⎯ Lending to them on high interest rates
⎯ Manipulating the accounts to keep them in a debt-trap.
2. Long gestation period: -
⎯ Time gestation between crop sowing and realization of income after production is quite long
⎯ Farmers need credit to meet their initial investment on seeds, fertilizers, implements and other
family expenses.
3. Source of economic development
⎯ Rural economic development depends primarily on infusion of capital/credit, from time to time,
to realize higher productivity in agriculture and non agriculture sectors

A major change occurred after 1969 when India adopted social banking and multiagency approach to
adequately meet the needs of rural credit. Explain

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 • Agriculture and Rural Development (NABARD) was setup in 1982 as an apex body to coordinate
the activities of all institutions involved in the rural financing system.
• The Green Revolution was as mile stone in the credit system as it led to the diversification of the
portfolio of rural credit towards productionoriented lending.
• The institutional structure of rural banking today consists commercial banks, regional rural banks
(RRBs), cooperatives and land development banks They are expected to distribute adequate credit at
cheaper rates. Recently,
• Self-Help Groups (henceforth SHGs) have emerged
Explain the role of micro-credit programmers in meeting the credit requirements of the poor.
Need: - Fill the gap in the formal credit system
• Formal credit delivery mechanism has proven inadequate for rural development.
• Since some kind of collateral is required, vast proportion of poor households were automatically out
of the credit network.
Working of SHGs
• The SHGs promote thrift (savings) in small proportions by a minimum contribution from each
member.
• From the pooled money, credit is given to the needy members to be repayable in small installments
at reasonable interest rates. •
Success
• By March end 2003, more than seven lakh SHGs had reportedly been credit linked.
• SHGs have helped in the empowerment of women. •

Critically evaluates the role of the rural credit / banking system in the process of rural development in
India.
Success
• Rapid expansion of the rural banking system had a positive effect on rural farm and non-farm output,
income and employment, especially after the green revolution - it helped farmers to avail services and
credit facilities and a variety of loans for meeting their production needs.
• We have now achieved food security which is reflected in the abundant buffer stocks of foods grains.
Failure
• Except commercial banks, other formal institutions have failed to develop a culture of deposit
mobilisation - lending to worthwhile borrowers and effective loan recovery.
• Agriculture loan default rates have been chronically high.
Suggestion
• Banks need to change their approach from just being lenders to building up relationship banking with
the borrowers.
• Inculcating the habit of thrift and efficient utilization of financial resources needs to be enhanced among
the farmers too.

What is 'Agricultural marketing'?

• Process that Involves assembling, storage, processing, transportation, packaging, grading and distribution of
different agricultural commodities across the country to the consumer’s .is called ‘Agricultural marketing
System’.
• An efficient way by which the farmers can dispose their surplus produce at a fair and reasonable price

Why ‘Agricultural marketing is required?

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▪ Manipulations by Big Traders: Prior to independence, farmers suffered from faulty weighing and
manipulation of accounts while selling their produce to traders.
▪ Market Facilities lacking: Farmers were often forced to sell at low price due to lack of required
information on prices prevailing in markets.
▪ Storage Facilities lacking: They also did not have proper storage facilities to keep back their produce for
selling later at a better price.

Discuss the measures initiated by the government in developing rural marketing aspect
Or
State intervention became necessary to regulate the activities of the private traders. How
1. Different policy Instruments: In order to protect the farmers, the government has initiated the following
policies:
▪ Minimum Support Prices (MSP): To safeguard the interest of farmers, government fixes the minimum
support prices of agricultural products,
▪ Maintenance of Buffer Stock: The Food Cooperation of India (FCI) purchases wheat and rice at the
procurement prices, to maintain buffer stock. Buffer stock is created in the years of surplus production
and is used during shortages.
▪ Public Distribution System (PDS): Fair price shops offer essential commodities like wheat, rice,
kerosene, etc. at a price below the market price, to the weaker sections of the society.
2. Regulated Markets: Regulated markets have been organized with a view to protect the farmers from the
malpractices of sellers and brokers. This policy benefitted farmers as well as consumers..
3. Infrastructural Facilities: to provide physical infrastructure facilities like roads, railways, warehouses,
godowns, cold storages and processing units.
4. Policy of Cooperative Marketing: Under this, marketing societies are formed by farmers to sell the output
collectively and to take advantage of collective bargaining, in order to obtain better price.

What are the emerging alternate marketing channels for agricultural products? Explain their benefits.
1. Direct selling to customers: If farmers directly sell their produce to consumers, it increases their incomes.
Some example of these channels are:
• Apni Mandi (Punjab, Haryana and Rajasthan)
• Rythu Bazars (Vegetables and fruits markets in Andhra Pradesh and Telangana)
• Hadaspar mandi(Pune)
2. Contracts/Alliances with national and multi-national fast food chains. They encourage farmers to
cultivate farm products (vegetables, fruits etc) of the desired quality by providing seeds and other inputs as
well as assured procurement of the produce at pre-decided prices.
Such arrangements will help in reducing the price risks of farmers and would also expand the markets for
farm products.

What is meant by 'Agricultural Diversification'?

Diversification is essential to provide extra profitable employment for the rural people to overcome poverty and
to raise their level of income.

Why is agricultural diversification essential for rural development in India?

Or
Explain the role of non-farm employment in rural economic development.

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1. Risk reduction: - Helps in overcoming the risks of the agricultural sector which may arise if there is a crop
failure due to droughts or floods.
2. Increasing income:- Provides additional opportunity of employment and income generation, diversification
helps in increasing income of rural people.
3. Seasonal Factor:- Most of the agricultural employment opportunities in India are seasonal. Diversification
helps in providing employment opportunities during this time.
4. Export booster: - Changes in consumer diets drive agricultural diversification. Such diversification is also
encouraged by the opening up of new export markets for horticulture, livestock and aquaculture products,
etc.

What are the various methods of Agricultural Diversification

1. Change in cropping pattern: farmers are shift from growing one crop to a multiple variety of crops. For
example, from growing food crops, to cash crops or commercial crops (like sugarcane, cotton, jute, oilseeds,
etc.).
2. Shifting of labor-force from the farming to the non-farm sector:-Increasing agricultural income is to
diversify into non-farm areas like animal husbandry and dairying, fisheries, horticulture, agro-processing
and food processing industries, etc.

Diversification of Productive Activities

Animal Husbandry
➢ Livestock production provides increased stability in income, food security, transport, fuel and nutrition
for the rural households.
➢ Today, livestock sector alone provides alternative livelihood options to over 70 million small and
marginal farmers including landless labourers •
➢ Poultry accounts for the largest share with 58 percent •
➢ Milk production in India has increased by more than 8 times between 1951-2014, mainly due to the
successful implementation of 'operation Flood'
Fisheries
➢ The fishing community regards the water body as Mother or Provider.
➢ Presently fish production from inland sources contributes about 49% to the total fish production and the
balance 51% comes from the marine sector.
➢ Among states kerala, gujrat, Maharashtra and Tamil nadu are the major producers of marine products.
➢ The socio economic status of fisherman is comparatively lower because of -: rampant unemployment,
lower per capita earning, high rate of illiteracy, indebtness, and absence of mobility of labour.
➢ There is a need to raise credit facilities, cooperative and SHGs, Cooperatives for fishermen to meet the
working capital requirements for marketing.
Horticulture
➢ India has adopted growing of diverse horticulture crops such as fruits, vegetables, flowers, medicinal
plants, etc. Horticulture sector contributes about l/3rd of the value of agriculture output and 6 percent of
GDP of India
➢ Thus, horticulture has emerged as a successful sustainable livelihood options and needs to be
encouraged significantly.
➢ Enhancing its role requires investment in infrastructure like electricity, cold storage systems, marketing
linkages, etc.
Information technology
➢ Governments can predict areas of food insecurity and vulnerability using appropriate information and

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 software tools so that action can be taken to prevent or reduce the likelihood of an emergency.
➢ IT also has a positive impact on the agriculture sector as it can disseminate information regarding
emerging technologies and its applications, prices, weather and soil conditions for growing different
crops, etc.
➢ IT also has potential of employment generation in rural areas. Experiments with IT and its application to
rural development are carried out in different parts of India.

Problems and Solutions of Non-Farm Activity

a) Livestock-: Though its numbers are quite impressive but its productivity is quite low as compared to
other countries. The solution is: promotion of good breeds of animals to raise productivity and improved
veterinary care is essential.
b) Fisheries: Problems related to over fishing and pollution need to be solved. The solution is :1. welfare
programmes for the fishing communities and reorientation in a manner which can provide long term
gains and sustenance of livelihood.2. Pollution of water bodies needs to be controlled.
c) Horticulture: Problem is that of more investment in this sector. The solution lies in more investment in
infrastructure like: electricity, cold storage systems, and technical improvement.

What is 'Organic Farming'? Explain its benefits and limitations. (6)

Organic farming is a system which avoids the use of synthetic inputs (such as chemical fertilisers, pesticides,
hormones, food additives, etc.) and relies mainly on 'natural' methods of farming (i.e., emphasizing the use of
animal manures, off-farm organic waste, etc.), crop rotations, biological system of nutrient

Explain its benefits of 'Organic Farming'

1) Safety of environment: The produce of organic farming is pesticides-free and is produced in an
environmentally sustainable way.
2) Adding income through exports: It generates income through international exports as demand for
organically grown crops is on a rise.
3) Food Value: It provides healthy food as organically grown food has more nutritional value than food
grown through chemical farming.
4) Economical Farming: Organic Farming offers a means to substitute costlier agricultural inputs (such as
HYV seeds, chemical fertilizers, pesticides, etc.) with locally produced cheaper organic inputs.
5) Role in Employment generation: Organic farming generates more employment opportunities as it
requires more labour input than conventional farming.

Explain its challenges in 'Organic Farming'

1. Shorter food life: Organic produce has a shorter life as compared to sprayed produce.
2. Limited choice of crops: The choice in production of off-season crops is quite limited in organic
farming.
3. Involves Low Yield: Organic farming has a lesser yield in the initial years as compared to modern
agricultural farming. As a result, small and marginal farmers find difficult to adapt to large-scale
production..
4. Marketing facilities and infrastructure lacking: Organic farming faces problems of inadequate
infrastructure and marketing facilities.

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Important Terms etc.
1. NABARD (National Bank for Agriculture and Rural Development) • set up in 1982 • as on apex body to
coordinate the activities of all institutions involved in the rural financing system.
2. RRBs (Regional rural banks) - Provide adequate credit at cheaper rates.
3. SHGs (Self-Help Groups) • Promote thrift in small proportions by a minimum contribution from each
member, and from the pooled money credit is given to the needy members to be repayable in small
instalments at reasonable interest rates. • Such credit provisions are referred to as 'micro-credit programmes'
4. MSP (Minimum Support Price) - Assurance of minimum support price for agricultural products by the
government.
5. Organic farming- A whole system of farming that restores, maintains and enhances the ecological balance.
6. Operation flood - A system whereby all the farmers can pool their milk produce according to different
grading (based on quality) and the same is is processed and marketed to urban centres through cooperatives.
In this system, the farmers are assured of a fair price and income from the supply of milk to urban markets.
Milk production in India has increased by more than 8 times between 1951-2014. This can be attributed
mainly to the successful implementation of 'operation Flood'.
7. Agricultural marketing - A process that involves the assembling, storage, processing, transportation,
packaging, grading and distribution of different agricultural commodities across the country.

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6TH CHAPTER
HUMAN CAPITAL FORMATION

Human Capital Formation

Refers to development of abilities and skills among the population of the country
Process of Investing in human capital to produce more human capital out of human resources

Difference between
Basis Physical Capital Human Capital
Nature Tangible and can be easily sold in the Intangible and cannot be sold in the market.
market.
Depreciation It depreciates with the passage of mine. Depreciation in human capital can be reduced by
making continuous investments in education and
health.
Mobility It is more mobile between countries. Less mobile between countries as compared to
physical capital.
Separation Physical capital (like machinery) can be Human capitals (like skills of a person) cannot be
separated from its owner. separated from the owner.
Formation It can be built through imports. Formation is to be done through conscious policy
formulations.

Human Capital And Human Development

The terms ‘Human Capital” and ‘Human Development’ sound similar, but there is a clear distinction between
them.
Basis Human Capital Human Development
Purpose It considers that investment in education and It considers that human welfare should be
health is unproductive, if it does not increase increased through investments in education and
the output of goods and services health if such investments do not result in
higher labour productivity
Means It treats human beings as a means to an end, Human beings are an end in themselves
the end being the increase in productivity
Scope Human capital is a narrow concept Human development is a broader concept
Meaning It states education and health as a means to It states that education and health are integral to
increase labour productivity human well-being because only when people
have the ability to read and write, they have
ability to make healthy life

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Sources of human capital formation (HTIME)
1. Health:
• Productivity of a healthy worker is much more than that of a sick person, or a person with poor health.
Various forms of health expenditures
✓ Preventive medicine (vaccination)
✓ Curative medicine(Medical intervention during illness)
✓ Social medicine (spread of health literacy)
✓ Provision of clean drinking water and good sanitation.
Health expenditure directly increases the supply of healthy labor force and is, thus, a source of human
capital formation.
2. Training:
Productivity of physical capital is substantially enhanced with the improvement in human capital. Due to
this reason, many firms provide on- the-job training to their workers. Two ways
✓ Workers are trained in the firm itself under the supervision of a skilled worker
✓ Workers are sent for off-campus training.
• It increases the skill and efficiency of the workers and leads to an increase in production and
productivity.
3. Information:
▪ It involves amount spent on seeking information about Labor market and other markets like education
and health.
▪ Information is necessary to make decisions regarding investments in human capital as well as for
efficient utilization of the acquired human capital stock.
▪ For example, people want to know the level of salaries associated with various types of jobs, whether
the educational institutions provide the right type of employable skills and at what cost.
4. Migration:
• People migrate from one place to another in search of jobs that fetch them higher salaries.
▪ Unemployed people from rural areas migrate to urban areas in search of jobs.
▪ Technically qualified persons (like engineers, doctors, etc.) migrate to other countries because of higher
salaries that they may get in such countries.
▪ Expenditure on migration is a source of human capital formation as better earnings in the migrated place
is more than the increase in costs due to migration.
5. Education:
▪ Economists have stressed the need for expanding educational opportunities in a nation as it accelerates
the development process and economic growth
• Spending on education by individuals is similar to spending on capital goods by companies
• Skill of an educated person is more than that of an uneducated person, which enables him to generate
more income and also
• Education gives higher earning capacity to people.
• It provides knowledge to understand the changes taking place in society.
• It also encourages innovations.
• It facilitates adaptation of new technologies.

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Summary of Sources of Human Capital Formation

Sources Benefits
Health Improves productivity of labor and enhances the quality of life
Training Improves skill and efficiency of the workers
Information: Helps in making better decisions regarding investment in human capital
Migration Helps in increasing earnings of migrants in new inhabited places
Education : Improves skills, helps in increasing future earnings and improves standard of living

Human Capital And Economic Growth

1. Economic growth means the increase in real national income of a country.

• The contribution of an educated person to the economic growth is more than that of an illiterate person.
• Similarly, a healthy person also contributes to economic growth by providing uninterrupted labour
supply for a longer period of time.
• Thus, both education and health, along with many other factors like on-the-job training, job market
information and migration, increases the income generating capacity of an individual.

2. HCF promotes inventions, innovations and technological improvements

• The human capital formations (HCF) not only increases the productivity of human resources but also
encourage innovations and creates ability to absorb new technologies.
• Education provides knowledge to understand changes in society and scientific advancements, thus,
facilitate inventions and innovations.
• Similarly, the availability of educated labour force facilities adaptation to new technologies.

Trained and educated on sound lines, a large population can itself become an asset in accelerating economic
growth and in ensuring social change in desired directions

Difficult to Prove Cause and Effect relation between Human Capital and Economic Growth
Due to measurement problems, it is difficult to prove that increase in human capital causes economic growth.
▪ For example, education measured in terms of years of schooling, teacher-pupil ratio and enrolment rates
may not reflect the quality of education.
▪ Similarly, health services measured in monetary terms, life expectancy and mortality rates may not
reflect the true health status of the people in a country.
Conclusion: -It means, it is difficult to establish a relation of cause and effect from the growth of human
capital (education and health) to economic growth. However, growth is in each sector has reinforced the
growth of every other sector.

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Growth of education sector in india
• Expenditures on both education and health are to be carried out simultaneously by all the three tiers of
the government.
1. Union government,
2. State governments
3. Local governments

Regulatory authority (education sector)

The Ministry of Human Resource Development (MHRD) is responsible for the development of human
resources in the country
1. National Council of Educational Research and Training (NCERT).
• Established on September 1,1961 as an apex national body to lead qualitative changes in school
education
2. University Grants Commission (UGC).
• Established on December 28, 1953 for the determination and maintenance of teaching, examination
and research in university education
3. All India Council of Technical Education (AICTE).
• Established in November 1945 for development of the technical education and management
education system in India

Regulatory authority (health sector)

• In the field of health, the Ministry of Health and Family Welfare (MoHFW) is instrumental and
responsible for implementation of various programmes on the national scale in the areas of health
and family welfare, prevention and control of major communicable and non-communicable diseases
as well as promoting research across the country. Health ministries and departments at the State level
are also engaged in this task.
• The Indian Council of Medical Research (ICMR) is the apex and premier medical research
organisation in the country.
• It is engaged in the task of research, professional development, collaboration, and knowledge
dissemination regarding various medical and health issues through its research institutions and
medical colleges.

Need For Government Intervention (Life)

1. Long term impact. The expenditures on education and health make substantial long-term impact and they
cannot be easily reversed.
2. Information lacking: - Individual consumers of these services do not have complete information about the
quality of services and their costs.
3. Fundamental right of the citizen:- A Welfare State must ensure that all citizens of the country get basic
education and health facilities as a matter of 'right'. This is not possible unless government intervenes to
provide basic education and health facilities to the poor and weaker sections free of cost.
4. Ensure Check on monopoly Private sector is governed by profit motive and is not interested in providing
education and health facilities at a reasonable cost which is affordable to all and the State will have to do
this job.

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Educational Sector In India

Growth in Government Expenditure on Education

The expenditure by the government on education is expressed in two ways which indicates the importance
of education in the scheme of things before the government
1. As a percentage of total government expenditure: During 1952 – 2014, it increased from 7.92 to 15.7.
2. As a percentage of Gross Domestic Product (GDP); During 1952 – 2014, it increased from 0.64 to
4.13.

Various commissions. Recommendations:-

• Education Commission (1964 – 66) had recommended that at least 6 % of GDP should be spent on
education. However, the current level expenditure is little over 4 %
• The Tapas Majumdar Committee, appointed by Indian Government in 1998, estimated an expenditure
of around Rs.1.37 lakh crore over10 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

Inadequate expenditure on education

• The expenditure on education is very less as compared to the desired level of education expenditure
recommended by the various commissions.
• Elementary Education (primary and middle school education) takes a major share of total education
expenditure.
• Share of higher or tertiary education (institutions of higher learning like colleges, polytechnics and
universities) is the least.

Govt steps to improve education

▪ Right to education In 2009, the Govt. of India enacted the Right of Education Act to make free
education a fundamental right of all children in the age group of 6-14 years.
▪ Education Cess:-Govt. of India has impose 2% “Education Cess’ on all Union taxes by spending on
elementary education.
▪ Education loans: - the government has sanctioned a large amount and loan schemes to promote higher
education for students

Future prospects in educational sector

1. Education for All: Still a Distant Dream
• In 1950, Directives of the Constitution directs that the government should provide free and
compulsory education for all children up to the age of 14 years.
• The literacy rates for both adults as well youth have increased.
• However, the absolute number of illiterates is still as much as India’s population was at the time
of independence.
2. Gender Equity: Better than Before
• The differences in literacy rates between males and females are narrowing. It indicates a positive
development in gender equity. However, women education needs to be promoted:
• To improve economic independence and social status of women

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 • Women education makes a favorable impact on fertility rate and health care of women and
children.
3. Higher Education: a Few Takes
• The Indian education pyramid is steep indicating lesser and lesser number of people reaching the
higher education level.
• As per NSSO data, in 2011-12 the unemployment rate of unemployment among youth males
who studied graduation and above in rural areas was 19%.
• An urban counterpart has relatively less level of unemployment at 16%. The most severely
affected ones were young rural female’s graduates as nearly 30% of them are unemployed
• Therefore, the government needs to increase allocation for higher education and also improve
the standard of higher education institutions, so that students are imparted employable skills in
such institutions.

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7TH CHAPTER
Employment
Meaning of Worker
A worker is an individual, who is involved
✓ In some economic activity, to earn a living.
✓ Contributes to the process of gross domestic product
✓ By rendering his productive activities.

Who all are included in ‘workers?’

• Self employed: - Includes self-employed persons, like shopkeepers, barbers, cobblers, etc.
• Temporarily workers :- Include people who remain temporarily absent from work due to illness, injury or
other physical disability, bad weather, festivals, social or religious functions.
• Helping workers: - Includes those people who help the main workers.

Who all are not included in ‘Workers?’

✓ Women are not categorized as workers as they are not paid wages in cash. Women carry out works like
cooking, fetching water and fuel wood and participate in farm labour.
✓ This narrow definition of workers leads to non-recognition of women’s work and, therefore, to the
underestimation of the number of women workers in the country.

QUE. Define worker – population ratio.

Ans. Worker – population ratio is the percentage of total population engaged in work.

QUE. Are the following workers; a beggar, a thief, a smuggler, a gambler: Why?
Ans. No, they are not workers because they are not doing any productive activity.
Find the odd man out: (i) owner of a saloon (ii) a cobbler (iii) a cashier in Mother Dairy (iv) a
tution master (v) transport operator (vi) construction worker.
Ans. (iii) and (vi) are odd ones. A cashier in Mother Dairy is a regular salaried employee and construction
worker is a casual worker. All others are self –employed.

QUE. Raj is going to school. When he is not in school, you will find him working in his farm. Can you
consider him as a worker? Why?
Ans. Yes, Raj can be considered as a worker. A person is a considered as worker if he contributes to the
process of gross domestic product (GDP) by rendering his productive activities. So, Raj is a worker.

QUE. Compared to urban women, more rural womwn are found working. Why?
Ans. More rural women are found working because of their poor economic condition as compared to urban
women.
QUE. Meena is a housewife. Besides taking care of household chores. She works in the cloth shop which
is owned and operated by her husband. Can she be considered as a worker? Why?
Ans. A person is a considered as worker if he contributes to the process of gross domestic product (GDP) is
considered as a worker. As Meena works in the cloth shop, owned and operated by her husband, she
should be considered as a worker. However, in India, such women workers are neither counted as
workers nor they are paid for such work.

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QUE. Find the odd man out (i) rickshaw puller who works under a rickshaw owner (ii) mason (iii)
mechanic shop worker (iv) shoeshine boy.
Ans. Shoe shine boy is the odd man out. All others (rickshaw puller, mason and the mechanic shop worker)
are hired workers. They render their services to their employers and in return, get salaries or wages. On
the other hand, shoe shine boy is a self – employed worker and carries out his occupation himself.

PARTICIPATION OF PEOPLE IN EMPLOYMENT

Worker Population ratio: - is an Indicator which is used to analyze the employment situation in the country.
Worker- population ratio is calculated by dividing the total number of workers in India by the Population and
multiplying it by 100.

Distribution of Employment
1. Self – Employment
Workers who own and operate an enterprise to earn their livelihood are known as self-employed.
• Self –employment is a major source of livelihood for both men and women.
• Example, shopkeepers, traders, businessmen, etc.
2. Regular workers (Regular Salaried Employees)
When a worker is engaged by someone or by an enterprise and is paid wages on a regular basis, then
such worker is known as regular salaried employee.
• Workers are hired on a permanent basis and also get social security benefits (like pension, provident
fund, etc.)
• For example,, Professors, teachers, Civil engineer working in the construction company, etc.
3. Casual Workers
Workers who are casually engaged and, in return, get remuneration for the work done, are termed as
casual workers.
• Casual Workers are not hired on a permanent basis. It means they do not have: (I) Regular Income;
(ii) Protection or regulation from the government; (iii) Job Security; and (iv) Social benefits.

Q. Do you think that in the last 50 years, employment generated in the country is commensurate with
the growth of GDP in India? How?
Ans. No, employment generated in the country does not match with the growth of GDP. Generally the
increased output is achieved by generating more employment opportunities.
• However, in the last 50 years, India has witnessed jobless economic growth where there was an
overall acceleration in the growth rate of GDP without corresponding expansion in employment
opportunities.
• It happened because rise in GDP occurred due to use of modern and advances technology, which
substituted labour for machines. It failed to generate new employment opportunities and employment
growth started declining and reached the level of growth that India had in the early stages of
planning.

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CASUALISATION OF WORKFORCE
The process of moving from self-employment and regular salaried employment to casual wage work is known
as actualization of workforce.

Employment structure
The employment structure in India can be studied into to two sectors;
• Formal or organized Sector;
• Informal or Unrecognized Sector.
.
FORMAL OR ORGANIZED SECTOR
All the public enterprises and private establishments which employ 10 or more hired workers are called
formal sector establishments.
• Workers who work in such establishments are known as formal sector workers.
• The organized sector provides work just 7 % of the total work force.
Advantages
• Government protection:-The government protects them in various ways through its labour laws
and they can form “Trade Unions” to protect their interests.
• Additional benefits: - They are guaranteed minimum wages, regular incomes, medical and
insurance facilities, maternity and related benefits, etc.
• Social security benefit: - Formal workers enjoy social security benefits and earn more than those in
the informal sector.

INFORMAL OR UNRECOGNIZED SECTOR

Informal sector includes all those private enterprises which hire less than 10 workers.
• Workers who work in such enterprises are known as informal sector workers. For example, farmers,
agricultural labourers, owners of small enterprises, etc.
In India, over 94 % employment is found in the unorganized sector
Drawbacks
• Layoff: - Such workers have the risk of being dismissed without any compensation.
• Earning is Irregular:- Workers do not get regular income.
• Miserable condition:- Worker live in slums and are unlawful resident
• Outdated technology: - Uses the outdated technology and do not maintain any accounts.
• No government govt.:- Workers do not have any protection or regulation from the government.

Difference between l and informal sector

Formal Sector Informal Sector
It includes all the public sector enterprise and It includes all the private sector enterprises which
private enterprises which employ 10 or more than employ less than 10 workers.
10 workers.
Employees are known as formal workers. Employees are known as informal workers.
Workers are entitled to social security benefits Workers are not entitled to social security benefits
Workers can form trade union. Workers cannot form trade union.

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DISTRIBUTION OF WORKFORCE IN FORMAL AND INFORMAL SECTORS
As the economy grows, more and more workers should become formal sector workers and the proportion of
workers engaged in the informal sector should decrease. However, the situation in India is very discouraging

• There are about 473 million workers in the country. ``

• There are about 30 million workers in the formal sector.
• About only 6% (30/473×100)! Thus, the rest 94 % are in the informal sector.

How the government has paying attention to the informal sector

Due to failure of formal sector in generating employment, India started paying attention to enterprises and
workers in the informal sector. With the efforts of International Labour Organisation (ILO), the Indian
government has initiated
• The modernization of informal sector enterprises
• Provision of social security measures to informal sector workers.
• Framing various labor laws

Q. Is it necessary to generate employment in the formal sector rather than in the informal sector?
Why?
Ans.
• Formal sector is the organized sector of the economy, which includes all the public enterprises and
private establishments that hire 10 or more workers.
• Workers of the formal sectors enjoy social security benefits and they remain protected by the labour
laws. On the other hand, people engaged in the informal sector do not enjoy any social security benefits
and do not have any protection or regulation from the government. As a result, informal workers are
generally very poor and live in slums.
• So, it is necessary to generate employment in the formal sector will rather than in the informal sector as
more jobs in the formal sector will not only absorb workforce from the informal sector but will also help
in reducing poverty and income inequalities.

Q. How will you know whether a worker is working in the informal sector?
Ans. A worker is working in the informal sector if;
• Such workers in a private enterprise, which employ less than 10 workers. For example, farmers,
agricultural labourers, owners of small enterprises, etc.
• Such worker does not get regular income and does not have any protection or regulation from the
government.
• Such worker has the risk of being dismissed without any compensation.

MEANING OF UNEMPLOYMENT.
Economists define unemployed person as one who is not able to get employment of even one hour in half a day
There are three sources of data on unemployment:
1. Reports of Census of India
2. National Sample Survey organisation (NSSO):
3. Directorate general of Employment and training (DGET):
.

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TYPES OF UNEMPLOYMENT IN INDIA
1. Disguised unemployment (Hidden Unemployment)
Disguised unemployment refers to a state in which more people are engaged in work than are really needed.
• The main problem of disguised unemployment is that it seems that all seem to be employed, but
marginal productivity of the surplus labour is zero, i.e. contribution of extra workforce is zero.
• For example, if two workers are needed on a piece of land and five workers are engaged on the same
job, then three workers are disguised unemployed
• It is the most major form of unemployment in the agricultural sector of developing countries like India.

2. Open Unemployment
• Refers to that fact in which persons are able and willing to work at the prevailing wage rate, but fail to
get work.
• It is called open unemployment because such unemployment can be seen and counted in terms of the
number of unemployed people
Note: - Open Unemployment is different from Disguised Unemployment.
• In case of open unemployment, workers are totally idle.
• In case of disguised unemployment workers appear to be working and do not seem to be idling away
their time.
3. Seasonal Unemployment
Unemployment that occurs at certain seasons of the year is known as seasonal unemployment.
• Seasonal unemployment is predominantly associated with agriculture.
• In agriculture, work is seasonal and there are no employment opportunities in the village for all months
in the year. So, when there is no work to do on farms, men go to urban areas and look for jobs. They
come back to their home villages as soon as the rainy season begins.

Raju is able to get work only for two hours in a day. Rest of the day, he is looking for work. Is he
unemployed? Why? What kind of jobs could persons like Raju be doing?
Ans. No, Raju is not unemployed. According to economists, “Unemployed is the one who is not able to get
employment of even on hour in half a day”. As Raju is getting work for two hours in a day, he is not
unemployed.
Raju is a; Casual Worker” and would be doing temporary jobs.

1. Discuss the steps taken by the government to solve the problem of unemployment?

Government policies and employment generation Broadly categorized into two aspects;
• Direct Employment: - By employing people in various departments for administrative purposes. It also
runs industries, hotels and transport companies and hence provides employment directly to workers.
• Indirect Employment With increase in output of goods and services of government enterprises, private
enterprises providing raw material to government enterprises will also raise their output. As a result, the
number of employment opportunities in the economy will increase. This increase in employment is known
as “Indirect Employment” by the government.

EMPLOYMENT GENERATION PROGRAMMES

'Poverty Alleviation Programmes' where the main employment programmes have been divided into two categories —
1. Self- employment programmes
2. Wage employment programmes).

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Government has also implemented a number of “Employment Generation Programmes”, like National Rural
Employment Guarantee Act-2005, prime Minister’s Rozgar Yojana, Swarna Jayanti Shahri Rozgar Yojana, etc.
• Government aims to alleviate poverty through such employment generation programmes.
• All these programmes aim at providing employment, services in primary health, education, rural shelter, etc.
• These programmes also aim to assist people in raising income and employment generating assets,
developing community assets and construction of houses and sanitation.

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9TH CHAPTER
ENVIRONMENT AND SUSTAINABLE DEVELOPMENT

MEANING OF ENVIRONMENT
Environment is defined as the total planetary inheritance and the totally of all resources.
• It includes all the biotic and abiotic factors that influence each other.
❖ Biotic Elements: Biotic elements include all living elements like birds, animals and plants, forests,
fisheries, etc.
❖ Abiotic Biotic: Abiotic elements include non –living elements like air, water, land, etc.

FUNCTIONS OF ENVIRONMENT (SAPP)

1. Sustains life: Environment includes basic necessities of life like sun, soil, water and air without which
human and animal life and plant life cannot exist.
2. Assimilates waste: The process of production and consumption generates a lot of wastage (mostly in the
form of garbage). This wastage is absorbed by the environment
3. Provides resources for production: Environment provides renewable and nonrenewable resources for
production. continuous supply of these resources remains available
4. Provides aesthetic services: Environment includes land, forests, rivers, oceans, mountains, deserts, etc.
People enjoy the scenic beauty of these surroundings (or aesthetic services). This improves the 'quality' of
human life.

Que:- What happens when the rate of resources extraction exceeds that of their regeneration?/ what do
you mean by Environmental Crisi
The environment is able to perform these functions only when
1. Resource extraction should remain below the rate of resource regeneration.
2. Generation of waste should remains within the absorption capacity of the environment.

If these two conditions are not fulfilled which can leads to the situation of “Environmental Crisis:-

Explain the supply –demand reversal of environmental resources.

Ans. The reversal of supply –demand relationship is responsible for degradation of the environment.
In the Past, Demand for environmental resources and services was much less than their supply. Pollution
was within the absorptive capacity of the environment; and Rate of resource extraction was less than the
rate of generation of these resources. As a result, an environmental problem does not arise.

However, the presently, the demand for resources is in far excess of supply, i.e., demand is beyond the
rate of regeneration of the resources. With the population explosion and with the advent of industrial
revolution, the pressure on the absorptive capacity of the environment has increased tremendously.
Thus, a reversal of supply –demand relationship for degradation of quality of the environment.

Explain how the opportunity costs of negative environmental impact are high.
Ans. Extraction of resources at a speed more than its regeneration reduces the carrying capacity of the
environment.

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 • In such situation, environment fails to perform its function of sustaining life, which leads to a situation
of environment crisis.
• It creates the need to explore alternative eco-friendly resources to avoid environmental crisis. Moreover,
environmental crisis also create various health problems which necessitate the need for heavy health
expenditure.
• The cost involved in searching new alternative resources together with the greater health expenditures
constitute the opportunity costs of negative environmental impact.
Such opportunity costs are very high and therefore, it is rightly said the opportunity costs of negative
environmental impact are high.

India has abundant natural resources –substantiate the statement.

Ans. The given statement is correct. India has abundant natural resources in terms of rich quality of soil,
hundreds of rivers and tributaries, lush green forests, plenty of mineral deposits, etc.
• The black soil of the Deccan Plateau is particularly suitable for cultivation of cotton, leading to
concentration of textile industries in this region.
• The Indo –Gangetic plains spread from the Arabian Sea to the Bay of Bengal are one of the most
fertile, intensively cultivated and densely populated regions in the world.
• India’s forests, though unevenly distributed, provide green cover for a majority of its population and
natural cover for its population and natural cover for its wildlife.
• Large deposits of iron –ore, coal and natural gas are found in the country. India alone accounts for
nearly 20 per cent of the world’s total iron –ore reserves.
• Bauxite, copper, chromate, diamonds, gold, lead, lignite, manganese, zinc, uranium, etc. are also
available in different parts of the country.

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.
During the past century, the atmospheric temperature has risen by 1.1F ( 0.6 C) and sea level has risen several
inches.

CAUSE OF GLOBAL WARMING(MIND)

1. Burning of coal and petroleum products (sources of carbon dioxide, methane, nitrous oxide, ozone)
2. Increased cattle production, which contributes to deforestation, methane production
3. Rise in Use of fossil fuels.
4. Deforestation, which increases the amount of carbon dioxide in the atmosphere; methane gas released in animal
waste

The atmosphere concentration of carbon dioxide and methane (CH4) have increased by 41 % and 160 %
respectively above pre –industrial levels since 1750.

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Effects OF GLOBAL WARMING (HIIT)
• Hurricanes and other tropical storms are likely to become stronger.
• Ice is melting worldwide, especially at the earth’s poles. It has led to a steep rise in sea level and coastal
flooding.
• Increased incidence of tropical diseases, like malaria, cholera, dengue, chikungunya, etc.
• Thousand of species (like polar bears) in danger of becoming extinct forever.

STATE OF INDIA’S ENVIRONMENT

Development activities in India have resulted in pressure on its limited natural resources.
1. Poverty is causing environmental degradation though cutting down of trees (to use fuel wood),
overgrazing of animals, pollution of water resources, encroachment into forest land.
2. Affluence in living standards is causing environmental degradation because with wealth, the demand
for goods and services increases. For increasing the production, the demand for finite natural resources
increases. It raises the pollution resulting from more vehicles and industries.

Effects of economic development on resources (BLAME)

The issues identified are (AS PER NCERT)
1. Biodiversity loss
2. Land degradation
3. Air pollution with special reference to vehicular pollution in urban cities
4. Management of fresh water
5. Effect of Solid waste management.

1. Biodiversity Loss:
• Biodiversity is defined as the totality of genes, species and ecosystems in a defined area.
• Human intervention has caused the majority of biodiversity loss in the last few decades like Pollution,
Overpopulation, Deforestation
• Loss of biodiversity refers to the extinction of human, plant or animal species worldwide
2. Land Degradation: -
• Refers to a decline in the overall quality of soil, water or vegetation condition, commonly caused by
human activities.
• In India, land suffers from different types of degradation, mainly because of following factor:-
a) Loss of vegetation occurring due to deforestation
b) Unsustainable fuel wood and fodder extraction
c) Indiscriminate use of agro-chemicals such as fertilisers and pesticides
d) Improper planning and management of irrigation systems
e) Extraction of ground water in the competing uses of land for forestry, agriculture, pastures, human
settlements and industries exert an enormous pressure on the country’s finite land resources.
3. Air Pollution
• Air pollution is the presence of materials in air in such concentration, which are harmful to man and the
environment.
Vehicular pollution in urban cities
• In India, air pollution is widespread in urban areas where vehicles are the major contributors, and in a
few other areas.
• Vehicular emissions are of particular concern and have the maximum impact on the general population.

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 • The number of motor vehicles has increased from about 3 lakh in 1951 to 67 crores in 2003. In 2003
• Personal transport vehicles (two-wheeled vehicles and cars only) constituted about 80 % of the total
number of registered vehicles thus contributing significantly to total air pollution load
4. Management of fresh water
• Water quality has continued to deteriorate the world.
• Industry and mining are expanding; rivers become contaminated with toxic chemicals and with
heavy metals such as lead and mercury.
• These pollutants are hard to remove from drinking water with standard purification facilities.
• Surface water near towns and cities become increasingly polluted over the years and even
groundwater has been contaminated.
• The direct impact of waterborne diseases is huge, especially for children and the poor.
5. Effect of Solid and Hazardous Wastes:
• Many cities generate more solid wastes than they can collect or dispose of.
• Inadequate collection and unmanaged disposal present a number of problems for human health and
productivity.
• Municipal solid waste sites often receive industrial and hazardous wastes, which may then seep into
the water supply.

Ways to control Vehicular pollution

• Promotion of public transport like use of Delhi Metro instead of private vehicles.
• Promotion of cleaner fuels in vehicles, like use of CNG instead of petrol and diesel.
• Use of cleaner fuels such as LPG in households to reduce indoor air pollution.
• Promotion of cleaner technologies, strengthening of emission standards, introducing economic
incentives and strengthening of the monitoring and reporting system

What is sustainable development?

• Sustainable development refers to the development that meets the need for the present, without
compromising the ability of future generations, to meet their own needs.

Word need means: - Distribution of resources, particularly the poor majority, for employment, food, energy,
water, housing, and ensures growth of agriculture, manufacturing, power and services.
Word Future generation means:- We should leave to the next generation a stock of ‘quality of life’ assets no
less than what we have inherited

Explain the relevance of inter generational equity in the definition of sustainable development.
Ans. Intra generational equity is a key principle of sustainable development because inequities are a cause of
environmental degradation. According to Brundtland Commission;
• Poverty is causing environmental degradation though cutting down of trees (to use fuel wood),
overgrazing of animals, pollution of water resources, and encroachment into forest land.
• High levels of affluence (wealth) are damaging the environment as they are accompanied by high levels
of consumption, which lead to resource depletion and waste accumulation. Many environmental
problems, such as global warming and chemical contamination, are the result of affluence rather than
poverty.
• Other equity concerns relevant to sustainable development policies include inequities in the impact of
environmental policies and inequities in the decision –making process.

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Strategies for sustainable development (BUTTEER)
1. Bio –compost:
• The use of chemical fertilizers has increase the agricultural production
o Negative effect
▪ Adversely affected the large areas of productive land
▪ Contaminated the water bodies.
o Solution:-
▪ Farmers have started using compost made from organic wastes of different types.

2. Use of Non –conventional sources of energy:

• Non –conventional sources like wind power and solar rays are cleaner and greener technologies,
o Effect
• Can be effectively used to replace thermal and hydro –power.
• India is naturally gifted with a large quantity of solar energy in the form of sunlight.
3. Traditional Knowledge and Practices:
• Traditionally, Indian people have been close to their environment like traditional systems of Ayurveda,
Unani, etc.
o Benefit
• All practices relating to agriculture system, healthcare system, housing transport, etc. used to
be environment friendly.
• Relatively free from side effects and do not involve large –scale industrial and chemical
processing.
4. To Change in unsustainable patterns of consumption and production:
• With increasing purchasing power, wasteful consumption, has increased consumerism.
• In several areas, desirable limits and standards for consumption and production need to be established
and applied through education, incentives and legislation.
5. Establishment of mini –Hydel Plants:
• In mountainous regions, continuous streams can be found almost everywhere.
o These streams can be used to generate electricity (via turbines) through Mini –hydel plants.
o Such power plants are more or less environment –friendly and generate enough power to meet
local demands.
6. Restriction on bio-pest:
• The advent of green revolution has increased the use of chemical pesticides, which not only
contaminates the food products, but also pollutes the water bodies.
• Solution:-
o Neem based pesticides are environment friendly and the free from side effects.
o Awareness is being created for use of various animals and birds (like snakes, lizards, owls,
peacocks) as natural pest controllers.

7. Role of Cleaner fuels

• In urban areas, use of compressed natural Gas (CNG) is being promoted to be used as fuel.
• In Delhi, use of CNG in public transport has significantly lowered air pollution.
• In Rural areas, use of LPG and GOBAR gas is being promoted as they are cleaner fuels and helps in
reducing household pollution to a large extent

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10TH CHAPTER
DEVELOPMENT EXPERIENCE INDIA

• We already know that Globalization has impacted the economies of difference countries across the
world and India is not an exception.
• There is also an increasing eagerness on the parts of various nations to try and understand the
developmental processes follow by other countries and their neighbor
• It allows them to better understand their own strengths and weaknesses vis-à-vis their neighbors.
• In this chapter we will compare the developmental strategies pursued by India and the largest two of its
neighboring economies—Pakistan and China
1. India (largest democracy of the world)
2. China, which has recently started moving towards a more liberal restructuring of its command
economy.
3. Pakistan, having an authoritarian militarist political power structure.

Developmental path—a snapshot view

India, Pakistan and China have many similarities in their developmental strategies.
1. India and Pakistan got independence in 1947 and People’s Republic of China was established in 1949.
2. All the three countries had started planning their development strategies in similar ways.
3. India announced its first five year plan in 1951, Pakistan announced in 1956 and China in 1953.
4. Till 1980s, all the three countries had similar growth rates and per capita incomes.
5. After 1980s all the three countries have performed differently.
6. India and Pakistan have made slow and irregular progress as compared to China.

CHINA
Economy
1. Establishment:( 1949) –
• After the establishment of People’s Republic of China (1949) under one –party rule, all the critical
sectors of the economy, enterprises and lands owned and operated by individuals, were brought
under government control.
2. Economic Planning (1953): -
• China announced its first five year plan in 1953.
3. Great Leap Forward (GLF) campaign (1958–60):
• In 1958, a programme named ‘The Great Leap Forward (GLF)’ campaign was invited by Mao
Zedong in Second Five Year Plan
4. Great proletarian Cultural Revolution (1966–76):
• In 1965, Mao Zedong introduced the Great Proletarian Cultural Revolution (1966 – 76), under which
students and professionals were sent to work and learn from the countryside.
5. Economic Reforms Introduced in China (1978): China introduced reforms in phases.
• In the initial phase, reforms were initiated in agriculture, foreign trade and investment sectors.
• In the later phase, Reforms were initiated in the industrial sector..
6. Special Economic Zones (SEZ): In order to attract foreign investors, special economic zones were set.

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Explain the Great Leap Forward campaign of China as initiated in 1958. Also, state the problems which
GLF campaign met with and its Success
Ans. The Great Leap Forward (GLF) campaign was initiated in China in 1958, which aimed at industrializing
the country on a massive scale.
• People were encouraged to set up industries in their backyards.
• In rural areas, communes were started. In the Commune system, people collectively cultivated lands. In 1958,
there were 26,000 communes covering almost all the farm population.
However, GLF campaign met with many problems:
1. A severe drought caused destruction in China killing about 30 million people.
2. Russia had conflicts with China, it withdrew its professionals who had earlier been sent to China to help in
the industrialization process.
Success
• Through the commune system, there was more equitable distribution of food grains
• Massive extension of basic health services in rural areas.

China did not have any compulsion to introduce reforms as dictated by the World Bank and
International Monetary Fund to India and Pakistan. Why did China introduce structural reforms in
1978? Also, evaluate the various factors that led to the rapid growth in economic development in China in
the post reform period.
Ans. China introduced economic reforms in 1978 because of the following reasons:
1. The new leadership at that time in China was not happy with the slow pace of growth and lack of
modernization in the Chinese economy under the Maoist rule. They felt that Maoist vision of economic
development based on decentralization, self-sufficiency and avoid of foreign technology, goods and capital
had failed.
2. Despite extensive land reforms, the Great Leap Forward (GLF) and other initiatives, per capita grain output
in 1978 was the same as it was in the mid-1950s.

Explain the strategy used by the CHINA in economics reforms during 1978.
1. Initial phase, reforms were initiated in agriculture, foreign trade and investment sectors.
• In agriculture, commune lands were divided into small plots which were allocated (only for use
and not as ownership) to the individual households.
• They were allowed to keep all income from the land after paying fixed taxes.
2. Later phase, Reforms were initiated in the industrial sector.
• Private Sector firms and township and village enterprises (enterprises which were owned and
opened and operated by local collectives) were allowed to produce goods.
• Enterprises owned by government (known as State owned Enterprises or soes), were made to
face competition.
3. Dual Pricing in the Reforms Process: This means fixing the prices in two ways;
• Farmers and industrial units were required to buy and sell fixed quantities of inputs and outputs
on the basis of prices fixed by the government, For other transactions, the rest were purchased
and sold at market prices
4. Social reforms China used the 'market system without losing political commitment' and succeeded in
raising the level of growth along with alleviation of poverty. Retaining collective ownership of land and
allowing individuals to cultivate lands, China has ensured social security in rural areas.

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Establishment of infrastructure in the areas of education and health, land reforms, long existence of
decentralized Planning and existence of small enterprises had helped positively in improving the social
and income indicators in the post reform period. COMMENT
OR
“The present day fast industrial growth in China can be traced back to the reforms introduced in 1978.”
COMMENT
Ans. The various factors that led to the rapid growth in economic development in China in the post-
reform period were as follows:
1. Land reforms:- • By retaining collective ownership of land and allowing individuals to cultivate lands,
China has ensured social security in rural areas.
2. Long existence of decentralized planning: - it used the 'market system without losing political
commitment' and succeeded in raising the level of growth along with alleviation of poverty.
3. Establishment of infrastructure in the areas of education and health.:- • Public investment in social
infrastructure brought about positive results in human development indicators in China.
4. Special economy Zone:- In order to attract foreign investors, special economic zones were set up.
Strategy
• Each reform measure was first implemented at a smaller level and then extended on a massive scale.
• The experimentation under decentralized government enabled to assess the economic, social and
political costs of success or failure.
• Reforms were made in agriculture (by handing over plots of land to individuals for cultivation), it
brought prosperity to a vast number of poor people.

PAKISTAN (EIGHT)
Historical Background
Pakistan, officially the Islamic Republic of Pakistan, gained independence on 14 August, 1947.
Population and Language
It has second largest Muslim population in the world after Indonesia. The national language is Urdu and English
is the official language. Pakistan also started like India…
1) Economic System; Pakistan follows the mixed economy model with co-existence of public and private
sectors.
2) Introduction of economic Policies; In the late 1950s and 1960s, Pakistan introduced a lot of regulated
policy framework for growth of domestic industries.
• High import tariffs were levied to discourage imports and encourage domestic production of consumer
goods
• Restrictions on imported goods to avoid competition.
3) Green Revolution; introduction of Green Revolution and increase in public investment in infrastructure led
to a rise in the production of food-grains. There was a positive impact on the agriculture sector
4) Higher Importance to Private Sector in late 1970s; In the late 1970s, there was a shift in the government
policy, when it adopted the policy of denationalization. Government encouraged the private sector and also
offered various incentives to them.
Financial Support during late 1970:-
• Pakistan received financial support from western nations
• Remittances from emigrants to the Middle –east.
o This helped the country in stimulating economic growth.
5) To bring Economic Reforms; In 1988, reforms were begin in the country

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Describe the path of developmental initiatives taken by Pakistan for its economic development.
Ans. Development initiatives taken by Pakistan:
1. In the late 1950s and 1960s, Pakistan introduced a variety of regulated policy framework (for import
substitution-based industrialisation). The policy combined tariff protection and direct-import controls.
2. The introduction of Green Revolution led to mechanisation and increase in public investment in
infrastructure, which led to a rise in the production of food grains.
3. In the 1970s, nationalisation of capital goods industries took place.
4. Pakistan then shifted its policy orientation in the late 1970s and 1980s when the major thrust areas were
denationalisation and encouragement of private sector.
5. During this period, Pakistan received financial support from western nations and remittances from Pakistani
workers in the middle-east. This helped the country in stimulating economic growth. The government also
offered incentives to the private sector. All this created a conducive climate for new investments.
6. In 1988, economic reforms were initiated in Pakistan.

"In Pakistan the reform process led to worsening of all the economic indicators. However, during the last
few years, Pakistan has recovered its economic growth and has been sustaining.” Defend or refute the
above statement. (6) Ans. The given statement is correct.
1. Declining growth rate - The reform process introduced in Pakistan led to declining growth rate in Pakistan.
2. Re-emergence of poverty - The proportion of poor in 1980s was 25 per cent, which started rising again
during 1990s.
The reasons for the slow-down of growth and re-emergence of poverty in Pakistan's
1. Unstable performance of agriculture sector - Agricultural growth and food supply situation were based
not on an institutionalized process of technical change but on good harvest. When there was a good harvest,
the economy was in good condition, when it was not, the economic indicators showed stagnation or negative
trends.
2. Over-dependence on remittances and foreign aid - In Pakistan most foreign exchange earnings came
from remittances from Pakistani workers in the middle-east and the exports of highly volatile agricultural
products. There was also growing dependence on foreign loans, and increasing difficulty in paying back the
loans.
3. Political instability over a long period of time. However, during the last few years, Pakistan has recovered
its economic growth. In 2015-16, the GDP registered a growth of 4.7 per cent, highest when compared to
the previous eight years.

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COMPERASTIVE STUDY – INDIA, CHINA AND PAKISTAN
Demographic Indicators
1. Population:
o China is the most populous country in the world with 1,303.7 million people
o India is the second most populated country with 1,103.6 million people.
o Pakistan is very less (162.4 million people)
.
2. Growth rate of Population:
o China annual growth rate of population is the lowest (1 per cent)
o India (1.7 per cent)
o Pakistan (2.5 per cent).
▪ Reason for the low growth of population in China: - is the ‘One –Child policy’ introduced
in the late 1970s.
▪ However, this policy has some other implications also. For instance, after a few decades,
there will be more elderly people in proportion to young people in China. This led China to
allow couples to have two children.

Demographic Indicators (2000 - 01)

Country Estimated Annual Density Sex Fertility Urbanization
population Growth of (per sq. Ratio Rate
(in millions) Population km)
(1990 -2003)
India 1,103.6 1.7 358 933 3.0 27.8
China 1,303.7 1.0 138 937 1.8 36.1
Pakistan 162.4 2.5 193 922 5.1 33.4

Gross domestic product and sectors

GDP growth rate is considered as the single most important indicator of an economy during the period.
1. China GDP 7.2 dollar trillion.
2. India’s GDP is 3.3 dollar trillion
3. Pakistan’s GDP is 0.94 trillion
Conclusions
• China was having double –digit growth of 10.3 % for one decade but fall in 2015–17 to 6.8
• Pakistan met with a drastic decline in growth rate from 6.3 % to 5.3 % due to reform processes
introduced in 1988 and political instability.
• India recorded a moderate increase from 5.7 % to 7.3 per cent.

Annual Growth of Gross Domestic Product (%), 1980–2017

Country 1980 -90 2015-2017
India 5.7 7.3
China 10.3 6.8
Pakistan 6.3 5.3

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SECTORAL CONTRIBUTION
Agriculture (Primary Sector)
In China
• Due to topographic and climatic conditions, the area suitable for cultivation is just 10 %
• Till 1980, more than 80 % of its population was dependent on farming as their sole source of livelihood.
• Since then, the government encouraged people to leave their fields and pursue other activities, such as
handicrafts, commerce and transport.
• In 2015–17, with 18 % of its workforce engaged in agriculture, its contribution to the GDP in China is 9 %
In India
• The contribution of agriculture to GDP was 17 %. The proportion of workforce engaged in agriculture
was 43 %.
In Pakistan
• The contribution of agriculture to GDP was 25% but proportion of workforce engaged in agriculture
was 42%

Industry (Secondary Sector)

Contribution to GDP
• Secondary sector contributed the highest to China’s GDP at 43 %.
• India, the share of secondary sector was 26 %.
• Pakistan the share of secondary sector 23 %.
Proportion of Workforce
• China has been shifting employment and output from agriculture to manufacturing and then to services.
• In India and Pakistan, the shift is taking place directly to the service sector.
Service (Tertiary Sector)
Contribution to GDP
• India and Pakistan, the service sector is emerging as a major player of development.
• Service sector contributes the highest to their GDP, with contribution of 51 % in case of India and 54 % got
Pakistan.
• The contribution of service sector to the GDP in China was 32 per cent.
Proportion of Workforce
• Pakistan was faster in shifting its workforce to service sector than India and China.
• The proportion of workforce engaged in service sector in 1980 for India, China and Pakistan were 17 per
cent, 12 % and 27 per cent.

Conclusion
• In the last two decades, the contribution of agriculture sector to GDP, which employs the largest
proportion of workforce in all the three countries, has declined.
• In the industrial sector, China has maintained a double –digit growth rate, whereas for India and
Pakistan, growth rate has declined.
• In the case of service sector, India has been able to raise of growth in the 1990s, while
• China and Pakistan reduced their service sector growth.
• China’s growth is mainly contributed by the manufacturing sector
• India’s growth by service sector.

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 Sectoral Share in GDP and Employment 2015-17
Sector % Share in GDP % Share in Employment
India China Pakistan India China Pakistan
Primary 17 9 25 42.7 17.5 42
Secondary 30 43 21 23.8 26.5 3.7
Tertiary 53 48 54 33.5 56 54.3

Human development Indicators

Human development Index (HDI): HDI is an important indicator to study the human development. Higher
value of HDI shows the higher level of growth and development of a country.
Income indicator
• GDP per capita,
• proportion of population below poverty line
Health indicators such as
• Mortality rates,
• Access to sanitation
• Literacy,
• Life Expectancy
• Malnourishment

Conclusions
1. Pakistan is ahead of India in reducing proportion of people below the poverty line and also its
performance in sanitation.
2. All the three countries report providing improved drinking water sources for most of its population.
3. India has the largest share of poor among the three countries.
4. China is moving ahead of India and Pakistan. This is true for many indicators

Facts and figures

Some Selected Indicators of Human Development, 2016–2017
ITEMS INDIA CHINA PAKISTAN
HDI (Human Development Index (Value) 0.640 0.752 0.562
RANK (based on HDI) 130 86 150
Life Expectancy at Birth (years) 68.8 76.4 66.6
Mean years of Schooling (% aged 15 and above) 6.4 7.8 8.6
GDP per capita (PPP US$) 6,427 15,309 5,035
People Below Poverty Line (at $3.20 a day ppp) 60.4 23.5 46.4
(%) (2011)
Infant Mortality Rate (per 1000 live births) 34.6 8.5 64.2
Maternal Mortality Rate (per 1 lakh births) 174 27 178
Population using Improved Sanitation (%) 44.2 75 58.3
Population with Sustainable Access to improved 94 96 91
Water Source (%)
Percentage of Undernourished Children 37.9 8.1 46.4
Liberty indicators
Human development indicators are all extremely important but not sufficient.
Along with these, we also need liberty indicators:
Examples of liberty indicators

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1. Measures of the extent of the Constitutional Protection rights given to the citizens
2. Extent of the constitutional Protection of the independence of the judiciary and Rule of Law.
Human development index may be said to be incomplete unless such indicators are included.

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