Unit-3 PROBLEMS OF ECONOMIC DEVELOPMENT IN THE CONTEXT OF INDIA.ppt
- 1. Unit-3 PROBLEMS OF ECONOMIC DEVELOPMENT IN THE CONTEXT OF INDIA
- 2. India as a developing economy Developing economy is such where there are suitable structural changes for economic development and as a result the process of economic development is accelerated. This means that there is increase in national income and per capita income. SOURCE: C. JAMNADAS & CO.
- 3. • India is one of the fastest growing economies of the world and is poised to continue on this path, with aspirations to reach high middle income status by 2047, the centenary of Indian independence. • It is also committed to ensuring that its continued growth path is equipped to deal with the challenges of climate change, and in line with its goal of achieving net-zero emissions by 2070.
- 4. • The growth of the past two decades has also led to India making remarkable progress in reducing extreme poverty. • Between 2011 and 2019, the country is estimated to have halved the share of the population living in extreme poverty - below $2.15 per person per day
- 5. • Certain challenges persist. Inequality in consumption continues, with a Gini index of around 35 over the past two decades. • Child malnutrition has remained high, with 35.5 percent of children under the age of 5 years being stunted, with the figure rising to 67 percent for children in the 6-59 months age group.
- 6. • India’s aspiration to achieve high income status by 2047 will need to be realized through a climate- resilient growth process that delivers broad-based gains to the bottom half of the population. • Growth-oriented reforms will need to be accompanied by an expansion in good jobs that keeps pace with the number of labor market entrants.
- 7. • The World Bank is partnering with the government in this effort by helping strengthen policies, institutions, and investments to create a better future for the country and its people through green, strong and inclusive development.
- 8. • Both the general government fiscal deficit and public debt to GDP ratio increased sharply in FY20/21 and have been declining gradually since then, with the fiscal deficit falling from over 13 percent in FY20/21 to an estimated 9.4 percent in FY22/23.
- 9. • At the same time, the government has remained committed to increasing capital spending, particularly on infrastructure, to boost growth and competitiveness.
- 10. • Public debt has fallen from over 87 percent of GDP to around 83 percent over the same period. • The consolidation has largely been driven by an increase in revenues and a gradual withdrawal of pandemic-related stimulus measures.
- 11. Basic Characteristics of India as a Developing Economy Low Per Capita Income (PCI) •According to the International Monetary Fund’s Report, in 2017, India’s PCI was $ 1983 and was ranked 140 out of 188 countries. •Further, according to the World Bank’s Report, in 2017, India’s PCI was $ 1940 and was ranked 138 out of 184 countries. •Therefore, we can conclude that the per capita income of an Indian resident is lower than most countries in the world.
- 12. • Occupational Pattern – Primary Producing • One of the fundamental characteristics of India as a developing economy is that it is majorly primary producing. What this means is that a majority of the population is engaged in agriculture • However, in 2011-12, the contribution of agriculture to the national income was only 13.9 percent. This disparity is slowing India’s progress. • The reason behind this difference is that agriculture is a low income earning sector.
- 13. • Population Pressure • It is 1.36 billion – the population of India as on January 17, 2019, 21:30 hours. We are the second most populated country in the world and our population is equivalent to around 17.74% of the total world population. • In India, the high levels of illiteracy lead to a high level of birth rates. Further, improvement in medical facilities has increased the average life of an Indian citizen and led to a decline in the death rates too.
- 14. • Chronic Unemployment and Under- Employment in India • Due to the deficiency of capital in India, it is difficult to engage the entire population in gainful employment. • Therefore, a cheap labor force is available in abundance. As a result, there is chronic unemployment and under-employment in our country.
- 15. • Steady Improvement in the Rate of Capital Formation • In 2017, the population growth rate in India was 1.13%. Therefore, the economy needed a high amount of investment to offset the additional burden imposed by the rising population. • This balance is critical to maintaining the costs of living. Otherwise, there is a risk that we could achieve growth only at the expense of unacceptable inflation.
- 16. • Inequality in Wealth/Asset Distribution • Unequal asset distribution is the primary cause of inequality in income distribution in rural areas. • This inequality also highlights the fact that the resource base of 50 percent of households in India is weak. • It is so weak that it can barely provide them with anything above the subsistence level of income.
- 17. • Poor Human Capital Quality • It is a simple equation. Underdeveloped countries have millions of illiterate citizens. Also, illiteracy retards growth since an individual needs a minimum level of education to acquire skills and/or understand social issues.
- 18. • Low-levels of Technology • India is a country of eclectic mixes. One one side, a company uses one of the most modern technologies while another company from the same industry uses the most primitive one. • Unfortunately, according to modern scientific standards, the majority of products are made with the help of inferior technologies.
- 19. • Demographic Characteristics • Demographically speaking, India has a high density of population with high infant mortality rates and comparatively lower life expectancy as compared to the developed countries. This makes it an underdeveloped economy. • Further, in India, the population density was 412 per square kilometer (in 2010). In comparison, the population density of the USA was 34 per square kilometer.
- 20. Other Characteristics Increase in national income. Increase in per capita income. Development oriented structural changes. Dual economy. Economic development through mixed economy. Changing industrial policy. Private ownership of means of production. Profit oriented production of goods. Development through economic planning. Foreign trade and increase in foreign exchange reserve. Increase in standard of living. SOURCE: C. JAMNADAS & CO.
- 21. Concept of Unemployment Unemployment in the context of individual: Voluntary unemployment. Transitional unemployment. Compulsory unemployment. According to Prof. Pigou, “A man is only unemployed when he is both not employed and desires to be employed. SOURCE: C. JAMNADAS & CO.
- 22. What is Unemployment? Definition & Meaning • Unemployment in India refers to the condition where individuals who are capable of working, actively seeking work, but are unable to find any form of employment. • The unemployed are individuals in the labor force, primarily in the age group of 15 – 59 years, who currently do not have a job or a steady source of income.
- 23. • As individuals who are capable and willing to work are unable to find gainful employment, it leads to a wastage of manpower resources. Unemployment and its related metrics are typically used to measure the health of a country’s economy.
- 24. • According to National Statistical Office (NSO), employment and unemployment can be defined by the following activity statuses of an individual – • Employed – Individuals engaged in any economic activity are classified as 'Employed.' This includes full-time, part-time, and temporary work, reflecting a broad understanding of employment.
- 25. • Unemployed – Individuals who are actively seeking or available for work but are not currently engaged in any economic activity. This emphasizes the willingness and ability to work as key criteria. • Neither working nor willing to work – Individuals who are neither seeking nor available for work fall outside the labor force, according to NSO. This category might include students, retirees, or homemakers.
- 26. • The first two categories, i.e., Employed and Unemployed constitute the Labor Force of an economy. It is typically the individuals between the age group of 15–59 years. • The following formula can be used to calculate the unemployment rate of a country –
- 27. Types of Unemployment • Frictional Unemployment • Frictional unemployment occurs when individuals are temporarily without a job while transitioning from one position to another or entering the workforce for the first time.
- 28. • For example, a recent graduate actively looking for a job or a professional who has quit one job to find a more suitable one would fall into this category. • This type of unemployment is generally short- term and is often seen as a regular and healthy part of a dynamic economy.
- 29. • Structural Unemployment • Structural unemployment arises when there is a mismatch between the skills that workers in the economy can offer and the skills demanded by employers.
- 30. • For instance, the automation of manufacturing processes may render certain manual jobs obsolete, leaving those without the necessary technological skills unemployed. • This type of unemployment can be long-term and may require significant retraining and education to overcome.
- 31. • Cyclical Unemployment • Cyclical unemployment is related to the fluctuations in the economy over the course of the business cycle. During recessions, many industries can suffer, leading to layoffs and thus, higher unemployment. • An example would be the increase in unemployment during the global financial crisis of 2008. Cyclical unemployment will decrease when the economy starts to improve. •
- 32. • Institutional Unemployment • Institutional unemployment results from long- term or permanent institutional factors and incentives in the economy. • Government policies, such as high minimum wage floors or restrictive occupational licensing laws, can contribute to this type of unemployment.
- 33. • For example, if a government sets the minimum wage too high, it might lead to employers being unable or unwilling to hire workers at that wage, leading to increased unemployment.
- 34. • Demand Deficient Unemployment • Demand deficient unemployment, or demand-deficit unemployment, occurs when there is not enough demand for workers that are available. • This is often a result of a general downturn in the economy and is closely related to cyclical unemployment. For example, during a severe recession, consumer demand falls, leading to reduced production and, consequently, a reduction in the workforce. •
- 35. • Voluntary Unemployment • Voluntary unemployment happens when a worker decides to leave a job because it is no longer financially compelling or satisfying. • An example might be a worker whose take-home pay is less than his or her cost of living or someone who leaves a job to pursue a hobby or other personal interests. While it's a personal choice, it can still contribute to the overall unemployment rate.
- 36. • Involuntary Unemployment • Involuntary unemployment occurs when individuals who are willing and able to work at the prevailing wage rate are unable to find employment. • This type of unemployment is not a result of a personal choice or voluntary decision to leave a job; rather, it's a situation where individuals are actively seeking employment but are unable to secure a position.
- 37. • An example might be factory workers who lose their jobs due to a factory closure and are unable to find new employment despite their best efforts. • Involuntary unemployment can be particularly distressing as it's often beyond the control of the individual and may require broader economic or policy interventions to address.
- 38. • Disguised Unemployment • Disguised unemployment refers to a situation where more people are employed in a job than is actually required. • It is often prevalent in the agricultural sector, especially in developing countries like India. For example, a farm may need only three workers, but the entire family of five may be working.
- 39. • The extra two workers appear to be employed, but their contribution to productivity is minimal or nil. • Disguised unemployment represents an inefficient allocation of labor, where individuals are underemployed rather than completely unemployed.
- 40. • Seasonal Unemployment • Seasonal unemployment occurs when individuals are unemployed during certain seasons or times of the year when their skills or labor are not in demand. • This type of unemployment is common in industries that are dependent on particular seasons, such as agriculture, tourism, and construction.
- 41. • For example, agricultural workers may face unemployment after the harvest season, while ski resort employees might be without work during the summer months. • Governments and industries often address seasonal unemployment through temporary employment opportunities and unemployment benefits tailored to these fluctuations.
- 42. • Vulnerable Unemployment • Vulnerable unemployment refers to individuals who are employed in precarious or insecure conditions, often lacking legal protections, benefits, or job security. • This type of unemployment is prevalent in the informal sector, where workers might be engaged in low-paying, temporary, or part-time jobs without contracts.
- 43. • For example, street vendors, daily wage laborers, and domestic workers often fall into this category in many developing countries, including India. • Vulnerable unemployment highlights the need for comprehensive labor laws and social protections to ensure the well-being and rights of these workers.
- 44. • Technological Unemployment • Technological unemployment arises when advancements in technology render certain jobs or skills obsolete, leading to job losses in affected industries. Automation, artificial intelligence, and digitalization are common drivers of technological unemployment.
- 45. • For instance, the introduction of automated teller machines (ATMs) has reduced the need for bank tellers, while automation in manufacturing has replaced many manual labor positions. • While technological unemployment can lead to increased efficiency and productivity, it also raises concerns about retraining, education, and social support for displaced workers, emphasizing the need for a balanced approach to technological progress.
- 46. • According to the World Economic Forum Future of Jobs Report 2020, 85 million jobs may be displaced by machines by 2025, but 97 million new roles may emerge. • As computers take over high-repetitive tasks typically assigned to entry-level employees, they pave the way for more complex, intellectually stimulating roles with competitive salaries. • The challenge lies in ensuring that the workforce is equipped with the skills to embrace these new opportunities.
- 47. The causes of increase in Unemployment Defective investment system. Rapid increase in population. Defective education system and manpower planning. Underdevelopment of agricultural sector. Underdevelopment of non agricultural sector. Lack of harmony between objectives of planning and reality. Poverty. Slow progress of economic development. Want of national employment policy. Inadequate use of productive capacity. SOURCE: C. JAMNADAS & CO.
- 48. India’s Unemployment Rate Month Unemployment Rate (%) India Urban Rural Aug 2020 8.35 9.83 7.65 Jul 2020 7.40 9.37 6.51 Jun 2020 10.18 11.68 9.49 May 2020 21.73 23.14 21.11 Apr 2020 23.52 24.95 22.89 Mar 2020 8.75 9.41 8.44 Feb 2020 7.76 8.65 7.34 Jan 2020 7.22 9.70 6.06 Dec 2019 7.60 9.02 6.93 Nov 2019 7.23 8.88 6.45 Oct 2019 8.10 8.27 8.02 Sep 2019 7.14 9.58 5.99
- 50. Effects of Unemployment Overall adverse impact of unemployment: From the view of the person. From the view point of national production. From the view point of distribution and consumption. From the view of society and political view. Adverse impact of unemployment on different economic fields: Effect on agriculture profession. Effects on trade and commerce. Effects on industry. Effects on the transportation. SOURCE: C. JAMNADAS & CO.
- 51. • I care for my job. • I care for my family. • I care for my sister. • I care for my car. • I care for you. • I care for my country. • I care for my health.
- 52. • Physics • Physics is interesting. • Physics is very useful. • Physics is an easy subject. • Physics is my favourite subject. • Physics interestinguseful easy • Subject favourite my
- 53. • Maths is difficult. • Maths is a difficult subject.
- 54. • Science is easy. • Science is an easy subject.
- 55. • Biology is difficult. • Biology is a difficult subject.
- 68. Family Family
- 69. is est
- 70. big grande
- 72. Brother Family
- 73. Sister Family
- 77. elder Family
- 78. younger Family
- 81. Father Family
- 82. Mother Family
- 88. Uncle Family
- 89. Aunt Family
- 92. Son Family
- 93. Daughter Family