Understanding Development: Goals and Income

• Development: encompassing progress, growth, advancement, and positive change, aiming to improve quality of life.

Perspectives on Development

• Differing perspectives on development arise because individuals have different aspirations and ideas about how life should be.
• A crucial aspect of development is that different people can have different developmental goals.
• What may be development for one may not be for the other; it may even be destructive for the other.

Income and Development

• People desire regular work, better wages, and decent prices for their crops or products.
• Besides income, people also seek freedom, security, respect, and equality.
• Nations are compared based on their average income, which is the total income of the country divided by its total population.

Limitations of Average Income

• Averages can be useful for comparison, they also hide disparities.
• Average income doesn't reflect how income is distributed among the population

Non-Material Factors

• Non-material things like equal treatment, freedom, and security are important for development.
• Money cannot buy everything needed for a good quality of life.
• Public facilities like schools and hospitals are crucial for overall development.

Body Mass Index (BMI)

• BMI is a way to check if adults are undernourished.
• It is calculated by dividing weight in kg by height in meters squared.
• If BMI is less than 18.5, the person is considered undernourished.
• If BMI is more than 25, then the person is overweight.

Human Development Index (HDI)

• HDI is a composite index used to measure countries' development.
• It considers health, education, and income levels.
• It is published annually by the United Nations Development Programme (UNDP).

Sustainability of Development

• Sustainable development aims to meet current needs without compromising the ability of future generations to meet their own needs.
• Overexploitation of natural resources can lead to environmental degradation, affecting future development.
• Using renewable resources instead of non-renewable resources is essential for sustainability.

Environmental Degradation

• Environmental degradation includes deforestation, soil erosion, water pollution, and air pollution.
• Excessive use of resources like groundwater can lead to their depletion.
• Pollution reduces quality of life.

Public Facilities and Services

• Availability of good public facilities and services such as healthcare and education play a critical role in improving people’s quality of life.
• Public distribution system makes food available to poor people at affordable price.
• Public facilities are essential for society to develop because they are essential services.

Sectors of the Indian Economy

• The economy is divided into primary, secondary, and tertiary sectors.
• Primary sector involves agriculture, forestry, and mining.
• Secondary sector involves manufacturing.
• Tertiary sector involves services like banking, education, and healthcare.

Gross Domestic Product (GDP)

• GDP is the total value of all final goods and services produced within a country during a specific period.
• It measures the size of the country's economy.
• GDP is calculated by summing up the production in the three sectors.

Historical Changes in Sectors

• Initially, the primary sector was the most important.
• As methods of farming changed and agriculture began to prosper, over time manufacturing activities began to expand.
• As development occurs, the tertiary sector becomes more significant.
• The reason is that as income levels rise, people demand more services like eating out, tourism, shopping, private hospitals, private schools, professional training etc.

Rising Importance of the Tertiary Sector

• The tertiary sector has become the largest producing sector in India.
• Factors contributing to this growth include increased income and demand for services.
• Development of IT has also boosted the service sector
• However, not all service sectors are growing equally.

Underemployment

• Underemployment occurs when people are working in jobs that do not fully utilize their skills and potential.
• Many people in the primary sector are underemployed.
• This leads to lower productivity and income levels.

Disguised Unemployment

• Disguised unemployment is a type of underemployment where more people are employed than necessary.
• Even if some people are removed, production does not suffer.
• It is commonly seen in agriculture.

Ways to Create More Employment

• Investing in infrastructure, such as roads, irrigation, and transportation, can generate employment.
• Promoting local industries and services can create jobs in rural areas.
• Improving education and skills can enhance employability.

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005

• MGNREGA guarantees 100 days of wage employment to every household in rural areas.
• It aims to improve the livelihood security of people in rural areas.
• If the government fails to provide employment, it has to pay unemployment allowances.

Organisation of Sectors

• Sectors can be organized as organised and unorganized.
• The distinction depends on employment conditions.

Organised Sector

• The organised sector covers enterprises registered with the government and follow its rules and regulations.
• It offers job security, fixed working hours, and benefits.
• Workers in this sector are entitled to social security benefits.

Unorganised Sector

• The unorganised sector includes small and scattered units outside of government control.
• It is often characterized by low pay, irregular employment, and lack of benefits.
• Workers are vulnerable to exploitation.

Protecting Workers in the Unorganised Sector

• Government support is essential for protecting workers in the unorganised sector.
• Providing access to credit, skill training, and social security can improve their conditions.
• Ensuring implementation of labour laws is crucial.

Sectors in Terms of Ownership

• Sectors can be divided into public and private.
• The distinction is based on who owns the assets and provides the services.

Public Sector

• The public sector covers government-owned and controlled enterprises.
• Its goal is to provide essential services and promote social welfare.
• For example, railways, post offices.

Private Sector

• The private sector includes privately-owned enterprises.
• Its goal is to earn profits.

Importance of Both Sectors

• Both the public and private sectors are necessary for economic development.
• The public sector provides essential services that the private sector may not find profitable.
• The private sector contributes to economic growth and innovation.

Money and Credit

• Money serves as a medium of exchange, eliminating the need for barter systems.
• It simplifies transactions and facilitates trade.
• Money can be easily stored.

Modern Forms of Money

• Currency (paper notes and coins) is the most common form of money.
• Demand deposits in banks function as money as they can be withdrawn on demand.
• Cheques are used to settle payments without physical transfer of cash.

Demand Deposits

• Demand deposits are bank accounts that allow depositors to withdraw money on demand.
• They offer safety and convenience.
• Banks use these deposits to provide loans.

Credit

• Credit refers to an agreement in which the lender supplies the borrower with money, goods, or services in return for the promise of future payment.
• It plays a crucial role in economic activities.
• Can have positive and negative impacts.

Terms of Credit

• Interest rate, collateral, documentation requirements, and mode of repayment comprise the terms of credit.
• Collateral is an asset that the borrower owns and uses as a guarantee to a lender until the loan is repaid.
• Terms of credit vary depending on the lender and the borrower.

Sources of Credit

• Sources include formal and informal lenders.

Formal Sector Credit

• Formal sector lenders include banks and cooperatives.
• They are regulated by the Reserve Bank of India (RBI).
• Generally charge lower interest rates.

Informal Sector Credit

• Informal sector lenders include moneylenders, traders, and relatives.
• They charge higher interest rates.
• Lack of regulation can lead to exploitation.

Role of the RBI

• The Reserve Bank of India (RBI) supervises the functioning of formal sector lenders.
• It sets rules regarding interest rates, loan activities, and other aspects of banking.
• The RBI also monitors that banks actually maintain cash balance.

Self-Help Groups (SHGs)

• Self-Help Groups (SHGs) are small groups of people, often women, who pool their savings and provide loans to members.
• They promote financial inclusion and empower women.
• SHGs address the problem that the poor have little access to formal sources of credit.

Globalisation and the Indian Economy

• Globalisation is the process of increasing interconnectedness among countries through trade, investment, and cultural exchange.
• This integration includes movement of goods, services, investment and technology.
• It has transformed the Indian economy.

Production Across Countries

• Multinational Corporations (MNCs) play a significant role in globalisation.
• MNCs control production in more than one nation.
• MNCs set up offices and factories for production in regions where they can get cheap labour and other resources.

Foreign Investment

• Foreign investment is investment made by MNCs in other countries.
• It can bring capital, technology, and expertise.
• Foreign investment promotes economic growth.

Interlinking Production Across Countries

• MNCs interlink production across countries by sourcing components and assembling products in different locations.
• This optimizes cost and efficiency.
• It facilitates global supply chains.

Role of Technology

• Technology has accelerated globalisation.
• Developments in transportation, communication, and IT have made it easier to connect countries.
• Containerization has reduced port handling costs and increased the speed of shipment.

Liberalisation of Trade and Investment Policies

• Trade barriers include taxes on imports, quotas and restrictions.
• Liberalisation involves reducing trade barriers to promote free trade and foreign investment.
• It improves competition and efficiency.

World Trade Organization (WTO)

• The World Trade Organization (WTO) is an international organization that promotes free trade.
• It establishes rules for international trade and resolves trade disputes.
• WTO agreements have been criticized for favoring developed countries.

Impact of Globalisation on India

• Globalisation has led to increased competition, lower prices, and wider choice for consumers.
• Some sectors have benefited from increased investment and technology.
• Some small producers and workers have struggled to compete.

Positive Impacts of Globalisation

• Access to wider market.
• Improvement in living standards.
• Technology transfer has taken place.

Negative Impacts of Globalisation

• Job insecurity has increased.
• Small businesses have been negatively affected.
• Increased income inequality.

The Struggle for a Fair Globalisation

• Fair globalisation would create opportunities for all and ensure that the benefits of globalisation are shared more equally.
• Government policies play a crucial role in promoting fair globalisation.
• Protection of worker’s rights and environmental protection should be prioritized.

Development encompasses progress and positive change, with varying perspectives based on individual aspirations. Different people have different developmental goals. Nations are often compared by average income, which can hide disparities in wealth distribution and doesn't account for non-material factors.