Intermediate 2nd Year Economics Textbook PDF

Text Book for INTERMEDIATE Second Year ECONOMICS Telugu and Sanskrit Akademi Andhra Pradesh SRI. Y.S. JAGAN MOHAN REDDY CHIEF MINISTER ANDHRA PRADESH AMARAVATI...

Text Book for INTERMEDIATE Second Year ECONOMICS Telugu and Sanskrit Akademi Andhra Pradesh SRI. Y.S. JAGAN MOHAN REDDY CHIEF MINISTER ANDHRA PRADESH AMARAVATI MESSAGE I congratulate Akademi for starting its activities with printing of Intermediate textbooks from the academic year 2021 – 22. Education is a real asset which cannot be stolen by anyone and it is the foundation onwhich children build their future. As the world has become a global village, children will have to compete with the world as they grow up. For this there is every need for goodbooks and good education. Our government has brought in many changes in the education system and more are to come. The government has been taking care to provide education to the poor and needy through various measures, like developing infrastructure, upgrading the skills of teachers, providing incentives to the children and parents to pursue education. Nutritious mid-day meal and converting Anganwadis into pre-primary schools with English as medium of instruction are the steps taken to initiate children into education from a young age. Besides introducing CBSE syllabus and Telugu as a compulsory subject, the government has taken up numerous innovative programmes. The revival of the Akademi also took place during the tenure of our government as itwas neglected after the State was bifurcated. The Akademi, which was started on August 6, 1968 in the undivided state of Andhra Pradesh, was printing text books, works of popular writers and books for competitive exams and personality development. Our government has decided to make available all kinds of books required for studentsand employees through Akademi, with headquarters at Tirupati. I extend my best wishes to the Akademi and hope it will regain its past glory. Y.S. Jagan Mohan Reddy Dr. Nandamuri Lakshmiparvathi M.A. M.Phil., Ph.D. Chairperson, (Cabinet Minister Rank) Telugu and Sanskrit Akademi, A.P. Message of Chairperson, Telugu and Sanskrit Akademi, A.P. In accordance with the syllabus developed by the Board of Intermediate, State Council for Higher Education, SCERT etc., we design high quality Text books by recruiting efficient Professors, department heads and faculty members from various Universities and Colleges as writers and editors. We are taking steps to print the required number of these books ina timely manner and distribute through the Akademi’s Regional Centers present across the Andhra Pradesh. In addition to text books, we strive to keep monographs, dictionaries, dialect texts,question banks, contact texts, popular texts, essays, linguistics texts, school level dictionaries, glossaries, etc., updated and printed and made available to students from time to time. For competitive examinations conducted by the Andhra Pradesh Public Service Commission and for Entrance examinations conducted by various Universities, the contents of the Akademi publications are taken as standard. So, I want all the students and Employees to make use of Akademi books of high standards for their golden future. Congratulations and best wishes to all of you. Nandamuri Lakshmiparvathi Chairperson, Telugu and Sanskrit Akademi, A.P. J. SYAMALA RAO, I.A.S., Principal Secretary to Government Higher Educational Department Government of Andhra Pradesh MESSAGE I Congratulate Telugu and Sanskrit Akademi for taking up the initiative of printing and distributing textbooks in both Telugu and English media within a short span of establishing Telugu and Sanskrit Akademi. Number of students of Andhra Pradesh are competing of National Level for admissions into Medicine and Engineering courses. In order to help these students Telugu and Sanskrit Akademi consultation with NCERT redesigned their Textbooks to suit the requirement of National Level Examinations in a lucid language. As the content in Telugu and Sanskrit Akademi books is highly informative and authentic, printed in multi-color on high quality paper and will be made available to the students in a time bound manner. I hope all the students in Andhra Pradesh will utilize the Akademi textbooks for better understanding of the subjects to compete of state and national levels. (J. SYAMALA RAO)  THE CONSTITUTION OF INDIA PREAMBLE WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a [SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC] and to secure to all its citizens: JUSTICE, social, economic and political; LIBERTY of thought, expression, belief, faith and worship; EQUALITY of status and of opportunity; and to promote among them all FRATERNITY assuring the dignity of the individual and the [unity and integrity of the Nation]; IN OUR CONSTITUENT ASSEMBLY this twenty-sixth day of November, 1949 do HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION.  Textbook Development Committee AUTHORS Dr. B. Guru Bheema Char Sri. Atla Srinivasulu M.A., M.Phil., Ph.D., Reader in Economics M.A., B.Ed., Jr. Lecturer in Economics S.B.S.V.M Degree College, Kurnool K.A.C Govt. Junior College, Nellore Sri. K. Venkatesulu Naidu Sri. Mandha Radha Krishnaiah M.A., M.Phil., Lecturer in Economics M.A., M.Phil., B.Ed, NET, SET SVA Govt Degree College (Men), Jr. Lecturer in Economics Sri Kalahasthi, Chittor District. Govt. Junior College, Nimmana Palli, Chittor District. Dr. K. Umamahesh Patnaik Sri. Chekuri Ganapathi Raju M.A., M.Ed, Ph.D. P.G.Dip. P.M.IR & LW M.A., Jr. Lecturer in Economics (APCSC) Head of the Department, Economics M.A.V.P Aided Junior College, Sri Medha Group of Institutions Gajuwaka, Visakhapatnam District. Hyderabad. EDITORS Prof. M. Prasada Rao M.A., B.L., P.G.D.A.S., Ph.D. (SUSSEX, U.K) Department of Economics Andhra University, Visakhapatnam Prof. M. Koteswara Rao LLM, M.A. (Eco), Ph.D. Professor Department of Economics, Acharya Nagarjuna University Guntur  Coordinating Committee of Board of Intermediate Education, A.P. Sri M.V. Seshagiri Babu, I.A.S. Secretary Board of Intermediate Education, Andhra Pradesh Educational Research & Training Wing (Text Books) Dr. A. Srinivasulu Professor Sri. M. Ravi Sankar Naik Assistant Professor Dr. M. Ramana Reddy Assistant Professor Sri J.V. Ramana Gupta Assistant Professor Telugu and Sanskrit Akademi, Andhra Pradesh Coordinating Committee Sri V. Ramakrishna, I.R.S. Director Dr. M. Koteswaramma, M.Com., Ph.D. Research Officer Dr. S.A.T. Rajyalakshmi M.Sc., B.Ed., M.A., Ph.D. Research Assistant Dr. K. Glory Sathyavani, M.Sc., Ph.D., M.Ed. Research Assistant  Foreword The role played by the Akademi in stabilizing Telugu Medium at the level of Higher Education since its inception (1968) is well known. The Akademi has rendered needful services by publishing a number of Text Books, Reference Books, Translations, Popular Series, Monographs, Dictionaries, Glossaries, Readings, etc., over the years. Many among the above mentioned books were also reprinted as per the demand. Sincere effort is being made to improve the quality of these books by conducting workshops, refresher courses and also by taking suggestions given by the intellectuals in general and the students and the teachers in particular. Akademi has been revising and updating its publications in accordance with the prescribed syllabi, as and when necessary. Akademi is publishing Text Books for Intermediate in Telugu Medium since its inception. In addition, the Akademi has entered a new phase of activity with the publication of language books from the year 1995, and preparation and publication of Intermediate Text books in English medium from the year 1998, as entrusted by the Board of Intermediate education. For the academic year 2014-15, the Board of Intermediate Education has revised the syllabus of all Humanities Text Books for first year of Intermediate and entrusted the preparation, printing and distribution of Text Books to Akademi. Accordingly, Akademi prepared this Text Book strictly in accordance with the prescribed syllabus for the academic year 2014-15. We are indeed very much grateful to the Government of India, State Government, State Universities, the Board of Governors of Telugu and Sanskrit Akademi. We also thank the Commissioner, Intermediate Education and Secretary, Board of Intermediate Education of Andhra Pradesh. We are also very much grateful to Text Book Development Committee of the subject concerned for their valuable cooperation. Constructive suggestions are solicited for the improvement of this book. The suggestions received will be examined and incorporated in the subsequent editions. Sri. V. Ramakrishna I.R.S. Director Telugu and Sanskrit Akademi, Andhra Pradesh  Preface This text book is meant for 2nd year Intermediate students of economics. The Board of Intermediate Education, Andhra Pradesh, Hyderabad has set to modify the existing Intermediate Second year syllabus in accordance with CBSE, ICSE and NCERT syllabi which will be effective from 2015-16. The purpose of this book is to introduce students to the exciting and challenging subject of Development Economics and understand development problems facing the economies of the developing countries like India. The present book contains X Units. These Units were written by Dr. B. Guru Bheema Char, (Units-VII, VIII and IX) K.Venkatesulu Naidu(Units-III and V), Dr. K. Umamahesh Patnaik (Units-VI and X), Sri. Atla Srinivasulu (Unit-IV), Sri. Mandha Radhakrishnaiah (Unit- I) and Chekuri Ganapathi Raju (Unit-II). In each Unit, an attempt is made to address the subject matter of development, basic concepts, fundamentals, necessary data regarding economic growth and development, population and human resource development, national income, poverty and unemployment, agriculture, industrial and territory sectors, planning reforms, environment and sustainable economic development Andhra Pradesh economy and to provide basic statistical tools of analysis as a preparatory for further studies. In this book the topics are presented in words, in figures with data wherever necessary and tabular analysis. The writers of this book have been involved in teaching Economics courses at the Intermediate and Undergraduate levels in different parts of the state of Andhra Pradesh. The students will find this book very lucid, useful and analytical to understand the basic concepts. This book is prepared keeping in mind the level of students at the Intermediate stage. Utmost care has been taken to maintain high academic standards. We are very much thankful to the Commissioner, Secretary and Staff of Board of Intermediate education, Andhra Pradesh, Hyderabad for their help in bringing out this text book. Any suggestions for improvement are welcome. EDITORS Prof. M. Prasada Rao M.A., B.L., P.G.D.A.S., Ph.D. (SUSSEX, U.K) Prof. M. Koteswara Rao LLM., M.A.(Eco)., Ph.D.  Contents Chapter 1: Economic Growth And Development 1.0 Introduction 1 1.1 Economic growth 2 1.2 Economic Development 2 1.3 Differences Between Economic Growth and Development 3 1.4 Classification of the world countries 4 1.5 Indicators of Economic development 5 1.6 Determinants of Economic Development 6 1.7 Characteristic features of Developed Countries 8 1.8 Characteristic features of Developing countries with special reference to India 12 Chapter 2: Population and Human Resources Development 2.0 Introduction 21 2.1 Theory of Demographic Transition 22 2.2 World Population 26 2.3 Causes of rapid Growth of population in India 28 2.4 Occupational distribution of population of India 33 2.5 Meaning of Human Resources Development 34 2.6 Role of Education and Health in Economic Development 35 2.7 Human Development Index (HDI) 39 Chapter 3: National Income 3.0 Introduction 45 3.1 Trends in the growth of India’s National Income 46 3.2 Trends in distribution of national income by industry Origin 48 3.3 Share of Public Sector and Private Sector in Gross Domestic Product 51 3.4 Share of Organised and Un-organised Sector in Net Domestic Product 52 3.5 Income Inequalities 53  3.6 Causes of Income Inequalities 55 3.7 Measures to control income inequalities 57 3.8 Unemployment in India 59 3.9 Poverty 70 3.10 Micro Finace-Eradication of Poverty 76 Chapter 4: Agriculture Sector 4.0 Introduction 81 4.1 Importance of agriculture in India 82 4.2 Features of Indian agriculture 86 4.3 Agriculture Labour in India 87 4.4 Land utilization pattern in India 91 4.5 Cropping pattern in India 93 4.6 Organic Farming 96 4.7 Irrigation facilities in India 97 4.8 Productivity of agriculture 100 4.9 Land holdings in India 107 4.10 Land reforms in India 114 4.11 Green Revolution in India 122 4.12 Rural credit in India 127 4.13 Rural Indebtedness in India 136 4.14 Agricultural Marketing 140 Chapter 5: Industrial Sector 5.0 Introduction 151 5.1 Significance of the Indian Industrial Sector in Post –Reform Period 152 5.2 Industrial Policy Resolution 1948 155 5.3 Industrial Policy Resolution 1956 156 5.4 Industrial Policy Resolution 1991 158 5.5 National Manufacturing Policy 160  5.6 Disinvestment 162 5.7 National Investment Fund (NIF) 163 5.8 Foreign Direct Investment 164 5.9 Special Economic Zones (SEZs) 165 5.10 Causes of industrial backwardness in India 167 5.11 Small Scale Enterprises (MSMEs) 168 5.12 Industrial Estates 173 5.13 Industrial Finance in India 174 5.14 The Industrial Development under the Five Year Plans in India 178 Chapter 6: Tertiary Sector 6.0 Introduction 183 6.1 Importance of Services Sector 184 6.2 India’s Services Sector 186 6.3 State-Wise Comparison of Services 187 6.4 Infrastructure Development 188 6.5 Tourism 192 6.6 Banking and Insurance 193 6.7 Communication 196 6.8 Science and Technology 196 6.9 Software Industry in India 196 Chapter 7: Planning And Economic Reforms 7.1 Meaning of Planning 199 7.2 NITI Ayog 203 7.3 Five Year Plans in India 203 7.4 XII Five Year Plan 214 7.5 Regional Imbalances 217 7.6 Role of Trade in Economic Development 221 7.7 Economic Reforms in India 223  7.8 GATT 229 7.9 WTO 231 Chapter 8: Environment and Sustainable Economic Development 8.1 Environment 237 8.2 Economic Development 240 8.3 Environment and Economic Linkages. 242 8.4 Harmony between Environment & Economy 252 Chapter 9: Economy Of Andhra Pradesh 9.1 History of Andhra Pradesh 263 9.2 Characteristic features of A.P. Economy 265 9.3 Demographic features 270 9.4 Occupational distribution of labour 275 9.5 Health Sector 276 9.6 Education 278 9.7 Environment 280 9.8 Agricultural sector 282 9.9 Industrial sector 288 9.10 Service and Infrastructure sector 291 9.11 Information and Technology 295 9.12 Tourism 297 9.13 Andhra Pradesh and Welfare Programmes/ Schemes 299 Chapter 10: Economic Statistics 10.1 Measures of Dispersion 303 10.2 Definitions of Dispersion 303 10.3 Importance of Measuring Variation 304 10.4 Properties of a good measure of variation 304 10.5 Methods of Studying Variation 304 10.6 Measures of Dispersion for average 308 10.7 Lorenz Curve 311 10.8 Correlation 312 10.9 Index Numbers 317 10.10 Weighted Aggregation Method 318  CHAPTER 1 ECONOMIC GROWTH AND DEVELOPMENT 1.7 Characteristic features of Developed Countries 1.8 Characteristic features of Developing 1.0 Introduction countries with special reference to India 1.1 Economic growth Model Questions 1.2 Economic Development Glossary 1.3 Differences Between Economic Growth and References Development 1.4 Classification of the world countries 1.5 Indicators of Economic development 1.6 Determinants of Economic Development 1.0 Introduction The study of Economic development has been attracting the attention of the economists right from the days of Adam Smith. But prior to the Second World War the focus was more on the problems of the Western Countries which were Industrialized and advanced. Afterwards the attention turned to the developing countries. There have been several attempts to analyze the persistent problems of under development and to find solutions for speedy and sustained Economic development. In the process many development theories and models emerged. Economic development is now recognized as an improvement in the quality of human life, instead of a mere rise in growth rate and per capita income. The developed countries try to increase the growth rate and improve the standard of living in their economies. Whereas developing countries like India, strive to tackle the problems of poverty, unemployment, income inequalities etc., Economic development can improve the productivity and the standard of living. According to the world development report (2013), 18.5 per cent of the world population lives in the developed countries (high income countries) and remaining 81.5 per cent lives in the developing countries (low and middle income countries). In this context Cairan Cross described developing countries as “The Slums of the world Economy”. 1 chapter corrected.pdf 1 6/4/2015 2:51:11 PM  2 Economics Till 1960s the terms economic growth and economic development were used synonymously. But Economists like Hicks and Schumpeter made a distinction between Economic growth and Economic development. In their opinion the concept of economic growth is related to the problems of developed countries where as the concept of economic development deals with the problems of developing countries. The present chapter deals with the concepts of economic growth and economic development and elaborates the characteristic features of developed and developing countries. 1.1 Economic Growth The term economic growth refers to the increase in the real output of goods and services in an economy. It is measured as the per cent rate of increase in real GDP. Economic growth occurs when the growth rate of real output is more than the growth rate of population. So all the countries try to increase the output on one hand and reduce the growth rate of population on the other so that the availability of goods and services per capita will increase. The progress of any economy depends on the following factors 1. The quantity and quality of its labour force. 2. Availability of natural resources 3. The accumulation of capital. 4. The technological change and innovation. 1.2 Economic Development The meaning of the term economic development is broader than economic growth. Economic development refers to progressive changes in the socio economic structure of a country. It is quantitative as well as qualitative because it includes increase in real national income, real per capita income, economic welfare, human development, institutional and technological changes. Robert McNamara, former World Bank President had estimated that about 40 per cent of developing world’s population did not benefit at all from the economic growth and structural changes during 1950s and 1960s. Therefore economists in 1970s redefined the concept of economic development in terms of economic welfare or in terms of the satisfaction of the basic needs of the people. 1.2.1 Definitions of Economic development Following definitions give a clear idea of the concept of economic development. According to C.P. Kindle Berger “Economic growth means more output and economic development implies more output and changes in the technological and institutional arrangements by which it is produced”. 1 chapter corrected.pdf 2 6/4/2015 2:51:11 PM  Economic Growth and Development 3 According to Prof. G.M. Meier “Economic development may be defined as a process where by the real per capita income of the country increases over a long period of time”. According to Colin Clark “Economic development is simply an increase in economic welfare”. According to Michael P. Todaro “Economic development is a multidimensional process involving major changes in social structures, popular attitudes and national institutions as well as the acceleration of economic growth, the reduction of inequality and the eradication of absolute poverty”. According to United Nations Expert committee “Development concerns not only man’s material needs but also the improvement of the social conditions of his life. Development is therefore not only economic growth, but growth plus change- Social, cultural, institutional and economic”. The concept of economic development has the following aspects: 1. Economic development is a dynamic and long term process. 2. It is measured by the real per capita income. 3. It includes growth with structural changes. 4. It ensures equal distribution of income and wealth. 5. It improves the quality of the life of the people, increases employment opportunities and eradicates the poverty. 1.3 Differences between economic growth and development Table1.1: Distinction Between Economic Growth and Development Economic Growth Economic Development 1. Economic growth refers to an increase in a 1. Economic development refers to not only country’s real output of goods and services economic growth but also progressive 2. It is a single dimensional phenomenon changes in the socio economic structure of 3. It is narrow concept. a country. 4. It is mainly related to developed countries 2. It is a multidimensional phenomenon. Eg. USA, Canada etc. 3. It is a wider concept. 5. It does not require Governmental 4. It is generally related to developing intervention. countries. Eg: India, China etc. 6. It denotes quantitative changes in the 5. It is not possible to achieve economic economy. development without the intervention of 7. Economic growth does not indicate the the government. distribution of income and wealth in the 6. It denotes qualitative changes in the economy. economy. 8. Economic growth can be compared with 7. Economic development indicates the the physical growth of a person. distribution of income and wealth in the 9. It can be measured. economy. 8. Economic development is like overall improvement of a person. (Both physical as well as intellectual) 9. It cannot be measured. 1 chapter corrected.pdf 3 6/4/2015 2:51:12 PM  4 Economics 1.4 Classification of the world countries The World Bank has classified the countries of the world according to the GNI per capita. The World Bank publishes the World Development Report every year with a different theme. To understand the classification of the countries, we need to have an idea of the concepts like Gross National Income (GNI) and Purchasing Power Parity (PPP) 1.4.1 Gross National Income (GNI) Gross National Income (GNI) is the sum of value added by all producers who are residents of a nation, plus any product taxes (minus subsidies) not included in output, plus income received from abroad such as employee compensation and property income. In other words it is the income received by a country both domestically and from overseas. 1.4.2 Purchasing Power Parity (PPP) Purchasing Power Parity is used worldwide to compare the income levels in different countries. It aims to determine the adjustments needed to be made in exchange rates of two currencies to make them at par with the purchasing power of each other. The World Bank in its world development report (2014) classified the countries on the basis of Gross National Income (G.N.I) per capita. Countries are divided into 1. Low Income Countries With G.N.I per capita of $1,045 and below 2. Middle Income Countries With G.N.I per capita ranging between $1,046 and $12,746. The middle income countries are again divided into a. Lower middle income countries With G.N.I per capita ranging between $1,046 and $4,125 b. Upper middle income countries With G.N.I per capita ranging between $4,126 and $12,746. 3. High Income Countries With G.N.I per capita of $12,747 or more. 1 chapter corrected.pdf 4 6/4/2015 2:51:12 PM  Economic Growth and Development 5 1.5 Indicators of Economic Development The economic indicators are the statistics about an economic activity. The economic indicators help to analyse the performance of an economy. Following are some of the indicators of economic development. (a) Real National Income (b) Real Per capita Income (c) Standard of Living But it has been felt that the above indicators have certain deficiencies and do not reflect the overall change in the economy. The real national income fails to take into consideration the growth of the population in the country which can nullify the development in the economy. The per capita income does not clearly reflect the standard of living because sometimes per capita consumption may be falling even though the per capita income increases. More over it does not consider the nature of income distribution in the economy. So various other indicators like PQLI, MEW, NEW and HDI have been developed over a period of time. 1.5.1 Physical Quality of Life Index (PQLI) According to Morris D Morris PQLI measures the social progress of the community. It covers different indicators like health, education, drinking water, sanitation, nutrition etc. It is calculated on basis of 3 parameters of 1. Life expectancy at age one 2. Infant mortality rate (IMR) 3. Literacy rate 1.5.2 Measure of Economic Welfare (MEW) William Nordhaus and James Tobin introduced the concept of MEW in addition to GNP as an indicator of economic development. MEW takes national output as a starting point, but adjusts it to include the value of leisure time, amount of unpaid work in an economy and deducts the value of environmental damage caused by industrial production and consumption which change the welfare value of the GNP. 1.5.3 Net Economic Welfare (NEW) By making some changes to the MEW, Paul Samuelson introduced the concept of Net Economic Welfare. It is a measure that attempts to put a value on the cost of pollution, crime, congestion and other negative effects to find a better measure of true national income. 1 chapter corrected.pdf 5 6/4/2015 2:51:12 PM  6 Economics 1.5.4 Human Development Index (HDI) The focus of the economists turned from economic growth to human development. Human development is a process of enhancing the choices of the people and raising their standard of living. From this background a new concept called human development index was introduced by Mahabub- ul-Haq in the first Human Development Report of the United Nations Development Programme (UNDP) in 1990. In addition to the earlier concepts like GNI, PCI, MEW, NEW and PQLI, the HDI is being used as a better measure of economic development. It measures the country’s over all achievement in its social and economic dimensions. It is a composite index of three dimensions like life expectancy, knowledge and a decent standard of living. 1.6 Determinants of Economic Development Economic development is a complex process. It is influenced by a number of factors such as natural resources, capital, human resources, technology, social attitude of the people and political condition in the country. All the factors having strong bearing on economic development are divided into 3 categories as shown below. Fig 1 Determinants of Economic Development 1. Natural factors/ 2. Economic 3. Non-Economic Resources factors factors a. Capital formation a. Human resources b. Marketable Surplus b. Technical progress c. Foreign trade c. Political freedom d. Social organization e. Corruption f. Desire to develop Let us examine these factors in detail 1. Natural Resources The development of any country depends on the availability of natural resources. Economists like Jacob Viner, William.J.Baumol and W.A.Lewis gave more importance to the natural resources in a country’s development. The progress of agriculture depends on availability of fertile soil, 1 chapter corrected.pdf 6 6/4/2015 2:51:12 PM  Economic Growth and Development 7 favourable climate, and abundant supply of water resources. Rapid industrialisation can be achieved with the availability of coal, petroleum and minerals like iron ore, copper, bauxite, tin etc. However the natural resources can make effective contribution to the economic development only when they are properly utilized. 2. Economic Factors: a) Capital Formation: Capital formation determines the pace of the economic development in a country. The significant role of capital in raising the level of production has been widely accepted. Lack of capital in the developing countries is the main obstacle to achieve economic development. So they have to save more to increase the capital. Development of economic and social infrastructure depends on the availability of capital. b) Marketable Surplus: Marketable surplus refers to the excess of output in the agriculture sector after the basic needs of the rural people are met. The marketable surplus raises the incomes in the rural areas which in turn stimulates the demand for goods and services. So the development of other sectors in an economy depends on the marketable surplus, particularly in the low income countries. c) Foreign Trade: Foreign trade helps the countries to increase the production of goods and services through division of Labour and specialisation. It results in the efficient use of the resources. Moreover foreign trade provides the market for goods and services which will expand the output and employment in the economy. Foreign trade facilitates the developing countries to import capital, technology and managerial skills from the developed countries. So Trade has been described as an engine of growth as it speeds up the process of growth and development. 3. Non Economic Factors a) Human Resources: The people in the country are called as human resources. Human resources are an important determinant of economic development because other resources are utilized by the people in the Country. If the labour is efficient and skilled it will contribute more to the development. If a Country fails to use its man power properly, then it’s population will become a burden on the economy. b) Technical progress: Technology plays an important role in the economic development. The use of modern and sophisticated technology enhances the productivity and production in all sectors of the economy. It minimizes the cost of production. All countries need to invest more on Research and Development to improve the technology. c) Political Freedom: Majority of the developing countries were under the British rule in the past. The British exploited the resources of those countries and made them as a 1 chapter corrected.pdf 7 6/4/2015 2:51:12 PM  8 Economics market for their goods and services. After they got independence all these countries have initiated planning strategy to achieve faster economic development. Hence political freedom is necessary to take strong and independent decisions regarding the development process. d) Social Organisation: Development process requires the active participation of all sections of people in a country. But in many countries due to lopsided development, masses show apathy towards the development process as they do not get the fruits of development. Experiences suggest that the defective social organization helped the rich to garner the benefits of development. This has led to widespread disparities among the people. e) Corruption: The rampant corruption at various levels in the developing countries has become a negative factor in the process of development. If the corruption is not rooted out, the capitalists, traders and other powerful economic classes will continue to exploit the resources of the country for their personal interests. The factors like tax evasion, misappropriation of public funds and connivance of the officials are the major hindrances in the way of development. f) Desire to Develop: The development process in any Country depends on the peoples desire to develop. According to Richard T. Gill “economic development is not a mechanical process. It is a human enterprise. It’s outcome will depend on the skill, quality and attitudes of the people”. 1.7 Characteristic features of Developed countries Based on certain features like per capita income, standard of living, availability and utilization of resources, technological development etc.., the countries of the world are classified into developed countries and developing countries. The Developed countries are also referred to as high income countries, industrialised countries and advanced countries. USA, UK, France, Germany, Canada, Japan are some of the developed countries. According to the World Development Report 2013, the high income economies comprise about 18.50 per cent of the world population and accounted for 68.80 per cent of world GNI. In the same way the developing countries are also termed as low income countries, under developed countries, backward countries and third world countries. Eg. India, China, Pakistan etc. 1 chapter corrected.pdf 8 6/4/2015 2:51:12 PM  Economic Growth and Development 9 Let us discuss the features of the developed countries 1. High per capita Income. 2. Importance of non-agricultural sectors. 3. Abundance of capital and technology. 4. Low level of unemployment. 5. Better quality of life. 1. High per capita Income The income per head per year is called per capita income. The main feature of the developed countries is high per capita income. The Table 1.2 indicates the per capita GNI (at market prices of 2012) of some developed countries along with India and China. Table 1.2 (Fig. in US Dollars) Country Exchange Rate Basis Purchasing power parity Basis Switzerland 82,730 56,240 U.S.A 50,120 50,610 Japan 47,870 36,290 Germany 44,010 41,890 U.K 38,250 36,880 China 5,740 9,210 India 1,530 3,840 Source: World Development Indicators – 2013 It can be noticed from the Table 1.2 that the per capita GNI of developed countries is far higher than the per capita GNI of the developing countries like India and China. In the year 2012 the per capita G.N.I of U.S.A ($ 50,120) at official exchange rate was nearly 33 times and at Purchasing Power Parity ($50,610) was 13 times that of India ($1,530). So there are huge differences in the per capita incomes of developed and developing countries. 2. Importance of Non-Agricultural sectors The developed economies are non agriculture in nature. The Industry and service sectors are well developed in these economies. The contribution of these sectors to income and the employment generation is very high when compared to the agriculture sector. These sectors make use of advanced technology. So the productivity is higher than that of agriculture sector and it becomes the driving force behind the progress of these economies. 1 chapter corrected.pdf 9 6/4/2015 2:51:12 PM  10 Economics Table 1.3: Population engaged in Agriculture and Share of different sectors to GDP Active population Country Engaged in Contribution to GDP (Percentage) Agriculture (Percentage) Agriculture Industry Services Year 2011 2012 2012 2012 U.K 1.2 0.7 20.5 78.8 U.S.A 1.6 1.3 21.0 77.7 Japan 3.7 1.2 25.6 73.2 China 36.7 10.1 45.3 44.6 India 51.1 18.0 31.9 50.1 Source: World Bank, world development Indicators 2014 It can be observed from the table 1.3 that the developed countries are Industry and Service sector oriented whereas the developing countries still depend on the agriculture sector. In the USA the proportion of people engaged in agriculture sector is just 1.6 per cent and its contribution to GDP is 1.3 per cent. Whereas the corresponding figures for a developing country like India are 51.1 per cent and 18.0 per cent respectively. 3. Abundance of Capital and Technology The most important feature of developed countries is high rate of capital formation and wide spread use of modern and sophisticated technology. As the developed countries are high income countries, their capacity to save is also very high. The banking system and financial institutions efficiently mobilize the savings. Table 1.4 shows the gross capital formation as a percentage of GDP in developed countries. Table 1.4: Gross capital formation as a percentage of GDP Country 1990 2012 Japan 33 19.9* Germany 24 17.2 U.K 20 14.5 U.S.A 18 14.9* China 35 48.4* India 24 35.6 Source: World Bank, World Development Indicators 2013 (*2011) 1 chapter corrected.pdf 10 6/4/2015 2:51:12 PM  Economic Growth and Development 11 Table 1.4 shows that the developed countries are capital abundant. The availability of capital leads to technical progress in these economies. In the above Table there is a decline in the rate of capital formation due to the economic slowdown in these economies which is a temporary phenomenon. The above Table reveals that rate of gross capital formation in India and China is higher than that of developed countries. 4. Low level of unemployment: There is a clear difference in the nature and magnitude of unemployment between developed and developing countries. The unemployment in the developed countries is caused by the shortage of effective demand. The unemployment in these economies is cyclical and frictional. Whereas developing countries like India experience open and disguised unemployment, which are caused by deficiency of capital. The rate of unemployment is marginal and the skills and mobility of labour are higher in the developed countries. 5. Better Quality of life A better quality of life is ensured in the developed countries due to the effective social security system, better compliance of pollution standards, availability of safe drinking water, well organized health care system and sanitation. The expenditure on education, research, training, skill formation and health is more in these countries. For Eg. The public expenditure on education and research in USA is more than 6 per cent of its GDP, whereas the developing countries spend around 3 per cent of their GDP. India spent 3.3 per cent of its GDP on education in 2004-05 and it increased to 4 per cent in 2011-12. The Table 1.5 shows life expectancy, adult literacy rates and HDI ranks of different countries for the year 2013. Table 1.5 Country Life Expectancy Adult literacy H.D.I Rank (years) (percentage) Year 2013 2013 2013 Canada 81.1 99.0 8 U.S.A 78.7 99.0 5 Japan 83.6 99.0 17 France 81.7 99.0 20 U.K 80.3 99.0 14 China 73.7 95.1 91 India 65.8 74.04 135 Source: UNDP, Human Development Report 2014 1 chapter corrected.pdf 11 6/4/2015 2:51:12 PM  12 Economics It is clear from the table 1.5 that the performance of the developed countries in terms of life expectancy and adult literacy is notable when compared to the developing countries. In the case of human development, the developed countries like Narway, Australia and Switzerland ranked First, Second and Third respectively in 2013 and India stands at 135 out of 187 countries. 1.8 Characteristic Features of Developing Countries with special reference to India 1.8.1 Definitions According to United Nations, “the countries which have real per capita income less than a quarter of the per capita income of the United States are developing economies”. According to the Planning Commission of India. “An under developed economy is characterized by the existence, in greater or lesser degree, of unutilized or underutilised man power on the one hand and of unexploited natural resources on the other”. On the basis of per capita income, the developing countries are separated from the developed countries. The developing countries have different characteristic features when compared to the developed countries. 1. Low per capita Income 2. Scarcity of Capital 3. Demographic Characteristics 4. Unemployment 5. Predominance of Agriculture 6. High Incidence of poverty 7. Income Inequalities 8. Low Quality of Life 9. Technological Backwardness 10. High Density of population 11. Dual Economy 12. Price Instability 1. Low per capita Income Low per capita income is the main feature of the developing countries. Table 1.6 represents the per capita GNI of different groups of countries. 1 chapter corrected.pdf 12 6/4/2015 2:51:12 PM  Economic Growth and Development 13 Table 1.6: Per capita G.N.I of various Groups of countries (2011) (Fig in US Dollars) Country/Group Per capita G.N.I Exchange P.P.P Basis Rate Basis Low Income 583 1,387 Lower Middle Income 1,877 3,912 Upper Middle Income 6,987 10,740 High Income 37,594 37,760 China 5,740 9,210 India 1,530 3,840 Source: World Bank 2013, World Development Indicators (2013) It is very clear from the Table 1.6 that there are wide differences among different groups of countries in terms of per capita GNI. The low and middle income countries which are known as developing countries, lag far behind the developed countries when it comes to per capita income. The per capita income of India and China which are considered as fast growing economies is also very less compared to the per capita income of developed countries. The per capita GNI (Exchange rate basis) of India has increased from $ 1,070 (2008) to $1,530 (2011), and on Purchasing Power Parity basis it increased from the $ 2,960 to $3,840 in the same period but it still remains in the category of low middle income countries. 2. Scarcity of Capital The insufficient amount of capital is characteristic feature of the developing countries. They are often called as “capital poor” economies. One indication of capital deficiency is the low amount of capital per head of population. The rate of capital formation which is an important determinant of economic development, is very low in these economies. It ranges between 15 and 20 per cent of their GDP. The rate of savings which stimulates the capital is very low because of low per capita incomes. Moreover the incentives for investment and the institutional arrangements are not effective to raise the levels of saving and investment. But In recent times the rates of saving and capital formation are high in case of India and China when compared to the developed countries. This is shown in the Table 1.7 1 chapter corrected.pdf 13 6/4/2015 2:51:13 PM  14 Economics Table 1.7: Gross Capital Formation and Gross Domestic savings as a per cent of G.D.P Country Gross capital Formation Gross Domestic saving 1990 2012 1990 2012 U.S.A 18 14.9 * 16 11.1 * U.K 20 14.5 18 12.1 Japan 33 19.9 * 34 19.0 * Germany 24 17.2 24 22.9 China 35 48.4 38 52.5 * India 24 35.6 23 27.9 Source: World Bank, World Development Indicators 2013, *2011 As per the table 1.7 in India the gross domestic saving rate has 23 per cent of GDP in 1990 and it increased to 27.9 per cent in 2012. In the same period the gross capital formation rate was 24 per cent of GDP and it increased to 35.6 per cent. It reflects the pace of development in the Indian economy. 3. Demographic Characteristics The developing countries are facing the problem of heavy population. Many of these countries have recorded the growth rate of population around 2 per cent. They are successful in reducing the mortality rates by improving the medical facilities but failed to control the birth rates in the same manner. This has led to population explosion. The huge population exerted pressure on the natural resources which resulted in poverty and unemployment. So the standard of living remained at low level. India is also facing the problem of heavy population. Its population was 1210 million in 2011 and it increased to 1278 million in 2015 which is 17.5 per cent of world population. When we observe the composition of population in india, it can be understood that there is higher dependency on the productive population which is not conducive for the economic development. 4. Unemployment Wide spread unemployment is one of the serious problems faced by the developing countries. The unemployment in these countries is open and it is several times higher than that of developed countries. The rural urban migration is adding to the problem of open unemployment in the urban areas. As the slow growing industrial sector fails to absorb the increasing labour force the pressure on the agriculture sector increases. This results in the disguised unemployment in the agriculture sector. 1 chapter corrected.pdf 14 6/4/2015 2:51:13 PM  Economic Growth and Development 15 In the Indian economy, the unemployment is because of scarcity of capital. It is also facing the problem of open and disguised unemployment. The planning commission estimated that there was a backlog of 37 million unemployed at the beginning of eleventh plan and it was expected that 45 million would add up to the existing unemployed force and the total unemployed would be 82 million by the end of the plan. 5. Predominance of Agriculture According to Harvey Leibenstein, the developing economies are essentially agrarian in their character. About 30 to 70 per cent of the population depends on agriculture in these economies. J.K.Galbraith stated that “a purely agricultural country is likely to be unprogressive even in its agriculture”. The agriculture sector in these economies is labour intensive and lags behind in making use of available technology. So the productivity of the agriculture sector is lower in these economies. Moreover the agriculture land is fragmented and subdivided due to heavy population pressure, which leads to small size of land holdings. The incomes of the people in agriculture are low because of little marketable surplus. Its contribution to GDP ranges between 20 and 30 percent. According to Indian Economic Survey - 2013-14, 54.6 per cent of the working population is engaged in the agriculture sector and it contributes 13.9 per cent of the GDP. The agriculture sector in the Indian economy is primitive and uses obsolete methods of production. Recently the agriculture activity has become uneconomical and majority of the farmers are debt ridden. 6. High Incidence of Poverty The most important feature of developing countries is the prevalence of mass poverty which means a certain percentage of population is not able to fulfill the basic needs of life. The people in these countries suffer from low levels of income, malnutrition, ill health and illiteracy. At relatively lower levels of per capita income, large income inequalities have resulted in widespread poverty in the developing economies. India is also facing the problem of poverty. As per the recommendation of Tendulkar committee, the planning commission has updated the poverty line as monthly per capita consumption expenditure (MPCE) of Rs. 673 for rural areas and Rs. 860 for urban areas in 2009-10. Based on this the percentage of population living below the poverty line was 29.8 per cent in 2009-10. 7. Income Inequalities Another distinguishing characteristic of the developing economies is the disparities in income and wealth enjoyed by the rich and poor sections of the society. Compared to the developed countries, the income inequalities are larger in the developing countries. The situation in India is no different. 1 chapter corrected.pdf 15 6/4/2015 2:51:13 PM  16 Economics Various rounds of surveys conducted by the NSSO corroborates the fact that the inequalities have increased over the years in the Indian economy. According to 68th round of NSSO for the year 2011-12, the monthly per capita consumption expenditure of the poorest 10 percent of the rural population rose by 11.5 percent in 2011-12 compared with the 66th round for the year 2009- 10. In the same period, the expenditure of the richest 10 percent of population increased by 38 per cent. In urban areas, the growth was 17.2 per cent and 30.2 per cent respectively over the same period. According to a report by the Organization for Economic Cooperation and Development (OECD) in December 2011, the inequalities in earnings in India have doubled over the past two decades. India’s richest 100 had a combined net worth which was almost 17 percent of its GDP of Rs.71,57,412 Crores in 2010-11. 8. Low Quality of Life The quality of life in the developing countries is very low in comparison with the developed countries. Three basic indices of real income, health and educational attainments are used to measure the quality of life of the people. The people in the developing countries suffer from malnutrition, high levels of pollution, lack of sanitation and safe drinking water. Improving the population’s health, education and technical training must be given top priority. The life expectancy at birth in developing countries is below 65 years whereas it is more than 75 years in the developed countries. In the case of infant mortality rate, it is 61 per thousand live births in the developing countries and 6 in the developed countries. We have already observed that the GNP per capita of developing countries is much lower than that of developed countries. 9. Technological Backwardness In the developing countries the production techniques are backward due to lack of focus on the research and development. These countries use labour intensive technique because adoption of modern technology requires huge capital which is deficient. Moreover the workers unions oppose the introduction of new technology as there is no social security against unemployment. But it limits their competitive strength in the international market. Indian economy is also technically backward. Modern and traditional techniques are seen side by side in different sectors of the economy. It has affected the productivity in the economy which is very low compared with the developed economies. 10. High Density of Population The number of persons living per sq.km is called as density of population. It is very high in the developing countries due to the large size of the population. The density of population of the world was 50 per sq.km in 2011. High density of population puts pressure on the available natural resources 1 chapter corrected.pdf 16 6/4/2015 2:51:13 PM  Economic Growth and Development 17 in the given area of land. The density of population in India was 382 per sq.km in 2011 whereas it was 145 in China, 33 in USA, 4 in Canada and 3 in Australia. 11. Dual Economy Developing economies are characterised by dualism. It refers to that condition of an economy where two sectors (Advanced and backward or modern and traditional sectors) exist side by side. There are different types of dualism. They are (a) Technological Dualism (b) Social Dualism (c) Financial dualismAccording to Benjamin Higgins, in the developing countries technically advanced and primitive sectors exist side by side which is called as technological dualism. In the opinion of Boeke the society in the developing countries is split into two parts upper and lower, which is known as social dualism. According to Myint, large unorganised financial market and a small organised financial market exist side by side, in the developing countries. This is known as financial dualism. The modern sector makes use of the advanced technology which increases the productivity and production. On the other hand the traditional sector follows the obsolete methods of production. This causes income inequalities in the society. Therefore technological dualism leads to social dualism. Indian Economy is also characterised by the dualism, the product and factor markets in India are divided with different degrees of imperfection. So the product prices and factor prices are not same for all groups of buyers and sellers. Technological dualism is prevalent in the Indian economy. The industrial sector uses the modern technology and the agriculture sector still follows old methods of production. 12. Price Instability The price instability is also a basic feature of the developing countries. In almost all developing countries like India there is continuous price instability because of shortage of essential commodities and gap between consumption and production. Rising inflation poses a problem to maintain the standard of living of the common people as their incomes hardly increase regularly. From the above discussion it is clear that the developing countries have different characteristic features which separate them from the developed countries. Besides the above mentioned factors, the developing countries are also characterised by inadequacy and insufficiency of technical education which is an important factor of economic development. The means of transport and communication are not well developed. Financial and banking system which provides capital for industry and trade is inadequate. Apart from the above, the unfavourable institutional set up and weak political leadership are responsible for their backwardness. Indian economy is typical example of a developing economy. After Independence, with the implementation of planning strategy the economy has got a clear direction and it is on the right path 1 chapter corrected.pdf 17 6/4/2015 2:51:13 PM  18 Economics of development. The new economic reforms which were introduced in early 1990s have stimulated the economy to record faster growth rate which is some times higher than that of the developed countries. India is emerging as one of the largest markets in the world. According to World Bank data in 2011, in purchasing power parity terms, India was the third largest economy in 2011 behind America and China and it is estimated that it will occupy the second place by 2050 (only behind China). 1 chapter corrected.pdf 18 6/4/2015 2:51:13 PM  Economic Growth and Development 19 Model Questions I. Write an essay on the following questions 1. Explain the characteristic features of developed countries. 2. India is a developing country –discuss. 3. Explain the features of developing countries with special reference to India. II Write the answers briefly for the following questions. 1. Differentiate between economic growth and development. 2. Explain the determinants of economic development ? III Write the answers in one or two sentences. 1. Economic growth 2. Economic development 3. Per capita income 4. Planning commission’s definition of a developing country. 5. Human capital 6. World bank’s classification of world countries 7. Dual Economy 1 chapter corrected.pdf 19 6/4/2015 2:51:13 PM  20 Economics Glossary 1. Economic Growth : Economic growth refers to an increase in a country’s real output of goods and services 2. Economic Development : Economic development refers to not only economic growth but also progressive changes in the socio economic structure of a country. 3. Per capita Income : The income per head per year is called per capita income. It is obtained by dividing the national income with population of the country. National Income Per capita Income: = Population 4. Human Capital : Expenditure on education, training, skill formation, research and improvement in health is called human capital 5. Dual Economy : An economy where both technically advanced and technically primitive sectors exist side by side is called as dual economy. References 1. Ruddar Dutt and K.P.M. Sundaram, Indian Economy 2. Misra & Puri, Problems of Indian Economy 3. R.C. Agarwal, Economics of Development and Planning (Theory and practice) 4. K.K. Dewett, Modern Economic theory. 5. Uma Kapila, Indian economy - Performance and Policies. 6. Govt. of India, Economic Survey – 2014-15. 7. Telugu Academy, Bharata Aarthika Vyavasta Samasyalu 1 chapter corrected.pdf 20 6/4/2015 2:51:13 PM  CHAPTER 2 POPULATION AND HUMANRESOURCESDEVELOPMENT 2.4 Occupational distribution of population of India 2.0 Introduction 2.5 Meaning of Human Resources Development 2.1 Theory of Demographic Transition 2.6 Role of Education and Health in Economic 2.2 World Population Development 2.3 Causes of rapid Growth of population in 2.7 Human Development Index (HDI) India Model Questions Glossary 2.0 Introduction The study of population and human resource development is very important in the process of economic development. It is particularly important because human beings are not only instrument of production but also end users. India and many other third world countries are now passing through the phase of population explosion. 2.0.1 Population Population of India means the total number of people living in India. Population is very essential for the growth of country. 2.0.2 Advantages of Population 1. Population provides work force to produce goods and services. 2. Population provides market for the products that are produced. 3. Population promotes innovative ideas. 4. Population promote division of labour and specialisation 1 chapter corrected.pdf 21 6/4/2015 2:51:13 PM  22 Economics 2.0.3 Disadvantages of Population 1. Population put pressure on means of subsistence. 2. Population leads to unemployment if there are no adequate jobs. 3. Population put pressure on social overheads like hospitals, schools, roads etc. 4. Population may result in increased consumption and reduced savings and capital formation. 5. Population may increase dependency. 2.1 The Theory of Demographic Transition This is the latest edition to the literature on population theories. According to the theory of demographic transition a country passes through three stages of population growth. 1. First Stage According to this stage, the country happens to be a backward and under developed country. It is primarily an agrarian economy with little or no industry. Trade in such an economy is also under developed. This type of economy is characterized by the existence of high birth and death rates. The birth rate is high on account of the peculiar social customs prevalent in society. Social beliefs in such a society favor the existence of larger families. Larger the number of children in a family, larger will be the earnings of that family, because the children instead of being liabilities will be positive assets for the family. Along with the high birth rate, the death rate is also high in such an economy, on account of poor diets, primitive sanitation and almost complete absence of medical facilities. The rate of infant mortality as well as maternal mortality are exceedingly in such an economy. India up to 1921 could be placed in the first stage of population growth. 2. Second Stage According to this stage, the country becomes a little more developed, economically speaking. As a result of this economic development, there is an appreciable reduction in the death rate. The death rate declines because of the greater and more regular availability of food supplies, greater control over diseases and epidemics, spread of health consciousness and availability of life saving drugs and medicines. Since the death rate declines rapidly while the birth rate continues to be high, there is a very rapid increase in the population of the country. This stage is, Therefore, the stage of population explosion. Whatever is gained as a result of economic development is nullified by the rapid expansion of population. The living standards of the people, Therefore, remain more or less static. Now India is passing through second stage of demographic transition. 3. Third Stage According to this stage, The country moves to a still higher level of development. There is a general spread of education through the length and breadth of the country. Consequently, People become more enlightened and begin to understand the implications of smaller families. The advantages of smaller families are increasingly realized by the people. Children now become more of liability 1 chapter corrected.pdf 22 6/4/2015 2:51:13 PM  Population and Human Resource Development 23 and less of an asset. The spread of family education for the results in a change in the attitude of women to unwanted maternity. These changes appear first in the urban areas and higher income groups, but later on spread to smaller towns and lower income groups, and finally to the rural areas. The net result of all these a drastic decline in the birth rate of the country. The death rate having all ready fallen in the second stage, there is now a new equilibrium established between the low birth rate and low death rate. Now all the developed countries are in the stage of demographic transition. 2.1.1 Demographic Trends in India 1. Size of Population The India’s population is growing since 1901 and India’s present population is above 121 crores in 2011. Table 1: Size of Population in India 1901-2011 Year Population (in crores) 1901 23.83 1951 36.11 1961 43.92 1981 68.33 2001 102.87 2011 121.02 Source: Misra and Puri - Indian Economy Himalaya Publication House Mumbai - 2014. India’s population rank is second in the world after China. India has only about 2.4 per cent of the world’s area and 1.2 per cent of the world’s income but, India accommodates about 17.5 per cent of the world’s population. Every Sixth person in the world is an Indian.The annual addition of India’s population is equal to total population of Australia. The combined population of U.P and Maharashtra more than the total population of USA. Which is third largest populous country in the world. 2. Rate of Growth Following Table shows the rate of growth of population in India. It shows growth rate of population per decade and per annum. 1 chapter corrected.pdf 23 6/4/2015 2:51:13 PM  24 Economics Table 2: Growth of population in India Between 1951 and 2011 Census Decadal Growth Average Annual Growth Year (Per cent) Rate (per cent) 1951 13.31 1.25 1961 21.64 1.96 1971 24.80 2.20 1981 24.66 2.22 1991 23.87 2.16 2001 21.54 1.97 2011 17.64 1.64 Source: Misra and Puri - Indian Economy Himalaya Publication House Mumbai - 2014. Since 1921, population has started increasing. In fact, year 1921 is known as ‘Year of Great Divide’ for India. From the decade 1971-81 to till date, the growth rate has come down to 1.64percent in 2001-2011. 3. Birth rate and Death rate Birth rate refers to number of birth per thousand of population. Similarly, death rate refers to number of deaths per thousand of population. Table 3: Birth and Death Rate in India during 1951-2012 Year Birth Rate Death Rate 1951 39.9 27.4 1981 33.9 12.5 2001 25.4 8.4 2011 21.8 7.1 2012 21.6 7.0 Source: Misra and Puri - Indian Economy Himalaya Publication House Mumbai - 2014. Over the years, birth rate in Indian has fallen and death rate has also fallen. Among all States, Kerala has lowest birth rate of and Bihar has the highest birth rate. West Bengal and Maharashtra have the lowest death rate. Orissa has highest death rate 4. Density of Population Density of population refers to the number of persons per square kilometer. It has increased since 1951; in 2001 it was 324 persons per square kilometer, in 2011 it was 382 persons per square kilometer. 1 chapter corrected.pdf 24 6/4/2015 2:51:14 PM  Population and Human Resource Development 25 Table 4: Density of population in India between 1951 and 2011 Year Density of Population 1951 117 1981 216 2001 325 2011 382 Source: Misra and Puri - Indian Economy Himalaya Publication House Mumbai - 2014. Density of population is not same for all the States. Kerala, West Bengal (880 persons), Bihar (1102 persons), Arunachal Pradesh has the lowest density with 17 persons. Population Density of Delhi is 11297 and Chandigarh with 9252. 5. Sex Ratio Sex ratio refers to the number of females per 1000 males. The following Table gives sex-ratio since independence. Female sex ratio has been declined. It is a matter of concern. Table 5: Sex Ratio during 1951-2011 Census Year Sex Ratio (females per 1000 males) 1951 946 1981 934 2001 933 2011 940 Source: Misra and Puri - Indian Economy Himalaya Publication House Mumbai - 2014. Sex ratio is most favorable to women in state of Kerala only. In Kerala ratio of females to males is 1084 as per 2011. Haryana has the lowest female sex ratio of 879 (2011) among states. The alarming rate in some developed states have the lowest sex ratio in the country. 6. Life Expectancy at Birth Life expectancy refers to the mean expectation of life at birth. The following Table shows life expectancy at birth both for males and females. Table 6: Life expectancy at Birth (in years) Period Life Expectancy at Birth 1951 32.1 1981 56 1991 59 2001 63 2011 66 Source: World Bank Report 2011 1 chapter corrected.pdf 25 6/4/2015 2:51:14 PM  26 Economics Life expectancy has improved over the years. Life expectancy at birth is highest in Kerala i.e. 71.4 and Madhya Pradesh is the lowest with 58 in 2006. Overall average was 66 years in 2011. This is the most important indicator in Human Development Index (HDI) when compared to most of the developed countries; life expectancy in our country is low. It is expected that female life expectancy is higher than males because biologically females are stronger than males. 7. Literacy Ratio Literacy ratio refers to number of literates as a percentage of total population. Literacy ratio among males and females is shown below. Table 7: Literacy Rate from 1951-2011 Census Year Literate persons Male Female 1951 18.33 27.16 8.86 1961 28.30 40.40 15.35 1971 34.45 45.96 21.97 1981 43.57 56.38 29.76 1991 52.21 64.13 39.29 2001 64.83 75.26 63.67 2011 74.04 82.14 65.46 Source: Misra and Puri - Indian Economy Himalaya Publication House Mumbai - 2014. The highest literacy ratio is 94 per cent in Kerala, about 88.7 per cent in Goa, 82.34 per cent in Maharashtra, 82.80 per cent Himachal Pradesh, 80.09 per cent in Tamil Nadu, 67.68 per cent in UP, 66.11 per cent in Rajasthan and 61.80 per cent in Bihar which is the lowest literacy ratio. 2.2 World Population It took millions of years for the world population to reach 100 crores mark by around 1830. The world population doubled i.e 200 crores in another 100 years by the year 1930. Then it took just 35 years to add another 100 crores to touch 300 crores around the year 1960. By 1974, i.e in