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Subjects /Indian Economy / Economic Development

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02 Mar 2021

Under economic development, Economic well being of a nation, region, local community or an individual is measured with an objective of improving the standard/quality of life.

Difference between Growth and Development

Difference between Growth and Development.



  1. Development is a broader or holistic concept.

  2. Development include Quantitative and Qualitative changes i.e., Social, Cultural and Political etc.

  3. Development is always Positive.

  4. Development is a Subjective Concept.

  5. Absolute measurement of development is not possible.

  1. Growth is rather narrow concept.

  2. Growth refers only Qualitative changes. i.e., Increase in GDP, GNP, PCI etc.

  3. Growth could be both Positive and Negative.

  4. Growth is an Objective concept.

  5. Growth could be measured exactly.

It means that where there is development there must be growth because without growth, Development is impossible, but it does not mean that where there is growth there is development.

Measurement of Development

Development is measured by UNDP (United Nation Development Program), it is one of the specific agencies of the UN.

It was started in 1990 and every year it presents Human Development Report, which is based upon Human Development Index (HDI), this index was prepared by two scholars:

  • Professor Amartya Sen
  • Professor Mahboob-ul-Haq

HDI is prepared taken into account 3 basic parameters or indices

  • Life expectancy or Longevity of Life
  • Educational Achievements
  • A decent standard of living

Expressed in terms of US dollar on the basis of Per Capita GNI (Gross National Income). According to Purchasing Power Parity (PPP)

PPP – the capacity of 2 different currencies to purchase same basket of commodities.

Following indices are also adopted by UNDP to reflect the true picture of development:

GDI (Gender-related Development Index)

  • It was adopted in 1995
  • It is prepared on the basis of parameters reflected under HDI, but separately for both Men and Women.
  • If the value of GDI is less than the value of HDI, it means there is greater gender inequality.
  • It means greater the difference between HDI and GDI, the greater is the Gender Inequality.

IHDI (Inequality – Adjusted Human Development Index)

  • It measures the degree of inequalities on the basis of parameters reflected under HDI among different segments of population in a particular country.
  • If the value of IHDI is less than the value of HDI, it reflects the size and degree of Inequality.
  • If IHDI = HDI , there is no equality.

GII (Gender Inequality Index)

  • It measures the gender inequality on the basis of 3 basic parameters:
  • Reproductive health
  • Empowerment
  • Economic Participation

MPI (Multi-Dimensional Poverty Index)

  • It is measured on the basis of deprivation of basic necessities of life, relating to health, education and income.
  • As per the UNDP report 2014, on the basis of MPI above 55% population in India is below the Poverty line.

Did you know - What is Green GDP?

Green GDP = GDP – (Environmental Depletion/Losses)

It is significant in two ways:

  • Future purpose
  • Finding solution for sustainable Human Development.

Basic Hurdles in Development

The basic hurdles in the Development of Nations

  • Vicious Circles of Poverty
    • Given by Ragner Nurkse
    • Under development – Low Real Income – Low Savings and Low Effective demands – Low investment – Low capital formation – Low productivity.
  • Dual Economy
    • It refers the existence of 2 contradictory economic conditions in a particular economy and theses are;
    • Fully developed Marketed Economy
    • Subsistence Economy (for survival)Unfortunately, this paradox, could be found in Indian Economy, even today.
  • Demonstration Effect
  • Spread Effect and Backwash Effect
  • Conspicuous Consumption
    • It refers increasing use of luxurious commodities which are generally termed as white goods.
  • Lack of Proper Marketing Facility Specially in Primary Sector
  • Unemployment

Did You Know

  • The economy of India has nearly increased six folds in less than 20 years.
  • Corruption and violence have cost the nation more than $Trillion.