Economy

Sample Copy
Economic, Growth and
Inclusive Growth
 Unacademy brings to you Notes 2.0
The Most Comprehensive Study Material
for UPSC CSE (GS)

What’s new about Notes 2.0 and what makes it one of the best study materials?
y Curated under the guidance of top Educators and Bureaucrats
y Comprehensive coverage of each and every topic
y Integration of UPSC Mains PYQs
y Timelines and Mindmaps
y Contemporary issues covered

Get 20 Books of Comprehensive Notes on 1 year and above Plus and Iconic subscription

Subscribe Now
Scan the QR Code

T&C Apply*
Deliveries will start from:
English: August 15, 2022 onwards
Why Unacademy

Congratulations
UPSC CSE Toppers
3 Economic Growth and Development

Is a person’s well-being solely dependent on his • Economic development is quantitative as

economic well-being? Are people of countries well as qualitative progress in an economy.
with higher Economic growth happier? What • Once the concept of the ‘welfare state’ got
is the difference between development and established, development became a matter
economic growth? These questions are very of high concern for the governments of the
asked. But in the 1960s, economists made a world, policymakers and economists alike.
distinction between Economic growth and Inclusive Growth
Economic development. Inclusive growth is economic growth that is
Economic Growth distributed fairly across society, and creates
• An increase in an economic variable (like opportunities for all.
GDP, GNI, NI etc.) over a period of time is Component of Inclusive Growth
known as economic growth. • Skill development: To have growth with
• The concept of Economic growth is the full potential development of skills is
applicable both for an individual (increase in a must. Some of the government schemes
income), and for a Nation (with an increase for skill development are Pradhan Mantri
in goods and services produced by it over a Kaushal Vikas Yojana (PMKVY), Pradhan
period of time). Mantri Kaushal Kendras (PMKK) etc.
• Economic Growth focuses on the • Financial inclusion: Financial inclusion
quantitative aspects of the growth of the is the process of including everybody or
economy like GDP and NDP. giving financial services to everybody at an
• Though growth is a value-neutral term, i.e., it economical cost. Some of the government
might be positive or negative for an economy schemes for financial inclusion are Pradhan
for a specific period, we generally use it in Mantri Jan Dhan Yojana (PMJDY), Pradhan
the positive sense. If economists say an Mantri Mudra Yojana etc.
economy is growing, it means the economy • Technical development: Technical
is having a positive growth otherwise, they development is very important for inclusive
use the term ‘negative growth’. growth as it will help to tackle the problems
• Economic growth is a widely used term in areas like agriculture, manufacturing,
in economics, which is useful in not only health, governance, and education. Some
national level economic analyses and of the government schemes for technical
development are the Start-up India
policymaking, but also highly useful in the
initiative, the Make in India initiative etc.
study of comparative economics.
• Economic growth: India is currently one
Economic Development
of the fastest-growing economies in the
• The term economic development is a very
world, but it has slowed due to cyclic and
comprehensive term as it includes various
structural problems. India has targeted to
aspects of human development. Economic
become a $5 trillion economy by 2024-2025.
growth is just related to the GDP growth
• Social development: It is also important
of the country, but economic development
to improve the marginalised section of the
is improving the living conditions of people
society in the country to have inclusive
of the country by providing good education,
growth. Some of the government schemes
housing, health, social and other basic
for it are the Credit, Enhancement
infrastructure along with good purchasing
Guarantee Scheme for the Scheduled
capacity for the people.

Economic Growth and Development 25

 Castes, National Scheduled Castes Finance • There is backwardness in the agriculture
and Development Corporation (NSFDC) etc. techniques.
Problems for Inclusive Growth • Illiteracy is still high in India.
• There is a high population in India, which is • Regional disparities in the country are major
in poverty. hindrances.
• There is high unemployment in India.

Previous Years’ Question (PYQ) (2014, Mains)

Q. Capitalism has guided the world economy to unprecedented prosperity. However, it often
encourages short sightedness and contributes to wide disparities between the rich and the
poor. In this light, would it be correct to believe and adopt capitalism to bring inclusive
growth to India? Discuss. (200 Words, 12.5 Marks)
Decoding the Question:
• In the intro, you need to define the concept of capitalism the body:
o  iscuss how capitalism led to short-sightedness and increased wide disparities
D
among the rich and poor.
o  he second part discusses the feasibility of capitalism in bringing inclusive growth
T
in India
• Try to conclude the answer by writing how inclusive growth can be achieved.
Answer:
Capitalism is an economic system in which private individuals or businesses own capital
goods. The production of goods and services is based on supply and demand in the general
market—known as a market economy. A capitalistic market economy is often criticised for
promoting short-sightedness and increasing disparities between rich and poor. It is visible as:
• Impact on Small Enterprises: As capitalism in globalisation promotes greater integration
of world economies. The bigger size of industries, and use of technologies brought very
tough times for small enterprises as they are not able to compete with big corporations.
• Impact on employment: Capitalism can create job opportunities, but the Indian experience
has seen low job creation in the formal, organised sector.
• Inequality: Increased inequality is another distortion created by capitalism. The poor
got fewer resources to spend, but on the other hand, the rich have been busy doubling
their resources. This inequality is underlined by various reports like the Oxfam report on
inequality, even sustainable development goals also want to reduce inequality.
•  rony capitalism: Crony capitalism is an indicator of the state of the economy where
C
success in business is determined by the mutual relationship between businessmen,
and government officials. This mutual relationship is hampering almost every system or
government machinery by increased corruption, fewer regulations, influencing governments
decisions etc.
•  aves and have nots: Haves and have nots is a concept where both rich and poor class
H
exists, but rich the rich class has access to all the resources and benefits, which they use
for their progress and success. On the other hand, poor people become less as they have a
very limited capacity to make progress.

26 Economic Growth and Development

 •  nequal distribution of power and materialistic things: Unequal distribution of materialistic
U
things like pleasure time, tourism, having cars and own house etc. are some of the criticisms
of capitalism. But on the other hand, capitalism leads to the concentration of power among
a few people, and policies at the government level are created for their own benefits.
With the adoption of the New Economic Policy in 1991, India officially started showing reforms
toward evolving into a capitalist market economy. Afterwards, India was able to achieve a
higher economic growth rate, but its growth has not percolated down to the poorest section
of the society. Hence, there is a debate in India’s context about whether capitalism can be
used for bringing inclusive growth in India or not.
• Capitalism’s very nature is profit-making, and this is the only motive behind its every step.
Thus, bringing inclusive growth by the use of capitalism is very challenging as there will be
a very minimal role of the state. But some proponents say that,
• Capitalism promotes more wealth than any other economic system in the world, thus they
claim capitalism creates more prosperity.
• Even proponents of capitalism claim that benefits obtained are meant for ordinary people
or general public welfare.
• Capitalism also believes in the downward filtration theory, which means even though
some people are concentrating more wealth, they are using it to create more economic
opportunities for the general public by generating employment.
Thus, if India really wants to achieve Sustainable development goals, then it has to adopt a
new model of democratic capitalism approach-: Compassionate Capitalism, which means
“capitalism in mind and socialism at heart”, a creed which looks at fairness and at ensuring
that everyone is better off. In other words, focus on wealth generation with the distribution
of wealth.

Previous Years’ Question (PYQ) (2016, Mains)

Q. Comment on the challenges for inclusive growth, which include careless and useless
manpower in the Indian context. Suggest measures to be taken to face these challenges.
(200 Words, 12.5 Marks)
Decoding the Question:
• In the Intro, try to define inclusive growth.
• the body,
o W
 rite in brief about Challenges for Inclusive Growth in India, including careless and
useless manpower.
o Write a measure to meet the above challenges.
• Try to conclude with a way forward.
Answer:
Inclusive growth refers to economic growth that is distributed fairly across society and
creates opportunities for all. Quantitatively, it results in a reduction of disparities in per
capita incomes across different socio-economic groups, thereby, reducing poverty. It provides
for equality of opportunity, access to essential services by all in health and education etc.

Economic Growth and Development 27

 Useless manpower relates to the presence of a large unskilled or adequately skilled labour
force. India is a highly informal economy, a large section of the labour force is without access
to social security and welfare schemes. Such a situation exposes them to various risks related
to health, life etc. without alternative cushioning support. That is why they are termed as
careless manpower.
Measures to meet the above challenges to Inclusive growth
• Primary education quality should be strengthened, and due to a lack of elementary
education, skill development programmes cannot be used to their full potential. The typical
heavy top of the Indian education system, and poor elementary education leads to skill
gaps and results in useless manpower.
• Skill development program: Skill training programmes like Pradhan Mantri Kaushal Vikas
Yojana, and the Skill India programme will build a strong, skilled labour force with certified
skills according to National Occupational Standard (NSO)
Gender budgeting: To focus on neglected sections relating to women. Labour force participation
of women is, as per the 2011 census, 26% women would be empowered if more women related
schemes such as Sukanya Samridhi Yojana, and Janani Suraksha yojana were implemented.

Previous Years’ Question (PYQ) (2017, Mains)

Q. What are the salient features of ‘inclusive growth’? Has India been experiencing such a
growth process? Analyse and suggest measures for inclusive growth. (250 Words, 15 Marks)
Decoding the Question:
• In the Intro, try to define inclusive growth.
• In the body,
o Discuss salient features of inclusive growth.
o Discuss inclusive growth in India.
o Measures to ensure inclusive growth in India.
• Try to conclude with a futuristic outlook of inclusive growth.
Answer:
Inclusive growth can be defined as equal distribution of resources across society and people
and it also implies providing every person an equality of opportunity. The disadvantaged and
the marginal section of society are benefitted from inclusive growth.
Salient Features of Inclusive Growth:
• Participation: People are having greater say on what they want to do, they are also more
participative when it comes to economic aspects. This economic participation and greater
participation in policy formulations and their implementation lead to inclusive growth.
• Equity: All classes of people in society, especially poor or socially disadvantaged groups
are able to take advantage of these opportunities.
• Growth: Higher economic growth will create opportunity for all sections of society and
help reduce inequality of opportunity and economic inequality.

28 Economic Growth and Development

 • Stability: Stable economic growth and a stable environment help businesses, communities,
and individuals to have sufficient levels of stability and confidence.
• Sustainability: Sustainable economic growth and development of social wealth over time
help maintain inter-generational well-being.
India and inclusive growth: India has witnessed higher economic growth but unfortunately it
did not convert it into inclusive growth for all. This is evident from the fact that since the tenth
Five Year Plan the theme of planning in India has been inclusive growth.
• Children: Huge number of children are still working in spite of many labour laws, which
leads to child crimes.
• Women: Lower sex ratio and high drop out rates in schools and increasing incidence of
violent crimes are reflective of the discriminatory practices against women. There are
evidences of high levels of anaemia as well during the adolescence period.
• SCs/STs and OBCs: There are many schemes that intend to distribute resources for SCs,STs
and OBCs but in reality the things are not good which is clear by observing poverty and
literacy rates among them.
• Disabled people: Affirmative action has been drafted through the law but has not yielded
practical results. The problem of accessibility in public, as well as private buildings and
transportation, adds to further exclusion.
To improve inclusive growth, need to take the following measures such as,
• Improving education in terms of its quality, accessibility, and affordability, for marginalised
sections of society.
• Need to focus on improving the skills of weaker sections and also improving women’s
labour force participation.
• Improving institutional capacities, designing policies, better targeting, reducing corruption
and legislative and policy reforms are needed.
• Improving policy implementation through an outcome-based approach.
• Creating awareness among people to increase their participation in the success of any
schemes.
• Divangyajans should be supported through aids and assistive technologies which make
them able to participate and take all available opportunities so that inclusive growth is
possible.
NITI Aayog’s Strategy for New India @75 pitches for inclusive growth through:
• Barrier free environment for the divyangjans.
• Providing essential services to the marginalised section of the society.
• Technology can be used for sustainable development by 2022-23.
• To enable migrants access city services.
• Inclusiveness for urban poor and slum dwellers.
• Making higher education more accessible for the most vulnerable groups.
Though the government has taken various steps and initiatives for achieving inclusive
growth still there are various hurdles which make it impossible for inclusive growth.
Making India a giant economy without addressing inequality is against the constitutional
objectives of economic, social, and political justice that needs to be achieved through
inclusive growth.

Economic Growth and Development 29

 Previous Years’ Question (PYQ) (2019, Mains)

Q. It is argued that the strategy of inclusive growth is intended to meet the objectives
of inclusiveness and sustainability together. Comment on this statement. (250 Words,
15 Marks)
Decoding the Question:
• In the introduction, define the concept of inclusive growth.
• In the body,
o Discuss the ideas of inclusiveness and sustainability.
o D
 iscuss the role of inclusive growth in achieving objectives of inclusiveness and
sustainability.
•  onclude with writing the need for inclusiveness and sustainability while focusing on
C
sustainable growth.
Answer:
According to the Organization for Economic Cooperation and Development (OECD), Inclusive
growth is economic growth that is distributed fairly across society and creates opportunities
for all. It refers to ‘broad-based’, ‘shared’, and ‘pro-poor growth’.
Triad of Inclusive Growth, Inclusiveness and Sustainability:
Inclusive growth must be based on Inclusiveness, which goes beyond mere economic
inclusion.
• Inclusiveness is a concept that encompasses equity, equality of opportunity, and protection
in market and employment transitions and is, therefore, an essential ingredient of any
successful growth strategy.
Former President of India Pranav Mukherjee asserted, “Inclusive growth should not be a mere
slogan but a fundamental driving force for sustainable development.”
• Sustainable development refers to the processes and pathways to achieve sustainability
(e.g., sustainable ecology, sustainable production and consumption, good government,
education etc.). Sustainability is a long-term goal for continuous inclusive socio-economic
and ecological growth.
Inclusive Growth to Realise Inclusiveness and Sustainability
• Reducing poverty: Growth which is ‘inclusive’ and “pro-poor”, the incomes of poor people
grow faster than those of the population, i.e., inequality declines. By focusing on inequality,
inclusive growth could lead to optimal outcomes for all households.
• Distribution of wealth: Inclusive growth helps the wider distribution of growth, which creates
demand in the economy and helps to lead to domestic demand-driven economic growth.
• Withstand external shocks: Inclusive growth builds strengths in the economy, and growth
becomes sustainable in the long term.
• Reduces vulnerability: Inclusive growth helps in reducing the vulnerability of all types
from the disasters of the present time and makes people, and the community future-
ready, this ensures both inclusiveness and sustainability.

30 Economic Growth and Development

 • Improve quality of life: With better income distribution, the quality of life substantially
improves materially.
o e.g., people move away from unsustainable energy sources, such as cow dung, wood
etc. to clean energy sources, such as LPG.
• Change in development model: Sustainable development brings the environment into
its inclusion, thus causing minimum depletion of resources and going for a circular
economy.
• Resolving structural and fundamental issues: Inclusive growth addresses fundamental,
and structural challenges in society and in the economy.
o For example, women empowerment initiatives like Self Help Groups will bring changes
and enhance the participation of women in economic activity, which will further lead to
sustainability and inclusiveness.
It is due to this inter-relation between this triad of inclusive growth, inclusiveness, and
sustainability the government is aggressively focusing on the strategy of inclusive growth in its
various programs and policies.
o E.g., Jan Dhan Yojana has focused on financial inclusion for all.
Thus, inclusive growth is necessary to promote sustainable development and inclusiveness.
In the past two decades, India’s economic growth has been phenomenal, but it has
underperformed on socio-economic indicators and Human development Indicators.
Therefore, in India’s context, inclusive growth is an idea to realise the dream of sustainable,
and qualitative growth.

Previous Years’ Question (PYQ) (2020, Mains)

Q. Explain intergenerational and intragenerational issues of equity from the perspective of

inclusive growth and sustainable development. (150 Words, 10 Marks)
Decoding the Question:
• In the introduction, try to define the concept of Equity/Inclusive growth.
• In the body,
o Explain inter-generational equity and issues.
o Explain intra-generational equity and issues.
•  ry to conclude by evaluating the need for inclusive growth and sustainable development
T
in order to bring equity in intergenerational and intragenerational with respect to
India.
Answer:
Equity means just, fair, and equitable distribution of resources and benefits of the
opportunity. Inclusive growth refers to providing employment opportunities to reduce
poverty, having access to health and education facilities, providing equality of opportunity
and empowering the masses through appropriate education and skills. It also includes
environmentally friendly growth, aims for good governance, and helps in creating a gender-
sensitive society.

Economic Growth and Development 31

 The intergenerational principle is the foundational principle that talks about justice and
equality among different generations in the conservation of the environment and its use.
Having its roots in the Stockholm declaration of 1972, It states that every generation holds
the Earth in common with members of the present generation and with other generations,
past and future. The Paris Agreement’s preamble shows the relevance of this principle in
current times.
Intergenerational Equity Issues:
• Intergenerational equity has become crucial in the present times, due to the growing
imbalance in the distribution of resources, the ongoing degradation of the environment
and the depletion of resources.
• Moreover, developed countries do not want to help developing or underdeveloped countries
to adopt green technologies, mitigation, and adaptation mitigation which underlines their
approach to economic prosperity at the cost of environmental degradation.
• In this context, the concept of sustainable development is introduced which refers to the
use of resources that should be done in such a manner that those resources shall also be
available to meet future needs.
Intragenerational Equity Issues:
• The concept of intragenerational equity provides rights and duties to every person of a
single generation to use and take care of the renewable and non-renewable resources
moderately among the members of the generation.
o F
 or example, one can see there are a lot of differences in countries like India where
rich people get easy access to almost all resources and poor people do not get the
same access.
• Inequity arises from top growing people and bottom growing people in the economy which
need to be addressed through inclusive and sustainable growth.
• As per an Oxfam report, India’s economic growth is an example of jobless growth which
resulted in increased inequality between the same generation of the people.
• Welfare schemes like subsidies and reservations are some instruments to ensure social
justice but these measures interfere with the free market principle.
In order to realise environmental security only distribution of resources (both renewable and
non renewable) is not sufficient. Recycling and reusing the resources are equally important.
Abiding by the laws made by the government is equally important for environment protection.
Intergenerational and intragenerational equity are two hands of the doctrine of sustainable
equity, the concept of intragenerational equity possesses a procedure in respect of the
allocation of resources among the members of a generation.

32 Economic Growth and Development

Indicators of Economic Development • The first such team, which developed the
• There are various indicators to measure the HDI was led by Mahbub ul Haq and Inge Kaul.
level of economic development of a nation • The following dimensions are used for
are as follows : measuring Human Development among the
Net Economic Welfare (NEW) world countries:
• Net economic welfare (NEW) is a concept of o A long and healthy life: Calculated
a broader measure of economic welfare than by life expectancy.
gross national product (GNP) as it adjusts o Access to education: the education
GNP by subtracting from it “bad”, such as dimension is measured by means of years
pollution and by adding the value of beneficial of schooling for adults aged 25 years and
nonmarket activities such as leisure time. more, and expected years of schooling for
children of school entering age.
NEW = GNP + Value of Housewives Services
o Decent standard of living: Assessed
+ Value of leisure - Expenditure on defence -
by Gross National Income (GNI) per
Cost of Environment Degradation
capita adjusted for the price level of the
• This theoretical concept was given by the country.
economist Paul Samuelson. This concept • Based on the performance of the countries
exposed the limitations of the current on the above indicators, the UN takes
calculation methods of economic progress informed decisions and helps countries,
called GDP. who need assistance to improve rankings
• Practically, it is tough to estimate this. and overall conditions of the people in
Therefore, it was not widely adopted. particular countries, especially “Least
Developed Countries”.
Physical Quality of Life Index (PQLI)
• In 2010 UNDP introduced changes in the HDI
• PQLI measures countries’ social well-being
index made by changes in indices. The three
by using the following social indicators:
new indices are discussed in the following manner.
o Life expectancy at birth
o Life expectancy index (LEI): Measures
o Infant mortality rate
life expectancy. This dimension uses
o Literacy rate
life expectancy at birth as its indicator.
• These indicators are measured on a scale
It is defined as “the number of years
of 1 to 100; on this scale 1, represents the
a newborn infant could expect to live
worst social conditions, and 100 refers to
if prevailing patterns of age-specific
the best available social conditions.
mortality rates at the time of birth were
• Based on the average score of the above to stay the same throughout the child’s
indicators, the performance of the country life”. It is calculated using a minimum
is known as PQLI. value of 20 years and a maximum value
• The PQLI scale was developed by Morris of 85 years.
David Morris.
o Education index (EI): It is the average mean
Human Development Index years of schooling, and expected years
• The dilemma of measuring the developmental of schooling. Estimates for mean years
level of economies was solved once the United of schooling are based on the duration
Nations Development Programme (UNDP) of schooling at each level of education.
published its first Human Development Expected years of schooling estimates
Report (HDR) in 1990. The report had a human are based on two factors: enrollment by
development index (HDI), which was the first age at all levels of education, and the
attempt to define and measure the level of number of children of school age in the
development of economies. population for each level of education.

Economic Growth and Development 33

 o Income index (II): It measures GNI per As the score of the HDI increased from
capita adjusted in Purchasing power 0.429 to 0.645 (annual HDI report 2020), if it
parity terms (PPP). UNDP shifted from counts in percentage form, then it is about
adopting GDP per capita to GNI per a 50% jump in India’s overall HDI score. This
capita because GNI per capita is suitable to substantial increase in score placed India
consider the well-being wellbeing of people above-average gainer in the South Asian
rather than the income of the country. region, the score of South Asia is about
• HDI is the geometric mean of the above 0.641 and above average with respect to
three indices. medium human developed countries with a
score of 0.631.
• The significant observance made by the HDI in
its report is that the unprecedented gap within
the countries is narrowing based on the scale
of “Basic Standard is narrowing”. As people
are coming out from poverty, hunger, and
Fig. 3.1: Human Development Index (HDI)
disease. But the newer challenges emerging
Classification of Countries on the basis of HDI: from climate change, rising inequalities to
HDI scores lie between 0 to 1 for different get access to quality education, emerging
countries. infectious diseases etc, are posing a threat to
the HDI, and SDG 2030 agenda.
• A score of 0-0.49 means low development
(For example, Mali). Changes in Human Development Report:
• A score of 0.5-0.69 means medium In 2010 United Nation, Development Programme
development (for example, India). (UNDP) introduced three changes in the HDI
report and these changes include indices
• A score of 0.7-0.79 means high development
such as the Multidimensional Poverty Index
(For example, China).
(MPI) and Gender Inequality Index (GII) and
• Above 0.8 means very high development
Inequality-adjusted Human Development
(For example, Norway).
Index (IHDI).
• Out of a total of 189 countries, India has
Inequality-Adjusted Human Development
ranked 131 on the Human Development
Index (IHDI)
Index 2020. The country fell into the
• In IHDI, the Human Development Index
category of medium human development
(HDI) is adjusted with inequalities in the
(With an HDI value of 0.645). In 2019, India’s
distribution of achievements in all the
rank was 129.
three components of HDI such as health,
education, and income.
• If there is a difference between HDI and
IHDI, it means there is a potential loss
in human development because of the
presence of inequality.
• Atkinson index is used to measure income
inequality.
Multidimensional Poverty Index
Fig. 3.2: India’s Performance in HDI over the Years • The global Multidimensional Poverty Index
(MPI) produced by the United Nations
• The performance of India in HDI from 1990 Development Programme (UNDP), and the
to 2019 has seen substantial improvement.

34 Economic Growth and Development

 Oxford Poverty and Human Development living. These three dimensions are further
Initiative measure poverty by considering divided into ten other indicators like health
various deprivations experienced by (child mortality, nutrition), education
people in their daily lives, including poor (years of schooling, enrolment), and living
health, insufficient education ,and a low standards (water, sanitation, electricity,
standard of living. It helps in measuring cooking fuel, floor, assets).
poverty based on the “deprivation” at the • As per the above ten deprivations of MPI,
‘household level.’ along with the ‘individual any household is considered poor, if he/she
level’ deprivation measurement in terms is suffering from the deprivation of 1/3 or
of health, education, and standard of more of the weighted indicators.

Table 3.1: The dimensions, Indicators, deprivation cutoffs, and weights of the global Multidimensional Poverty Index

Gender Inequality Index (GII) • It uses the following three dimensions to

• It is an index for the measurement of gender measure gender disparity :
disparity.

Economic Growth and Development 35

 Fig. 3.3: Gender Inequality Index (GII)

• The Gender Inequality Index (GII) provides Has Development Delivered Happiness?
insights into gender disparities in health, • In the past decades, the world has chased
empowerment, and the labour market. GDP growth to bring ‘posterity’ and
Unlike the human development index (HDI), ‘happiness’. We have succeeded in growing
however, higher values in the GII indicate global economic output. Yet ‘wellbeing’ and
worse achievements. ‘happiness’ indices have largely remained
• This index is a composite measure flat, inequality has increased, and natural
to quantify the loss of achievement within resources have been degraded.
a country because of gender inequality. • Our focus on GDP growth to achieve
• India has a Gender Development happiness has not worked in delivering
Index (GDI) value of 0.820. The Human happiness.
Development Report also calculates Gender • Happiness is a broader thing than
Inequality Index (GII) to highlight gender- development. The so-called ‘development’
based inequalities in the countries, taken for which the world has been striving
on three measures: economic activity, hard for the last many decades is capable
reproductive health, and empowerment. of delivering material happiness to
The GII value of the country was 0.488, mankind. Happiness has its non-material
which made it rank at the 123rd place side also.
out of the 162 nations. (Data from Human Indicators of Happiness
Development Report 2020)
There are various indicators to measure the
Gender-related Development Index (GDI) level of happiness of a nation. Some such
• Gender-related Development Index is an indicators are:
index to measure gender disparities with Gross National Happiness:
respect to three dimensions of HDI, i.e.,
• The Gross National Happiness index is
Health, Knowledge and Standard of living.
utilised to measure the collective happiness,
and well-being of a population.
• The term Gross National Happiness was
• It addresses gender gaps in life expectancy, coined in 1972 by the then king of Bhutan,
education, and income. Jigme Singye Wangchuck.
• More the GDI value, the lesser the gender • Gross National Happiness is based on
disparity. four dimensions: Sustainable economic

36 Economic Growth and Development

 development, Good governance, Andhra Pradesh
Preservation of cultural values, and • Andhra Pradesh is the second state in the
Conservation of the environment. country after Madhya Pradesh to start the
• The objective of GNH is to achieve a happiness Index department.
balanced development in all facets of life • Its ‘Sunrise AP Vision 2029’ has taken
that are essential for happiness. Bhutan as a model to focus on matters
World Happiness Report including health, time use, education etc.
• World Happiness Report is a measure of Maharashtra
happiness, published by the United Nations • The Government of Maharashtra is
Sustainable Development Solutions contemplating introducing a separate
Network (UN SDSN) in 2012. ‘happiness ministry’ to encourage positivity
• It was developed by Helliwell, Layard, and in society.
Sachs. Social Progress Index
• The Report measures the happiness • The Social Progress Index offers a rich
and well-being of a country, and helps framework for measuring the multiple
to guide public policy based on the dimensions of social progress, benchmarking
following six parameters: success, and catalysing greater human
o Real GDP per capita (at PPP) wellbeing.
o Healthy life expectancy • The 2021 Social Progress Index ranks 168
o Social support countries on social progress.
o Freedom to make life choices Nutrition and Basic Medical Care 84.42

o Generosity Water and Sanitation 69.99

Shelter 80.63
o Perception of corruption
Personal Safety 61.20
• The report uses data from the Gallup World Access to Basic Knowledge 72.03
Poll. Access to Information and Communication 70.22

World Happiness Report 2022 Health and Wellness 60.18

Environmental Quality 55.27

• This is the 10th annual World Happiness
Personal Rights 60.16
Report, which ranks the 146 countries in
Personal Freedom and Choice 62.22
the world. Inclusiveness 42.22

• Finland has been named the world’s Access to Advanced Education 61.58

happiest country for the fifth year running, 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

followed by Denmark. Afghanistan was Fig. 3.4 Social Progress Index Score
ranked as the unhappiest nation, followed
by Lebanon, Zimbabwe, Rwanda and • The index is published by Social Progress
Botswana, respectively. India saw a marginal Imperative, and is based on the writing
improvement in its ranking, jumping three of Amartya Sen, Douglas North, and Joseph
spots to 136, from 139 a year ago. Stiglitz.

Indian State’s Happiness Initiative • Norway tops the 2021 SPI ranking, and
India is ranked 115th out of 168 countries.
Madhya Pradesh
Environmental Performance Index
• Madhya Pradesh became the first state to
announce its happiness department. • The Environmental Performance Index
is used to measure the environmental
• Madhya Pradesh, in collaboration with the
performance of a country.
Indian Institute of Technology (IIT)
Kharagpur developed a happiness index for • EPI highlights leaders and best practices
measuring the well-being of the people. and provides guidance for other countries

Economic Growth and Development 37

 that want to be leaders in environmental • The World Bank every three years compares
sustainability. countries in terms of PPP.
• The index is prepared by Yale University • India is ranked third in the world on
and Columbia University in collaboration the basis of GDP (PPP) behind China and
with World Economic Forum (WEF). the USA.
• The First Environmental Performance Difference Between Market Exchange Rate &
Index Report was published in the PPP
year 2006. • The market exchange rate is the market
• The 2020 Environmental Performance price of one currency in terms of another
Index (EPI) provides a data-driven summary currency.
of the state of sustainability around the • Thus, the present market exchange rate for
world. Using 32 performance indicators Indian rupees is in the range of 65 to 70
across 11 issue categories, the EPI ranks rupees per U.S. dollar.
180 countries on environmental health, and • The market exchange rate depends on the
ecosystem vitality. demand and supply of these currencies in
• India has ranked 168 places out of 180 the open market.
countries in the Environment Performance • The PPP exchange rate measures the
Index 2020. relative purchasing power of different
• Denmark topped the index, and Liberia was currencies.
at the bottom of the index. • India ranks third, when GDP is compared
• Low scores on the EPI suggest the necessity in terms of purchasing power parity
for national sustainability efforts on a approximately at $11.40 trillion.
number of fronts, particularly protecting • Whereas India is the fifth-largest economy,
biodiversity, cleaning up air quality, and with a nominal GDP of $2.936 trillion.
reducing GHG emissions. • For Example, in GDP calculation at market
Purchasing Power Parity (PPP) price, India’s economy is well behind
• When making comparisons among Japan’s. However, price levels in Japan are
countries which use different currencies, much higher than that in India.
it is necessary to convert values, such • So, when the national income of the two
as national income (GDP), to a common countries is adjusted in terms of PPP, the
currency. This is done through purchasing Indian economy surpasses the Japanese
power parity (PPP). economy because of lower prices in India.
• Purchasing Power Parity states that Least Developed Countries (LDC)
the expenditure on a similar commodity • The United Nations has recognised
must be the same in both currencies when least developed countries (LDCs) as a
accounted for the exchange rate. category of States that are deemed highly
disadvantaged in their development
process, for structural, historical and also
geographical reasons.
• For example, Suppose the cost of a cake
in India is Rs. 250, and the cost of the • The classification of the least developed
same cake in the USA is $ 10. Therefore, country was introduced by the Economic
purchasing power parity will be 250/10 = Rs. and Social Council (ECOSOC) of UNO
25 per dollar. in 1971.
• Purchasing Power Parity (PPP) is very • The following three criteria are used by the
important and is used to compare the CDP to determine LDC status:
national income and standard of living.

38 Economic Growth and Development

 o Per capita income (gross national o Develop a global partnership for
income per capita) development.
o Human assets (indicators of nutrition, India’s Achievement in MDGs
health, school enrolment and literacy) • India is a signatory to the Millennium
o Economic vulnerability (indicators Declaration accepted at the United Nations
of natural and trade-related shocks, General Assembly (UNGA) in September
physical and economic exposure to 2000, and has made its commitment toward
shocks, and smallness and remoteness). the eight important development goals.
• Economic Vulnerability Index (EVI): The • The goals of the MDGs converge with India’s
Economic Vulnerability Index is a composition own development goals to decrease child
of the following eight indicators: mortality, poverty and other concerns.
o Population size • India has witnessed significant improvement
o Remoteness toward the MDGs, with some goals having
o Merchandise export been met ahead of the 2015 deadline, but
o Contribution of agriculture to the Gross progress has been inconsistent.
Domestic Product (GDP) • For example, according to official national
o Homelessness owing to natural disasters estimates, India has achieved the target of
o Instability of agricultural production reducing poverty by half, but it is falling short
o Instability of exports of goods and services of achieving the target for reducing hunger.
o Share of the population residing in low Sustainable Development
elevation coastal zone • The UN World Commission on Environment
• At present, 46 countries are on the Least and Development (UNWCED) defines
Developed countries (LDCs) list. it as “the development that meets the
• Various International Organisations give demands of the current generation
special assistance to LDCs. without compromising the needs of future
• Criteria of LDCs are reviewed every three generations to meet their own needs.”
years by the Economic and Social Council • It is related to carrying capacity, which refers
(ECOSOC). to the capacity of the environment to absorb
• Countries may “graduate” out of the LDC the adverse impact of human activity.
categorisation after indicators exceed these • Sustainable development presents a
criteria in two consecutive reviews. framework to generate economic growth,
Millennium Development Goals (MDGs) achieve social justice, and preserve
• The United Nations Millennium Development environmental sustainability.
Goals (MDG) are eight goals that all 191 UN • It recognises that growth must be both
members had agreed to achieve by the year inclusive and environmentally sound to
2015. reduce poverty, and meet the needs of the
• The eight Millennium Development Goals: future generation.
o Eradicate extreme poverty and hunger. Dimension of Sustainable Development:
o Achieve universal primary education. There are three dimensions of Sustainable
o Promote gender equality and empower development-
women. • Economic dimension: Economic
o Reduce child mortality. dimension deals with encouraging
o Improve maternal health. businesses and organisations to increase
o Combat malaria, HIV/AIDS, and other investment, efficiency in production,
diseases. and economic growth.
o Ensure environmental sustainability.

Economic Growth and Development 39

 • Social dimension: It deals with encouraging • Environmental dimension: It defines how
people to participate in environmental to protect ecosystems and air quality, and
sustainability. focuses on the elements that place stress
on the environment.

Fig.3.5: Sustainable Development

40 Economic Growth and Development

Indicators of Sustainable Development • Natural capital includes the world stock of
Green GDP all-natural assets like soil, air, water etc.
• The normal calculation of the progress made • Man-Made capital includes goods and
on the economic front is shown in the GDP services that are used to produce other
of the country. But during this achievement goods and services, such as machines,
of economic progress, the negative impact tools etc. it can also include ‘financial
on the environment is needed to count capital’ like money.
hence the concept of “Green Gross Domestic • It has emerged as the important leading
Product” was introduced. economic indicator of sustainable economic
• The economic cost of water pollution, and development.
land degradation is not incorporated in the Sustainable Development Goals (SDGs)
GDP. • They are a universal set of targets, goals
• For example, WWF’s Living Planet Report and indicators that UN members will be
finds that 25% of India’s total land is expected to use to frame their nation’s
undergoing desertification. This will have policies over the next 15 years (2015-2030).
a direct influence on the future food • Sustainable Development Goals (SDGs)
production, thus affecting our agrarian follow Millennium Development Goals,
economy as the country could see a
which expire in 2015.
decrease in crop production.
• To make development much futureproof
• The Ministry of Statistics and Programme
and the development process should
Implementation (MOSPI) set up an expert
be in consonance with the needs of the
group in 2011 led by Partha Dasgupta with
future or coming generations, the United
the mandate of developing a framework
Nations adopted the 2030 Agenda for
for a green national account in India. The
Sustainable Development which consist of
process is not yet completed.
17 SDG main targets, which are included
Genuine Saving with the 169 sub-targets with the use of
• Genuine Saving measures the sustainability 304 indicators.
of economic development. • The table below highlights 17 Sustainable
Genuine Saving = Gross Saving - Depreciation Development Goals (SDG) and India’s effort
in man-made capital - Depreciation in toward achieving each of them.
Natural capital

Goals Objective Description India Efforts

BY 2030, End poverty in all its - Mahatma Gandhi National Rural
forms everywhere. Employment Guarantee Scheme
Goal-1 No poverty (MGNREGA)
- National Social Assistance
Programme (NSAP)
Achieve food security, end - Targeted public distribution
hunger and better nutrition by system (PDS), National Nutrition
Goal-2 Zero Hunger
2030. Mission (NNM),
- National Food Security Act (NFSA)
Promote wellbeing and ensure - National Health Mission (NHM)
Good Health
Goal -3 healthy lives for all at all - Ayushman Bharat
and Well-being
stages.

Economic Growth and Development 41

 Goals Objective Description India Efforts
Make Sure that all boys and - Sarva Shiksha Abhiyan (SSA)
Quality girls complete free, equitable - National Education Policy
Goal-4
Education and quality primary and
secondary education by 2030.
To attain gender equality and - Sukanya Samridhi Yojana
Goal-5 Gender Equality
empower all females. - Janani Suraksha Yojana
Ensure affordability, - Swachh Bharat Abhiyan.
availability and sustainable - National Rural Drinking Water
Clean Water and
Goal-6 management of water and Programme.
Sanitation
sanitation for every individual
by 2030.
Ensure access to reliable, - National Solar Mission.
Affordable and
Goal-7 affordable, sustainable and
Clean Energy
modern energy for all by 2030.
Promote sustained, inclusive, - National Skill Development
Decent Work and sustainable economic Mission,
Goal-8 and Economic growth. - Deendayal Upadhyaya Antyodaya
Growth Yojana,
- Atal Innovation Mission
Build resilient infrastructure, - Make in India
Industry,
promote inclusive and - Start- Up India
Goal-9 Innovation and
sustainable industrialisation
Infrastructure
and foster innovation by 2030.
Decrease inequality within and - National Mission for Empowerment
amongst countries by 2030. of Women : Rajiv Gandhi Scheme
for Empowerment of Adolescent
Reduced Girls (SABLA)
Goal-10
Inequality
- Kasturba Gandhi Balika Vidyalaya
(KGBV)
- PMKISAN
Make cities and human - Smart Cities Mission
Sustainable settlements inclusive, - Atal Mission for Rejuvenation and
Goal-11 Cities and resilient, secure, and Urban Transformation (AMRUT)
Communities sustainable. - Pradhan Mantri Awas Yojana
(PMAY)
Responsible Ensure sustainable - National Policy on Biofuels for
Goal-12 Consumption consumption and production managing the efficient use of
and Production patterns. natural resources.
Take important and urgent - National Action Plan on Climate
Goal-13 Climate Action action to tackle climate Change
change and its effects.

42 Economic Growth and Development

Goals Objective Description India Efforts
Conserve and sustainably - National Plan for the Conservation
Life Below utilise the seas, oceans of Aquatic Ecosystems
Goal-14
Water and marine reserves for
sustainable development.
Protect, restore, and promote - National Afforestation Programme
sustainable utilisation of - Project Tiger
Goal-15 Life on Land terrestrial ecosystems, - Project Elephant
combat desertification and
halt biodiversity loss.
Promote inclusive and - Development of Infrastructure
Peace and
peaceful societies for Facilities for the Judiciary
Goal-16 Justice Strong
sustainable development; give - Introduction of the AADHAR card
Institutions
access to justice for all.
Strengthen various means of - India’s membership in institutions
Partnerships
implementation and revitalise like the Shanghai Cooperation
Goal-17 to Achieve the
the international partnership Organisation, BRICS, and its New
Goal
for sustainable development. Development Bank.
Table 3.2: Sustainable Development Goals

The world has changed dramatically in increasing. Finally, governance is becoming

the last two decades, but there are four more complex, especially with the growing
shifts that are particularly serious. Firstly, influence of technology (SDSN, Action Agenda
we are closer than ever to eradicating Report 2014). Today’s problems will escalate
extreme poverty. Secondly, human societies quickly and dangerously, if we do not urgently
are causing more damage than ever to and radically change course. The Sustainable
the planet and the environment. Thirdly, Development Goals (SDGs) give us a plan to
inequality among and between countries is fight these challenges.

Previous Years’ Question (PYQ) (2018, Mains)

Q. “Access to affordable, reliable, sustainable and modern energy is the sine qua non to
achieve Sustainable Development Goals (SDGs)”. Comment on the progress made in India in
this regard. (150 Words, 10 Marks)
Decoding the Question:
• In the Intro, try to write about Sustainable Development Goals briefly or highlight the
energy situation in India.
• In the body
o Firstly, discuss how SDG Goal 7 will help to achieve other Sustainable Development
Goals.
o Secondly, discuss India’s progress in achieving SDG Goal 7.
• Conclude with India’s energy future targets.

Economic Growth and Development 43

 Answer:
The Sustainable Development Goals (SDGs), are a universal call to action to end poverty,
protect the planet and ensure that all people enjoy peace and prosperity by 2030. Access to
affordable, reliable, sustainable, and modern energy is Goal 7 of SDG.
• Affordable means the energy, which is cheap or subsidized, that is, the poor are also
benefited in the same way.
• Reliable energy means the developmental needs of the entire nation can rely upon it.
• Sustainable energy takes into the inter-generational equity aspect.
• Modern energy encompasses a huge spectrum of energy largely, which has low negative
externality on the environment and economy.
This access is the sine qua non to achieve Sustainable Development Goals as it is directly or
indirectly related to other goals such as innovation and infrastructure, sustainable cities and
communities, health and well-being, gender equality, industry, etc.
Energy Scenario in India
India is the 4th largest consumer of energy after the USA, China, and Russia, but it is not
endowed with abundant energy resources. According to the International Energy Agency (IEA)
2020, around 700 million people in India gained access to electricity between 2000 and
2018, reflecting strong and effective policy implementation. India has a crucial role to play in
achieving Sustainable Development Goals. It has done a commendable job in providing clean,
and efficient energy to people and achieving targets of inclusive growth. In this regard, India
has taken various steps like:
• Pradhan Mantri Ujjwalla Yojana: It aimed to provide LPG connections to 8 crores of BPL
households by 2020.
• Compulsory guidelines: The Ministry of Finance has issued mandatory guidelines for
adopting energy-efficient appliances in all central government buildings, which are
implemented by Energy Efficient Services Limited (EESL) by 2020.
• Deen Dayal Upadhyay Gram Jyoti Yojana: Under the scheme, the government has
committed to supply reliable and 24*7 power supply to the entire villages by 2019. Along
with this scheme, SAUBHAGYA Scheme was launched for 100% village electrification with
last mile connectivity. Till now, under both schemes, more than 75% of rural households
have electricity connections.
• Renewable energy: India’s share of renewable energy has constantly been increasing, and
now it is around three times as compared to 2007. On 30th November 2017 total installed
capacity in India was around 330 GW, out of which 18% was from renewable energy sources.
• Pradhan Mantri Urja Ganga Project: It aims to lay gas pipelines and connect western,
northern, and southeastern gas markets with major gas sources. Also, it aims to set up a
city gas distribution network even in small towns. It will increase access to the CNG gas
stations and direct to home cooking gas.
• New hydrogen exploration and licensing policy: To increase domestic oil and gas production
and immune India from global oil shocks.
• Ultra-mega power projects: Establishing 4000-megawatt projects, each using supercritical
technology, which will help in achieving SDG relating to good health and wellbeing, reduced
inequality, affordable and clean energy etc.

44 Economic Growth and Development

 • UDAY- Ujwal Discom Assurance Yojana: Under this scheme, state governments are
encouraged to take all debt of financially distressed state electricity distribution companies
to make them supply affordable power to poor households.
Sustainable Development Goals can be the true scale on which the developmental progress
of any nation depends. With a population of 1.4 billion and one of the world’s fastest-
growing major economies, India will be vital for the future of the global energy markets. It
will strengthen the four pillars of India’s energy future, i.e., energy access, energy efficiency,
energy sustainability and energy security.

Economic Growth and Development 45

 List of 20 Books

1. Medieval History
2. Ancient History
3. Indian Geography
4. Modern History
5. Governance
6. Indian Economy
7. Basic Science
8. Post-Independence
9. Indian Society
10. Ethics, Integrity and Aptitude
11. Science and technology
12. Physical Geography
13. World History
14. Indian Polity
15. Human & Economic Geography
16. Disaster Management
17. Internal Security
18. Art and Culture
19. International Relations
20. Environment and Ecology
 Note: This is only a sample copy of Unacademy UPSC Notes 2.0. The entire package comes
with 20 booklets (5500 Pages) which comprehensively cover the UPSC GS (Prelims & Mains
Syllabus)

FAQs (Frequently asked questions)

1. Who will be eligible for Unacademy UPSC Notes 2.0

Ans: Learners who take 1-year or above Unacademy subscription on or after 15th July will be
eligible for Notes 2.0

2. Are notes available in Hindi and English both?

Ans: No, currently Notes 2.0 will be available in English only. Although, Hindi Medium Aspirants will
be provided with Notes 1.0

3. If I have taken the Unacademy Subscription before the 15th of July, will I be eligible for Notes
2.0?
Ans: Learners who have taken the Unacademy subscription before 15th July will not be eligible for
physical copies of Notes 2.0. However, you can access the soft copy of Notes through your Android/
IOS app. The digital copy of the Notes will be uploaded by the 18th July.

4. If I am not taking Unacademy Subscription, Can I purchase Unacademy Notes 2.0 Separately?
Ans: No, as of now, notes are available with 1 year or above subscription only

5. By when the New Notes will be delivered?

Ans: For English Notes: Delivery will start from Aug 15, 2022.