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Monday, November 16, 2015

Economic Growth Versus HDI in Context of The Indian Economy

All I can say about this is that this is one of the biggest projects I have compiled in my life and this was tiring,as well but since the topic was so interesting,I really liked working on it.

This is not meant to be copied,under any circumstances but I am posting this today to provide to fellow students a little insight and help on how to complete Economics projects.The topic is not provided in the suggestions section of the Bengali text book of WBCHSE. But I figured out that I was not interested to work on Macroeconomics at the moment or about something as inclined to Microeconomics as irrigation is.This project combines both Macroeconomics and Microeconomics and the current topic that all people in Economics are talking about : the legendary concept of HDI.

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Economics Project
Type : Secondary Data Based

Topic – Economic Growth Versus HDI in Context of The Indian Economy

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COMPLETED AND Submitted by – Titas Biswas
Class – XI
Roll number – 09
SESSION :- 2015-2016

I extend my warm regards and gratitude to the respected principal and the insightful subject teacher to make it possible to work on this project. The project genre is interesting and has helped me to exercise my philosophical and writing skills.
I have enjoyed working on this topic and i am thankful to the subject teacher for allowing me to work on an otherwise unusual topic. I also thank the authority for providing the necessary time in order to complete this project.

This is to certify that this project has been made by titas biswas of class XI on the topic ‘Economic Growth Versus HDI in Context of The Indian Economy’,which is a secondary data based Economics project under the guidance of our Economics teacher .................... and has been completed  successfully.
Yours truly,
Titas Biswas
Class XI


·     What is Economic Growth?
Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.
·     What is HDI?
The Human Development Index (HDI) is a composite statistic of life expectancy, education, and per capita income indicators, which are used to rank countries into four tiers of human development. The HDI was developed by Pakistani economist Mahbub ul Haq, is anchored in the Indian Nobel laureate Amartya Sen’s work on human capabilities, often framed in terms of whether people are able to "be" and "do" desirable things in their life,and was published by the United Nations Development Programme.

In this project, we are going to try to perceive the juxtaposition between the economic growth and human development in India and thus try to come to a conclusion of how much has really been the social development that is the utopian dream of every ‘successful economy’.

Economic Growth Before 1947
Econo-politically, India was born on 15th August,1947. Before that, India was a colony thriving under imperialistic rule of the British. Further before,the known presence of an economy was the Indus Valley civilization.The Indus civilization's economy appears to have depended significantly on trade, which was facilitated by advances in transport. Around 600 BC, the Mahajanapadas minted punch-marked silver coins. The period was marked by intensive trade activity and urban development. By 300 BC, the Maurya Empire united most of the Indian subcontinent. The political unity and military security allowed for a common economic system and enhanced trade and commerce, with increased agricultural productivity.
For the next 1500 years, India produced its classical civilisations such as the Rashtrakutas, Hoysalas and Western Gangas. During this period India is estimated to have had the largest economy of the ancient and medieval world between until 17th century AD, controlling between one third and one fourth of the world's wealth up to the time of Maratha Empire, from whence it rapidly declined during European colonization.

Ironically, it would be a grave mistake to call say India was  thriving under the British rule, a better way of claiming is barely thriving, or barely attempting to thrive. This is so because the entire population of India faced the potential threats every colonized country has faced in history and is supposed to face in future (broadly under imperialism). From labour exploitation to demolition of indigenous industries, the colonialists left no stone unturned to devastate the Indian economy.
Now, better not say the Indian economy since India was still just a multi-cultural, multi-lingual, multi-provincial land, geographically a sub-continent. In fact, the formation of India is intricately connected to resistance to most prominently the British and also other foreign imperialistic forces including the French, the Spanish, the Dutch and the Portuguese. And this did not happen in 1947; this started in 1857, so if cognitive investigation follows, the seeds of dissidence must have been sowed even longer ago. But in human history, there is nothing called one economy. Or economic unity within a particular geographic boundary, if that is not a slum colony covering only little of our precious land.
And there was no economic unity in what we call India today. There were businessmen, industrialists, professors, lawyers, doctors, artists and other professionals and there was the nearly starving working class and their condition was nothing better than the third estate before 1789 in France.
The nationalists did try to cumulate the spirit within the citizens of people living in this sub-continent but with so many religions and so many fundamentalists to intensify communalism and so many different languages and so many different cultures, it was next to impossible to gather the population under a single umbrella.And economically,that was just impossible.
Labour exploitation observed some of their worst phases,at least relatively during this period and they were forced for unpaid labour (called ‘begar’),most of them were still landless under the ruthless landlords-tenant system that functioned back then nearly everywhere in this place and there was no security of tenure.The best example to prove that our economy was nearly dead is the Bengal Famine of 1943 in which nearly 3 million people died.And it is cited as one of the worst man made holocausts in the world history has ever seen.
Again, as many times our indigenous industries tried to stand on their own feet,the British devastated all the further chances of doing so by either imposing taxes on exports or taking other measures to dictate terms to just shut off such industries.So,our economy was not our economy really before 1947 and if we have to talk about an Indian economy and its well-being,we better talk about the context after 1947,after the birth of India.
Economic Growth After 1947
An independent India was bequeathed a shattered economy, widespread illiteracy and shocking poverty.
Contemporary economists divide the history of India’s economic growth into two phases – first 45 years after independence and the two decades of free market economy.
After the independence India adopted a socialist-inspired economic model with elements of capitalism. India adopted a USSR-like centralized and nationalized economic programs called Five-Year Plans. This Nehruvian policy suppressed economic growth for several decades.

Socialist rate of growth

Compare India (orange) with South Korea (yellow). Both started from about the same income level in 1950. The graph shows GDP per capita of South Asian economies and South Korea as a percent of the American GDP per capita.
The "Nehruvian Socialist rate of growth" is used to refer to the low annual growth rate of the economy of India before 1991. It stagnated at around 3.5% from the 1950s to 1980s, while per capita income growth averaged extremely low 1.3% a year.At the same time, South Korea grew by 10% and Taiwan by 12%.This phenomenon was called the "Hindu rate of growth", by the leading Indian economist Raj Krishna.

Socialist reforms (1950–1975)
In 1975 the size of GDP (in 1990 US dollars) was $545 billion in India, $1561 billion in the USSR, $1266 billion in Japan, and $3517 billion in the US.

Before independence a large share of tax revenue was generated by the land tax, which was in effect a lump sum tax on land. Since then land taxes have steadily declined as a share of revenues and completely replaced by sales taxes.

Moreover, the structural economic problems inherited at independence were exacerbated by the costs associated with the partition of British India, which had resulted in about 2 to 4 million refugees fleeing past each other across the new borders between India and Pakistan. The settlement of refugees was a considerable financial strain. Partition also divided India into complementary economic zones. Under the British, jute and cotton were grown in the eastern part of Bengal, the area that became East Pakistan (after 1971, Bangladesh), but processing took place mostly in the western part of Bengal, which became the Indian state of West Bengal in 1947. As a result, after independence India had to employ land previously used for food production to cultivate cotton and jute in Bengal and for its mills.

Government was assigned an important role in the process of alleviating poverty, and since 1951 a series of plans had guided the country's economic development. Although there was considerable growth in the 1950s, the long-term rates of real growth were less positive than India's politicians expected.

Toward the end of Nehru's term as prime minister, India would continue to face serious food shortages despite hoped for progress and increases in agricultural production.

Since 1950, India ran into trade deficits that increased in magnitude in the 1960s. The Government of India had a budget deficit problem and therefore could not borrow money from abroad or from the private sector, which itself had a negative savings rate. As a result, the government issued bonds to the RBI, which increased the money supply, leading to inflation. In 1966, foreign aid, which was hitherto a key factor in preventing devaluation of the rupee was finally cut off and India was told it had to liberalise its restrictions on trade before foreign aid would again materialise. The response was the politically unpopular step of devaluation accompanied by liberalisation. The Indo-Pakistani War of 1965 led the US and other countries friendly towards Pakistan to withdraw foreign aid to India, which further necessitated devaluation. Defence spending in 1965/1966 was 24.06% of total expenditure, the highest in the period from 1965 to 1989. This, accompanied by the drought of 1965/1966, led to a severe devaluation of the rupee. Current GDP per capita grew 33% in the 1960s, reaching a peak growth of 142% in the 1970s, decelerating sharply back to 41% in the 1980s and 20% in the 1990s.

From FY 1951 to FY 1979, the economy grew at an average rate of about 3.1 percent a year in constant prices, or at an annual rate of 1.0 percent per capita. During this period, industry grew at an average rate of 4.5 percent a year, compared with an annual average of 3.0 percent for agriculture. They managed to tamp down on the natural business acumen and abilities of the population, yet some economists differed over the relative importance of those factors.

This is a chart of trend of gross domestic product of India at market prices estimated by Ministry of Statistics and Programme Implementation with figures in millions of Indian Rupees.

Gross Domestic Product
US Dollar Exchange
Per Capita Income (as % of USA)
4.79 Indian Rupees
4.79 Indian Rupees
4.77 Indian Rupees
4.78 Indian Rupees
7.56 Indian Rupees
8.39 Indian Rupees

The Union government treasury reported annual revenue of £5–6 billion in 1975 thus registering an average annual growth of almost 12 per cent during the third quarter of the 20th century. Nevertheless, prime minister Indira proclaimed emergency and suspended the Constitution in 1975. About one-fifth of the national population were urban by 1975.
Last month, Morgan Stanly and HSBC lowered India’s economic growth forecast for fiscal years 2013 and 2014 from 5.2 to 5 percent and from 6.2 to 6 percent respectively. These numbers do not sound encouraging, but compared to a GDP growth of 4.5 percent for October-December quarter of FY2013, this news provides some encouragement for India’s economy. According to Finance Minister Chidambaram Palaniappan, India’s economy would grow 6.2-6.7 percent during FY 2014. If accurate, it would be a good economic recovery. Although it is nowhere near the double digit GDP growth India was enjoying a few years ago, the recent news of an economic turnaround is a cause for celebration, especially when U.S. and European economies are still struggling to get back to pre-recession levels.

India’s economic journey from an impoverished country to an emerging global economy is an inspiring example for many developing nations. In order to understand India’s economic voyage, it is essential to shed some light on India’s political and economic history. After 200 years of British rule, India became an independent sovereign nation in 1947. This newly born nation faced a number of issues including a shattered economy, a minimal rate of literacy and horrific poverty. It was a mission impossible for Indian leaders, but Sardar Patel, Nehru and others transformed India into a secular and democratic nation.

Early Economic Growth

To better understand India’s economic growth, its economic history should divided into two phases, the first 45 years after the independence and the last twenty years as a free market economy. During the first 45 years after independence, India’s economy was divided into two distinct segments, private and public. The private sector owned and operated small to medium size businesses and industries protected by the government and the government took care of everything else. The government was in charge of most of the consumer services including transportation such as airlines, railroads and local transportation, communication services such as postal, telephone and telegraph, radio and television broadcasting, and social services such as education and health care. The intention of the government was to provide these services, at a reasonable cost, as well as employment. India adopted a five-year development plan from its closest ally, the Soviet Union, in order to improve infrastructure, agricultural production, health care, and education, but the progress was extremely slow due to India’s democratic system.

Absence of Economic Policies

India’s economy and political system encountered a severe crisis during the time of Indira Gandhi and her Congress Party rule. During her administration, there was no economic progress because of a lack of attention to economic improvement. Gandhi and her Congress Party paid more attention to how to remain in power rather than solving India’s economic and social problems. In 1975, Gandhi arrested opposition leaders, imposed censorship on the press and suspended elections. During this time, economic growth stagnated and widespread corruption became the norm. Finally, bowing down to tremendous internal and external pressure, she declared a general election in 1977.

Gandhi and her Congress party lost that election. In a few years, she came back into power again and her son Rajiv Gandhi took over after her assassination, as prime minister. He remained in power until he was also killed in a bomb blast and India’s economy was completely ignored.

Collapse of the Soviet Union and the Gulf War

During the early 1990s, India’s economy began to worsen and was faced with growing inflation, unemployment and poverty and historically low foreign exchange reserve. The collapse of the Soviet Union significantly impacted Indian’s economy because the Soviets were India’s major trading partner and a key supplier of low cost oil. As a result, India had to buy oil from the free market. India was receiving a huge remittance of foreign exchange from Indians working in the Middle East, but the Gulf War sent thousands of Indian workers back home resulting in a huge dent in India’s foreign reserve.

Consequently, India’s foreign exchange reserve fell to a low of $240 million, just enough to support only two weeks of imports. The International Monetary Fund (IMF) and the World Bank offered help to India in exchange for economic reforms. The government ran out of options and finally, the government had to change its closed-door economic policies in 1991.

Time for Economic Reforms

Fortunately, no one from the Gandhi family was in power to make decisions for the country and Prime Minister Narasimha Rao took steps towards liberalization and privatization to reform India’s economy. Manmohan Singh, who was the finance minister at that time went forward and introduced several economic reforms. He lowered tariff levels, reformed exchange rate policy, liberalized industrial licensing policy and also relaxed India’s foreign direct investment (FDI) policy. These reforms opened the doors for multinational corporations to invest in India. India received positive responses from international investors. Before the 1991 reforms, foreign equity ownership was restricted to 40 percent and the transfer of technology was necessary to do business in India. These barriers were removed for foreign companies. Many multinational corporations (MNCs) took advantage of India’s new economic policies and increased their stakes to more than 51 percent in their subsidiaries resulting in a several fold increase in foreign direct investment in just three years.

Driving Forces Behind Economic Growth

There were three major driving forces behind India’s economic growth and prosperity after economic reforms of 1991; Increased foreign direct investment, India’s expertise in information technology and increased domestic consumption because of a growing middle class population. The combination of foreign direct investment and expertise in information technology helped produce thousands of new jobs and created a growing middle class that in turn created increased domestic consumption and that resulted, again, in more foreign direct investments to meet the demand of Indian consumers.

India’s growing middle class is the backbone of its economy and it is expected that about half of its population will fall into the category of middle class by 2040 with a substantial amount of disposable income.

Knowledge Based Economy

The last phase of growth came from a growing information technology industry and service industry. India became a hub for information technology and a knowledge-based economy. Because of the availability of a highly talented technical workforce and improved protection of intellectual property, many western firms shifted their research and development departments to India in order to reduce their R&D cost. India was able to pick up most of the outsourcing from western countries because of the low cost. India was the major recipient of the outsourced call centers, medical billing centers and other business administration and insurance related services. India’s economy is now supported by its own expertise in information technology, larger capital market, improving infrastructure and growing middle class with increasing disposable income.

To make India’s economic growth more sustainable, India needs a second generation of reforms to speed up privatization of government owned businesses, improve financial and legal systems to protect investment and modernize its infrastructure. It is also important to introduce business friendly tax reforms, upgrade labor laws to the international level and eliminate bureaucracy to attract more international corporations with more investment.

Gross Domestic Product
US Dollar Exchange
Inflation Index (2000=100)
Per Capita Income
(as % of USA)

8.39 Indian Rupees

7.86 Indian Rupees
12.36 Indian Rupees
17.50 Indian Rupees
32.42 Indian Rupees

About one-fourth of the national population was urban by 2000.

Gross Domestic Product
US Dollar Exchange
            Inflation Index (2000=100)
Per Capita Income
(as % of USA)
44.94 Indian Rupees
44.09 Indian Rupees

45.83 Indian Rupees
54.93 Indian Rupees

This is a chart of trend of gross domestic product and foreign trade of India at market prices estimated by Ministry of Statistics and Programme Implementation with figures in millions of Indian Rupees.

Impact on Small Scale in India

This impact shall be studied right from the beginning of colonization in 18th century. Colonization can be considered as 1st wave of globalization.
In pre colonization era, India’s textiles and handicraft was renowned worldwide and was backbone of Indian economy. With coming of industrial revolution along with foreign rule in India, Indian economy suffered a major setback and much of its indigenous small scale cottage Industry was destroyed.

After independence, government attempted to revive small scale sector by reserving items exclusively for it to manufacture. With liberalization list of reserved items was substantially curtailed and many new sectors were thrown open to big players.

Small scale industry however exists and still remains backbone of Indian Economy. It contributes to major portion of exports and private sector employment. Results are mixed, many erstwhile Small scale industries got bigger and better. But overall value addition, product innovation and technology adoption remains dismal and they exist only on back of government support. Their products are contested by cheaper imports from China. Policies of government toward SSI were covered in previous article access here and here

Impact on Agriculture

As already said, share of agriculture in domestic economy has declined to about 15%. However, people dependent upon agriculture are still around 55%. Cropping patterns has undergone a huge change, but impact of liberalization can’t be properly assessed. We saw under series relating to agriculture that there are still all pervasive government controls and interventions starting from production to distribution (here SPS and here – WTO).

Global agricultural economy is highly distorted. This is mainly because imbalance in economic and political power in hands of farmers of developed and developing countries. In developed countries, commercial and capitalistic agriculture is in place which is owned by influential Agri corporations. They easily influence policies of WTO and extract a better deal for themselves at cost of farmers of developing world.

Farming in developing world is subsistence and supports large number of poor people. With globalization there has been high fluctuation in commodity prices which put them in massive risk. This is particularly true for cash crops like Cotton and Sugarcane. Recent crises in both crops indicate towards this conclusively.

Also there is global Food vs. Fuel confusion going on. Sugar and corn are used to manufacture ethanol which is used as fuel. In USA Corn is produced mainly for this purpose, as sugar cane is in Brazil. Now there are apprehensions that what if converting food into fuel is more remunerative for producers? More than 1 billion people still live in hunger, much more are just hand to mouth. It is futile to expect that free market will take care of these people, who don’t have any purchasing power. Clearly, Agriculture is biggest market failure, but is rarely discussed for being so in WTO.

Another global debate born out of globalization is one of GM crops. Here too powerful MNCs like Monsanto hold the key. USA allows unhindered use of GM crops, but EU bans it. In India field trails are going on. (It was discusses here)

On the positive note, India’s largely self-sufficient and high value distinguished products like Basmati Rice are in high demand all over. Generally speaking, India is better placed to take up challenge of globalization in this case. If done in sustainable and inclusive manner, it will have a huge multiplier impact on whole economy. Worldwide implicit compulsion to develop Food processing Industry is another landmark effect of globalization.

Apart from these, Farm Mechanization i.e. use of electronic/solar pumps, Tractors, combines etc. all are fruits of globalization. Now moving a step further, Information technology is being incorporated into agriculture to facilitate farming.

Impact on Services Sector

In this case globalization has been boon for developing countries and bane for developed ones. Due to historic economic disparity between two groups, human resources have been much cheaper in developing economies. This was further facilitated by IT revolution and this all culminated in exodus of numerous jobs from developed countries to developing countries. Here US have to jealously guard its jobs as we guard our agriculture.

IT industry

Software, BPO, KPO, LPO industry boom in India has helped India to absorb a big chunk of demographic dividend, which otherwise could have wasted. Best part is that export of services result in export of high value. There is almost no material exported which consume some natural resource. Only thing exported is labor of Professionals, which doesn’t deplete, instead grows with time. Now India is better placed to become a truly Knowledge Economy.

Exports of these services constitute big part of India’s foreign Exchange earnings. In fact, the only three years India had Current Account surplus, I.e. 2000-2002, was on back of this export only.


Further, in banking too India has been a gainer. Since reforms, there have been three rounds of License Grants for private banks. Private Banks such as ICICI, HDFC, Yes Bank and also foreign banks, raised standards of Indian Banking Industry. Now there is cut through competition in the banking industry, and public sector banks are more responsive to customers.

Here too IT is on path of bringing banking revolution. New government schemes like Pradhan Mantri Jan dhan Yojana aims to achieve their targets by using Adhaar Card. Having said this, Public Sector Banks still remain major lender in the country.

Similarly Insurance Industry now offers variety of products such as Unit Linked Insurance plans, Travel Insurance etc. But, in India life Insurance business is still decisively in hands of Life Insurance Corporation of India.

Stock Markets

Another major development is one of Stock Markets. Stock Markets are platforms on which Corporate Securities can be traded real time. It provides mechanisms for constant price discovery, options for investors to exit from or enter into investment any time. These are back bone of free markets these days and there is robust trade going all over the world on stock exchanges. Their Importance can be estimated from the fact that, behavior of stock markets of a country is strongest indicator of health and future prospects of an economy.

These markets has thrown open wide array of associated services such as Investment Banking, Asset Management, Underwriting services, Hedging advice etc. These collectively employ lakhs of people all over India.

Similarly there are commodities market which provides avenues for investment and sale of various eligible commodities.

Telecom Sector

Conventionally, Telecom sector was a government owned monopoly and consequently service was quite substandard. After reforms, private telecom sector reached pinnacle of success. And Indian telecom companies went global. However, corruption and rent seeking marred growth and outlook of this sector.

Entry of modern Direct to Home services saw improvements in quality of Television services on one hand and loss of livelihood for numerous local cable operators.

Education and Health Sector

It should be noted that food (Agriculture), Health and education (and to lesser extent banking) are among basic necessities, which every human being deserves and can’t do without. Unfortunately, in developing countries there is market failure in all these sectors and majority of people can’t afford beyond a certain limit (or can’t afford at all). Concept of free markets, globalization, liberalization etc. fails here miserably. Free markets provide goods and services to people who can afford paying for them, not to those who deserve and need these.

Now if we consider these sectors from angle of our inclination towards free markets, certainly there has been lot of progress. There has been world class education available in India and Deregulation has resulted in Mushrooming of private engineering and Medical Colleges. But in reality, this had far reaching devastating effect on society.

These new colleges accommodate only a miniscule proportion of aspirants at very high costs. Recently, an Independent organization ‘Transparency International’ came out with report claiming that India’s medical system is most corrupt in the world. This was no surprise, we all know from where it starts. High fees of education forces many aspirants to take educational loans from banks. After qualifying job market is unable to absorb majority of them. Practice turns out to be option of last resort. Now to make a decent living and to pay back the loans person is lured by corruption. Consequently, when many similar cases are put together, we get a corrupt system, economy and society.

Reality is that after deregulation and liberalization, government along with other sectors, pulled its hand from social sectors too. Now there is Mediocre to high quality options are available in private sector which can be availed as per one’s budget. In public Sector Less than Mediocre to Mediocre options are available. This leaves huge proportion of aspiring students and expecting patients.

On Social front India’s performance is deplored all over the world and it is probably behind all important developing economies. This lacuna has been recognized and government has taken the charge. In case of education almost universal enrollments has been achieved upto primary level and now impetus should be on improving quality, so that student of public schools comes at par with at least average private ones.

In Terms of Demographic Statistics Right Now and Then in India : Causes and Analysis

Once in a year, the United Nations Development Programme releases its Human Development Report.

This puts out a country-wise Human Development Index, which is constructed by using a combination of years of schooling, life expectancy and income indicators.

Like its predecessors, the 2014 report (released two days ago) allows one to compare India’s performance with other countries.

The country’s overall rank is 135 -- which puts it nearly three-quarters of the way down the list.

Just over 100 of the total list of 187 countries are in the ‘High’ or ‘Very High’ human development category. India is bracketed with over 40 other countries in the Medium Human Development category (index ranging from 0.550 to 0.700).

India’s score for 2013, at 0.586, places it near the bottom of the Medium category -- which is understandable since it crossed from Low to Medium only six or seven years ago.

The list bears out once again that human development is linked closely to income.

The richest countries have the best human development index, and the poorest have the worst.

Only 10 countries with a lower per capita income than India have a better index; and four countries with higher income have a lower index.

So incomes and human development tend to go together. This is intuitive, indeed obvious, and should not surprise. India has done better than the average in terms of the rate at which it has improved its score on the index. The annual increase in 2000-13 has been 1.49, against a Medium category average of 1.17. However, quite a few countries have managed to improve their index faster than India -- among them Bangladesh, which now has a better index than Pakistan despite being much poorer (both countries are ranked somewhat lower than India).
At India’s present rate of progress on human development, it may take some 15 years for India to get to where China is today, (in the High development category, with an index of 0.719).
That said, there is a lot of grim news buried in the details. For instance, India accounts for a mammoth 40 per cent of those who suffer from ‘multi-dimensional poverty’ -- UNDP’s term for deprivation.
The country also does poorly on many indicators of inequality, in both absolute as well as relative terms. Gender inequality is a weak spot. On education, the numbers are poor and India does particularly poorly on the equality front.
But the country seems to be catching up -- enrolment ratios at primary, secondary and tertiary levels are now comparable with the average for the Medium category.
But on both education and health, the country spends somewhat less (in relation to gross domestic product, or GDP) than Medium category countries as a whole.
Two factors are particularly worrisome, and both relate to the environment.
One is that India suffers from natural resource depletion at a rate that equals 4.9 per cent of gross national income -- which must be placed against annual GDP growth in the last three years of 5.3 per cent. It should be clear that growth achieved while doing damage to the environment is not sustainable.
If one factor is in the additional point that the people who suffer the most on account of environmental damage are the poor, then it should be clear that a growth process that is environmentally harmful is also anti-poor.
For one, the difference in the wealth share held by India’s poorest 10 per cent and the richest 10 per cent is enormous; India’s richest 10 per cent holds 370 times the share of wealth that it’s poorest hold.
India’s richest 10 per cent have been getting steadily richer since 2000, and now hold nearly three-quarters of total wealth.
India’s 1 per centers – its super-rich – have been getting richer even faster. In the early 2000s, India’s top 1 per cent held a lower of share of India’s total wealth than the world’s top 1 per cent held of its total wealth. That changed just before and after the global recession – though the world’s super-rich are recovering - and India’s top 1% holds close to half of the country’s total wealth.
Not surprisingly, India then dominates the world’s poorest 10 per cent.


The Wealth Drain in British-Ruled India

The ‘Drain of wealth’ from India to England started after 1757, when the Company acquired political power and the servants of the Company a ‘privileged status’ and, therefore, acquired wealth through dastak, dastur, nazarana and private trade. For company, becoming a political power meant its ownership of revenues as used in financing ‘investments’ and ‘expenditure’ of ‘colonial budget’. The Company servants, after 1757, extorted immense wealth from Indian rulers, zamindars, mer­chants and common-people, amounting to not less than 6 million between 1758 and 1765; four times more than the total land revenue collection of Bengal in 1765.
After the wealth drain process was over,that is,remarkably,after 1947,we have to pay attention to how the socialistic fiver year plans work,how further could they have worked and how far were they implemented practically.
Five Year Plans and The Extent of Their Success
The following were the goals of every five year plan in general,with minor specialisations in case of each :-
·       Population control.
·       Generating employment by giving priority to agriculture and rural development.
·       Reduction of poverty.
·       Ensuring proper availability of food and water for the poor.
·       Availability of primary health care facilities and other basic necessities.
·       Primary education to all children in the country.
·       Empowering the socially disadvantaged classes like Scheduled castes, Scheduled tribes and other backward classes.
·       Developing self-reliance in terms of agriculture.
·       Acceleration in the growth rate of the economy with the help of stable prices.
From here,it is clearly visible that the aim of the five-year plans were to accelerate the process of economic growth by accelerating the process of economic development. It must be noted that economic development cannot take place without economic growth but economic growth can take place without economic development. Since India developed these socialist policies along with some capitalist elements,it resulted in India being a mixed economy and it had all the elements required to nurture the seeds of economic well being. But the pace was not as was expected and this phenomena was highly international than being solely national.
Development was taking place but there were major loopholes in the implementation and functioning of these developmental plans.A big reason here was the distorted psychology of the intermediaries.Often,they swapped the money for personal benefits in between and the money could never provide nutrition to the processes it was otherwise supposed to.India was still very young as a democracy and there was not as much funding it could expend for administrative supervision. And even if it would have been applied,there was no guarantee that these people would be moral,either.This is a big drawback and a major cause of deterioration in the economy.
However,it was not that the economy was stagnated or the plans did not function at all.The plans functioned and both the nominal and real GDP subsequently increased but what was never satisfying was the rate of economic development,which means economic growth + social change.

International Causes
When a different country or a body consisting of foreign countries dominate the economy of a nation for their own benefits, in terms of social sciences, it is termed as imperialism.
Now,the International Monetary Fund and the World Trade Organisation and the World Bank never stopped interfering with developmental processes all over the world,including India.
In the 1990s,after the Cold War had come to an end,Super 301 was imposed on India to liberalise trade.This meant that if India was not allowing open market,then all its exports would have been shunted immediately.
The liberalization did have some remarkably good effects on the economy.The theory of deficit financing (Lord Keynes) was used for multiple times,there was better employment than before,the economy did not face many chances of stagnation,the trade flourished and so did industries. Indigenous industries established themselves in bolder terms.All these effects had some good impact aligning with the definitions of developmental economics. But it created the plank that the entire third world today suffers from : dual economy.
The open market forced the country’s governance to reduce subsidies drastically and this affected our public sector.The agriculture never flourished as it was supposed to,or had been promised about. The Green revolution that began in the late 1960s with the implementation of the IADP along with the third five year plan was and is sort of a trap in itself. The production could be massively increased with the newly introduced HYV seeds and chemical pesticides and fertilisers,only until it made the entire piece of land unproductive or completely dependent on these inputs in order to be able to produce anything at all.
Also,this involved a lot of arsenic consumption and the illiterate farmers of India often not knowing the ill-effects fall prey to the poisonous components of these chemicals while trying to implement their usage. The poison that these crops absorb results in several diseases,including fluorosis and arsenicosis that results in causing harm to the lungs, skin, kidneys, and liver and may even prove to be cancerous. This is definitely not something that aligns with a progress in human development.
The liberalization might have helped in flourishing agriculture if we had enough infrastructure in the agricultural context but we did not have as much infrastructure,both the wealth gap and reduction in subsidy being the cause to this and since the subsidy was now reduced, making the poor farmers poorer and stunting the further chances of securing a place of Indian agriculture in the international market.
Also,it was clearly observed that richer farmers,retired officials were those who benefitted from this.This is so because they could afford the necessary infrastructure required.This ensued (and continues ensuing)  a class struggle between the landless farmers and labourers and the rich landlords, something that has existed in this country for more than 2 centuries. Since the landlords are rich and the poor farmers are generally illiterate all over the country, the tenants who cultivate the land of the landlords still do not have any security of tenure and are often evicted according to the landlord’s wish. The credit system, especially the agricultural credit system is also as terrible.Most of the illiterate farmers do not know where to borrow credit from and so go to the landlords to ask for the same instead of forming co-operative socities or going to a government bank that does not charge even one-fourth the interest rate the landlords do.
We also have been blessed with terrible storage facilities and there is absolutely no attempt to preserve or manufacture quality preserved foodstuff with the agricultural produce.The lukewarm approach of the government in this context has not very helpful until now.
All of these is a cause of wealth gap or wealth disparity and all of this cause wealth disparity as a counter effect.This continues as a dangerous cycle,often termed as a spiral (much like in the Bohr model in Chemistry) which keeps getting weaker as it keeps getting repeated.
Flourishing industries have given birth to rich industrialists in this country.Now,statistically,the number of millionaires is increasing whereas the number of the absolute poor is decreasing.This drainage is worse and is as unpreferred as the wealth drainage  during the colonial times,if not even more.
Much later to this,in recent years,the economy has been inviting tax dodgers,especially in terms of online retailing and this is the part of the extension of the cobweb.
And all this actually affects the economy. In the Introduction of this project,we had read about a concept called HDI. From life expectancy at birth,maternal death rate,infant death rate,education to gender equality,all of each of these indicators actually effect the economic well being of people living in a country.

A brief culmination of calculating the same has been provided as follows.
Published on 4 November 2010 (and updated on 10 June 2011), the 2010 Human Development Report(HDI) combines three dimensions:-

A long and healthy life: Life expectancy at birth
Education index: Mean years of schooling and Expected years of schooling
A decent standard of living: GNI per capita (PPP US$)
In its 2010 Human Development Report, the UNDP began using a new method of calculating the HDI. The following three indices are used:

1. Life Expectancy Index (LEI) = = \frac{\textrm{LE} - 20}{85-20}

2. Education Index (EI) = = \frac{{\textrm{MYSI} + \textrm{EYSI}}} {2}

2.1 Mean Years of Schooling Index (MYSI) == \frac{\textrm{MYS}}{15}
Expected Years of Schooling Index (EYSI) = = \frac{\textrm{EYS}}{18}
3. Income Index (II) = = \frac{\ln(\textrm{GNIpc}) - \ln(100)}{\ln(75,000) - \ln(100)}

Finally, the HDI is the geometric mean of the previous three normalized indices:\textrm{HDI} = \sqrt[3]{\textrm{LEI}\cdot \textrm{EI} \cdot \textrm{II}}.
LE: Life expectancy at birth
MYS: Mean years of schooling (Years that a person 25 years-of-age or older has spent in schools)
EYS: Expected years of schooling (Years that a 5-year-old child will spend in schools throughout his life)
GNIpc: Gross national income at purchasing power parity per capita


Ultimately, what can be said based on works of many scholars mentioned above, we can assume that efforts for integrating new dimensions reflecting human rights and human freedom in measuring HDI are on thin ice. Only realistic way is not try to integrate those dimensions into overall HDI and not to consider the incorporation of sustainability, human freedom and other indicators into the index, unless we want to destabilise, discredit and depreciate the whole concept of HDI. Instead of that, information about human rights and freedom and environmental un/sustainability should serve as additional information about each country in the index. At the end, human development and human rights are in fact two sides of the same coin – there is no development without human rights and human freedom.


Post Script : The project does not actually involve any help from any teacher or guide or website in
order to be written.Certificate /Acknowledgement is plain statutory.

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