What is Economic Development in India – In the present day development economics one finds broadly two main approaches to the concept of economic development these are (i) the traditional approach, and (ii) the new welfare oriented approach.

The traditional approach – Economic Development

The traditional approach defines development strictly in economic terms. For the exponents of traditional approach economic development implies a sustained annual increase in the GNP at rate varying from 5 to 7 per cent or more together with such changes in the structure of production and employment that the share of agriculture declines in both. Whereas those of the manufacturing and tertiary sectors increase.

The policy measures thus suggested are the ones which induce industrialization at the expense of agricultural development. Objectives of poverty elimination, reduction in economic inequalities and employment generation are mentioned in passing reference only and in most cases it is assumed that rapid gains in overall growth in GNP or per capita national product would trickle down to people in one form or the other.

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The new welfare oriented approach

Jacob Viner was probably the first economist who in the early 1950s argued that it was not correct to claim that a country was achieving economic progress as long as the incidence of poverty in the country had not diminished. Although his views deserved greater attention, yet they failed to receive any support until the beginning of the 1970s.

In the early 1970s, however, having realized that about 40 per cent of the developing world’s population had not benefited at all from the rise in GNP per capita and structural changes in the economy during the 1950s and 1960s, many economists called for the rejection of the narrow definition of economic development.

During the 1970s they redefined the concept of economic development in terms of the reduction or elimination of poverty, inequality and unemployment within the context of a growing economy. In this phase “Redistribution with growth” became the popular slogan.

Questions Raised by Dudley

Dudley’s seers raised some basic questions while conceptualizing economic development. He asserted, “The question to ask about a country’s development are therefore:

• What has been happening to poverty?
• What has been happening to unemployment ?
• To inequality ?

If all three of these have declined from high levels, then beyond doubt this has been a period of development for the country concerned. If one or two of these central problems have been growing worse, especially if all three have, if would be strange to call the result ‘development’ even if per capita income doubled.

Economic Development in India

This line of argument is based on the practical experience of a number of third world countries. Leaving aside a few socialist developing countries, growth efforts have completely bypassed the poorest in the developing nations of Asia, Africa and Latin America.

Interestingly some of these countries have recorded spectacular increase in GNP for quite some time, and yet both income inequalities and poverty have grown. According to the traditional approach, these countries are characterized as developing, whereas by the more recent poverty, equality and employment criteria they are still backward.

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