ECONOMIC DEVELOPMENT OF

INDIA
(Robust economy with tattering
masses)
Om Prakash Yadav
omjiyadav@gmail.com

omjiyadav.blogspot.com

Indian Economy has been moving with a great speed for

more than a decade. It has registered a growth of 8-9 % last two
consecutive fiscal years, although, it is expected a slow down this
financial year, but it is certainly going to be near 8%. Many people of
new generation might not appreciate this phenomenal growth because
they tend to compare these figures with countries like US, UK, Japan,
Germany France etc., but if we make retrospection into 1950s and
1960s, only then we realise the difference. For example, in 1960
India’s per capita income was 73 US dollars, whereas; in the same
period that of Thailand was 92 US dollars. In 1991, it rose to 300 US
dollars and in 2004; it further rose to 500 US dollars. The per capita
income is expected to touch 1500 US dollars in 2020 in today’s
dollars. Now the so called ‘Hindu rate of growth’ myth is allayed.
When Budget is presented in the Indian parliament, the entire
world loves to watch it, so much so that even the Sensex of the Wall
Street gets affected by the speech of the FM of India. Such an
achievement, by no means can be under estimated. So far as the
growth of Indian Economy is concerned, the FM said in his Union
Budget speech that in the last three years GDP is increased by 7.5%,
9.4% and 9.6% i.e. an average increase is about 8.8%. Almost every
sector of the Economy, the growth has been nothing short of
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spectacular. For example, the Industries sector registered about 10.6
%, Service sector 10.4 and Non-agriculture sector registered 10.4%
growth in the 2007-08. But the Agriculture sector’s performance in
this regard is dismal, it is only 2.5%. If we look at the picture of area
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wise performance of these sectors, at least the economic indicators are

very encouraging. If we see the Sector wise developments for 2007-
08, the indicators are very satisfactory. Agricultural production, for
example is about 219 million tonnes, decisively more than the
previous year, thanks to favourable monsoon and hard labour of our
farmers. Similarly, other sectors of economy also, are making the
same kind of success story. The Service sector and especially the IT
sector, has been writing spectacular success stories year after year.
The IT professionals of India are now second to none. This Sector has
been the key driver of growth in recent years, but not so much so in
2006-07, when industry and services contributed in like fashion to
GDP growth. Growth in the service sector was 9.6 and 9.8% in 2004-
05 and 2005-06. It picked up to 11.0% in 2006-07. The rapid growth 2

communication and transportation in this country are gearing up the

economic growth to much accelerated speed.
Railways, hitherto the ‘White Elephant’ of Indian Government has
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made a turn around. The operating ratio has been brought down from
1.02 to 78.03. In non-technical terms the cost of running railways has
been considerably reduced. The deficit has been overcome and profit
has been made. According the budget speech made by Lalu Prasad,
the Railway Minister, the Railways has earned a profit of more than
20,000 crore rupees. Indian Railways has carried more than 728 MT
of revenue cargo in the year 2006-07 recording a growth of 9.2% over
previous year. Ministry of Railways is constructing ‘dedicated freight
corridor’ to further increase the freight carriage. These are the success

1
Economic outlook for 2007-08, (Economic Advisory Council to the PM)
2
Report of economic advisory council to Prime minister of India
3
Report submitted by Rakesh Mohan Committee termed Railway as white elephant

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stories of Railways which is considerably contributing to the robust
growth of Indian Economy.
Manufacturing sector on the other hand is again doing well. The
growth of GDP arising in this sector jumped to 12.3% in 2006-07
from 9.1% in the previous year and 8.7% in the year prior to that (i.e.
in 2005-06). Overall GDP grew by 7.5% and 9.0% respectively in
these two years, indicating the relatively larger contribution of
manufacturing, and industry more generally, to the current heightened
pace of economic expansion.
ENERGY- Any developing economy would require energy to
sustain and move forward the pace of social and economic
development.
1-According to the FAO, number of hungry people in India has
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increased by 19 million between1991 to 2001. Nearly half the

children are chronically malnourished.
2-India has largest number of medical colleges in the world and is
among the largest producers of doctors. We have now more than
20000 hospitals whereas; it was 2717 in 1951, 11174 in 1991 and
18218 in 2001. Approximately 15000 new doctors qualify every year.
Paradox is that about five lakh people die from tuberculosis every
year. This number is almost unchanged since independence! Almost
two million cases of malaria are reported every year and are not
decreasing.
3- Largest number of children in India is undernourished and they do
not get adequate food to eat. According to 2001 census the infant
mortality rate is 64/1000 and access to sanitation facilities is only
28%
4- India is the 4th largest producer of medicine in the world and also a
large exporter of It., whereas; DPT coverage is only 55%. Number of

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Food and Agriculture Oraganisation

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T.B patients in India is 5 million and number of deaths due to T.B is
nearly 4, 50,000(2004-05). This is the paradox in which we live.
5- The condition of children of this giant economy is far from
satisfactory. According to one estimate, number of children who died
before the age of 5 yrs is 63 out of 1000 . The condition of tribal
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children is much more precarious. In Orissa for example, number of

children (below 3 yrs) severely malnourished is 21%. In Maharashtra
number of tribal children who died in 2003-04 under 6 yrs of age due
to malnutrition is 9000. The number of doctors in this country is only
48 in every one lakh population, which is very less in comparison
with other developed nations.
These are some indicators which cry about glaring contradictions in
Indian Economy. One quarter of world population is poor and
according to one estimate, there are about 200 million slums in India.
Dharavi in Mumbai is the biggest slum of the world. More than 40%
of Indian family live in single room, whereas; Mukesh Ambani has 6

constructed the biggest house in the world which costs about 700
crore rupees. What a contrast! Robert Reich a member in Clinton’s
cabinet has said in his book ‘ supercapitalism’ that wealth of Bill
Gates and Warren Buffet equals the wealth of 100 million poor
Americans. Now this situation is fast appearing in Indian society.
Manifestations of these contradictions and paradoxes: even after
such robust growth in Industry, construction, service and other such
sectors, the growth in agriculture sector remained far from
satisfaction.
The growth in agriculture sector, though lower than in the non-
agriculture, nevertheless remained higher than the growth of
population in 1950s. For example, the population growth during
1951-2006 was on an average 2.1%, whereas; during the same period
the growth in agricultural food production was on an average 2.5%. It
5
The UN report.
6
Chairman of Mukesh Dhirubhai Ambani Reliance Company.

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is perhaps due to this reason, that during this period we were, except
few exceptions, self sufficient in this area. This equilibrium started
showing signs of disturbance after 1990s, not incidentally when
liberalisation era was ushered. With the advent of LPG , the 7

agriculture sector gradually became victim of government’s apathy. It

was during this period the food grain production started showing
signs of down ward trend. In the beginning of 21st century, the
production of food grains remained at 1.2% whereas; population
growth came down only to 1.9%. Due to this mismatch in food
production and its consumption, the Indian Economy started showing
aberrations which could not precipitate till 2007-08. The data
available with the Ministry of Agriculture, the per capita availability
of food grains in 1990-91 was 468 grams, which declined to 419
grams in 2005-06 registering 13% decline. The euphoria of
Liberalisation, Privatisation and globalisation (LPG) was such that the
required amount of attention towards agriculture was/is not paid
resulting in a decline of 0.26% in cultivation area over a period of 16
years. Even the cropping pattern underwent remarkable change.
People in many areas switched over to commercial and cash crops.
For example farmers in the states like A.P., Maharashtra, Tamilnadu
some parts of Kerala switched over to cotton crop. They went on
using hybrid seeds like B2 cotton indiscriminately in order to get
more and more yield. Initially, all went well but gradually the
problem precipitated. The cost of production soared and farmers were
indebted. In absence of well a pronounced and properly implemented
credit policy of Banks, the farmers were trapped in the web of money
lenders. Results are devastating. More than one lakh of farmers have
so far committed suicide in these areas. Situation in areas like
Bidharbha, Telengana etc is very pitiable. The government came out
with a loan waver policy in 2008-09 budget presented in the
parliament, but it too, is not proving effecting in bringing down the
cases of suicides in these areas.

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Liberalisation, Privatisation and Globalisation.

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According to NSSO , about 1/3rd or 200 million rural Indian
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populations spend only 12 rupees/ a day and consume only 12

kilograms of cereals per month.
The urban areas are also far from good. According to reports of
NSSO, urban poor consumes only 10 kilograms of cereals per month,
whereas; an average rich in Delhi spends rupees1, 40,000 on wedding
reception. Such is the paradox and such is the gap.
The data regarding glaring inequalities are numerous and difficult to
arrange but the picture is clear. The gap between rich and poor is
increasing with enormous speed. The inter-personal and inter-regional
gap in economic prosperity is widening with a great speed. The rich
are plucking flowers, whereas; thorns are pricking the poor. All
attempts in this regard have failed to yield desired results. When India
registered 8-9% growth rate, many people called it ‘robust’,
‘remarkable’ and ‘excellent’ but few called it ‘over heating of
economy’. Such high speed and pace of economic growth, if allowed
to go unabated without equitable distribution would precipitate in
catastrophic consequences. This is the reason why the discrepancies in
our economy are manifesting in different social, economic and
political forms.
RISING INFLATION- The inflation is rising and so are the prices
essential commodities. The figure has reached all time high in 16
years. National and international debates have started on this issue.
The rise in crude oil prices led to price rise of Petrol and diesel in
many parts of the world including India. Protests in many parts of
Europe became major concern for the governments. A summit to end
the food crisis was held in Rome and discussions were held. The
entire world leaders were unanimous at least on a point that, if they
fail to feed the poor population of their country, the very roots of
democracy would be at stake. We cannot allow vehicles to run at the
cost of hungry people. We cannot follow the American pattern where

8
National Sample Survey Organisation report.

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15% of the land is used for bio-fuel. They even destroy their farm
yields to maintain market price. This is causing serious food scarcity
all across the world. Such is the magnitude of problem. India is not an
exception to it. If we follow the European and American model with
closed eyes and folded hands, we will have to face much harsh and
tough times in years to come. The bio-fuel is not only a fuel of
vehicle; rather it is the blood of poor people across the world.
Therefore, it is the right time when our policy maker will have to
think twice and thrice that what ways they would evolve to lessen the
gap between rich and poor. The glaring and abhorring contradictions
in the economy would mar all the achievements which we had made
during these years. If rich are moving in lememosine, the poor should
be allowed to move in the buses also. If the HNIs spend crores on 9

wedding, the daughter of poor should not be allowed to be sold due to

economic hardships. Corporate Hospitals are here to cater to needs of
big businessmen and babus, but Government Hospitals should also
properly run so that no one dies for want of life saving drugs. Sky
soaring buildings of Public Schools with air-conditioned class rooms
are no harm to the society, but government schools should have at
least wooden benches and hand pumps. The mushroom like growth of
English schools in every streets of every town and city are perhaps
due to failure of government educational institutions. It is said that it
legal ways are closed, people take recourse of illegal means. Similarly
when government fails to deliver, so called NGOs come and usurp the
position hitherto legally meant for government agencies.
If India has to stand tall amidst the developed Nations, it has to ensure
that the sharp differences are blurred and gaps plugged, or else we
will go on creating ‘oasis’ in ‘deserts’.

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High Networth Individuals ( those who posses more than 100 crore rupees)