CONTRASTS IN THE

GLOBAL SOUTH 2

SOUTH ASIA: INDIA

SUGGESTED READINGS
• Rohit Lamba and Arvind Subramanian (2020). Dynamism with Incommensurate Development: The Distinctive Indian
Model, Journal of Economic Perspectives—Volume 34, Number 1—Winter 2020—Pages 3–30.
• Joshi, Vijay, (2017) India's long road: the search for prosperity, Oxford UP
• Panagariya, Arvind (2008), India: the emerging giant, Oxford UP
• Roy, Tirthankar, (2016) ‘The British Empire and The Economic Development of India (1858-1947)’, Revista de Historia
Económica / Journal of Iberian and Latin American Economic History, Volume 34, Issue 2
• World Development Reports on India available online
• Also see:
• https://www.weforum.org/agenda/2018/12/all-of-the-world-s-top-10-cities-with-the-fastest-growing-economies-will-be-
in-india/
• Former IMF Chief Economic Advisor and former Reserve Bank Governor Prof Raghuram Rajan and Dr Abhijeet
Banerjee, Nobel Prize Winner in Economics, 2019 on Indian economy
• https://lnkd.in/ehpqVQr Lecture 1
• Https://lnkd.in/e39Veii Lecture 2
GEOGRAPHY AND DEMOGRAPHICS

• Location: Surrounded by Pakistan, China, Bangladesh and Nepal

• Population:
 1950-51 - 359 mln
 2015- 1292.71 mln

• Number of States: 28 states; 9 Union Territories

GROWTH RATES (IN %)
Decades Korea India China

1961-65 10.7 3.7 1.9

1965-70 10.6 4.6 7.4
1971-75 7.6 2.9 5.9
1976-80 7.0 3.2 6.6

1981-85 7.8 5.2 10.8

1986-90 9.6 6.0 7.9

1990-95 7.8 5.1 12.3

1996-00 3.6 5.9 8.6

2001-05 4.5 7.0 9.6
2005-10 4.2 8.6 11.2
2010-15 3.7 6.8 8.3
2015-19 2.7 6.6 6.7
GDP GROWTH RATES OF INDIA, CHINA AND KOREA
(5 YEAR AVERAGE)
OVERVIEW (1950-90)

• India’s development strategy in

pre-reform period was focused
on: economic growth; self
reliance; social justice.
• India followed inward looking
heavy industry based
industrialization approach
• Heavy government intervention
and highly regulated economy
• Less emphasis on primary
education than higher education
• Inadequate infrastructure
INDIA ‘S GDP GROWTH RATES - 1950-
90
COMPOSITION OF GDP: 1950-1990
(AVERAGES IN PER CENT)
Decades Agriculture Industry Services
1950-60 53.6 11.6 34.4
1961-70 45.6 15.0 39.1
1971-80 40.8 16.7 42.2
1981-90 35.0 18.7 46.3
REASONS FOR SLOW GROWTH
DURING 1950-90
• Heavy government intervention and highly regulated economy
• Very large bureaucracy
• Large public sector
• High cost economy- lack of competition, inefficiencies
• More focus on redistribution rather than growth

9
ECONOMIC REFORMS STARTED IN 1991

• Objective of Economic Reforms

• Acceleration of economic growth

• Reduction in poverty
• Increase productivity
• Reduce Inefficiencies

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LEARNING BY DOING

• Devaluation of Indian Rupee- 18%

• Wide ranging reforms in
– industry - abolition of industrial licensing
– finance - interest rates deregulated, controls removed
– external - import licensing removed except few goods; export controls in 1991 on 439
goods
– foreign investment- automatic approval of FDI
– fiscal sector

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CHARACTERISTICS OF INDIAN
REFORMS
• Gradual as against big-bang approach
• Reforms ‘Irreversible’
• Reforms with a ‘human face’
“The government will follow economic policies that will promote growth
with social justice and lead to greater self-reliance. We have no use for
jobless growth; nor for growth that leaves untouched large sections of the
people.” – Union Budget 1996-97
• Inclusive Growth
• Sectors like agriculture and labour market not touched
• Banks’ ownership remains unchanged

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OVERALL

• Reforms started in July 1991

• Triggering factors: a combination of external and internal factors
• Wide ranging reforms in most sectors
• Outcomes: sharp increase in growth rates, reduction in poverty, increase in
per capita income
• India’s rise in global economy
• Lot still remains undone - Human development; agriculture; Infrastructure

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 HUMAN DEVELOPMENT
• Literacy Rate (per cent)
 18.3 – 1951- (Males- 27.2; Females- 8.9)
 52.2 - 1991 – (Males- 64.1; Females – 39.3)
 69.1- 2014 – (Males- 75.7; Females- 62.0)
 74- 2018- (Males- 82; Females- 66)

• Crude Birth Rate (per thousand)

 39.9 - 1951
 29.5 - 1991
 20.4 – 2016
 18- 2018

• Infant Mortality Rate (per thousand live births)

 146 – 1951
 80 - 1991
 34- 2016
 28- 2019
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HUMAN DEVELOPMENT CONTD.

• Life Expectancy at Birth (years)

 32.1 – 1951
 59.4 – 1991
 69- 2017

• Death Rate
 27.4 – 1951
 9.8 – 1991
 6.4 - 2016
 POVERTY IN INDIA
• Head count poverty –

 1973 -74 - 54.9 per cent

 2004-05 - 27.5 per cent
 2011- 21.9 per cent

• Density of poverty - number of poor per unit of land area was 91.8 per sq km in 2004-05
 39.4 people per sq km in Rajasthan to 392 per sq km in Bihar

 https://ophi.org.uk/multidimensional-poverty-index/

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AREA UNDER FOREST COVER (IN SQ
KM)
710000
708273
708000
706000
704000
702000 701495

700000
697898
698000
696000
694000
692000
2013 2015 2017
• “The telephones that existed were not dependable- it was rare to get a
number on the first attempt. The employees of the telephone department
were arrogant and corrupt. If the line went down, it could take months to
fix unless one bribed the lensman. When an MP complained in
Parliament of these breakdowns, C.M.Stephens, Mrs Gandhi’s
communications minister, replied that telephones were a luxury, not a
right, and that anyone who was dissatisfied could return the telephone,
because there was an eight year waiting list for this ‘broken down
product’.”

*** G. Das (2000), p. 208.

MOBILE CELLULAR SUBSCRIPTIONS
(PER 100 PEOPLE)
160.0

140.0 136.0
127.5 130.8
119.5 120.7
120.0
104.3
100.0
87.3
80.0

60.0

40.0

20.0

0.0
India Ghana Switzerland UK China NZ US
INDIAN MOBILE REVOLUTION?

Rashmi Umesh Arora India Unbound Session II UOA (2009) 20

INDIAN ECONOMIC MIRACLE?

• Miracle –Yes, it has taken place

• From 3.5 per cent economic growth rate to 8-9 per cent growth rate
• Huge change in mindset
• Increase in productivity
• Much still remains undone and a long way to go (concern areas: poor
infrastructure; agriculture; rural areas; poor human development- health, water
supply; still high poverty; large regional disparities particularly two northern
states Uttar Pradesh and Bihar; growth of labour intensive industries)

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