In his Independence Day address, Prime Minister asked Indians to embrace the “Panch Pran” — five vows — by 2047 when the country celebrates 100 years of independence.
- The ‘developed country’ goal is the first of the five vows that Prime Minister exhorted Indians to take during his address to the nation on Independence Day.
GS III: Indian Economy (Growth and Development)
Dimensions of the Article:
- What is a “developed” country?
- Why is the United Nations classification contested?
- Where does India stand?
- How much can India achieve by 2047?
What is a “developed” country?
- The ‘World Economic Situation and Prospects’ of the United Nations classifies countries into three broad categories:
- Developed economies
- Economies in transition
- Developing economies
- The idea is “to reflect basic economic country conditions”, and the categories “are not strictly aligned with the regional classifications”. So, it isn’t as though all European countries are “developed”, and all Asian ones are “developing”.
- Compared to less industrialised countries, a developed country is one that is industrialised, has a developed economy, and an advanced technological infrastructure.
- While developing nations are those that are either pre-industrial and largely agrarian or they are currently industrialising.
- Organizations like the United Nations, World Bank, World Trade Organization, and World Economic Forum group developed and developing countries based on their metrics.
- For instance, the UN divides nations into low-, lower-middle-, middle-, and high-income nations. This classification is based on the gross national income (GNI) per capita of each nation.
- Low –Income Economy: GNI per capita of up to $1,085
- Lower Middle-income: GNI per capita up to $4,255
- Upper-Middle-income: GNI per capita $13,205
- High-Income economy: GNI per capita above $13,205
Why is the United Nations classification contested?
- It can be argued that the UN classification is not very accurate and, as such, has limited analytical value.
- Only the top three mentioned in chart 3 alongside — the US, the UK and Norway — fall in the developed country category.
- There are 31 developed countries according to the UN in all. All the rest — except 17 “economies in transition” — are designated as “developing” countries, even though in terms of proportion, China’s per capita income is closer to Norway’s than Somalia’s.
- China’s per capita income is 26 times that of Somalia’s while Norway’s is just about seven times that of China’s.
- Then there are countries — such as Ukraine, with a per capita GNI of $4,120 (a third of China’s) — that are designated as “economies in transition”.
Where does India stand?
- India is currently far behind both the so-called developed countries, as well as some developing countries.
- Often, the discourse is on the absolute level of GDP (gross domestic product).
- On that metric, India is one of the biggest economies of the world — even though the US and China remain far ahead.
- However, to be classified as a “developed” country, the average income of a country’s people matters more.
- And on per capita income, India is behind even Bangladesh.
- China’s per capita income is 5.5 times that of India, and the UK’s is almost 33 times.
- The disparities in per capita income often show up in the overall quality of life in different countries.
- A way to map this is to look at the scores of India and other countries on the Human Development Index (HDI), a composite index where the final value is reached by looking at three factors:
- Health and longevity of citizens,
- Quality of education they receive,
- Standard of life.
- India has made a secular improvement on HDI metrics. For instance, the life expectancy at birth (one of the sub-metrics of HDI) in India has gone from around 40 years in 1947 to around 70 years now.
- India has also taken giant strides in education enrolment at all three levels — primary, secondary, and tertiary.
What is the distance left to cover?
- A 2018 diagnostic report on India by the World Bank despite being the world’s third-largest economy in purchasing power parity (PPP) terms, most Indians are still relatively poor compared to people in other middle income or rich countries.
- 10% of Indians, at most, have consumption levels above the commonly used threshold of $10 (PPP) per day expenditures for the global middle class.”
- Other metrics, such as the food share of consumption, suggest that even rich households in India would have to see a substantial expansion of their total consumption to reach levels of poor households in rich countries.
How much can India achieve by 2047?
- The World Bank’s 2018 report had made a mention of what India could achieve by 2047.
- By 2047 — the centenary of its independence — at least half its citizens could join the ranks of the global middle class.
- This will mean that households have access to better education and health care, clean water, improved sanitation, reliable electricity, a safe environment, affordable housing, and enough discretionary income to spend on leisure pursuits.
-Source: Indian Express