India: International Development

Executive Summary

Different analyses have been carried out on the issues affecting the development of most countries in the world and India has been one major country of focus. With the various reports from the World economic surveys and the World Bank, it is clear that India is one country that has greatly been affected by under-development. The reports have tried to establish ways in which the country’s development can be revived in order to cater for its high population and for the growing economy.

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This study has identified the sectors in which India is mostly affected, that is, those key areas that represent the level of under-development. In this aspect, the key indicators of under-development as given by the different surveys and reviews have been specified. These act as a guide towards the areas that are mostly affected by under-development in the country. On the other hand, remedies for curbing under-development have also been brought up and these are categorized into the mainstream, alternative and new remedies. It is argued that if the country would implement these remedies, there would be significant improvement in development because the remedies are based on the under-developed areas.

The study also comes up with the obstacles that have hindered the proper implementation of the identified remedies and in the implementation of these remedies the government with the support of the International bodies like World Bank should come up with ways of overcoming these obstacles so that the country may succeed in its development strategies. The viewpoints in this study reflect the opinions brought out as additional ways of enhancing development not only in India, but in other less developed countries as well. The study concludes that despite the country’s economic growth, there is need to effectively implement the policies set by the International bodies so that it may rise to achieve its development objectives.

Introduction

India is one country that has been able to move from low economic growth to a high level of growth, which has been recognized internationally in terms of the country’s gross domestic product and market exchange rate. In the early 1980s, the country’s economy was guided by socialist-based policies that advocated for extensive regulation, public ownership of property and protectionism which greatly increased the levels of corruption and in turn resulted in slow economic growth. From 1999, the country has been moving from the slow economic growth rate to economic liberalization and a market-based economy. Despite these improvements, however, there is still slow development in the country’s economy and this has brought the attention of the World Bank and other international organizations, which are looking for the cause of this slow development and also coming up with appropriate remedies (World Bank report 2008).

According to the World Bank report (2008), despite its rise in the gross domestic product, India remains one of the world’s poorest countries. The percentage of people living below the international poverty line was 60% in 1981 and 42% in 2005. In 2005, the population of people living below $ 2.50 dollars a day was 85.7% in 2005 which was much higher than that in sub-Saharan Africa. India has also created ways of reducing famine but the number of children suffering from malnutrition continued to rise and this caused more under-development in the country.

With the high dependence of agriculture, the rate of economic development has continued going down and this has inhibited the country’s economy from reducing the number of people living below the national and international poverty level. This has been the major reason why the country is still regarded as a less developed country despite its high economic growth rate in the last few decades. This study looks at the indicators that show that the country is under-developed as well as the remedies that are focused towards promoting development in the country.

India’s under-development

According to Holland (2002) as India makes effort to get to a new level in development, the poor state in the natural environment still remains a critical issue and it is clear that it could be one of the key limiting factors for development. The deterioration of the natural environment has been of significant impact that even the public and private enterprises are affected. On the other hand, despite the report on under-development, India still remains one of the fastest growing countries in the world. The level of under-development is brought up by the challenges that it incurs in its growth process, which despite the fast growth, still makes it a less-developed country.

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The Indian Development Policy Review (2006), Inclusive Growth and Service Delivery: Building on India’s Success, was aimed at looking into the major challenges that were impeding development. According to the review, the under-development of the major public services was one factor that was resulting in the country’s under-development. The economy was not efficient in delivering the key public services like health care, water and sanitation and education to its large population and this acted as a barrier towards development.

Indicators of under-development in India

From the results obtained by the National Sample Survey, the percentage of the poor people living in India rose from 35% in 1991 to a level of 38.5% in the following two years and with the majority of Indians living in rural areas, poverty levels have continued to rise significantly. On the other hand, a study taken by the International Food Policy Research Institute (IFPRI) indicates that even if the country’s overall economic growth has significantly improved in the 1990s, growth has not worked positively on rural poverty.

Indicators by World Bank have shown that agricultural growth has been unstable in the last decade, with a percentage growth of 5% in 1994 and 1995 to a decline of 0.9% in the following year and then an increase of 9.6% in 1997. This then declined by 1.9% in the following year and declined further by 0.2% in 1999. The instability in agricultural growth is likely to make worse the level of under-development, although the World Bank anticipates improvement in agriculture if the Millennium Development goals are achieved.

The financial budget for India is another indicator of the state of the country’s economy. The fiscal deficit during 1999-2000 rose to 5.4%, way above what had been anticipated. The main reason for the high rise in government expenditures was due to the inability of the government to finance the excessive wage bills (The Financial Times 2000-2001). As a result, the national deficit budget has been used by the World Bank report to show that unless the government works towards cutting on its expenditures, the level of development may go down.

The World Bank report (2008) shows that India is in the process of development and with the implementation of the Millennium Development Goals it is likely to show a significant improvement by the year 2010. However, from the perspective of the level of poverty and its economic activities, India can be said to be still lagging behind in terms of development. India can be said to be a low-income and under-developed country as a result of the following development indicators:

People living below National poverty line (1994 and 2000 respectively):

  • Rural – 37.3% 30.2%
  • Urban – 32.4% 24.7%
  • National – 36% 28.6%

People living below international poverty line (2004-2005):

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  • Population below $1 a day – 34.3%
  • Population below $ 2 a day – 80.4%

Remedies towards India’s development

The World Bank’s report on India, India: Policies to Reduce Poverty and Accelerate Sustainable Development released in the year 2000 showed that there is a wide gap in the poverty levels between the different Indian states, which meant that regional disparities was very high. According to the report, over 40% of people in the Maharashtra, Rajasthan, Madhya Pradesh, Uttar Pradesh, Orissa and Bihar states live below the poverty and most of these states are bankrupt and cannot afford to finance their social sectors. The report notes that in order to boost economic development and reduce the level of poverty, there is need to come up with policy reforms which are focused on development and poverty reduction. The reforms (remedies) may be categorized into mainstream, alternative or new remedies.

Mainstream remedies

These are remedies that can be applied in any country in the world to promote development. They are not focused on a specific economy and they relate to any country that is under-developed. India’s mainstream remedies as set out by the World Bank report (2008) include:

Anti-corruption efforts: The major development consequences of India’s high levels of corruption are the loss incurred in the Exchequer, an unsuitable climate for investment and a rise in the price of the government-subsidized goods and services. The Transparency International report on the study for India shows that the money value of corruption in the most basic services that the government provides is estimated at Rs. 21 068, which is a very high value.

According to Kinsbury (2008), remedies on corruption are being carried out by the government in order to promote development through curbing corruption. Computerization of services and the government acts which provide vigilance commissions has been one major way of curbing corruption. They have created channels that are used by the citizens to air their grievances. Whistle blowing is another successful way that the government has come up with. It is now possible to make telephone calls to the public to expose a corrupt organization. These remedies are working towards development in the country through improved economic services.

Alternative remedies

In order to maintain rapid economic growth in India, the country would require greater and more effective infrastructural investment to create job opportunities for the high population and mainly those living below the poverty level. Economic growth should also be distributed regionally to reduce the high levels of region disparities in development (Ramesh 2009).

Ramesh (2009) in the Guardian Weekly argues that enhancing regional growth includes working towards the improvement of the labor laws and regulations, improving agricultural technology and public infrastructure, assisting the regions that are lagging behind in development to catch up, as well as motivating the poor through policies that will initiate them to participate in the trade markets. These measures will be important in boosting economic growth and reducing the poverty level. Other effective alternative remedies that the country has implemented are:

  1. Provision of subsidies for the essential commodities and services.
  2. Privatization of power in order to enhance efficiency and proper management.
  3. Enhancing efficiency in public expenditure especially of key services like health and education in order to improve the financial budget.
  4. Provision of better infrastructural services to promote the private enterprises and enhance improved economic growth.

Implementing these remedies may not be easy especially in an under-developed country like India and they may require long term strategies to be enforced in order to make the remedies a future success.

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New Remedies

With the recent studies being undertaken, there has arisen the need to develop new strategies that are focused towards promoting development in India. The World Bank has established a Rural Development Strategy that is focused on South Asian countries and this has been focused on issues concerning rural development in the specific countries as well as the cross regions. The major focus in India’s rural development strategies is on agriculture and its marketing policy. With support of agricultural sector by the government, regional disparities in respect to development will be minimized and rural development will be enhanced (World Bank report 2008).

On the other hand, the government of India through its states has released its Vision 2020 document which looks into issues that will promote economic growth and development in the different states of India. This is another new remedy and it is organized in three sections. The first section covers social issues like poverty eradication, improved social welfare, enhancing proper education services and building infrastructure to promote rural development. The second section focuses on the major potential areas like development of agro-industries, promoting fishery industries, encouraging dairy and poultry production and developing a successful Information Technology centre. The third section looks into the aspect of ensuring the state governance is focused towards improving the living standards of people and promoting growth.

These remedies, if well implemented are likely to bring change to India as well as other developing nations that are still lagging behind in their development strategies. The World Bank report shows that if the Millennium Development Goals (MDGs) are to be achieved by the year 2015, there will be considerable progress made to alleviate poverty in India and in turn promote development. The Department for International Development (DFID) is also assisting India to develop new strategies focused on development.

Obstacles limiting the success of these remedies

According to the Economist (2008) one of the greatest barriers is the difficulty in assessing the impact of the development programs and strategies. The DFID has not been able to evaluate the progress made while implementing the remedies mainly due to the unavailability of reliable data in form of development indicators. Lack of accurate data on the Millennium Development goals indicators inhibits the DFID program to successfully implement the remedies and monitor their progress.

Another obstacle towards the success of the set remedies is the size of the country. The population as well as the general size of India is very high and this impedes the development schemes from being implemented in all sectors of the country. Despite efforts to ensure sustainable development in all parts of the country, there are still challenges to reach out all the states. Regional disparities still hinder development because the strategies come up with must be implemented at the regional level and not all sectors will benefit from these strategies. The high population also hinders the government from coming up with financial budgets that cater for the needs of the entire population (The Economist 2006).

View points and analysis of the viewpoints

India is capable of improving its economic development if it carries out an extensive analysis of the means of implementing the suggested remedies. The World Bank still regards India as a country with great potential and capabilities, with its rising economic growth making it distinct from other less developed countries. The process of India’s development may be looked at from different viewpoints, which are essential in ensuring that the country moves from under-development to full development stage.

Any country needs to make use of its local resources to enhance independence, which is one major step towards development. India has, for a long time relied on the World Bank for aid but with the improved economic growth, the country aims at developing its own strategies that will help it support its economic activities. The Economist has published a statement showing the way men and women of India struggle to make their ends meet and since most Indians are farmers, there has been a strategy to modernize and improve the agricultural sector. The Congress party has come up with strategies aimed at creating employment for the peasant farmers through the establishment of the National Rural Employment Guarantee Scheme (NREGS). These will focus on providing at least 30 million families with an annual average of 43 days of work.

According to the Financial Times (2004), the solution to the recession in the global economy is investment in the emerging countries. Therefore, India should take the opportunity to encourage foreign investment in its country in order to boost the performance of the domestic companies. India has been experiencing a fast growth in industrialization and this has been seen by its high levels of pollution. Yet, the country has not utilized this industrial development to enable the domestic companies participate in the global markets. As one of the alternative viewpoints, therefore, the country needs to support its local industries so that the economy may improve.

Analysis of viewpoints

The analysis focuses on how the remedies suggested may be affected by the changes that are taking place in India. The viewpoints brought out are solutions that may be implemented together with the remedies in order to promote international development in the country and in this analysis, it is important that other factors are taken into consideration. These factors have been brought out by the Financial Times (2009) as follows:

  1. Modernization and neo-liberalism: Despite the high levels of corruption in India, the country is still growing in terms of modernization. It is clear that a country that experiences high levels of bribery and corruption especially in the public sector is unlikely to develop. However, India has been able to overcome economic problems brought about by the level of corruption and successfully go through a phase of modernization and liberalism in its industrial sectors. Since the country got its independence in 1947, it has shown rapid growth in the small scale industries and the industries have been contributing over 40% in the national industrial output and up to 80% in industrial employment as well as 35% in exports. Therefore, even as the country implements the remedies on anti-corruption measures, it is important to note that development is still taking place and measures on liberal industrialization should also be enhanced. The government needs to support the growth of the industrial sector in order to promote modernization. The World Bank and other international organizations have been trying to provide financial back-up to developing countries’ industries and this way, they have been able to control the activities of these industries. Since the World Bank is managed by the developed economies like Europe and America, India would be required to promote its industries activities so that the World Bank may get the returns of its financial support. This leads to neo-liberalism in the country’s economic policies and neo-liberal conditions are set which the country must meet in order to get more finances for development.
  1. Dependency: The issue of dependency in India brings up a different perspective on the country’s level of economic development. Despite the fact that the country is experiencing high rates of modernization in its industrial sector, there is still a lot of dependence on agriculture. One of the alternative remedies that have been suggested is on the improvement of infrastructure in the country. However, it is clear that majority of rural people depend solely on agriculture and this limits the proper implementation of these remedies. Income derived from agricultural activities is hardly sufficient to cater for the massive population and at the same time improve on the country’s economy. On the other hand, great dependence on the International organization like World Bank is another factor that may have to be re-examined in order to enable the country to implement the strategies towards development. Dependence hinders development even when the country is making great efforts to improve the economy.
  1. Post-colonialism: With the integration of western values in the Indian culture, it would be correct to note that the British has influenced the development of India. The education of India has been improved by the British system and this has enhanced the skills of the country’s labor force. On the other hand, it is as a result of colonization that relations with countries like United Kingdom have been enhanced in the post-colonial era. However, despite all this the country needs to improve on its political systems independently so that it may move towards development.
  2. Localism: Localism focuses on the development of the local production and consumption of goods and services. The localists’ viewpoints on India’s development emphasize on the local control of the government and the industrial sector. They are concerned with the issues that affect development in the country and to them; the Indian government should not rely on international organizations for support. The localists feel that Indians can develop their own economy by promoting agriculture as well as making use of the large population to obtain labor for their local industries. While international trade liberalization is encouraged as a remedy towards development, the Indian localists argue that trade should be restricted to the local goods and services in order to focus on local development.
  3. Critical feminists: The Indian feminists advocate for the recognition of women in development. From the different analyses carried out women have actively been contributing towards development through their participation in household economic activities and feminists are of the opinion that they should also participate in politics in order to reduce the high levels of corruption and create change in governance and this way the country will move towards development. Majority of the rural population is made up of women and when they are provided with education, they rare capable of making a difference in the country’s economy.
  4. Religious perspective: India’s population is dominated by Hindus who have a strong belief in sustenance and co-operation. Most Indians who are guided by their religious beliefs argue that it is through sustaining development that the country may advance. Religious aspects need to be taken into consideration while enhancing the country’s development in order to ensure that there is co-operation from the different communities and there is a positive attitude towards the development strategies implemented.

Conclusion

From the trends of development in India, it is clear that there is still need to work on the domestic industries, growth. This is one way to ensure that the country is developing as it also experiences economic growth. Moreover, the country needs to work towards rural development since most people are in the rural areas. This also means working towards rural industrialization and making use of agriculture to promote the local industries. The country is capable of promoting its domestic industries because it has available resources in terms of labor and the raw materials as well as financial support from the World Bank. Therefore, by focusing on domestic industrialization, the country will promote its economic development.

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