Economics Notes (Class 11)

CBSE Class 11 Economics Chapter 10 Development Experience of India in Comparison with Neighbours

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Development Experience of India in Comparison with Neighbours

Development Experience of India in Comparison with Neighbours

Development Experience of India in Comparison with Neighbours

 

Development Path of India, Pakistan, and China

  1. All the three countries started their development path at the same time. India and Pakistan got independence in 1947 and the People’s Republic of China was established in 1949.
  2. All the three countries had started planning their development strategies in similar ways. India announced its First Five Year Plan in 1951, Pakistan announced in 1956 and China in 1953.
  3. India and Pakistan adopted similar strategies, such as creating a large public sector and raising public expenditure on social development.
  4. Both India and Pakistan had adopted ‘mixed economy’ model but China had adopted ‘Command Economy’ model of economic growth.
  5. Till the 1980s, all three countries had similar growth rates and per capita incomes.
  6. Economic Reforms were implemented in China in 1978, in Pakistan in 1988 and in India in 1991.

 

Development Strategy:
A. China
  1. After the establishment of the People’s Republic of China under one-party rule, all the critical sectors of the economy, enterprises, and lands owned and operated by individuals were brought under government control.
  2. A Programme named ‘The Great Leap Forward (GLF) campaign was initiated in 1958, which aimed at industrializing the country on a massive scale. Under this programme, people were encouraged to set up industries in their backyards.
  3. 1965, Mao Tse Tung introduced the ‘Great Proletarian Cultural Revolution (1966-1976)’, under which students and professionals were sent to work and learn from the countryside (rural areas).
  4. In rural areas, the commune system was started, under which people collectively cultivated lands.
  5.  Reforms were introduced in China in phases.
  6.  In the initial phase, reforms were initiated in agriculture, foreign trade, and investment sectors. In the later phase, reforms were initiated in the industrial sector.
  7.  The reforms process also involved dual pricing. This means fixing the prices in two ways; farmers and industrial units were required to buy and sell fixed quantities of raw materials and products on the basis of prices fixed by the government and rest were purchased and sold at market prices.
  8.  In order to attract foreign investors, special Economics Zones (SEZ) were set up. SEZ is a geographical region that has economic laws different from a country’s typical economic laws. Usually, the goal is to increase foreign investment.

 

B. Pakistan
  1.  Pakistan followed the mixed economy model with co-existence of public and private sectors.
  2.  Pakistan Introduced tariff protection for manufacturers of consumer goods, together with direct import controls on competing imports.
  3. The introduction of the Green Revolution and the increase in public investment in infrastructure in select areas led to a rise in the production of food grains.
  4.  In the 1970s, Capital goods industries were nationalized.
  5.  In 1988, structural reforms were implemented. Major thrust areas were denationalization and encouragement to the private sector.
  6. Pakistan also received financial support from western nations and remittances from emigrants to the Middle countries. This helped the country in stimulating economic growth.
C. India
After Independence, India has adopted a mixed economy as an economic development strategy. Both public and private sector co-exist side by side. In order to achieve rapid economic growth, planned development economy was introduced.


Economic Development Strategy after Independence

  1. Both public and private sectors were allotted to carry business activities. The public sector was allotted activities like coal, mining, steel, power, roads etc. The private sector was allotted to establish industries subject to control and regulations in the form of law.
  2. The public sector was given a major push by the Government. Maximum revenues in this sector were invested which increased from Rs. 81.1 crore in First Five-Year Plan (1951-56) to Rs 34,206 crores in Ninth Five-Year Plan (1992-97)
  3. The public sector was given importance in order to eliminate poverty, unemployment etc.
  4. The public sector contributed to the industrialization of the economy. It also helped the Indian economy to achieve a considerable degree of self-sufficiency.


Comparative Study – India, Pakistan, and China

1. Demographic Indicators:
  1. The population of Pakistan is very small and accounts for roughly about one-tenth of China and India.b. Though China is the largest nation geographically among the three, its density is the lowest.
  2. Population growth is highest in Pakistan followed by India and China. One child norm which was introduced in China in the late 1970s is the major reason for low population growth. But this measure led to a decline in the sex ratio, that is the proportion of females per 1000 males.
  3. The sex ratio is low and biased against females in all the three countries. There is strong son-preference prevailing in all these countries.
  4. The Fertility rate is low in China and very high in Pakistan.
  5. Urbanization is high in both China and Pakistan- with India having 28 percent of its people living in Urban areas.

 

2. Gross Domestic Product (GDP) and Sectors :

a.China has the second largest GDP (PPP) of10.1trillion(approx)in2013whereasIndiasGDP(PPP)andPakistanGDP(PPP)are

10.1trillion(approx)in2013whereasIndia′sGDP(PPP)andPakistanGDP(PPP)are4.2 trillion (approx) and $0.47 trillion (approx) respectively.

b. On this path of Development china’s average growth rate is about 9.5% while India’s and Pakistan’s average growth rate is about 5.8% and 4.1% respectively.


c. In China, in the year 2011. with 37 percent of its workforce engaged in agriculture, its contribution to GDP is 9 percent (approx). While in India and Pakistan the contribution of the agricultural sector in GDP is about 19% and 21% respectively. In India, about 56% are engaged in the agricultural sector, while in Pakistan this figure is about 45%.


d. In China, manufacturing contributes the highest to GDP at 47 percent whereas, in India and Pakistan, it is the service sector which contributes the highest (more than 50 percent of GDP)


e. Though China has followed the classical development pattern of the gradual shift from agriculture to manufacturing and then to services, India and Pakistan’s shift has been directly from agriculture to the service sector.


f. In the 1980s, India, China, and Pakistan employed 17, 12 and 27 percent of its workforce in the service sector respectively. In 2011, It reached the level of 25, 33 and 35 percent respectively (approx.).


g. China’s growth is mainly contributed by the manufacturing sector where as in both India and Pakistan, the service sector is emerging as a major player of development.

3. Human Development Indicators:
  1. In most areas of human development, China has performed better than India and Pakistan. This is true for many indicators-per Capita GDP or proportion of population below poverty line, health indicators such as mortality rates, access to sanitation, literacy, life expectancy or malnourishment etc.
  2. Pakistan is ahead of India in reducing the proportion of people below the poverty line and also its performance in transferring labor force from the agricultural sector to the industrial sector and access to water is better than India.
  3. Contrary to it, India is ahead of Pakistan is the education sector and providing health services.
  4. India and Pakistan are ahead of China in providing improved water sources.


Conclusion

A. India-India performed moderately as is clear from
  1. A majority of its people still depend on agriculture.
  2. Infrastructure is lacking in many parts of the country.
  3. It is yet to raise the level of living of more than 22% of its population that lives below the poverty line.

 

B. Pakistan-Pakistan has performed poorly. The reasons for the slowdown of growth and re-emergence of poverty in Pakistan’s economy are
  1. Political instability.
  2. Volatile performance of the agriculture sector.
  3. Over-dependence on remittances.
  4. Growing dependence on foreign loans on the one hand and increasing difficulty in paying back the loans on the other.

 

C. China-China has performed comparatively the best as is clear from:
  1. Success in raising the level of growth along with alleviation of poverty.
  2. It used the market mechanism to create additional social and economic opportunities without political commitment.
  3. By retaining collective ownership of land and allowing individuals to cultivate lands, China has ensured social security in rural areas.
  4. Public intervention in providing social infrastructure has brought about positive results in human development indicators in China.

NCERT Solutions

Fill in the blanks
  • First Five Year Plan of ________________ commenced in the year 1956. (Pakistan/China)
  • Maternal mortality rate is high in _____________. (China/Pakistan)
  • Proportion of people below poverty line is more in __________(India/Pakistan)
  • Reforms in ______________ were introduced in 1978. (China/Pakistan)
Answer:(a) Pakistan, (b) Pakistan, (c) India, (d) China
 
Question 1: Why are regional and economic groupings formed?
Answer: Regional and economic groupings are formed by nations to strengthen their economies by close cooperation and by knowledge sharing.
 
Question 2: What are the various means by which countries are trying to strengthen their own domestic economies?
Answer: As the examples of India, China, and Pakistan show; countries are trying various means to strengthen their own domestic economies. Reforms in agriculture, improvement in industrial production and promoting privatization are the major means to attain this.
 
Question 3: What similar developmental strategies have India and Pakistan followed for their respective developmental paths?
Answer: Both India and Pakistan began with a greater focus on the public sector during the first phase of economic development. After that, both the countries followed the path of privatization so that productivity could be improved. In the agricultural sector, both the countries implemented the Green Revolution.
 
Question 4: Explain the Great Leap Forward campaign of China as initiated in 1958.
Answer: The Great Leap Forward campaign of China began in 1958. It was aimed at industrializing the country in a big way. People were encouraged to set up industries in their backyards. Communes were started in rural areas so that farming could be collectively done.
 
Question 5: China’s rapid industrial growth can be traced back to its reforms in 1978. Do you agree? Elucidate.
Answer: China’s rapid industrial growth can be traced back to its reforms in 1978. Reforms were introduced in phases in China. In the first phase, reforms were initiated in agriculture, foreign trade, and investment sector. Reforms in the industrial sector were initiated in the second phase. The private sector was encouraged to improve production. Village and township enterprises which were owned by the local government were also encouraged to improve production. The State Owned Enterprises (SOEs) were made to face competition with the private sector. A policy of dual pricing was followed to improve industrial productivity. Special economic zones were also created to motivate industrialists.
 
Question 6: Describe the path of developmental initiatives taken by Pakistan for its economic development.
Answer: In the 1950s and 1960s Pakistan introduced many policies for import substitution in order to protect its domestic industry. During this period, the Green Revolution was initiated to improve agricultural output. In the 1970s the capital goods industry was nationalized. Pakistan then dramatically changed its economic policy in the late 1970s and 1980s. The new policies were aimed at greater privatization. In addition to changes in policies, the inflow of foreign loans and remittances helped in creating a conducive environment of growth in Pakistan.
 
Question 7: What is the important implication of the ‘one child norm’ in China?
Answer: While the ‘one child norm’ helped in arresting the growth of population in China, it has a severe drawback. After some years from now, there will more elderly people in China than young people. The cost of social security will increase while the number of workers will decline significantly in China. This will result in a huge economic burden on China.
Question 8: Mention the salient demographic indicators of China, Pakistan, and India.
Answer: The population of China is 1.35 billion, that of India is 1.2 billion and that of Pakistan is 179 million. The annual growth rate of population is highest in Pakistan (1.68) followed by India (1.26) and China comes a distant third at 0.49. Sex ratio is almost equal in these countries with about 48% of the population comprised of females. The fertility rate is highest in Pakistan at 3.3%; followed by India (2.6) and China (1.6). The level of urbanization is highest in China at 57%; followed by Pakistan (37) and India (32).
Question 9: Mention the various indicators of human development.
Answer: Various indicators of human development are as follows:
  • Life expectancy at birth
  • Adult literacy rate
  • GDP per capita
  • People below the poverty line
  • Infant mortality rate
  • Maternal mortality rate
  • Population with improved access to sanitation and drinking water

 

Question 10: Define the liberty indicator. Give some examples of liberty indicators.
Answer: Parameters which show relative democratic liberty and freedom enjoyed by citizens in a country can be termed as liberty indicator. The extent of democratic participation in social and political decision making is an example of liberty indicator. The extent of constitutional protection to the rights of citizens is another example.
Question 11: Evaluate the various factors that led to the rapid growth in economic development in China.
Answer: There are many factors which led to the rapid growth in economic development in China. Unlike India and Pakistan; Chinese reforms were not initiated under compulsion from IMF and World Bank, rather they were the results of an innate desire by the political establishment. Establishment of infrastructure in the areas of health and education, the long existence of decentralized planning and the existence of small enterprises helped in ensuring the success of the reforms. Provision of education and health care in rural areas helped in developing human capital. The commune system helped in the equitable distribution of food grains among the people. Each reform measure was first implemented at a small level and then replicated at a bigger level. Decentralization helped in the proper analysis of successes and failures of various reform measures.
Question 12: Group the following features pertaining to the economies of India, China, and Pakistan under three heads:
One-child norm, Low fertility rate, High degree of urbanization, Mixed economy, Very high fertility rate, Large population, High density of population, Growth due to the manufacturing sector, Growth due to the service sector.
Answer: India: Mixed economy, very high fertility rate, large population, high density of population, growth due to the service sector
China: One-child norm, low fertility rate, the high degree of urbanization, mixed economy, large population, growth due to the manufacturing sector
Pakistan: Mixed economy, very high fertility rate, growth due to the service sector
Question 13: Give reasons for the slow growth and re-emergence of poverty in Pakistan.
Answer: Experts believe that growth in Pakistan was mainly caused by years of good harvest. Moreover, growth was fueled by finance from external borrowings and remittances from the Middle East. When the crops failed the economy suffered. This also resulted in greater inability in paying back loans. These factors led to slow growth and re-emergence of poverty in Pakistan.
Question 14: Compare and contrast the development of India, China, and Pakistan with respect to some salient human development indicators.
Answer: China is way ahead of India and Pakistan at most of the human development indicators. Pakistan is ahead of India in terms of reducing the number of people below the poverty line and in providing better sanitation and drinking water. But both the countries perform equally badly in terms of infant mortality and maternal mortality rates. All the three countries perform badly in sex ratio. However, in assessing human development we should not ignore various liberty indicators which include the extent of democratization and protection of various fundamental rights.
Question 15: Comment on the growth rate trends witnessed in China and India in the last two decades.
Answer: In the last two decades, China has been able to maintain a double-digit growth rate. India began with a low growth rate of 5.7% in the first decade and has fared somewhat better in the second decade with 7.4% growth rate.
Question 16: Compare and contrast India and China’s sectoral contribution towards GDP in 2003. What does it indicate?
Answer: The following table shows sectoral contribution in GDP in 2003 in India, China, and Pakistan. It is clear from the above table that agriculture is the lowest contributor to GDP in all three countries. In the case of China, the industry is the largest contributor to GDP and the service sector is slightly behind it. But in case of Pakistan and India, the service sector is the largest contributor to the GDP and is way ahead of the other two sectors.

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