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IMBALANCES IN INDIAN ECONOMIC DEVELOPMENT
INTRODUCTION: It has been commonly believed that the problems of the western industrial societies are identical to that of the Third World and hence the same patterns of growth and development are prescribed for the developing countries. But aping the Western system has led to serious imbalances in the economic development of India.
DEVELOPMENT OF THOUGHT: The Rostow model of unilinear growth is not suitable to the Third World countries which are not undeveloped but are underdeveloped states. India has followed a capitalist path of development with help from the public sector but poverty continues to be a major problem even after forty-five years of independence. Hunger, malnutrition, abject poverty and exploding unemployment have become the main features of the Indian economy. The development pattern has been lopsided with only 10% of the Indians controlling over33.6% of the national wealth. Most of the benefits of the economic Growth have been hogged by a tiny minority, leaving the overwhelming majority sidelined. The western model of development has thus proved to be unsustainable.
CONCLUSION: There is no hope of improvement for the Indian economy without a change in the distribution of assets and incomes in favour of the poor. This depends essentially on the political process and is a matter of political will and commitment.
Regionalism may serve as a mechanism for preserving the language and culture of the area, and for increasing assertion of the states’ rights as opposed to the Union Government’s powers. It also involves the propagation of “sons-of-the-soil” theory, the discriminatory type of regional ethnocentrism and may lead to inter-regional rivalries. The development process in operation at the national level, the deepening economic crisis, people’s lack of access to means of fulfilment of basic human needs and uneven development stoke the flames of regionalism.
The bulk of the Third World states, including India, got decolonised in the backdrop of the cold war. The U.S. social scientists viewed the problems of the western industrial societies as identical with that of the Third World. This is particularly true of modernisation development theorists, who have identified the problems of the developed and developing the world as similar. There is no categorisation in terms of historical periods. No effort is made at distinguishing societies which grew into industrial societies with the coming of the industrial revolution and societies which are trying to transform themselves into industrial societies two hundred years later. Rostow’s unilinear model of growth is a typical example.
They assumed that the post-colonial states would undergo the same stages of economic growth as the western states had undergone earlier. But by the sixties the societies in Latin America. Africa and Asia had witnessed economic stagnation, insurgent movements urban decay, revolutions etc. This crisis of development in the Third World challenged the very assumptions underlying this approach. Rostow’s unilinear growth model is historical. He assumes that the Third World states are traditional. But today’s Third World states are not traditional because colonialism distorted their socio-economic structures. These are not undeveloped but underdeveloped states. This model ignores the differences in the initial conditions in comparing the underdeveloped states of today with the 18th or 19th century western states.
Unlike the Third World today, the West had unique historical advantages in the initial stages of development. When the West started, the whole world was open to it. The migration of people from Europe to the USA, Australia, Canada, and other places— involving a fifth of the population reduced population pressure and released funds for industrial use. They had the monopoly of cheap raw materials and captive markets fox selling their manufactured goods in the colonies. Agricultural exports from the colonies helped Britain invest in industries. The West established an international economic system to its advantage and to the disadvantage of the new Third World. Here one might point to the odious comparison of Germany’s and Japan’s post-war Il recovery with the Indian case. Such a comparison ignores the fact that for the former it was the case of recovery of an already developed economy whereas the Indian case involves the development of an underdeveloped economy.
The development would mean improvement in the well-being of the masses and their quality of life. The minimal level of well-being must include the satisfaction of basic needs. Conversely, under-development involves the denial of basic needs to the people while enhancing the material returns to the dominant groups. It deprives the majority of their survival and sustenance.
India, like most underdeveloped countries, has been following the capitalist path of development. The public sector came into, provide crutches to developing capitalism. But poverty continues to be a major problem in the country.
The poverty line consists of the daily minimum per capita calorie intake of 2,400 in the rural areas and 2,100 in the urban areas. Nearly five decades of post-colonial development in India has failed to build up a just and equitable society. The recent government efforts at misleading the public with a fake claim about its having lifted 57 million people above, the poverty line notwithstanding, 26 per cent of India’s population is below the poverty line. In other words. As per the latest NSSO, survey 1999-2000 260 million out of India’s 997 million are living a life of squalor and destitution. Malnutrition and disease are endemic to these “Wretched of the Earth” whose ranks are swelling annually (27.09 million in the rural areas and 23.62 million in the urban areas.)
Even in the Green Revolution Punjab, 24 per cent of small farmers and 31 per cent of marginal farmers live below the poverty line. This means a slow death. Because malnutrition is less dramatic than outright famine, it does not provoke the kind of public outrage and government action that mass starvation does. If the present trends continue, by the end of this century India will have 472 million poor or more than the total number at the time of Independence.
Countrywide diet surveys by the National Nutritional Monitoring Bureau (NNMB) show that diet in nearly half the households surveyed in different parts of the country was deficient even on the basis of lowered yardstick of adequacy adopted by the NNMB since 1976. Again, the basis of the new (lowered) yardstick for assessment of malnutrition adopted by the NNMB, only less than 15 per cent of children below five years could be considered as being in a normal state of nutrition, the rest suffering varying in3g degrees of malnutrition. Because of under-nutrition and infections, of them ion children born in 1983, three million will grow into adulthood with impaired stamina and poor mental abilities, and seven million will grow into adulthood suffering from milder forms of malnutrition, resulting in their mental and physical impairment. Only three million babies (one-eighth of the total) will grow into healthy, productive and intellectually able persons. According to Mr James Grant, Director of UNICEF, about 3,000 children died in India daily in 1985.
An expenditure of 30 paise per head is needed for making up the shortfall in the nutritional intake of pre-school children for their normal growth. Since a child cannot be isolated from the family as a unit, the additional cost of improvement for a family is Rs 2 per day. But for one-third of the families, income is less than Rs. 2 per head. About 1.5 million tonnes of food grains are needed. The problem of malnutrition in our country, including the problem of malnutrition in our children, is a problem of inequitable distribution rather than of insufficient food resources.
While 27 million tonnes of food stock is lying with the Food Corporation of India and other government agencies, half of India’s population does not have the purchasing power to buy food. The government is stepping up efforts to export the “surplus” food grains. Like imperialist Britain which diverted land in India from staple food to export crops, the post-colonial Indian rulers are making frantic efforts to increase export outlets for agricultural and allied products in spite of serious hunger and malnutrition in India. In’ terms of value, such exports increased from Rs. 487 crore to Rs. 2,056 crore during the decade from 1970-71 to 1980-81. These exports include main ‘sources of protein for people like pulses, fish, meat, rice, fruits, vegetables, oils etc. The accent on exports has caused diversion of land used for growing food (Jawar, millets, pulses etc.) for poor people to the production of items for export like soya.
Even the food-for-work programmes, which could moderate the off-season rise in the prices of food grains in villages and exerted some upward pressure on agricultural wages, have practically been given up in spite of the huge food stock with the government and famine conditions in some parts of the country like Kalahandi district of Orissa where children are currently abandoned or sold for paltry sums for want of food and mothers and wives are deserted due to extreme economic distress.
At the other extreme, according to the World Bank 10 per cent of Indians control over 33.6 per cent of the national wealth. After adjustments for their share in black money – transaction–which some estimates put at half of the • G.N.P.–the share of this 10 per cent minority works out to be over 5I per cent. A mere 2.5 per cent of the rural households own 30 per cent of land in the “Socialist Republic of India”.
According to a survey by the National Council of Applied Economic Research, one per cent of households in the country holds 14 per cent of the national wealth while the bottom. 50 per cent account for less than 7 per cent of the national wealth. The bottom 50 per cent of the rural households share 8.2 per cent of the rural wealth while the corresponding urban share was only 3.2 per cent. The top I per cent of the rural households claim 13 per cent of wealth with the corresponding urban share at 70 per cent. The urban areas exhibit a higher degree of concentration of wealth.
Eleven industrial houses control Rs 27,000 crore of the public money. Their own investment in these companies is only Rs. 148 crore—only half a per cent. According to European Bank estimates, a few Indian business houses have slashed away Rs 25,000 crore in European banks—the postcolonial drain of wealth from India. An International Monetary Fund Staff survey put the amount of black money in India at about 50 per cent of the gross national product in 1982-83 i.e. the underground economy was a formidable Rs 72,000 crore in 1982-83 and Rs 76,000 crore in 1984-85.
The disparities in income distribution go hand in hand with uneven regional development. Punjab with the green revolution stands out in contrast to the severely depressed Gangetic state of Bihar. In villages, the death rate is twice as high as in cities.
It is the rural rich who grab most of the benefits like credit and irrigation facilities and subsidies. The poor households have to depend on traditional money-lenders for both their “production and consumption” loans. This has led to massive indebtedness and reduced millions of poor in rural areas to a state of slavery in the form of bonded labour. This century-old practice forces generations, of a family into unpaid work from “womb to tomb” to pay off a debt. According to the London based Anti-slavery Society’s conservative estimates, the number of India’s bonded labourers in 1972 was three million—-three million slaves in the world’s largest “democracy”. The actual number of bonded labourers is said to be more than twice as high. The Bonded Labour System Abolishment Act of 1976 has not made any difference because for these helpless millions entering into bondage is the only source of survival.
The massive economic suffering, abject poverty, destitution, exploding unemployment and growing economic disparities inflicted by the state result in protests. Given the coercive orientation of the state power towards lower classes, such protests are sought to be silenced by the repressive power of the state. The collision of the police, the administration, and landlords in suppressing the rural poor’s demand for implementation of the statutory minimum wages reflect the nature of the state power. Januzzi, s forecast in his study of land reforms I Bihar, is already with us: violence to forestall change will stand face to face with violence to promote change.
Cold blooded murder of protesting people by the police in false encounters has become a common feature of -law and order” of the post-colonial Indian state. Even civil rights monitoring groups are subject to police brutalities and harassed by the state. The human rights (which include the right to economic. social, cultural, super/sub-imperialist power has led to an unbridled increase in expenditure on defence disproportionate to its security environment. The revised upward defence accounts for 15 per cent of the Budget. Further, the stated amount is a gross under-estimate because part of the value of defence allocations is disguised through dispersal under different heads of accounts. e.g. the expenditure on several forces whose functions are no different from the army – the Border Security Forces, Assam Rifles, J&K Light Infantry, the Indo-Tibetan Border Police and the Navy-Coast Guard—is shown in the Home Ministry’s account. Taking into account the various subterfuges employed is understanding the defence expenditure, the actual expenditure, on defence is far higher due; 15% claimed by the government.
An overwhelming majority of the people in India live in rural areas and they have to make a living through agriculture. In these areas, the land is a primal-% productive asset and is a tangible expression of economic and hence political power. Given the highly inequitious landownership patterns, the very individuals who own a large share of land dominate local politics and the lives of their roles as landlords, money lenders and employers. The prime reason for having a reform, of basic relations among tillers of land is to reduce poverty by reducing inequality. Tenancy reform, without land redistribution, is ineffective. While land reform is no remedy for all agrarian hills; nothing short of it will provide economic growth coupled with social equity and power sharing. Land reform is a matter of political will. The Indian state has been vacillating between ritual gestures of radical intent and applying the full apparatus of repression at its disposal. The pattern becomes all the more compelling as the potential power of the elite, which gains economically, conies into conflict with the poorest stratum of labourers.
On the whole land reform measures have been a force. A good amount of redistribution of land did take place in different pails of the country in the fifties and early sixties. But they occurred more due to the political and other pressures exerted by the numerically powerful middle class cultivating tenants on both upper caste landholders and the state. It benefitted the rich. The landless poor and the marginal farmers have not benefitted from such redistribution.
The distribution of the national income has been too uneven to prevent a grave distortion in the production and consumption patterns. In an economy where the bulk of consumption, production and investment decisions are made through a market mechanism, it is the income distribution which determines the patterns of consumption, expenditure as well as the demand and, hence. the composition of the industrial product. Consumer goods production is turned to the government, the public sector’s role has been advocated by big capitalists, including Tata and Birla, in their 1946 Bombay plan. Nearly three-fourths of the public sector investments were on infrastructure where private capital was shy to step in because of low or no returns. The public sector accounts for less than a quarter of the domestic product. Agriculture is wholly in the private sector. The rest of the economy consists of private business and industries plus a small sector owned jointly by the government and private investors.
Post-colonial India has registered considerable industrial growth. It is a leading industrial power in the Third World. It confirmed its status as a potential member of the nuclear club with its 1974 Pokhran nuclear test. It has a large (third largest) pool of active scientific manpower. Agricultural output has nearly doubled during the last two decades from 72 million metric tonnes of foodgrains in 1965-66 to an estimated 142 million tonnes in 1982. The agricultural share of the gross domestic product dropped from 50 per cent to 37 per cent between 1960 and 1981. Industry, on the other hand, grew from 20 per cent to 26 per cent while that of the services increased from 30 per cent to 37 per cent.
Most of the benefits of economic growth, however, have been hogged by a tiny minority, leaving the overwhelming majority sidelined. “Socialist” India is characterised by accentuating polarisation between an affluent minority and the masses below the officially defined poverty line which is a euphemism for the requirements of the upper-income brackets. The vast unemployment, under-employment and dire poverty of the population severely restrict the internal market for manufactured goods. The large scale underutilised capacity of the industry would be fully utilised if the mass of the poor has the purchasing power. The “export-led” growth effort is precisely aimed at compensating the lack of purchasing power of the masses at home.
Is it desirable to struggle for the establishment of society like the industrialised West? Like most Third World states, India has broadly been pursuing a western development model. The implicit promise of “catching up” with the West or “bridging the gap” is nearly impossible to attain. The chasing of western living standards is also not environmentally and ecologically sustainable. It will be suicidal for the poor countries to apt the USA which with 6 per cent of the world’s population consumes about 35 per cent of the world’s resources.
For whom is the development process functioning? Growth is not distributionally neutral. The income distribution, the flow of capital, and concentration of economic power continue to be in favour of the upper-income brackets in the rural and urban areas. The capitalist development strategy offers no hope to the masses. What are the political determinants of this patently anti-democratic process? The answer lies in the very nature of the state power in India. The repressive character of the state against the poor and the oppressed highlights the very class character of the Indian state. There is no hope of improvement for the peripheralised masses without institutional change–change in the distribution of assets and incomes–in favour of the poor. This, in turn, depends on the change in the co-relation of inter-class forces in favour of the masses. Re-distribution of wealth is contingent on a great deal of change in the existing power structure. This is essentially a political process, a matter of political will and commitment.
While this involves high political risk in terms of the alienation of existing power wielders, it can also create new legitimacy for the government in terms of a new support structure through peasant and workers mobilisation. As a well-known anti-communist, Raymond Aron remarked:
“The operation of the system. or the capitalist world market is hound to favour the already industrialised countries so greatly that most of the others are doomed to a future of under-development unless there is a socialist revolution (whether it is in the name of Marxism or antimerism is irrelevant)”.
Capitalism in India rules out a people-oriented development. The content and direction of the state policy are to subserve the interests of the top 10 per cent while increasing the burden of masses who are drifting at or below the subsistence level. In the age of “late capitalism”, the path of capitalist development in a peripheral count!), like India is bound to be distorted and slow. These are the problems inherent in the Indian development strategy which defines the parameters for the possibilities and potentialities of development—political, economic, and socio-cultural—in every part of India.