The persistent and long-term improvement of a society’s or nation’s economic well-being is referred to as economic development. Typically, it entails a trifecta of rising productivity, rising living standards for the populace, and economic expansion.
A number of strategies can be used to promote economic development, such as investing in human and physical resources, encouraging entrepreneurship and innovation, enhancing infrastructure, increasing trade, and developing supportive legislative and regulatory frameworks.
Economic development’s overarching objectives are to foster sustainable economic growth and lessen inequality, poverty, and unemployment. Governments, businesses, civil society organisations, and people are just a few of the many stakeholders that must be involved in this intricate and diverse process.
Need for Economic Development
- Poverty Reduction: Raising living standards and reducing poverty depend on economic development. It boosts income levels, generates jobs, and gives people access to fundamental goods and services like healthcare and education.In India, 415 million individuals were able to escape poverty between 2005–2006 and 2019–21, according to the latest Multidimensional Poverty Index (MPI) released by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI) at the University of Oxford.
- Growth in the Economy: Economic development encourages economic growth, which in turn results in higher output, higher productivity, and more substantial economic activity.
- Increased International trade: Economic development will help India increase its Export Competitiveness, which will boost the economy. As per the Ministry of Commerce, India demonstrated a positive trend despite the disastrous second wave of Covid-19 in April–May 2021. Since March of last year, it has remained above the $30 billion threshold.
- Infrastructure Improvement: Infrastructure, such as roads, bridges, and public transit systems, can be improved with the aid of economic development. Increased mobility will have a multiplier effect as people will have better access healthcare, education, and employment possibilities. The growth of the economy will help in reducing the logistics cost and eventually reduces the cost of doing business in India.
- Innovation & Entrepreneurship: Economic development encourages innovation and entrepreneurship, which can result in the creation of new products and services. This can create an ecosystem where innovation and entrepreneurship are encouraged.
- Social Development: Economic development helps with the improvement of the conditions of the vulnerable and disadvantaged in society at large. There are a lot of employment and job opportunities created, and people also get ways to start their own ventures. The erstwhile disadvantaged sections like SC/ST, Women etc. get opportunities in a growing economy which were earlier not available to them. Economic Development also helps in bridging the Rural-Urban divide by ensuring that opportunities of livelihood are not concentrated only in urban centres.
Challenges
- Population: India has one of the highest population densities in the world, which poses a significant challenge to its infrastructure’s ability to keep up with the rapid population growth. This presents a major obstacle for Indian economy development. Recent data shows that India is almost at the verge of overtaking China in becoming the world’s most populous country.
- Poverty: With roughly 22% of the population living below the poverty line, poverty is a huge barrier to the growth of Indian economy. This suggests that a sizeable portion of the population is unable to participate in economic growth & development, producing a cycle of poverty that impedes economic growth & development.
- Lack of Education: Poor or Lack of education is another issue the Indian economy has to deal with. In India, only about 74% of the population is literate. This implies that many people are unable to obtain suitable employment opportunities and engage in the economy. Numerous societal issues are also caused by this.
- Income inequality: Economic development may result in income inequality, in which a small portion of the population profits greatly more than the rest. Social unrest and a perception of unfairness in society may result from this. OXFAM Report of India 2023 titled “Survival of the Richest” quoted that resources in India are not scarce but the inequitable distribution of it causes the scarcity. The rich are getting richer while the poor are getting poorer.
- Corruption: Corruption can impede economic development by causing inefficient resource usage, unequal benefit distribution, and a lack of confidence in governmental institutions. Economic growth and investment can be hampered by corruption.
