Developed country

Developed country

Subject: Economy

Section: National Income

Context: The ‘developed country’ goal is the first of the five vows that Prime Minister Narendra Modi exhorted Indians to take during his address to the nation on Independence Day.

The “Panch Pran” — five vows?

• Every Indian should focus on developing the country;
• 100 per cent freedom from slavery;
• Taking pride in Indian heritage;
• Ensuring importance is given to unity and integrity and
• Every citizen should be responsible.

What is a developed country?

• Different Institutions follow different criteria
• The UN’s World Economic Situation and Prospects classifies countries into three broad categories: 
  • Developed economies– There are 31 developed countries according to the UN in all.
  • Economies in transition–17 economies are in transition
  • Developing economies-remaining countries
• It is done to reflect basic economic country conditions and it is independent of regional classifications. 
  • So, not all European countries are “developed”, and not all Asian ones are “developing”.
• Criteria–United Nations uses the World Bank’s categorisation based on Gross National Income (GNI) per capita (in current US dollars)

Why is the United Nations classification contested?

• It lacks accuracy and analytical value:
  • China’s per capita income is closer to Norway’s than Somalia’s and it is designated  as a developing country while Ukraine’s, per capita GNI is $4,120 (a third of China’s) — is designated as “economies in transition”.

India’s position:

• India is currently far behind both the so-called developed countries, as well as some developing countries even though:
  • India is one of the biggest economies of the world in terms of GDP (gross domestic product).
  • India has made a secular improvement on Human Development Index 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.
    • Human Development Index (HDI), a composite index where the final value is reached by looking at three factors:
• the health and longevity of citizens,
• the quality of education they receive, and
• their standard of life.
• India is the world’s third-largest economy in purchasing power parity (PPP) terms.
• However:
  • In terms of 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.
  • Ten percent of Indians, at most, have consumption levels above the threshold of $10 (PPP) per day expenditures for the global middle class.
  • India’s current HDI score (0.64) is much lower than what any of the developed countries had even in 1980

How much can India achieve by 2047?

• If  India were to grow as fast as China did between 2007 and 2022, then, it will take India another 15 years to be where China is now. 
• The World Bank’s 2018 report mentions what India could achieve by 2047.
  • At least half its citizens could join the ranks of the global middle class i.e. households have access to better education and health care, clean water, improved sanitation, reliable electricity, a safe environment, affordable housing, and enough income to spend on leisure.
  • It requires fulfilling prerequisites– increasing income well above the extreme poverty line and  improved public service delivery.