Topic 5
🟢 Lite — Quick Review (1h–1d)
Rapid summary for last-minute revision before your exam.
- HDI (Human Development Index): Composite of health (life expectancy), education (mean/expected years of schooling), and income (GNI per capita); India ranked 134/189 in 2024
- Poverty: Multidimensional Poverty Index (MPI) developed by OPHI and UNDP; India reduced poverty significantly (~415 million people escaped poverty 2005-2021)
- Unemployment: Types — Disguised (agriculture), Seasonal, Frictional, Structural, Cyclical; India’s unemployment rate ~7-8% (2024)
- MGNREGA 2005: 100 days guaranteed wage employment to rural households; Right to Work in rural India
- IBC 2016: Insolvency and Bankruptcy Code; revolutionized debt recovery; Banks filed thousands of cases; resolution changed NPA landscape
- ⚡ Food security in India: NFSA 2013 — 80 crore people entitled to highly subsidised foodgrains (rice ₹3/kg, wheat ₹2/kg)
🟡 Standard — Regular Study (2d–2mo)
Standard content for students with a few days to months.
Indian Economy — Growth and Development
Understanding economic growth and development concepts is crucial for the SBI PO exam, particularly questions on poverty, employment, and government welfare schemes.
Economic Growth vs Economic Development
Economic Growth: Increase in a country’s output of goods and services over time; measured by GDP/GNP growth rate.
Economic Development: Broader concept encompassing improvement in health, education, income distribution, environmental sustainability, institutional quality, and human welfare.
Limitations of GDP as a Welfare Measure:
- Doesn’t account for income distribution
- Doesn’t value unpaid work (household work, caregiving)
- Doesn’t subtract environmental degradation costs
- Doesn’t reflect quality of life improvements
Human Development Index (HDI)
Developed by: Mahbub-ul-Haq (Pakistan); adopted by UNDP in 1990
Dimensions and Indicators:
| Dimension | Indicator | Measure |
|---|---|---|
| Health | Life expectancy at birth | Expected years of schooling |
| Education | Mean years of schooling | Expected years of schooling |
| Income | Gross National Income per capita (PPP-adjusted) | — |
HDI Calculation: Each dimension is normalized to a 0-1 scale, then averaged: HDI = (Health × Education × Income)^(1/3)
HDI Ranges:
- Very High: > 0.8
- High: 0.7-0.8
- Medium: 0.55-0.7
- Low: < 0.55
India’s HDI (2024 data):
- HDI value: ~0.645 (Medium development)
- Rank: 134 out of 189 countries
- Life expectancy: ~67 years
- Mean years of schooling: ~6.5 years
- GNI per capita (PPP): ~$7,000
Other UNDP Indices:
- Inequality-adjusted HDI (IHDI): Adjusts HDI for inequality
- Gender Development Index (GDI): Gender-disaggregated HDI
- Multidimensional Poverty Index (MPI): Poverty beyond income
Poverty and Its Measurement
Absolute Poverty
Defined in terms of a specific consumption basket; person below this consumption level is considered poor.
Poverty Lines (Tendulkar Committee, 2011-12):
- Rural: ₹972/month per person
- Urban: ₹1,407/month per person
These poverty lines have been contested; Rangarajan Committee (2014) proposed higher estimates (Rural: ₹1,772, Urban: ₹2,670).
Multidimensional Poverty Index (MPI)
Developed by: Oxford Poverty and Human Development Initiative (OPHI) and UNDP
Dimensions:
- Health: Nutrition, child mortality
- Education: Years of schooling, school attendance
- Standard of Living: Cooking fuel, sanitation, drinking water, electricity, housing, assets
Poverty in India (NITI Aayog MPI Report):
- ~415 million people escaped multidimensional poverty between 2005-06 and 2019-21
- Major reduction due to improvements in cooking fuel, sanitation, and nutrition
Schemes for Poverty Alleviation
MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act, 2005):
- Guarantees 100 days of wage employment per year to every rural household
- Right-based approach — government must provide employment within 15 days or pay unemployment allowance
- Wages linked to minimum wages; indexed to inflation
- Works include: Road construction, water conservation, tree planting, etc.
PM-KISAN (Pradhan Mantri Kisan Samman Nidhi):
- Direct income support of ₹6,000/year to farmer families
- Paid in 3 installments of ₹2,000
- Aadhaar-linked; DBT directly to bank accounts
PM Jan Dhan Yojana (Financial Inclusion):
- Zero-balance accounts; RuPay debit card
- ₹2 lakh overdraft facility
- Insurance covers
Employment in India
Types of Unemployment
- Disguised Unemployment: More people employed than needed; common in agriculture
- Seasonal Unemployment: No work available during off-season (agriculture)
- Structural Unemployment: Mismatch between skills and available jobs; due to technological change
- Frictional Unemployment: Between jobs; temporary; always present
- Cyclical Unemployment: Due to economic downturn/recession
Unemployment Data
NSSO (National Sample Survey Office) Surveys:
- Periodic Labour Force Survey (PLFS): Quarterly and annual
- Current Weekly Status (CWS): More comprehensive unemployment measure
- Usual Status (PS+SS): Principal and subsidiary status combined
Employment Categories:
- Self-employed: Own-account worker, employer, helper in household enterprise
- Regular salaried: Formal employment with written contract
- Casual wage labour: Temporary, daily-wage work
Recent Employment Trends
- Formalisation: Growth in EPFO subscriptions, formal employment post-2017-18
- Gig Economy: Platform-based work growing (delivery, ride-sharing)
- Manufacturing vs Services: Services sector now largest employer and contributor to GDP
- Green Jobs: Renewable energy, environmental sustainability creating new employment
Key Government Schemes for Economic Development
Infrastructure
PM Gati Shakti (National Master Plan for Multi-Modal Connectivity):
- Integrated planning of infrastructure projects
- ₹100 lakh crore investment target
- Digital platform for coordinated planning
Bharatmala Pariyojana:
- Highway construction program; ₹10 lakh crore investment
- Golden Quadrilateral connecting major cities; North-South, East-West corridors
Sagarmala:
- Port-led development
- Modernisation of ports, coastal shipping, inland waterways
MSME Sector
PM Mudra Yojana:
- Loans up to ₹10 lakh to non-corporate, non-farm enterprises
- Three categories: Shishu (< ₹50,000), Kishore (₹50,000-5 lakh), Tarun (₹5-10 lakh)
- 30+ crore loans disbursed since launch
Startup India:
- Tax exemptions for 3 years
- Startup India seed fund
- Simplified regulatory framework
Insolvency and Bankruptcy Code (IBC) 2016
The IBC revolutionised debt recovery in India.
Key Features:
- Time-bound resolution: 330 days including litigation (extendable by 90 days)
- Adjudicating Authority: National Company Law Tribunal (NCLT) for companies; Debt Recovery Tribunal (DRT) for individuals
- Insolvency Professional: Manages the process
- Committee of Creditors (CoC): Financial creditors (banks) vote on resolution plan
Impact:
- Over 5,000 cases admitted since 2016
- Large cases: IL&FS, DHFL, Bhushan Steel, Essar Steel, Jet Airways
- Recovery rate: ~45-50 paise per rupee (on average; varies widely)
- NPA reduction in banks’ balance sheets
2024 IBC Amendments:
- Real estate included; home buyers given recognition as financial creditors
- Pre-packaged insolvency for MSMEs
- Cross-border insolvency provisions
🔴 Extended — Deep Study (3mo+)
Comprehensive coverage for students on a longer study timeline.
Inclusive Growth
Definition: Economic growth that benefits all sections of society, reducing inequality.
Barriers to Inclusive Growth in India:
- Regional inequality (states at different development stages)
- Rural-urban divide
- Caste and gender inequality
- Concentration of industry in a few sectors and regions
Government’s Inclusive Growth Strategy:
- Skill India: Vocational training, Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
- Digital India: Bridging digital divide; connectivity for rural areas
- Financial Inclusion: Jan Dhan, PM Suraksha Bima, Jeevan Jyoti Bima
- Healthcare for All: Ayushman Bharat (health insurance for poor)
Sustainable Development Goals (SDGs)
Adopted by UN: 193 countries in 2015; 17 goals to be achieved by 2030
India’s Performance:
- Ranked 111/166 on SDG Index (2023-24)
- India performing well on: Poverty eradication (SDG 1), Health (SDG 3), Gender equality challenges remain
- NITI Aayog tracks India’s SDG performance
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