2.2         ndian     onom
        IntroductIon                                                   economIc growth
     Similar to seers and philosophers, economists,                A term coming from the life sciences, ‘growth’ in
     were also party to human’s quest for a better                 economics means economic growth. An increase
     tomorrow. We have been a witness to a number                  in economic variables over a period of time is
     of notions coming in from the literature of                   economic growth. The term can be used in an
     Economics in this area—starting with a very                   individual case or in the case of an economy or for
     humble and layman’s word like ‘progress’ to                   the whole world. The most important aspect of
     technical terms like ‘growth’, ‘development’ and              growth is its quantifiability, i.e., one can measure
     ‘human development’. With greater dependence                  it in absolute terms.2 All the units of measurement
     on the idea of the ‘economic man’, the world                  may be applied, depending upon the economic
     created immense wealth in the post-War decades.               variable, where growth is being studied. We have
     It was in the 1980s that social scientists started            a few examples:
     finer studies in the area of mankind’s actions,                      (i) An economy might have been able to
     finally challenging the very idea of the ‘economic                         see growth in food production during
     man’ (‘rational man’). Thus starts mankind’s urge                          a decade which could be measured in
     to introspect the lives of humanity on the planet                          tonnes.
     earth. Meanwhile, humanity was faced with an                       (ii) The growth of road network in an
     unique riddle of climate change. By now, courtesy                          economy might be measured for a decade
     the UNO, the world has the World Happiness                                 or any period in miles or kilometres.
                                                                       (iii) Similarly, the value of the total production
                                                                                of an economy might be measured in
        Progress                                                                currency terms which means the economy
     Progress is a general term frequently used by                              is growing.
     experts to denote betterment or improvement                       (iv) Per capita income for an economy might
     in anything. In economics, the term was used                               be measured in monetary terms over a
     for a long time to show the positive movement                              period.
     in the lives of people and in an economy. It had                    We may say that economic growth is a
     both quantitative and qualitative aspects to it.              quantitative progress.
     After a point of time, some economists started                      To calculate the growth rate of an economic
     using all the three terms—progress, growth and                variable the difference between the concerned
     development—interchangeably to mean almost                    period is converted into percentage form. For
     the same thing. But it was only during the                    example, if a dairy farm owner produced 100
     1960s, 1970s and 1980s that a clear meanings of               litres of milk last month and 105 litres in the
     these terms really evolved.1 The term ‘progress’              following month, his dairy has a growth rate of 5
     became a general term with no specific meaning                per cent over a period of two months. Similarly,
     in economics or denoting both growth and                      we may calculate the growth rate of an economy
     development. But growth and development were                  for any given successive periods. Growth rate is
     allotted their clear-cut meanings.
                                                                       2.    As the IMF and the WB considered this yardstick of
        1.  Based on the analyses in Michael P. Todaro and Stephen           development as quoted in Gerald M. Meier and James
            C. Smith, Economic Development, Pearson Education,               E. Rauch, Leading Issues in Economic Development,
            8th Ed., New Delhi, 2004, pp. 9–11.                              Oxford University Press, New Delhi, 2006, pp. 12–14.