UNDERDEVELOPED ECONOMY MEANING AND FEATURES

MEANING

The term underdevelopment refers to the state of an economy where levels of living of masses (peoples) are extremely low due to very low levels of per capita income due to low levels of productivity and high growth rates of population. Underdeveloped countries are now known as developing countries.

FEATURES

S No	HEADINGS	EXPLANATIONS
1	Low per capita income.	The level of income as measured by per capita REAL GNP is very low in underdeveloped countries. During 1990-2018, the Indian economy has grown at a faster rate than the developed economy. Even then the difference in per capita income between India and the developed economy is quite large. Currently, as per world bank report, 2018 per capita income of the USA is $65,062 on PPP based whereas India has only $7,783 PPP (Purchasing power parity) based.(exchange rate based $ 2,134)

S No	CAUSES	EXPLANATIONS
2	Low level of living	Since about three-fourth of world population lives in countries which have less than one-fifth share in world income, it is obvious that a vast majority of people in these countries must be living under conditions of poverty, malnutrition, disease, illiteracy, etc. even basic necessities such as minimum food, clothing and shelter are not easily accessible to the large number of poor peoples. In 1999 the average calorie intake of food is only 2,496 in India as compared to over 3,400 calories per day in most developed countries.
3	High rate of population growth	Low productivity and high growth rates of population is largely responsible for low income and poor living standards. High growth rate of population means more people to be fed, clothed and provided other necessary goods year after year. In India rate of growth of population which was about 1.31 per cent per annum during 1941-50 has risen to 1.93 per cent during 1991-2001 and in 2011 census population slightly less to 1.5 percent p.a.

S No	CAUSES	EXPLANATIONS
4	High     levels     of unemployment and underemploymen t	Unemployment levels are high in the underdeveloped countries. Thus, countries have not been able to make fuller use of their labour force. At present 5.6 percent of labour force are unemployed. On the other hand, rapidly increasing population leads to a sharp rise in labour force, and low level of economic activity fails to absorb this addition to labour supply. Moreover, in the agriculture sector of the Indian economy, a much larger number of labourers are engaged in production than are really needed.
5	Dependence of agriculture in the economy	Since majority of people (around 80 per cent of total population) live in rural areas and work in agriculture, this is the biggest source of employment. In India, about 50 per cent of the working population was engaged in agriculture and its contribution to national income was 17 per cent only On the other hand developed economy like USA contribute only 0.9 per cent to its national income and they imports more of agriculture products in compare to underdeveloped country.

S No	CAUSES	EXPLANATIONS
6	Low    rate           of capital formation	Another one of the basic characteristic of the Indian economy is the existence of capital deficiency. Capital deficiency is an important characteristic of underdeveloped economy. Capital formation or investment is low in India, low capital formation leads low productivity which leads to low incomes and the low income leads to low saving, and then low saving leads to low rate of capital formation. Thus it forms the vicious circle of poverty. In india during 1950 s total saving is about 10 percent of national income and at present around 30 per cent is saving and investments , for development purpose such rate is not sufficient.
7	Unequal distribution of           income and wealth	Inequality in asset distribution is the principal cause of unequal distribution of income in the rural areas. It also signifies that the resource base of 50 per cent of the households  is so weak that it can hardly provide them anything above the subsistence level of income. According to National Sample survey 60 per cent of the poor rural households owned only 9.3 per cent of area. according to human development report 2015, the quintile ratio is 5, means averages income of 20% riches are 5 times more than average income of 20% poorest of population.

8	The           socio- economic indicators       of consumption	Underdevelopment also finds expression through several socio- economic indicators, such as per capita intake of calories, fats and protein, population per TV set and physician. India is far behind the developed countries so far as these indicators of standard of living are concerned. Illiteracy rate is also very high in India- 35% in 2001, as against less than 5 per cent in developed countries. human development report (2005), India ranks at No. 127 in the world. Its record in terms of removing malnutrition is poor, as 46 per cent of the child population suffers from it. According to 2001 census, only 52 per cent of the population has access to safe drinking water.
9	Technology backwardnes s	Low level of technologies are key factor in underdeveloped countries. Using outdated technologies , machines and know how are responsible for slow growth in India that directly affects the export in adverse manner, even in agriculture sectors poor technologies leads to low productivity and then low income , investments and saving.
10	Manpower deficiency	Manpower is considered as human capital and underdeveloped countries lacks proper training, education and necessities (food , clothes and shelter etc.) to workforce which ultimately  resulted into poor health, low income , productivity , savings and low growth of economy.

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