Human Resources and

Economic Development
The Theory of Demographic Transition, Size and Growth Rate of
Population in India
• The Theory of Demographic Transition is a model that explains the transformation of a country’s population
structure over time. This theory suggests that a country's population growth goes through three stages as it
transitions from a pre-industrial to an industrialized economic system.
• Stages of Demographic Transition:
1.Stage 1: High Birth and Death Rates (Pre-Transition)
1. Characteristics: In pre-industrial societies, both birth and death rates are high due to limited medical knowledge, low living
standards, and insufficient healthcare.
2. Population Growth: Growth is slow because the high birth rates are offset by equally high death rates.
2.Stage 2: Declining Death Rates (Early Transition)
1. Characteristics: As countries industrialize, advancements in medicine, sanitation, and food production lead to a drop in death
rates. Birth rates remain high, leading to rapid population growth.
2. Population Growth: The gap between high birth rates and declining death rates results in a significant increase in population.
3.Stage 3: Declining Birth Rates (Late Transition)
1. Characteristics: Birth rates begin to fall due to changing social norms, increased access to education (especially for women),
urbanization, and family planning measures.
2. Population Growth: The rate of population growth slows as birth rates approach the lower death rates.
•Stage 4: Low Birth and Death Rates (Post-Transition)
•Characteristics: In fully industrialized economies, both birth and death rates stabilize at low levels. The population
grows slowly, plateaus, or even declines.
•Population Growth: There is minimal growth or sometimes population decline as birth rates fall below replacement
levels.
•Stage 5 (Hypothetical): Some countries may enter a fifth stage where population decline is observed due to
sustained low birth rates.
• Size and Growth Rate of Population in India:
• India’s population has been significantly shaped by the demographic transition and
continues to evolve.

• Current Population Size: India is the second-most populous country in the world,
with a population of approximately 1.4 billion as of 2023.

• Population Growth Rate: India’s population growth rate has slowed over the past
few decades. In the 1950s and 1960s, the growth rate was as high as 2.2-2.3% per
year. However, it has now declined to around 1% per year due to falling birth rates.
• Key Factors Influencing Population Growth in India:
1.Fertility Rate: India’s total fertility rate (TFR) has dropped from around 6 children per
woman in the 1950s to below 2.2 in 2023, nearing the replacement level of 2.1.
2.Life Expectancy: Life expectancy has improved dramatically, from an average of around
37 years in the 1950s to over 70 years in recent years due to better healthcare and living
standards.
3.Infant Mortality Rate: The infant mortality rate has significantly decreased, contributing
to higher population growth in the earlier stages.
4.Urbanization and Education: Increased urbanization and better access to education,
especially for women, have led to a decline in birth rates. Families are opting for fewer
children due to rising living costs and aspirations for better quality of life.
5.Government Policies: India has implemented family planning programs to control
population growth, promoting the use of contraception and raising awareness about
smaller family norms.
6.Youthful Population: India has a relatively young population, with a large working-age
demographic that could fuel economic growth in the coming decades.
 Quantitative Population Growth Differentials in Different
•Countries
Population growth rates vary significantly across countries due to differing economic, social,
and demographic factors. The major determinants include fertility rates, life expectancy,
immigration, and national policies. Here's a breakdown of population growth differentials:
• 1. High Population Growth Countries:
• Examples: Nigeria, Ethiopia, Democratic Republic of the Congo, Pakistan.
• Growth Rate: These countries often experience annual population growth rates of 2-3% or
higher.
• Reasons for High Growth:
• High Fertility Rates: Many low- and middle-income countries have fertility rates above the replacement
level of 2.1 children per woman, often exceeding 4 children per woman.
• Lower Death Rates: Improved healthcare, sanitation, and nutrition have lowered death rates, especially
in Africa and South Asia.
• Younger Population: A large proportion of the population is in the reproductive age group, fueling rapid
growth.
• 2. Moderate Population Growth Countries:
• Examples: India, Brazil, Mexico, Indonesia.
• Growth Rate: These countries exhibit growth rates between 1-2% annually.
• Factors:
• Declining Fertility Rates: These countries are experiencing a decline in birth rates due to urbanization, increased access to
education (especially for women), and family planning.
• Improved Healthcare: Lower infant mortality and higher life expectancy contribute to population growth, although it is slowing
in these countries.
• 3. Low Population Growth Countries:
• Examples: United States, China, Russia.
• Growth Rate: These countries generally have growth rates below 1%, with some nearing zero population
growth.
• Reasons for Low Growth:
• Low Fertility Rates: These countries have fertility rates near or below the replacement level (around 1.5-2.0 children per
woman).
• Migration: In some countries like the U.S., population growth is sustained primarily due to immigration rather than natural
growth.
• Aging Populations: Countries like China and Russia are seeing an aging population with fewer people in the reproductive age
group, slowing growth.
• 4. Negative Population Growth Countries:
• Examples: Japan, Italy, Germany, South Korea.
• Growth Rate: These countries are experiencing negative population growth, with annual
population shrinkage.
• Reasons for Population Decline:
• Very Low Fertility Rates: Fertility rates in these countries are well below the replacement level, often
as low as 1.2-1.4 children per woman.
• Aging Populations: A significant proportion of the population is elderly, leading to higher death rates
and a shrinking workforce.
• Low Immigration: Countries with stricter immigration policies, such as Japan, are not replenishing
their population through migration.
• Key Factors Influencing Population Growth Differentials:
1.Fertility Rates: The number of children born per woman plays a key role in determining
the growth rate of a country.
2.Economic Development: Higher income levels generally lead to lower fertility rates due
to lifestyle changes, increased access to education, and family planning.
3.Government Policies: Policies that promote or restrict population growth (e.g., China's
former one-child policy) can influence birth rates and migration patterns.
4.Migration: Countries with high immigration (like the U.S. and Canada) often experience
sustained population growth, even with low fertility rates.
• The Sex Composition of Population
• Sex Composition refers to the ratio of males to females in a population. It is expressed
as the Sex Ratio, typically defined as the number of males per 1,000 females.
• Global Sex Ratio Trends:
• At Birth: Globally, there are more males born than females, with a typical ratio of about
105 males for every 100 females. This biological advantage for males compensates for
their higher mortality rates at younger ages.
• Later Life: As populations age, the sex ratio tends to balance out and eventually favors
females. Women generally have higher life expectancy than men, leading to a higher
proportion of elderly women compared to elderly men.
• Factors Affecting Sex Composition:
1. Biological Factors:
1. The natural sex ratio at birth is generally slightly skewed in favor of males.
2. Cultural and Societal Influences:
1. In some countries, cultural preferences for male children (e.g., India, China) have led to skewed sex
ratios due to sex-selective abortions and female infanticide.
2. For example, in 2023, India had a sex ratio of 108 males for every 100 females at birth, while China
had around 111 males for every 100 females.
3. Migration:
1. Male-dominated migration patterns (such as labor migration to the Gulf States) can temporarily skew
the sex ratio in certain countries or regions.
4. War and Conflict:
1. Historical and ongoing conflicts can also skew sex ratios, as males are more likely to be involved in
combat or face higher mortality rates during wartime.
• Country Examples of Sex Ratios:
1. India:
1. Sex Ratio: In 2023, the sex ratio was around 1,020 males per 1,000 females. This has improved due
to efforts to curb sex-selective abortions and enhance the status of women.
2. China:
1. Sex Ratio: China's sex ratio is around 1,050 males per 1,000 females, although this number varies
by age group and region. The impact of the one-child policy and son preference led to a significant
imbalance in the sex ratio at birth.
3. Russia:
1. Sex Ratio: Russia’s overall sex ratio is skewed in favor of females, with about 860 males for every
1,000 females due to higher male mortality, especially in working-age groups.
4. United States:
1. Sex Ratio: The U.S. has a relatively balanced sex ratio at 1,020 males per 1,000 females, although
the ratio favors females in the elderly population.
• Age Composition of Population
• Age Composition refers to the distribution of a population across various age
groups. It plays a crucial role in understanding a country’s demographic structure
and its socio-economic implications. The age composition of a population is
typically broken down into three main groups:
1.Young Age Group (0-14 years):
1. This group represents children and young dependents. A large proportion of young people
suggests a high dependency ratio, meaning there are more people dependent on the working-
age population for support.
2. Implications:
1. A large young population can indicate future labor force growth.
2. High demand for education, healthcare, and childcare services.
3. If the country cannot provide adequate opportunities, this can lead to unemployment and social
challenges.
Working-Age Group (15-64 years):
•This group consists of economically productive individuals. A larger proportion of this group typically signals a
demographic advantage known as the demographic dividend, where the working population supports dependents
(children and elderly) more efficiently.
•Implications:
•Countries with a large working-age population can experience rapid economic growth if adequate employment
opportunities exist.
•Investment in education and skill development is critical to maximizing the productivity of this group.
•Old Age Group (65 years and above):
•This group includes the elderly population who are typically retired and depend on social services and pensions.
•Implications:
•A large elderly population increases the demand for healthcare, social services, and pensions.
•Countries with an aging population may face challenges related to shrinking labor forces, increased healthcare
costs, and a higher dependency ratio.
• Global Trends in Age Composition:
• Developing Countries: Many developing nations (e.g., Nigeria, Ethiopia) have a
youthful population, with a significant proportion under 15 years. This results in a
high dependency ratio but offers future growth potential.
• Developed Countries: Developed nations (e.g., Japan, Germany) tend to have aging
populations, with a higher proportion in the elderly group. This presents challenges
related to labor shortages and increasing costs for elderly care.
• Example – India’s Age Composition:
• Young Population: As of 2023, around 25% of India's population is under the age of
15.
• Working-Age Population: Around 67% of the population falls into the working-age
group, providing India with a large demographic dividend.
• Elderly Population: Around 8% of the population is above the age of 65, though this
proportion is expected to grow as life expectancy increases.
• Density of Population
• Population Density is the number of people living per unit of area, usually measured in people
per square kilometer or square mile. It is a key metric used in demographic studies to understand
how populations are distributed across a geographic region.
• Factors Affecting Population Density:
1. Geography and Climate:
1. Areas with favorable geography (fertile land, flat terrain) and temperate climates tend to have higher
population densities. For example, river valleys like the Ganges in India or the Nile in Egypt have historically
supported dense populations.
2. Harsh climates (e.g., deserts, mountains) and inhospitable terrain (e.g., tundras, rainforests) tend to have lower
population densities.
2. Economic Development:
1. Urbanized and industrial regions typically have higher population densities because of better job opportunities,
healthcare, education, and infrastructure.
2. Rural or economically underdeveloped areas often have lower population densities.
•Social and Political Factors:
•Political stability and good governance can attract higher population densities by ensuring
access to essential services and economic opportunities.
•Conflicts, wars, or political instability may drive people away, lowering the population density
of affected regions.
•Historical Factors:
•Historical settlement patterns, such as trade routes and colonial expansion, have shaped
modern population densities.
• Global Population Density Examples:
• High-Density Countries:
• Bangladesh: One of the most densely populated countries in the world, with over 1,200
people per square kilometer. The combination of fertile land and limited space has
resulted in high population density.
• Monaco: An extremely high population density (around 25,000 people per square
kilometer) due to its small size and urbanization.
• Low-Density Countries:
• Mongolia: One of the least densely populated countries, with about 2 people per square
kilometer, due to its vast area and harsh, sparsely populated steppe landscape.
• Australia: Despite being a large country, Australia has a low population density
(around 3.3 people per square kilometer) due to its large desert areas.
• Population Density in India:
• Overall Density: India has an average population density of about 464 people per square
kilometer, making it one of the most densely populated large countries in the world.
• Regional Variation:
• High Density: States like Bihar (1,100 people per square kilometer) and West Bengal have very high
population densities due to fertile land and intensive agriculture.
• Low Density: States like Arunachal Pradesh and Himachal Pradesh have much lower population densities,
with fewer than 100 people per square kilometer, largely due to their hilly terrain.
• Conclusion:
• Age Composition is vital for understanding a country’s demographic challenges and
opportunities. Countries with a youthful population need to invest in education and job creation,
while aging populations need strong healthcare and social security systems.
• Population Density varies dramatically across the globe due to factors like geography, economic
development, and political stability. Regions with high density often face pressures on resources
and infrastructure, while low-density areas may struggle with economic isolation.
• Urbanization and Economic Growth in India
• Urbanization refers to the increasing concentration of people in urban areas,
leading to the expansion of cities and towns. It is a global trend closely linked with
industrialization, modernization, and economic development. In India, urbanization
has been a key driver of economic transformation and has played a pivotal role in
the country’s growth trajectory.
• Urbanization in India:
• Key Trends in Urbanization:
1.Growing Urban Population:
1. India’s urban population has increased rapidly over the past few decades. In 1951, about 17%
of India’s population lived in urban areas, and by 2023, this figure has risen to around 35-
40%.
2. Projections: By 2050, nearly 50% of India’s population is expected to live in urban areas,
reflecting the rapid pace of urbanization.
•Emergence of Mega-Cities:
•India has several mega-cities (urban areas with a population of over 10 million), such as Mumbai, Delhi,
Bengaluru, Kolkata, and Chennai. These cities serve as economic hubs, attracting investment and labor
from across the country.
•Tier-II and Tier-III Cities: Alongside the growth of mega-cities, smaller cities (Tier-II and Tier-III) like
Pune, Surat, Ahmedabad, and Lucknow are witnessing rapid urban expansion, driven by economic
opportunities.
•Rural-to-Urban Migration:
•One of the primary drivers of urbanization in India is rural-to-urban migration. People migrate to cities
seeking better employment opportunities, education, healthcare, and living standards.
•Urbanization and Infrastructure Development:
•Urbanization in India has spurred significant infrastructure development in sectors such as housing,
transportation, telecommunications, and energy. Large-scale projects like smart cities, metro systems,
and urban renewal programs have been undertaken to modernize urban infrastructure.
• Economic Growth in India:
• Contribution of Urbanization to Economic Growth:
• Urbanization is a critical factor driving India’s economic growth. As more people move to
cities, the economy experiences structural shifts and increased productivity.
1.Industrialization and Job Creation:
1. Urban areas in India are the centers of industrialization and services sector growth. The majority of
manufacturing units, industries, and service-based firms are located in cities, providing millions of jobs.
2. Sectors like IT and software services, financial services, manufacturing, and logistics have thrived in
urban environments, contributing significantly to GDP growth.
2.Higher Productivity:
1. Urban areas typically exhibit higher productivity compared to rural areas. Cities enable economies of
scale, foster innovation, and promote knowledge exchange, leading to more efficient production and better
utilization of resources.
2. A higher concentration of skilled labor, capital, and infrastructure in cities helps boost economic output
and innovation.
•Growth of the Services Sector:
•India’s economic growth is increasingly driven by the services sector, which accounts for over 55% of GDP.
Urban areas are hubs for services like information technology (IT), telecommunications, healthcare,
education, financial services, and tourism.
•Cities like Bengaluru have become global IT hubs, and Mumbai remains the financial capital of the country,
contributing significantly to economic growth.
•Consumer Markets and Urban Demand:
•The rise of a middle class in urban areas has led to a surge in consumer spending. Urban households spend
more on goods, services, and housing, driving domestic demand.
•The expansion of retail, real estate, entertainment, and e-commerce sectors in urban centers has been a major
factor in economic expansion.
•Infrastructure and Investment:
•Urbanization has attracted foreign direct investment (FDI) and domestic investment in sectors like real
estate, transport, infrastructure development, and urban planning. Programs like Smart Cities Mission and
Atal Mission for Rejuvenation and Urban Transformation (AMRUT) aim to improve urban infrastructure,
making cities more conducive for business and investment.
• Challenges of Urbanization and Economic Growth in India:
• While urbanization has driven economic growth, it has also posed several
challenges that need to be addressed for sustainable development:
1.Urban Poverty and Inequality:
1. Urbanization has led to an increase in urban poverty and inequality. Many migrants moving to
cities in search of jobs end up in slums or informal settlements with poor living conditions.
2. The lack of affordable housing and adequate social services (healthcare, education) exacerbates
inequalities between the rich and poor in urban areas.
2.Pressure on Infrastructure:
1. Rapid urbanization has put immense pressure on urban infrastructure. Traffic congestion,
inadequate public transport, water shortages, and poor sanitation are common problems in
many Indian cities.
2. Urban local bodies struggle to keep up with the growing population, leading to inefficiencies in
public services.
1. Environmental Degradation:
1. Increased urbanization has led to environmental issues such as air and water pollution, waste
management problems, and deforestation.
2. Cities like Delhi face severe air pollution crises, and inadequate waste management in many urban
centers has resulted in environmental degradation.
2. Informal Employment:
1. A significant proportion of the urban workforce in India is employed in the informal sector, where
job security, social security benefits, and labor rights are often lacking.
2. Informal employment, such as street vending and construction work, contributes to economic activity
but does not provide long-term stability.
• Government Initiatives to Promote Sustainable Urbanization:
1. Smart Cities Mission:
1. Launched in 2015, the Smart Cities Mission aims to promote sustainable urban development by
creating 100 smart cities with improved infrastructure, better governance, and enhanced living
conditions.
2. AMRUT (Atal Mission for Rejuvenation and Urban Transformation):
2. AMRUT focuses on providing basic infrastructure services in cities, such as water supply, sanitation, and transport,
to ensure better living standards and economic opportunities.
3. Housing for All (Pradhan Mantri Awas Yojana - Urban):
1. This scheme aims to provide affordable housing to all urban residents by 2022, addressing the housing needs of the
urban poor and promoting inclusive urban growth.
4. National Urban Transport Policy:
1. The government is focusing on promoting sustainable urban transport systems, such as metro networks and bus
rapid transit systems, to reduce congestion and pollution in cities.
• Conclusion:
• Urbanization in India has been a major driver of economic growth, fostering industrialization, job
creation, and the expansion of the services sector. However, the rapid pace of urbanization has also
brought challenges such as urban poverty, infrastructure deficits, and environmental degradation.
For India to sustain its economic growth and realize the full potential of its urban areas, there is a need
for policies that promote sustainable urbanization, equitable access to resources, and improved
infrastructure.
• Population Projections (2001-2026)
• Population projections help estimate future demographic trends, aiding in planning for healthcare,
education, infrastructure, and employment. For India, population projections for the period between 2001
and 2026 reveal significant changes in population size, composition, and distribution.
• Key Highlights of Population Projections:
1. Overall Population Growth:
1. India’s population grew from about 1.03 billion in 2001 to an estimated 1.4 billion in 2023. Projections indicate that India
will continue to grow and may reach around 1.5 billion by 2026, surpassing China to become the world’s most populous
country.
2. The population growth rate has slowed down in recent years, with fertility rates declining due to urbanization, education,
and family planning.
2. Age Structure:
1. Youth Population: India’s youth population (ages 15-24) peaked around 2021 and is expected to decline in the coming
decades as fertility rates drop. By 2026, the working-age population (15-64 years) will remain a major demographic force
but may start shrinking after 2030.
2. Elderly Population: The elderly population (above 65 years) is growing rapidly due to increased life expectancy. By
2026, the percentage of people aged 65 and above will be around 10%, creating challenges related to healthcare and
pension systems.
•Regional Population Growth:
•Population growth rates vary across states. Northern states like Uttar Pradesh and Bihar continue to have higher
fertility rates, while southern states like Kerala and Tamil Nadu have seen significant fertility declines, leading to
slower growth.
•Urbanization:
•The urban population is projected to grow faster than the rural population. By 2026, it is estimated that around 40-
45% of India’s population will live in urban areas, up from around 35% in 2001. This shift will put pressure on
urban infrastructure, housing, and employment opportunities.
•Fertility Decline:
•The Total Fertility Rate (TFR), which was around 2.4 children per woman in 2011, is projected to decline to
around 2.0 by 2026. This reflects the trend toward smaller family sizes due to changing socio-economic factors.
• The Demographic Dividend
• The Demographic Dividend refers to the potential economic growth that can arise when a
country has a relatively large proportion of its population in the working-age group (15-64
years) compared to dependents (children and elderly). This occurs due to a declining birth rate
and slower growth in the dependent population.
• India’s Demographic Dividend:
• India is currently experiencing a demographic dividend, which is expected to last until around
2040. This period presents both challenges and opportunities for the country's economic and
social development.
• Key Aspects of India’s Demographic Dividend:
1. Economic Growth Potential:
1. With a large proportion of the population in the working-age group (approximately 67%), India has the
opportunity to increase productivity, savings, and investment. If India can effectively leverage this
demographic shift, it can boost GDP growth significantly.
2. Countries like China and South Korea experienced rapid economic growth during their demographic
dividend periods by investing in human capital, infrastructure, and technology.
• Challenges in Harnessing the Dividend:
• Unemployment and Underemployment: A significant challenge is providing
enough employment opportunities for the growing working-age population. High
levels of unemployment or underemployment, particularly among the youth, could
lead to social unrest and wasted potential.
• Skill Development: India needs to invest heavily in education, vocational training,
and skills development to ensure that its workforce is equipped to meet the demands
of modern industries, especially as automation and AI reshape job markets.
• Health and Well-being: The working-age population must remain healthy to be
productive. Access to affordable healthcare and improving health outcomes are
critical in ensuring the workforce remains economically active.
1. Gender Equity:
1. The participation of women in the workforce is relatively low in India, particularly in rural areas. To maximize the benefits of
the demographic dividend, India must focus on increasing female labor force participation by providing better access to
education, healthcare, and childcare.
2. Urbanization:
1. The demographic dividend is closely tied to urbanization. Urban areas provide greater opportunities for employment,
innovation, and economic growth. However, India's cities need to prepare for the influx of migrants by improving infrastructure,
housing, and basic services.
3. End of the Dividend and Aging Population:
1. After the demographic dividend period ends, India will face the challenge of an aging population. The proportion of elderly
people (65 and above) will rise, increasing the dependency ratio and placing pressure on pension systems and healthcare
services.
• Conclusion:
• India’s demographic landscape is undergoing significant changes with implications for its economic and social
development. While the country has a large and youthful population, improving the quality of population
through health, education, and skills development is crucial to maximizing economic potential. Population
projections up to 2026 suggest continued growth, with a growing elderly population and further urbanization.
Leveraging the demographic dividend effectively is vital for India to sustain its economic growth trajectory, but
it requires targeted investments in education, healthcare, employment, and gender equity.
Human Development in India: The Concept and
Measures
Human development is a multidimensional concept that focuses on improving the quality
of life and overall well-being of individuals. It goes beyond economic growth and
income levels, addressing factors such as education, health, and social conditions. In
India, this framework has been instrumental in guiding policies aimed at enhancing the
living standards of its population.
Concept of Human Development
The core idea of human development revolves around expanding the range of choices
available to people. These choices involve leading a long and healthy life, acquiring
knowledge, and having access to the resources needed for a decent standard of living. The
broader goals of human development include:

1.Health: Improving life expectancy and access to healthcare.

2.Education: Increasing literacy and educational attainment.
3.Income: Ensuring a sustainable livelihood and reducing poverty.
4.Equity: Promoting gender equality and social inclusion.
5.Sustainability: Ensuring environmental sustainability and protecting natural resources.
Measures of Human Development
• Several indicators are used to measure human development. The most commonly known
measure is the Human Development Index (HDI), which focuses on three core
dimensions:
1.Life Expectancy at Birth (a measure of health),
2.Mean Years of Schooling and Expected Years of Schooling (a measure of education),
3.Gross National Income (GNI) per capita (a measure of income).
Other key indices and measures related to human development include:
• Multidimensional Poverty Index (MPI): This assesses various deprivations related to
health, education, and standard of living.
• Inequality-adjusted Human Development Index (IHDI): This adjusts the HDI for
inequality in the distribution of each dimension.
• Gender Development Index (GDI) and Gender Inequality Index (GII): These
measure gender disparities in human development achievements and gender-based
inequalities, respectively.
Human Development Index for Various States in
India
India, with its diversity, exhibits varying levels of human development across its states. The HDI rankings within India
highlight significant disparities in health, education, and income.
• High HDI States:
1. Kerala: Consistently ranks the highest in HDI, with high life expectancy, near-universal literacy, and a robust healthcare
system.
2. Delhi: Benefits from high per capita income, better healthcare, and educational outcomes.
3. Goa: Known for its high literacy rates and life expectancy.
• Moderate HDI States:
1. Maharashtra: A major economic hub, it has relatively better income levels and education but still faces health and social
challenges.
2. Punjab: Strong in agriculture and education but needs improvements in healthcare access.
3. Tamil Nadu: Demonstrates good performance in health and education, driven by progressive social policies.
• Low HDI States:
1. Bihar: Despite economic growth, struggles with low literacy rates, poor healthcare, and high poverty levels.
2. Uttar Pradesh: Faces significant challenges in education, health services, and income levels.
3. Madhya Pradesh: Although efforts are being made, health and education indicators remain below national averages.
 National Human Development Report

The National Human Development Report (NHDR) is a

comprehensive document published by the Government of India, which
evaluates the progress and challenges related to human development
across the country. It provides an in-depth analysis of various states
and union territories based on indicators like health, education, and
income. The first NHDR was published in 2001 by the Planning
Commission (now NITI Aayog), and it followed the same conceptual
framework as the global Human Development Reports, initiated by the
United Nations Development Programme (UNDP).
Key Highlights of the National Human Development Report
1. Human Development Indicators (HDI) for India
1. Health: Life expectancy, infant mortality rate (IMR), and access to healthcare services.
2. Education: Literacy rates, enrollment in primary, secondary, and tertiary education.
3. Income: Per capita income, consumption patterns, and poverty levels.
4. Gender Development: Gender disparities in literacy, employment, and health services.
2. Regional Disparities in Human Development The NHDR highlights the stark differences in human
development between states. Southern and western states like Kerala, Goa, and Tamil Nadu
consistently rank higher in HDI due to better education, healthcare, and income levels. Northern and
central states like Uttar Pradesh, Bihar, and Madhya Pradesh tend to lag behind in these indicators.
3. State-wise HDI Rankings States are ranked based on a composite index that combines the three key
dimensions of health, education, and income. For instance:
1. Kerala: Highest rank due to high literacy rates, low IMR, and relatively higher income levels.
2. Bihar and Uttar Pradesh: Low rankings because of poor performance in healthcare, education, and per capita
income.
•Human Poverty Index (HPI) The NHDR also includes an analysis of the Human Poverty Index
(HPI), which measures deprivation in terms of longevity, knowledge, and standard of living. States
with high levels of human poverty typically show poor performance in access to healthcare, literacy,
and adequate living conditions.

•Gender-related Development Index (GDI) Another important measure highlighted in the report is
the Gender-related Development Index (GDI). It assesses the relative achievements of men and
women in health, education, and income. Gender disparities are particularly notable in states like
Haryana and Rajasthan, where female literacy rates and health outcomes are significantly lower than
their male counterparts.
• Key Findings from NHDR 2001
• Kerala: Topped the HDI ranking due to its social and educational policies, which prioritize literacy and health.
• Bihar: Was ranked lowest in terms of HDI, facing significant challenges in education and health.
• National Trends: The NHDR emphasized that while India has made progress in economic growth, large portions of the
population still face challenges related to poverty, education, and health services.
• Policy Recommendations from NHDR
• The NHDR recommends several policy interventions to improve human development in India, such as:
1. Investments in Education and Healthcare: More resources are needed to ensure universal education and improve
healthcare access, particularly in lagging states.
2. Reducing Regional Disparities: Special attention is required for states with lower HDI rankings to balance national
growth.
3. Focus on Gender Equality: Addressing gender disparities in literacy, healthcare, and employment is crucial for overall
human development.
4. Sustainable Development: Ensuring that growth and development are sustainable and inclusive, particularly for
marginalized communities.
• Subsequent Reports and Updates
• While the NHDR 2001 was a landmark report, various updates and state-specific reports have since been produced,
often by NITI Aayog. These reports track the progress of different states and recommend strategies for further
improvement in human development, aligning with the Sustainable Development Goals (SDGs).
• The NHDR remains an important reference point for policymakers and scholars interested in understanding and
improving the human development landscape in India.
The profile of GDP and employment in
India
The profile of GDP and employment in India has undergone significant changes over the decades,
influenced by factors such as liberalization, technological advancements, demographic shifts, and
policy reforms. India’s economy has evolved from being predominantly agrarian to becoming more
services-oriented, with emerging contributions from the industrial and digital sectors.
• 1. Evolution of GDP Profile in India
• Pre-Liberalization Era (Before 1991)
• Agriculture: Dominated the economy, contributing about 50% of the GDP in the 1950s. India’s
economic policies were largely focused on self-sufficiency in food production and rural development.
• Industry: The industrial sector, particularly heavy industries, was highly regulated, with the
government playing a central role through public sector enterprises. Industrial licensing limited
private sector participation.
• Services: This sector contributed less significantly to the economy, primarily consisting of basic
public services.
Post-Liberalization Era (1991 onwards)

• The economic reforms of 1991 marked a shift towards a more open and market-driven
economy. The changes in the GDP structure became more prominent:
• Agriculture: Its contribution to GDP declined sharply from about 30% in 1990 to less
than 15% by 2023, as productivity in other sectors grew, and urbanization increased.
• Industry: The contribution of the industrial sector, including manufacturing,
construction, and utilities, increased but faced challenges from global competition. By
2023, industry accounted for about 25-30% of the GDP.
• Services: The services sector became the dominant force in India’s economy,
contributing around 55-60% to GDP. Growth in IT, finance, telecommunications, and
other knowledge-based services has positioned India as a global leader in outsourcing
and digital services.
Employment Trends in India
• Agriculture Employment:
• Historical Importance: Agriculture has traditionally been the largest employer in India. In 1951, over 70% of
the workforce was engaged in agriculture.
• Declining Share: Despite its shrinking share in GDP, agriculture continues to employ a large proportion of the
population (nearly 42% as of 2022). This has led to concerns about low productivity and disguised
unemployment in rural areas.
• Industry Employment:
• Slow Growth: The industrial sector has not generated as many jobs as initially expected. Manufacturing, in
particular, has struggled to absorb a significant part of the labor force, leading to a stagnation in employment
growth within the sector.
• Informal Employment: Much of the industrial workforce is employed in the informal sector, particularly in
small-scale manufacturing and construction, which limits productivity gains and wage growth.
• Services Employment:
• Fastest Growing: The services sector has become the primary driver of employment growth, particularly in
urban areas. Jobs in information technology, finance, hospitality, healthcare, and telecommunications have
expanded rapidly.
• Formal and Informal Split: While high-skill jobs in IT and finance are expanding in the formal sector, a large
portion of the services workforce remains informal, with low wages and limited job security (e.g., retail,
transportation, and personal services).
3. Sectoral Shift: GDP vs. Employment
• One of the most striking aspects of India’s economic transition is the mismatch between GDP
contributions and employment across sectors:
• Agriculture: Contributes less than 15% to GDP but employs over 40% of the workforce,
highlighting the challenge of low agricultural productivity.
• Industry: Contributes around 25-30% to GDP but employs only about 23-25% of the workforce.
• Services: Contributes over 55% to GDP but employs only around 35-40% of the workforce. The
sector's rapid growth has not translated into enough broad-based employment opportunities,
especially for low-skill workers.
4. Recent Trends and Policy Initiatives
• Make in India and Manufacturing Push:
• The Make in India initiative, launched in 2014, aimed to boost manufacturing and increase its
contribution to GDP and employment. The government has set targets to raise the share of
manufacturing to 25% of GDP and create 100 million new manufacturing jobs by 2025. However,
progress has been slow due to challenges like infrastructure bottlenecks, regulatory hurdles, and
global competition.
• Digital Economy and Start-up Ecosystem:
• India’s digital economy has grown significantly, with the rise of the IT sector, start-ups, and
e-commerce. This transformation is creating high-skill job opportunities in tech-driven
industries, positioning India as a global hub for software services, but it has yet to fully
address the need for mass employment.
• Gig and Informal Employment:
• The gig economy is growing, particularly in sectors like food delivery, ride-hailing, and
freelance services. However, these jobs often lack social security and are highly dependent
on market fluctuations, posing risks to long-term employment stability.
• Agricultural Reforms and Rural Employment:
• Various initiatives like PM-KISAN, crop insurance schemes, and rural infrastructure
development aim to enhance the income and productivity of farmers. Employment schemes
like MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) continue
to provide a safety net for rural workers, although their impact on structural employment
remains limited.
5. Challenges and Future Outlook
• Jobless Growth:
• One of the key challenges for India is jobless growth, where economic growth is not accompanied by proportional
increases in employment. This is particularly evident in the services sector, where high productivity and automation
reduce the need for large numbers of workers.
• Informality in the Workforce:
• India’s labor market remains heavily informal, with over 80% of workers employed without formal contracts, benefits,
or social security. The government has implemented labor code reforms to address some of these issues, but informality
remains deeply entrenched.
• Need for Skill Development:
• To match the demands of a growing and evolving economy, there is an urgent need for upskilling and reskilling.
Government programs like Skill India aim to address these gaps, but further investment in vocational training and
education is critical.
• Conclusion
• The changing profile of GDP and employment in India reflects a complex narrative of growth, structural transformation,
and enduring challenges. While services dominate in terms of GDP, agriculture remains the largest employer, with
significant productivity gaps. Addressing these imbalances through policy reforms, investment in infrastructure, and
skill development will be essential for ensuring inclusive growth in the future.
GDP, Employment, and Productivity per Worker in India
• India’s economy has experienced substantial shifts over the past decades, particularly
with the changing dynamics between Gross Domestic Product (GDP), employment,
and worker productivity. The interaction between these variables is key to
understanding the structure of the economy and the ongoing challenges of job
creation, poverty reduction, and sustainable growth.
1. GDP and Sectoral Composition
• Overview of GDP in India
• India’s GDP has grown steadily over the last few decades, transforming the country into one of the largest
economies in the world. The shift in sectoral contributions to GDP over time highlights the evolving nature
of the economy:
• Agriculture: Once the dominant sector, contributing more than 50% of GDP in the 1950s, agriculture’s
share has diminished to about 15% by 2023. However, it remains critical for employment, as it supports a
large portion of India’s workforce.
• Industry: The industrial sector, including manufacturing, construction, and mining, has grown but has not
been able to absorb labor at the same rate as the services sector. It now contributes around 25-30% of GDP.
• Services: The services sector is the driving force of India’s economy, contributing over 55% of GDP.
Sectors like information technology (IT), finance, trade, and real estate have played a significant role in this
growth.
• GDP Growth Trends
• India has seen impressive GDP growth rates, especially after the economic liberalization of 1991. Between
2000 and 2020, the average GDP growth rate hovered around 6-8% per year. However, the COVID-19
pandemic in 2020 led to a contraction in GDP, though the economy rebounded strongly in 2021-2022.
2. Employment by Sector
• Agriculture
• Employment Share: Despite its small contribution to GDP, agriculture still employs nearly 42% of the total
workforce. This highlights a serious productivity gap compared to other sectors.
• Issues: Agriculture faces problems such as underemployment, low productivity, and disguised unemployment,
where more workers are engaged in agricultural activities than are necessary.
• Industry
• Employment Share: Industry employs about 23-25% of India’s labor force. Manufacturing is the key component
but has seen a slower growth in terms of job creation due to automation, global competition, and limited
infrastructure development.
• Challenges: The "Make in India" initiative aimed to increase industrial employment, but challenges such as
regulatory constraints, skill mismatches, and inadequate infrastructure have limited its impact.
• Services
• Employment Share: The services sector employs around 35-40% of the workforce and is the fastest-growing
area for job creation, particularly in high-skill industries like IT, finance, and business services.
• Issues: While high-skill jobs are abundant, much of the services sector remains informal, employing millions in
low-skill, low-wage jobs in areas such as retail, transportation, and personal services.
3. Productivity per Worker
• Productivity per worker (also known as labor productivity) is a critical measure of how efficiently labor is used to produce
goods and services. It is typically measured as GDP per worker. Productivity varies significantly across sectors in India,
reflecting the structural issues of employment and economic development.
• Agriculture Productivity
• Low Productivity: Productivity in agriculture is substantially lower than in industry and services. This is due to factors such as
small landholdings, reliance on traditional farming techniques, inadequate access to technology, and limited irrigation facilities.
• Comparison: Agricultural productivity per worker is a fraction of that in industry and services. Estimates suggest it can be as
low as one-third of the productivity in the industrial sector and even lower compared to services.
• Industry Productivity
• Moderate Productivity: Productivity in the industrial sector is higher than in agriculture but lags behind advanced economies
due to lower mechanization, infrastructure bottlenecks, and regulatory challenges. However, sectors like construction and mining
show higher productivity due to capital-intensive processes.
• Services Productivity
• High Productivity: Services have the highest productivity per worker in India, especially in IT, financial services, and
telecommunications. These sectors benefit from modern infrastructure, higher capital investments, and technological innovation.
For instance, workers in the IT sector can produce 10-15 times the value that a worker in agriculture might generate.
4. Productivity Gap and Structural Imbalances
• Productivity Gaps Across Sectors
• The productivity gap between agriculture and services is one of the largest in the world.
Agriculture remains highly labor-intensive with minimal technological advancement, while
services are capital- and knowledge-intensive.
• This imbalance is a major driver of inequality, as a large proportion of the population remains
employed in low-productivity sectors, leading to lower overall economic output per capita.
• Informal Sector and Low Productivity
• India’s economy is characterized by a significant informal sector, with about 80-90% of
workers engaged in informal employment. Productivity in the informal sector is generally lower
due to poor access to technology, lack of formal training, and limited capital investment.
• Sectors such as retail, transportation, and hospitality remain largely informal, keeping
productivity and wages low.
5. Policy Initiatives and Future Outlook
• Government Initiatives
• Several government initiatives aim to address the issues of low productivity and employment:
• Make in India: Focused on boosting manufacturing and increasing industrial employment.
• Skill India: Aims to enhance the skill set of the Indian workforce to improve productivity and employability,
particularly in sectors like manufacturing and services.
• Digital India: Seeks to harness the power of technology and digital infrastructure to enhance productivity across
various sectors.
• Agricultural Reforms: Efforts to modernize agriculture through better irrigation, access to technology, and
market reforms aim to increase productivity in the sector.
• Need for Structural Reforms
• Diversification of Employment: There is a pressing need to shift surplus labor from low-productivity sectors like
agriculture to higher productivity sectors such as manufacturing and services.
• Improvement in Infrastructure: Both physical and digital infrastructure must be upgraded to support
productivity growth, particularly in rural areas.
• Formalization of Employment: Encouraging formalization through policy reforms, social security nets, and labor
laws is essential to improving worker productivity and economic stability.
Conclusion
• India’s GDP growth has been robust, but its employment structure and productivity
trends reflect deep-seated challenges. The mismatch between sectoral GDP
contributions and employment distribution, particularly the over-reliance on
agriculture, highlights the need for a more balanced and inclusive growth model.
Bridging the productivity gap between sectors and improving the quality of
employment through formalization, skill development, and infrastructure investment
will be critical for sustaining long-term economic growth and social equity in India.
The relative shift in the shares of Net State
Domestic Product (NSDP) and employment
Agriculture, industry, and services across different Indian states reflects both national
economic trends and unique regional dynamics. Over time, the contribution of
agriculture to state economies has decreased significantly, while the industrial and
services sectors have expanded, albeit at different paces depending on the state.
However, the shift in employment shares has not been as rapid, leading to
productivity gaps and regional disparities.
1. Relative Shift in Shares of NSDP (Sectoral Contribution)
• The composition of NSDP across states highlights the shift from an agrarian to a more diversified economy, with
services becoming the dominant sector.
• Agriculture
• Declining Share: Agriculture's share of NSDP has declined across almost all states. In states like Punjab,
Haryana, and Uttar Pradesh, which are primarily agricultural, the contribution of agriculture to NSDP has
decreased steadily, often dropping below 20-30% in recent years.
• High-Dependency States: Some states with significant rural populations and agrarian economies, like Bihar,
Madhya Pradesh, and Odisha, still have relatively high contributions from agriculture (above 20%), although
the long-term trend is towards reduction.
• Industry
• Manufacturing and Construction: Industrial growth has been more concentrated in states like Gujarat,
Maharashtra, Tamil Nadu, and Karnataka, where manufacturing, infrastructure development, and
construction have contributed heavily to the NSDP. In these states, the industry can account for 30-40% of the
state economy.
• Lagging States: In states like Bihar and Uttar Pradesh, industrialization has been slower, with the industry
contributing less to NSDP (below 20%). This reflects the limited manufacturing and capital investment in these
regions.
Services
• Dominant Sector: The services sector has grown across almost all states, with
Karnataka, Maharashtra, and Telangana leading the charge due to their strong
IT and technology sectors. In these states, services contribute 60-70% of NSDP,
reflecting their role as service-driven economies.
• Low-Service States: In more rural and less developed states like Bihar and
Chhattisgarh, the service sector’s share of NSDP is lower (around 40-50%),
though it is still growing as infrastructure and urbanization improve.
2. Relative Shift in Employment by Sector
• While NSDP shows a clear shift from agriculture to industry and services, employment has not followed the same pattern. A
large portion of the workforce remains in agriculture, even in states where its contribution to the economy has significantly
declined.
• Agriculture Employment
• Persistently High: States like Uttar Pradesh, Bihar, and Madhya Pradesh still have over 50-60% of their workforce
employed in agriculture, even though agriculture’s share of NSDP is relatively low. This reflects low productivity and
disguised unemployment in the sector.
• Declining Employment: In states like Punjab and Haryana, where agriculture was historically dominant, employment in
agriculture has decreased, with more labor moving to the services or industrial sectors.
• Industry Employment
• High Industrial Employment: States like Gujarat, Tamil Nadu, and Maharashtra have relatively high levels of
employment in industry (20-30%), reflecting their more developed manufacturing sectors. However, even in these states, the
shift towards automation has limited industrial job growth in recent years.
• Lower Industrial Employment: In states like West Bengal and Bihar, industrial employment remains low due to slower
industrial development, with employment in this sector typically ranging from 10-15% of the workforce.
• Services Employment
• Rising Employment: In states like Karnataka (home to the IT hub Bengaluru) and Maharashtra (Mumbai’s financial
sector), employment in services has grown rapidly, absorbing a large part of the urban workforce. Services employ 40-50% of
the workforce in these states.
• Challenges in Rural States: In more rural states like Uttar Pradesh and Odisha, the services sector is growing but has not
been able to absorb the surplus labor from agriculture as quickly. Services employ less than 30-35% of the workforce in these
states, many of whom are in low-skill, informal jobs.
3. Regional Trends and Disparities
• High-performing states (Maharashtra, Gujarat, Karnataka, Tamil Nadu)
• Shift Towards Services: These states have seen a marked shift towards the services sector in both
NSDP and employment. Services like IT, finance, real estate, and hospitality dominate their economies.
• Balanced Industrial Base: While services lead in terms of contribution to NSDP, the industrial sector
still plays a significant role in employment, particularly in manufacturing, pharmaceuticals, automobiles,
and construction.
• Lower Agriculture Dependency: The agriculture sector has shrunk in terms of both NSDP contribution
and employment, with less than 20% of the workforce engaged in agriculture.
• Agrarian States (Punjab, Haryana, Uttar Pradesh, Bihar)
• Agriculture Dominance: In these states, agriculture remains a major employer despite its declining
share of NSDP. Punjab and Haryana, traditionally agriculturally prosperous states, are seeing slower
industrial and services sector growth compared to southern and western states.
• Low Productivity: The high proportion of the workforce in agriculture, despite its shrinking NSDP
contribution, highlights the productivity gap and the challenges of creating non-farm employment in these
regions.
• Emerging States (Telangana, Andhra Pradesh, Odisha)
• Growth in Industry and Services: States like Telangana and Andhra Pradesh are experiencing rapid
growth in both industry (especially IT and construction) and services, which is helping diversify their
economies.
• Agriculture to Services Shift: Odisha, historically reliant on agriculture, is seeing a gradual shift
towards industry (especially mining and steel) and services (like tourism and trade), although agriculture
still plays a significant role in employment.
4. Productivity Per Worker Disparities
• The shift in NSDP and employment shares highlights the productivity gap across
sectors and states:
• Agriculture: States like Bihar, Uttar Pradesh, and Madhya Pradesh still have a
large portion of their workforce in low-productivity agricultural jobs. This leads to
low per capita income and stunted economic growth.
• Industry: In Gujarat, Maharashtra, and Tamil Nadu, where industrialization
has been successful, worker productivity in manufacturing and construction is
higher, contributing more to NSDP per worker.
• Services: States like Karnataka and Maharashtra exhibit high productivity in the
services sector, particularly in technology-driven fields like IT and finance, where
a smaller workforce generates a disproportionately large share of the NSDP.
5. Challenges and Policy Implications
• Employment Mismatch: The slow pace of labor shift from agriculture to industry and services in
many states is a major concern. Despite the economic growth in services, it has not absorbed labor fast
enough, leaving many workers in low-productivity agricultural jobs.
• Need for Skill Development: To facilitate labor shifts, states must invest in skill development programs
that prepare workers for opportunities in industry and services, particularly in rural areas.
• Regional Imbalances: Addressing regional disparities through targeted industrial policies and
infrastructure investment is critical to ensuring balanced growth. States with lower industrial and
services activity need special attention to improve their workforce productivity.
• Urbanization and Job Creation: States like Maharashtra and Karnataka have benefited from
urbanization, which has supported the growth of services and high-productivity jobs. States with
lagging urbanization, such as Bihar and Madhya Pradesh, face challenges in creating such
opportunities.
• Conclusion
• The relative shift in NSDP and employment across agriculture, industry, and services in India’s states
illustrates the complexities of economic transformation. While services dominate in terms of output,
employment continues to be concentrated in low-productivity agriculture in many states. Bridging this
gap through skill development, investment in industry, and urbanization will be key to ensuring
inclusive growth across all regions.