Understanding Economic Development
📚 NCERT Economics Textbook
Class	10th Standard
Board	RBSE / CBSE / All Boards
Subject	Social Science (Economics)
Chapters	5
Medium	English
Session	2025-26

Understanding Economic Development is the economics textbook prescribed by NCERT for Class 10 students in India. The book covers fundamental concepts of economics including development, sectors of economy, money and banking, globalisation, and consumer awareness. It is part of the Social Science curriculum and carries 20 marks in the board examination.

The textbook aims to help students understand how economies function, how development is measured, and what role consumers play in the market. It provides a foundation for understanding economic policies and their impact on society.

Development

Development is a comprehensive term that refers to the progress or improvement in economic, social, and political conditions of a country or region. It encompasses not just economic growth but also improvements in quality of life, reduction in poverty, and enhanced well-being of all citizens.

Different developmental goals

Different people have different developmental goals based on their circumstances, needs, and aspirations. What constitutes development for one person may not be the same for another. The table below illustrates how various groups perceive development differently:

Category	Developmental Goals	Reason
Landless rural labourers	More days of work, better wages, local school	Need regular income and education for children
Prosperous farmers	Higher support prices, better irrigation	Want higher income from farming
Urban unemployed youth	Job opportunities, affordable education	Need employment and skill development
Girl from a rich family	Equal treatment, freedom, security	Aspires for respect and equal opportunities

Income and other criteria

While income is an important criterion for measuring development, it is not the only factor. People also seek:

• Equal treatment and freedom
• Security and peace
• Respect from others
• Pollution-free environment
• Better public facilities

Per Capita Income

Per Capita Income (also called Average Income) is calculated by dividing the total national income by the total population. It is commonly used to compare the economic development of different countries.

Classification (World Bank, 2019)	Per Capita Income
Rich or Developed Countries	US$ 12,056 per annum or more
Low Income Countries	US$ 1,005 per annum or less
India	Low middle income country

Comparison of Indian states

The following comparison shows that per capita income alone is not sufficient to measure development:

Indicator	Kerala	Punjab	Bihar
Per Capita Income (₹)	1,15,000	1,19,000	34,000
Infant Mortality Rate (per 1000)	10	25	38
Literacy Rate (%)	94	82	70
Net Attendance Ratio (%)	98	81	56

Note: Despite having lower per capita income than Punjab, Kerala performs better on human development indicators like literacy rate and infant mortality rate.

Human Development Index (HDI)

The Human Development Index is a composite index published by the United Nations Development Programme (UNDP) that measures development based on three parameters:

1. Health – measured by life expectancy at birth
2. Education – measured by mean years of schooling and expected years of schooling
3. Standard of Living – measured by per capita income

HDI value ranges from 0 to 1, where values closer to 1 indicate higher human development.

Sustainable Development

Sustainable Development is defined as development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs. It emphasizes the judicious use of natural resources and environmental conservation.

Renewable Resources	Non-Renewable Resources
Groundwater (if recharged) Forests (if replanted) Wind energy Solar energy	Crude oil Coal Natural gas Minerals

Sectors of the Indian Economy

Economic activities can be classified into different sectors based on the nature of activity, ownership, and employment conditions.

Classification by nature of activity

Sector	Also Known As	Activities	Examples
Primary	Agriculture & Related	Natural product extraction	Farming, fishing, mining, forestry
Secondary	Industrial Sector	Manufacturing & processing	Factories, construction, textiles
Tertiary	Service Sector	Services & support	Banking, transport, education, IT

Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is the value of all final goods and services produced within a country during a particular year. It is used to measure the size of the economy and the contribution of each sector.

Only final goods and services are counted to avoid double counting. Intermediate goods are not included separately.

Historical changes in sector contribution

Year	Primary Sector	Secondary Sector	Tertiary Sector
1950-51	55%	15%	30%
2000-01	26%	24%	50%
2016-17	15%	23%	62%

Disguised Unemployment

Disguised Unemployment (also called underemployment) occurs when more people are employed in an activity than actually required. If some workers are removed, production would not be affected. This is commonly found in Indian agriculture where family members share work that could be done by fewer people.

Organised and Unorganised Sectors

Aspect	Organised Sector	Unorganised Sector
Registration	Registered with government	Small, unregistered units
Rules	Follows labour laws	No fixed rules
Job Security	Secure, with pension and PF	No job security or benefits
Examples	Government offices, large companies	Small shops, construction labour

MGNREGA 2005

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) guarantees 100 days of employment per year to every rural household. Key features include:

• Work must be provided within 15 days of demand
• One-third of jobs are reserved for women
• Work should be within 5 km of residence
• If work is not provided, unemployment allowance must be paid

Money and Credit

This chapter explains the evolution of money, its functions, the role of banks, and the importance of credit in economic activities.

Barter System and its limitations

Before money was invented, the barter system was used for exchange of goods. However, it had several limitations:

• Double coincidence of wants – Both parties must want what the other has
• No common measure of value
• Difficulty in storing value
• Indivisibility of certain goods
• Not suitable for large transactions

Functions of Money

Function	Description
Medium of Exchange	Money is used to buy and sell goods and services
Measure of Value	Money provides a common standard to measure worth
Store of Value	Money can be saved for future use
Standard of Deferred Payment	Money enables borrowing and lending

Modern forms of money

Modern money exists in two main forms:

1. Currency – Paper notes and coins issued by the Reserve Bank of India (RBI)
2. Demand Deposits – Money deposited in banks that can be withdrawn on demand

Currency is called legal tender because no one can refuse to accept it as payment.

Credit

Credit refers to an agreement where the lender supplies money, goods, or services in return for a promise of future payment with interest.

Terms of Credit include:

• Interest Rate – Extra amount paid for using the loan
• Collateral – Asset given as security against the loan
• Documentation – Required paperwork
• Mode of Repayment – How the loan will be paid back

Sources of Credit

Aspect	Formal Sources	Informal Sources
Providers	Banks, Cooperatives	Moneylenders, traders, relatives
Interest Rate	Lower (regulated by RBI)	Higher (unregulated)
Supervision	RBI supervises	No supervision
Accessibility	Less in rural areas	Easily accessible

Self-Help Groups (SHGs)

Self-Help Groups are small groups of 15-20 members, usually rural women, who pool their savings and provide loans to members at reasonable interest rates. After 1-2 years of regular savings, SHGs become eligible for bank loans.

Globalisation and the Indian Economy

Globalisation is the process of rapid integration or interconnection between countries through the movement of goods, services, investments, technology, and people.

Multinational Corporations (MNCs)

A Multinational Corporation is a company that owns or controls production in more than one country. MNCs spread production through:

• Setting up joint ventures with local companies
• Buying local companies
• Placing orders with local producers
• Opening their own production units

Factors enabling Globalisation

• Technology – Fast transport, communication, IT, internet
• Foreign Investment – MNCs investing in other countries
• Foreign Trade – Import and export of goods and services
• Liberalisation – Removal of government barriers on trade

Liberalisation

Liberalisation means removing barriers or restrictions set by the government on trade and business. Major reforms in India since 1991 include:

• Removal of trade barriers
• Reduction of import taxes
• Allowing foreign companies to set up in India
• Privatisation of public sector companies

World Trade Organisation (WTO)

The World Trade Organisation was established in 1995 to liberalise international trade. It has 164 member countries and sets rules for international trade. However, developed countries often retain unfair trade advantages.

Impact of Globalisation

Positive Impacts	Negative Impacts
More job opportunities Better quality products Lower prices for consumers Technology transfer Foreign investment increase	Job losses in some sectors Small producers struggle Farmers not benefited much Environmental concerns Increasing inequality

Consumer Rights

A consumer is anyone who buys goods or services for personal use. Consumer rights are legal protections given to consumers against exploitation by sellers.

Consumer Rights under COPRA 2019

The Consumer Protection Act, 2019 provides six rights to consumers:

Right	Description
Right to Safety	Protection against hazardous goods
Right to be Informed	Know about quality, quantity, price, ingredients
Right to Choose	Select from variety of products at competitive prices
Right to Seek Redressal	File complaints and get compensation
Right to be Heard	Concerns must be heard in consumer forums
Right to Consumer Education	Know about rights and remedies available

Three-tier Consumer Court System

Level	Forum	Claim Amount
District	District Consumer Disputes Redressal Forum	Up to ₹1 crore
State	State Consumer Disputes Redressal Commission	₹1 crore to ₹10 crore
National	National Consumer Disputes Redressal Commission	Above ₹10 crore

Quality Certification Marks

Mark	Used For
ISI Mark	Industrial products (electrical goods, etc.)
Agmark	Agricultural products (ghee, spices, etc.)
Hallmark	Gold jewellery (purity certification)
FSSAI	Food products (food safety)

Important Dates: 24 December is National Consumer Day and 15 March is World Consumer Rights Day.

Important Questions

Q1. What is development? Why do different people have different developmental goals?

Development refers to improvement in economic, social, and environmental conditions. Different people have different goals because their life situations, needs, and aspirations vary. A landless labourer wants more work while a farmer wants better crop prices.

Q2. Why is per capita income not an adequate indicator of development?

Per capita income does not show: (1) distribution of income, (2) quality of life, (3) public facilities available, (4) non-material aspects like security and freedom. Two countries with same income may have different development levels.

Q3. What are the three sectors of the Indian economy?

Primary Sector (agriculture and related activities), Secondary Sector (manufacturing and industry), and Tertiary Sector (services like banking, transport, education).

Q4. What is disguised unemployment? Give an example.

Disguised unemployment occurs when more people work than required. Example: If 5 family members work on a farm that needs only 3 workers, 2 are disguised unemployed.

Q5. What are the main functions of money?

Medium of exchange, measure of value, store of value, and standard of deferred payment.

Q6. What is globalisation?

Globalisation is rapid integration between countries involving movement of goods, services, investments, technology, and people across borders.

Q7. What are the six consumer rights under COPRA 2019?

Right to Safety, Right to be Informed, Right to Choose, Right to Seek Redressal, Right to be Heard, and Right to Consumer Education.

References

1. NCERT. "Understanding Economic Development." Textbook for Class X. National Council of Educational Research and Training, 2024.
2. RBSE. "Economics Syllabus Class 10." Rajasthan Board of Secondary Education, 2025-26.
3. World Bank. "World Development Indicators." 2024.
4. UNDP. "Human Development Report." United Nations Development Programme, 2024.

See also

• Class 10 History Notes
• Class 10 Geography Notes
• Class 10 Civics Notes
• RBSE Class 10 Syllabus 2025-26