It means increase in the market value of the goods & services produced by an economy over time.

It implies sustained expansion in effective labour force, capital , volume of internal & external trade and level of consumption in an economy.

It has been one of the principal objectives of planning in India.

Economic growth is measurable & objective. Real per capita income is the most reliable indicator of economic growth.

Since Independence, India has made significant progress in several areas of economic &

human development. Food production has grown to provide adequate level of food

security. Infrastructure development has proceeded with good speed . A vast pool of

trained human resources has been developed. A vast network of development institutions

has been nurtured.

Economic growth is a function of multiple socio-economic variables .These could be considered as factors affecting economic growth.

Factors affecting economic growth can broadly be classified into two categories, namely-

Economic factors – natural resources, human capital, investment in

capital goods & entrepreneurship .

Non- economic factors- social factors, political factors &

demographic factors.

Natural resources are an important source of national wealth around the world. Yet, experience shows that natural riches are neither necessary nor sufficient for economic prosperity and progress. The worlds richest countries include Hong Kong, Japan, Singapore and Switzerland which do not owe their national wealth to nature and many others, such as the United States and the United Kingdom, where natural resources nowadays play only a minor role in the generation of national income.

Among developing countries, natural resources are relatively more prevalent. But there are also clear examples of countries that are genuinely rich in terms of natural resources but still have not been able to sustain economic growth. It thus appears that the generosity of nature may sometimes although by no means always turn out to be a mixed blessing.

If a country doesn’t have much resources, the best way is to put those limited resources to optimal use.

If natural resource development is properly managed, the associated revenue can be used to speed up growth, reduce inequality, and lift people out of poverty.

Human capital is a collection of resources—all the knowledge, talents, skills, abilities, experience, intelligence, training, judgment, and wisdom possessed individually and collectively by individuals in a population. These resources are the total capacity of the people that represents a form of wealth which can be directed to accomplish the goals of the nation or state or a portion thereof.

NON -ECONOMIC

FACTORS AFFECTING

ECONOMIC GROWTH

Social institutions exert a determining influence on economic progress & can either help or hinder the progress of a nation.

In underdeveloped economies, social institutions & structure do not provide proper necessary atmosphere & proper conditions for scientific growth. The important social institutions in India are- cast system , joint family system, religious beliefs & customs.

Whereas in developing & developed countries, social institutions & structure pave a way for successful economic growth . People believe more in their hard work rather than in their fate. This improves their performance contributing to economy’s progress.

There are often political factors involved in why some countries remain poor, and one of those is bad government. Governments need to do lots of things to encourage development – they need to build and maintain infrastructure, and raise and spend finance wisely, on the right projects.

They also need to set up their laws and business practices in a way that encourages investment and initiative, that protect businesses and individuals legally, and that honour property rights, contracts and copyrights.

People's economic behaviour varies at different stages of life, changes in a country's age structure can have significant effects on its economic performance.

Nations with a high proportion of children are likely to devote a high proportion of resources to their care, which tends to depress the pace of economic growth.

By contrast, if most of a nation's population falls within the working ages, the added productivity of this group can produce a high level of economic growth, assuming that policies to take advantage of this are in place. In fact, the combined effect of this large working-age population and health, family, labour, financial, and human capital policies can create virtuous cycles of wealth creation.

And if a large proportion of a nation's population consists of the elderly, the effects can be similar to those of a very young population.

To sum up, the factors that are the basic determinants to economic progress are natural resources, (including land, minerals, water, forests etc. ) , the quantity & quality of country’s population (demographic factors ) , the technological innovations ( including discoveries, inventions etc ) , entrepreneurial skills, social & institutional factors ,and a stable government and its efficient working. Favourable external circumstances and prospects of foreign trade also promote growth.