Economics Essay- Comparative study between India and Australia

Economic Development refers to the progression in an economy which includes an increase in living
standards, development of human capital, increasing the literacy ratio and increasing the general
welfare of citizens. India and Australia are both emerging economies. Whilst India experienced
exponential growth after economic liberalisation, Australia experienced rapid growth from the
mining boom. Two economies can be compared by focusing on the level of development, such as
economic growth, quality of life, unemployment rate, environmental sustainability and the role of
the Government in the provision of health care, education and welfare.
Economic Growth is the quantitative measure of the total amount of goods and services produced in
an economy in a given year which is also known as the GDP (Gross Domestic Product). Whilst
Australia has achieved relatively stable economic growth, India is expanding rapidly. India has a
larger economy than Australia in terms of nominal Gross Domestic Product. In 2013, Indias GDP was
1.877 trillion USD making it the tenth largest economy in the world. GDP PPP (Gross Domestic
Product Purchasing Power Parity) measures sum value of all goods and services produced in the
country. Indias GDP PPP in 2013 was 4.99 trillion USD making it the worlds third largest economy.
Australia on the other hand, was ranked 12th in the world according to World Bank in terms of
nominal GDP. Australias GDP in 2013 was 1.56 trillion USD and Australias GDP PPP was 998.3 billion
USD. Indias annual GDP growth rate in 2013 was 5%, double that of Australias at 2.5%. .
Economic growth had begun to slow down (shown in figure 1.2) because of high interest rates and
high inflation causing a decline in investment. Despite India having a high GDP and being the worlds
fastest growing economy; it has an extremely low GDP per capita. In 2013, Indias GDP per capita
was 4,000 USD ranking it 169th in the world. In contrast to this, Australias GDP per capita in 2013
was 67,458.36 USD ranking it 4th in the world according to the IMF. Indias GDP per capita is much
lower than Australias and this is why India is struggling with poverty.
The Indian economy is significantly larger and growing faster than the Australian economy and this
is because developed economies have a high GDP per capita but slow growth rate because of lower
population and developing economies have low GDP per capita but a faster growth rate.
Figure 1.1

Figure 1.2

Economics Essay- Comparative study between India and Australia

Quality of Life refers to the standard of living within a population. The most accurate measurer for
Quality of Life is the Human Development Index (HDI) which takes into account life expectancy,
average years of schooling and gross national income per capita. In 2011, Australia was positioned
second in the world behind Norway with a HDI of 0.977. India was ranked 119th with a HDI of 0.519.
Australias life expectancy at birth was 81.9 years as opposed to Indias 64.4 years. In 2014, Australia
still maintained the position of 2nd in the world after Norway however, India was ranked 135th out of
the 187 countries. Its ranking had decreased. Indias life expectancy at birth had increased to 66.4
years but the HDI score was still substantially low at 0.586 as opposed to Australias score of 0.933.
From these figures, it can be concluded that Australia holds a high quality of life with high living
standards as opposed to India.

Unemployment rate measures the percentage of people who are unemployed and actively seeking
work over the participation rate.

Figure 1.3

As shown in Figure 1.3, the unemployment rate reached an all-time high of 9.4% in 2010 and after
that it began falling. In 2013 the unemployment rate was 8.8%. The agriculture industry is the major
employer for the Indian economy employing 47% of the working population in 2012.
The unemployment rate in Australia has been rising strongly. It has increased to 6.40% in January of
2015 from 6.10% in December of 2014. It has risen
Figure 1.5
to the highest level in more than 12 years.
As shown in figure 1.5, Australias unemployment
rate is continually rising because of low economic
activity. Economists predict that by the end of
December 2015, the unemployment rate will be as
high as 7%. Australias employment structure differs
from Indias employment structure. Whilst in India,
agriculture sector is the major employer; the service
industry is the major job creator in Australia
employing over 75% of the Australian working population.
These statistics show that the unemployment rate is high in Australia but lower compared to Indias
and this is because India has a larger population.

Economics Essay- Comparative study between India and Australia

Environmental Sustainability refers to the degree, to which an economy makes decision, takes action
and operates in relation to the protection of the national environment and the preservation of
natural resources. Indias pollution levels have risen substantially with economic growth causing
deterioration of air quality and water pollution. According to a WHO survey, 13 of the 20 most
polluted cities are in India. A study also found that outdoor air pollution was the reason behind the
620,000 premature deaths in 2010 in India. A recent report by the UN stated that there are more
than 100,000 people who die each year in India because of water borne diseases. These findings
suggest that Indias environmental quality isnt to a very high standard and there are high levels of
air and water pollution. By comparison, Australias environmental quality is to a high standard with
air, water, noise and traffic pollution levels being substantially lower than that of other countries.
Australians can enjoy clean drinking water, clean air and low levels of traffic pollution.
Whilst Australia has a much cleaner environment, it isnt environmentally sustainable. Since
Australia is heavily reliant on the combustion of fossil fuels, its carbon dioxide emissions were 16.93
metric tons per capita in 2010. This is in stark contrast to Indias CO2 emissions per capita being 1.67
metric tons in 2010, significantly lower than Australias.
Figure 1.6

Figure 1.6 highlights the increase in carbon emissions from 1990 to 2010. CO2 emissions have grown
by 47%, from 260 million tonnes in 1990 to 384 million tonnes in 2010. This is a rapid increase in the
amount of carbon dioxide being emitted. Australias greenhouse emissions per capita are higher
than any other developed country. In 2011, Australias net contribution to global greenhouse gas
emissions was 547 million tonnes. These findings show that for a population of just 23 million
people, Australia uses lots of energy. With the abolishment of the carbon tax, CO2 emissions are
predicted to continue rising and this can lead to global warming.

The role of Government in different economies can be examined by the provision of health care,
education and welfare services provided. The Australian Government spends a larger proportion of
their GDP on healthcare as compared to India. In 2012, Australia spent 9.1% of their GDP on
healthcare services as opposed to the 4.0% of the GDP spent by India, which is quite a significant
difference when compared. Australia has a well-developed public health care system known as
Medicare which covers most of the basic healthcare needs such as a visit to the doctors, tests, and

Economics Essay- Comparative study between India and Australia

preventive health care like cancer screenings and vaccines. Indias public healthcare system is still
relatively underdeveloped. However, the Indian Government is attempting to reform their
healthcare system. The two major health programs adopted are National Rural Health Mission
(NRHM), which is the central governments attempt to improve delivery of services in public facilities
and Rashtriya Swasthya Bima Yojana (RSBY), which is a health insurance program that covers people
below the poverty line.
Australia has a well-established public education system providing universal free education. In
2011the Australian Government spent 5.1% of their GDP on education. This is higher than the 3.4%
of Indias GDP spent on education. Australias welfare system is to a very high standard, providing a
greater level of assistance than other countries. Total spending on social security and welfare was
$131.9 billion in 2012-13, or around one third of total government spending in Australia. Australia
spends 19.5% of the GDP on social welfare providing a safety net for Australians. India spends 7.3%
of GDP on social services. A Social Protection Index India (SPI) report India 23rd out of the 35
countries in relation to social protection offered to the poor. Whilst these findings convey that the
Indian Government doesnt spend much in relation to social welfare, the Government has initiated
programs to combat poverty and to reduce the disparity between the rich and the poor. The
Government has assisted in food supply at low prices, providing free tap water in villages and
tackling unemployment. The Government guarantees one member from 60 million rural
households 100 days of work each year.

Australia and India have more differences than similarities. Whilst Australia has achieved high levels
of economic development, India still has scope for development. Australia offers a high standard of
living with being ranked 2nd in the HDI. There is a high GDP per capita in Australia and stable
economic growth. Unemployment rates are risings however Australian Government provides many
social welfare payments including unemployment benefits. However, Australia isnt environmentally
sustainable due to the large amounts of emission of CO2. India has achieved substantial economic
growth in these past years. India has poor standards of living and high levels of unemployment,
poverty and pollution. The Indian Government however is involved in initiatives to reduce the
unemployment and poverty rate and with those rates being reduced, India can achieve a higher level
of economic development.