Economic development is a planned growth. It implies economic growth along with progressive changes in certain areas which determine the well being of the people. Thus, it has a qualitative dimension rather than a quantitative one.

The important indicators of Economic Development are as follows:

i. Structural Transformation:  

• Structural transformation such as changes in attitudes, ideologies, institutions etc. can be considered as an important indicator of economic development.  
• Such changes further lead to modernization and urbanization in the country.

ii. Per Capita Consumption (PCC):  

• PCC basically indicates the extent of material well‐being and the standard of living of the people in an economy.
• Consumers intend to increase their standard of living by increasing their spending viz. by consuming more goods and services. Hence, an increase in PCC is considered as an indicator of economic development.
• PCC in simple terms refers to the quantum of money spent by an individual in a year on consumption of goods and services.
• Increased standard of living and welfare of the people in an economy depends upon the higher Per Capita Consumption (PCC).
• It can be calculated as:

PCC = \(\cfrac{Totel\, Private\, Consumption\, Expenditure}{Totel\, Population}\)

iii. Qualitative Entrepreneurship:

• Qualitative entrepreneurship is one of the important indicators of economic development. 
• Entrepreneur is a person who runs an enterprise.
• Talented and efficient entrepreneurs are required for the economic development as they keep the wheels of the economy moving. 
• The history of developed countries indicates that the economic development of an economy is mainly due to the creative talents of the entrepreneurs.  
• Entrepreneur is the person with some special qualities such as ability to innovate, hard work, vision, self confidence, positive attitude, etc.  

iv. Environmental Balance:  

• Environment consists of climate, soil, water etc. on which a nation’s agriculture and industrial sector depends.  
• The process of economic development causes environmental imbalance. This happens due to pollution, over‐exploitation of natural resources, etc. Such practices must be avoided for the sake of future generations. 
• It is the responsibility of the nation to achieve sustainable economic development with the help of eco‐friendly practices and environmental conservation.

v. Per Capita Income (PCI): 

• Per Capita Income (PCI) is another important indicator of economic development. It is defined as ‘Average income of a nation’.
• An increase in PCI indicates an increase in economic development. In other words, it indicates economic welfare of the country.
• Some economists prefer Real Per Capita Income to Real National Income. This is because; economic development will have no meaning if it fails to increase the standard of living of the common people.
• According to the Economists, “Economic development is a process whereby, an economy’s real per capita income increases over a long period of time”.
• A rise in the PCI is possible when the growth of national income is more than the growth of population.
• It can be calculated as:

PCI = \(\cfrac{Totel\, National\, Income}{Totel\, Population}\)

vi. Productivity Per Hectare of Land:  

• Land productivity is an important indicator of economic development. 
• Higher the productivity of land, higher is the economic development.
• Land productivity is the average yield (in kilograms) of a crop per hectare of land.

  ‐  It can be calculated as: 

Productivity per hectare = \(\cfrac{Totel\, Production\, of\, Crops\, (in\, kgs)}{Totel\, Land\, Area\, Under\, the\, crop}\)

• The agricultural productivity mainly depends upon the soil, climate, rainfall, chemical fertilizers, seeds, equipments etc. 

vii. Physical Quality of Life Index (PQLI):

• Overall well being and quality of life of the people are the important factors on which the development of the economy largely depends.
• PQLI is one such indicator which refers to the overall well being of the people that depend upon life expectancy, infant mortality and literacy.

viii. Capital Formation:  

• Capital formation is another indicator of economic development that depends upon the rate of capital formation which further depends upon savings.
• It means converting savings into physical productive assets such as transport facilities, electricity generation, dams, modern technology etc. 
• Increase in capital formation leads to increase in economic development of the nation.

ix. Industrial Progress:

• The Industrial progress plays a significant role in the economic development of a nation.
• During the period of Second Five Year Plan, Indian industries got an opportunity to expand. This further helped in increasing the national output and per capita income.
• As and when the industries started to expand, the share of industrial sector in the GDP started increasing, leading to the rise in employment, output and income in other sectors also.
• Apart from this, modernization, urbanization, education, technical knowledge etc. is also related to the process of industrialization.

x. Human Development Index (HDI):

• HDI refers to the process of enlarging people’s choices and well being.
• It is measured in terms of the expectancy of life, education achievement and GDP. Per Capita HDI is the simple average of these three factors.
• It is the index used by the United Nations to measure the progress of a country.
• HDI is an important indicator of economic development. It involves availability of better health and educational facilities which further helps to improve the overall efficiency and productivity of the people of the economy.  
• Here, an upward movement in HDI indicates improvement in human development.

xi. Gross National Income or GNP:  

• According to Dr. Kuznet, real GNP is a useful indicator of economic development. 
• It refers to the total market value of all final goods and services produced in an economy during a particular year including Net Income from abroad.