CDZ2A/CDC2A INDIAN ECONOMY Unit : I - V

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1 CDZ2A/CDC2A INDIAN ECONOMY Unit : I - V

2 Unit I - Syllabus Indian Economy Underdevelopment Economic Development Economic growth Determinant of Economic Development and Growth Rostow s of developing Growth Obstacles for Economic Development Indicators of Economic Development National Income Basic concepts computation of National Income CDZ2A/CDC2A INDIAN ECONOMY 2

3 INDIAN ECONOMY It is a Mixed Economy of Socialist Economy and Capitalist Economy Video link CDZ2A/CDC2A - INDIAN ECONOMY 3

4 Underdevelopment Underdevelopment refers to the underutilization of resources and unexploited manpower Video link CDZ2A/CDC2A INDIAN ECONOMY 4

5 Economic Development Economic development refers to the adoption of new technologies, transition from agriculture-based to industrybased economy, and general improvement in living standards. CDZ2A/CDC2A INDIAN ECONOMY 5

6 Economic Growth The increase in real terms of the output of goods and services that is sustained over a long period of time, measured in terms of value added. CDZ2A/CDC2A INDIAN ECONOMY 6

7 Determinant of Economic Development and Economic Growth Economic Factors Natural resources Capital Formation Condition of Foreign Trade Economic System Non Economic Factors Human Resources Technology Know-how General Education Corruption CDZ2A/CDC2A INDIAN ECONOMY 7

8 Rostow s Stages of Economic Growth Stage I Traditional Society Stage II Transitional Society Stage III Take Off Stage IV Drive to Maturity Stage V High Mass Consumption CDZ2A/CDC2A INDIAN ECONOMY 8

9 Obstacles for Economic Development Domestic Capital Formation Saving potential Investment Obstacles Lack of infrastructure Video link CDZ2A/CDC2A INDIAN ECONOMY 9

10 Indicators for Economic Development High Standard of living Education Trade Transport Employment National Income CDZ2A/CDC2A INDIAN ECONOMY 10

11 Per capita Income CDZ2A/CDC2A INDIAN ECONOMY 11

12 National Income Indicators of economic development Measures the volume of commodities and Services CDZ2A /CDC2A INDIAN ECONOMY 12

13 Methods of National Income Product method Income method Expenditure method Video link CDZ2A/CDC2A INDIAN ECONOMY 13

14 Concepts of National Income Gross Domestic Product Gross National Product Net Domestic Product Net National Product Per Capita Income CDZ2A/CDC2A INDIAN ECONOMY 14

15 Causes for slow growth in National Income High Growth Rate of Population Excessive Dependence on Agriculture Occupational Structure Low Level of Technology and its Poor Adoption Poor Industrial Development Poor Development of infrastructural Facilities CDZ2A /CDC2A INDIAN ECONOMY 15

16 Unit II - Syllabus Poverty Inequalities Unemployment Population Transport Foreign Trade CDZ2A /CDC2A INDIAN ECONOMY 16

17 Meaning of Poverty Poverty Person not able to fulfill their basic need ( Food, Cloth and Shelter). Absolute Poverty It is a condition where a person does not have the minimum amount of income needed to meet the minimum requirements for one or more basic living needs over an extended period of time. Relative Poverty It is a condition in which people lack the minimum amount of income needed in order to maintain the average standard of living in the society in which they live CDZ2A/CDC2A - INDIAN ECONOMY -I 17

18 Poverty CDZ2A/CDC2A INDIAN ECONOMY 18

19 Poverty Line The estimated minimum level of income needed to secure the necessities of life. CDZ2A /CDC2A INDIAN ECONOMY 19

20 Causes for Poverty Video link CDZ2A/CDC2A INDIAN ECONOMY 20

21 Inequalities of Income and Wealth The unequal distribution of household or individual income across the various participants in an economy. CDZ2A/CDC2A INDIAN ECONOMY 21

22 Unemployment Unemployment is often used as a measure of the health of the economy. The most frequently measure of unemployment is the unemployment rate, which is the number of unemployed people divided by the number of people in the labour force. CDZ2A /CDC2A INDIAN ECONOMY 22

23 Kinds of Unemployment Video link CDZ2A /CDC2A - INDIAN ECONOMY 23

24 Causes for Unemployment CDZ2A/CDC2A INDIAN ECONOMY 24

25 Population CDZ2A /CDC2A INDIAN ECONOMY 25

26 Population Explosion CDZ2A /CDC2A INDIAN ECONOMY 26

27 Effects of Population Explosion CDZ2A /CDC2A INDIAN ECONOMY 27

28 Transport Transport is the movement of people, animals and goods from one location to another. Modes of transport include Railway, Roadway, Airway and Waterway. CDZ2A/CDC2A INDIAN ECONOMY 28

29 Transport CDZ2A /CDC2A INDIAN ECONOMY 29

30 Balance of Trade and Balance of Payment Balance of Trade refers to difference in the export and import of goods. Balance of Payment refers to systematic record of all economic transactions between the residents of a country and rest of the world in a year CDZ2A /CDC2A - INDIAN ECONOMY 30

31 Foreign Trade The total quantity of futures contracts bought and sold during a trading day. The volume of trade numbers, reported as often as once an hour throughout the current trading day, are estimates. CDZ2A/CDC2A INDIAN ECONOMY 31

32 Composition of India s Exports CDZ2A /CDC2A INDIAN ECONOMY 32

33 Unit III - Syllabus Agriculture Contribution to economic development Green revolution Irrigation Land reforms Food policy Public Distribution System. CDZ2A/CDC2A INDIAN ECONOMY 33

34 Agriculture CDZ2A /CDC2A INDIAN ECONOMY 34

35 Agriculture - Contribution to Economic Development Agriculture plays a vital role in India's economy. Over 58 per cent of the rural households depend on agriculture as their principal means of livelihood. Agriculture and allied sectors like forestry and fisheries accounted for 13.7% of the GDP (gross domestic product) in 2013, about 50% of the workforce. CDZ2A/CDC2A INDIAN ECONOMY 35

36 . Agriculture Sector and Allied Activities CDZ2A/CDC2A INDIAN ECONOMY 36

37 Problem faced by the Agriculture Sector in India Lack of Resources Most of the rural families are dependent on agro-based activities for their livelihood, where land is the limiting factor. Over 75% of the farmers own less than two hector land. As only about 28% agricultural land is under irrigation and the rest under rainfed areas, a large number of people are seasonally employed, causing severe underemployment for over 250 days in a year. CDZ2A /CDC2A INDIAN ECONOMY 37

38 Problem faced by the Agriculture Sector in India CDZ2A /CDC2A INDIAN ECONOMY 38

39 Lack of Confidence among Poor People Our natural resources although scarce, are not optimally utilised due to lack of education, awareness and confidence. This has resulted in neglect of various development schemes which were introduced for sustainable use of these resources. Presently, about one half of the geographic area is categorised as wastelands. Over 70% of the rain water flows back to the sea causing flood and soil erosion. CDZ2A /CDC2A INDIAN ECONOMY 39

40 Lack of Management Rural development projects are often implemented without adequate planning. In the absence of an integrated approach to tackle multidimensional interrelated problems Sectorial development activities may not deliver expected results. Apart from integration of various sectors, many of these projects also lack proper planning and resource mobilization. CDZ2A/CDC2A INDIAN ECONOMY 40

41 Green Revolution The introduction of high-yielding varieties of seeds after 1965 and the increased use of fertilizers and irrigation are known collectively as the Green Revolution. CDZ2A/CDC2A INDIAN ECONOMY 41

42 Achievements of Green Revolution Let us now turn our analysis towards the achievement of new agricultural strategy adopted in India. The most important achievement of new strategy is the substantial increase in the production of major cereals like rice and wheat. CDZ2A/CDC2A INDIAN ECONOMY 42

43 Irrigation Irrigation is the application of controlled amounts of water to plants at needed intervals. Irrigation helps grow agricultural crops, maintain landscapes, and re-vegetate disturbed soils in dry areas and during periods of inadequate rainfall. CDZ2A/CDC2A INDIAN ECONOMY 43

44 Irrigation Video link CDZ2A/CDC2A INDIAN ECONOMY 44

45 Land Reform Land Reform involves the changing of laws, regulations or customs regarding land ownership. Land reform may consist of a government-initiated or governmentbacked property redistribution, generally of agricultural land. CDZ2A/CDC2A INDIAN ECONOMY 45

46 Food Subsidy in India India has one of the largest food subsidy programmes in the world that has created a relatively effective social safety net but is also under increasing criticism because of its large contributions to government budget deficits, economic inefficiency and poor targeting. The Food Corporation of India is always under attack from all quarters for perceived operational inefficiencies leading to increase in the food subsidy burden. CDZ2A /CDC2A INDIAN ECONOMY 46

47 Public Distribution System(PDS) PDS makes a distinction between below poverty line B.P.L. and (A.P.L) above poverty line B.P.L. card holder get food grains at 50 percent cost of F.C.I. procurement price whereas A.P.L. gets foods grain at economic cost of F.C.I. s. CDZ2A/CDC2A INDIAN ECONOMY 47

48 Unit IV - Syllabus Industry Role of Industry Large scale Industry Small scale industry New Economic Policy CDZ2A/CDC2A INDIAN ECONOMY 48

49 Industry An industry is a group of manufacturers or businesses that produce a particular kind of goods or services. Workers in the textile industry design, fabricate, and sell cloth. Industry comes from the Latin industria, which means"diligence, hard work," and the word is still used with that meaning. CDZ2A /CDC2A INDIAN ECONOMY 49

50 Role of Industry in the Economy It has the ability to produce different products It has the capacity to give employment It has the capacity to adjust to the changing tastes of the consumers It helps the economy earn foreign currency which we use to finance our imports Video link CDZ2A/CDC2A INDIAN ECONOMY 50

51 Large Scale Industry In the nineteenth century, India saw the emergence of large factories, machinery, and government regulation of industrial work three features that define a large-scale industry. It also examines major industries, labour, capital, technology, entrepreneurship, management, and the princely states. CDZ2A/CDC2A INDIAN ECONOMY 51

52 Large Scale Industry Video link CDZ2A /CDC2A INDIAN ECONOMY 52

53 Difference between Cottage and Small Scale Industries Cottage Industries Small Scale Industries These are mostly in villages, although they are scattered all over the country. They do not have hiredlabourers. Run by family members. Simple tools are used with very little Capital. Cottage industry produce ancillary goods for small industry. However small industries are mostly in urban areas. But in small industries there are hired labourers. Required more capital for machinery which runs on power. Where as they produce ancillary goods for large industry. CDZ2A /CDC2A INDIAN ECONOMY 53

54 Small Scale Industry Video link CDZ2A/CDC2A INDIAN ECONOMY 54

55 Role of Small Scale Industry The small scale sector was to be promoted and protected because. It was believed that the small scale sector would use labour intensive techniques in the production of consumer goods, thus creating employment opportunities for a fast expanding labour force. It would add to the supply of consumer goods in the short run and offset the inflationary tendencies by meeting the demand. It was an important instrument of industrial development. The small scale sector could exploit the possibilities of rural industrialization, CDZ2A/CDC2A INDIAN ECONOMY 55

56 Industrial Policy before 1991 India started her quest for industrial development after independence. The industrial policy resolution of 1948 marked the beginning of the evolution of Industrial policy. It is prescribes the respective roles of the public, private, joint, and co - operative sectors. It also indicates the role of the large medium and small scale sector. CDZ2A /CDC2A INDIAN ECONOMY 56

57 The Evolution of Industrial Policy CDZ2A/CDC2A INDIAN ECONOMY 57

58 Development in the Public Sector The estimated expenditure on projects both of the Central and State Govt. amounts to Rs. 94 crores and out of it, about Rs. 83 crores were on projects which were directly under Central Government. The participation of private capital, indigenous and foreign was envisaged at about Rs. 20 crores. The major industrial project in the public sector was a new iron and steel plan estimated to cost Rs. 80 crores in all and Rs. 30 crores were allotted in the present plan period. CDZ2A/CDC2A INDIAN ECONOMY 58

59 Unit V - Syllabus Five Year Plans in India Total Outlay Objectives of Five Year Plan Achievements of Five Year Plan Failures of Five Year Plan CDZ2A/CDC2A INDIAN ECONOMY 59

60 What is Plan? A plan spells out how the resources of a nation should be put to use. It should have some general goals as well as specific objectives which of time. are to be achieved with in a specified period In India plans are of five year duration and are called FIVE YEAR PLAN. CDZ2A/CDC2A INDIAN ECONOMY 60

61 Five Year Plan Video link CDZ2A /CDC2A INDIAN ECONOMY 61

62 Planning Commission The planning commission is an organisation in the Government of India which formulates India s Five Year Plan. It was set up on 15 March, 1950 with Prime Minister Jawaharlal Nehru as the chairman. Now Mr.Montek Singh Ahluwalia holds the position of deputy chairman CDZ2A /CDC2A INDIAN ECONOMY 62

63 Planning Commission CDZ2A /CDC2A INDIAN ECONOMY 63

64 Five Year Plan CDZ2A/CDC2A INDIAN ECONOMY 64

65 Plan Outlay of Public Sector in India CDZ2A /CDC2A INDIAN ECONOMY 65

66 Targeted and Actual Growth Rate CDZ2A/CDC2A INDIAN ECONOMY 66

67 Objectives of Economic Planning To Increase Per capital Income and National Income Higher level of employment Growth with social justice Increase industrial output Reduction of inequality in income Modernization Self-reliance CDZ2A/CDC2A INDIAN ECONOMY 67

68 Objectives of Economic Planning Economic Growth Reduction of Economic Inequalities Balance Regional Development Modernization Reduction of Unemployment CDZ2A/CDC2A INDIAN ECONOMY 68

69 Achievement of Economic Planning Increase in National Income Increase in Per capital income Increase in rate of Capital formation Development of Industries Development of infrastructure Increase in employment Modernization CDZ2A/CDC2A INDIAN ECONOMY 69

70 Failure of Economic Planning No substantial in standard of living Rise in prices Increase in unemployment Less growth in agricultural Sector Inequality in distribution of income and wealth Inefficient administration Slow capital formation Poor development of infrastructure CDZ2A/CDC2A INDIAN ECONOMY 70

71 Conclusion Economic Planning help in mobilizing and allocating the resources in desired manner. Objective of economic planning is to reduce inequality economic growth, balanced regional growth, modernization. Each five year plan aims at achieving certain target. Five year plan constitute the steps toward the fulfillment of objective of economic planning. CDZ2A/CDC2A INDIAN ECONOMY 71