Daily Class Notes: Indian Economy (PDF)

DAILY CLASS NOTES NCERT: Indian Economy Lecture - 02 Basics of Economics  2 Basics of Economics ❖ Development ❖ Sectors of Economy ❖ Disguised Une...

DAILY CLASS NOTES NCERT: Indian Economy Lecture - 02 Basics of Economics  2 Basics of Economics ❖ Development ❖ Sectors of Economy ❖ Disguised Unemployment ❖ Organised and Unorganised Sector Development:  The notion of development is different for different sets of people.  Example: A girl previously confined indoors without educational opportunities will experience significant development if given the chance to attend school. In contrast, a boy already attending school may not perceive the same level of development because he is already engaged in the educational system. Development varies according to individual circumstances and opportunities.  The development of a particular set of people can be destructive for other sets of people.  Example: For a villager, development means sustaining life with local resources. However, an industrialist seeking to establish a factory in the same village by deforesting it perceives development differently. Thus, what's developmental for one can have adverse consequences for another, highlighting the conflict between environmental conservation and economic growth.  Development refers to sustained growth which brings positive change in the lives of people.  Example 1: Merely increasing one's income from 1000 to 1200 rupees does not necessarily signify essential development. True development encompasses sustained growth, improved living standards, good health, access to quality education, and other holistic improvements that enhance overall well-being. Income alone is not an adequate measure of development.  3  Example 2: The statistics presented in the chart for Haryana do not conclusively indicate the highest level of development among states. Despite Haryana's higher growth rate, Kerala surpasses in areas like literacy and healthcare. Hence, while Haryana shows greater growth, overall development is more prominent in Kerala due to its comprehensive well-being indicator.  While a millionaire may not necessarily find peace despite wealth, an individual earning modestly and enjoying a harmonious family life may be considered more developed. It highlights that well-being extends beyond monetary success.  Development can be compared between the individuals as well as between the countries on similar lines.  While averages are useful for comparison, they hide disparities.  Example: Country A has a higher average income (Rs 500) than Country B (Rs 200). However, this does not necessarily indicate greater development because Country A may have hidden income inequality, which impacts overall well-being and development despite the higher average income. Sectors of Economy:  Primary Sector: It involves activities related to raw materials and natural resources.  Examples: agriculture, farming, forestry, etc.  Steel is used as a raw material for car manufacturing. The extraction of steel from iron ore so that it can be transformed into finished products and sold is an activity belonging to the Primary sector.  Secondary Sector: This sector contains activities that involve the processing and manufacturing of raw materials into finished products.  Examples: construction, manufacturing, etc.  4  The automotive sector uses steel to construct various parts of a car and cars are produced in factories. Hence, the automobile industry is an example of the Secondary Sector because it takes the resources obtained from the Primary sector and makes products for consumers.  Tertiary Sector: This sector contains activities that provide services to individuals or businesses.  Examples: transportation, teaching, banking, etc.  Cars sold in auto dealerships are an example of the Tertiary sector because manufactured goods are sold by the companies to their customers. Example of ParleG Biscuits: It goes through numerous stages (primary – secondary – tertiary) to reach the consumer.  Primary sector: Farmer grows the wheat (raw material)  Secondary sector: Wheat is processed into biscuits in factories.  Tertiary sector: It provides transport to send biscuits from the factory to the market Aspect Primary sector Secondary Tertiary Sector Sector Employment  Maximum employment in 1947  Minimum was from Primary Sector employment in  In 2023, maximum employment 1947. comes from this sector. Total income  Maximum income in 1947.  Maximum  Minimum income in 2023 (due income from to unequal distribution of wealth) this sector in 2023 Disguised Unemployment:  When more people are engaged in a job than what is actually needed for the work, it is called Disguised Unemployment.  5  Example: In a farming sector, 5kg of rice is produced by two individuals working on the land. Even with the addition of two more workers, the total output remains unchanged, indicating surplus labour with minimal productivity impact. Organised and Unorganised Sector:  Organised Sector: Those activities where terms of employment are based on rules and regulations and job security is ensured fall under the Organised Sector.  Example: Government Employees  Unorganised Sector: Those activities which are often outside the control of government are termed as Unorganised Activities.  Examples: Labourers, Daily wage workers etc. Aspect Organised Employment Unorganised Employment Typically, organised jobs have Unorganised labour, such as daily wage provisions for paid medical workers, often lack such benefits, and Leave Policies leave and defined notice taking a leave might result in a loss of periods. income. Organised employment is Unorganised employment often lacks Rules and governed by established rules formal regulations, leading to job Regulations and regulations that provide insecurity and a lack of standardised job security and benefits. benefits.  Development: It involves holistic progress, encompassing economic growth, improved living standards, and access to education and healthcare.  Sectors of Economy: The economy comprises the primary sector (agriculture), secondary sector (industry and manufacturing), and tertiary sector (services), representing the diverse components of economic activity.  6  Disguised Unemployment: This phenomenon occurs when surplus labourers are engaged in tasks that do not increase production, often found in the agricultural sector.  Status of Economy of India (1947 vs 2023): India's economy has transformed from primarily agrarian in 1947 to a diverse, globally competitive economy in 2023, marked by rapid industrialisation and service sector growth.  Organised vs Unorganised Sector: Organised sectors offer job security and regulated benefits, while unorganised sectors often lack these, leaving workers vulnerable to job insecurity and inconsistent benefits. 