Economics Chapter-1 Part-1 PDF

# Chapter 1: Status of Indian Economy - India is the fastest growing economy - India has tremendous progress in several fields in seven decades - Period from 1757-1947: Indian economy was subject to great exploitation - **Purpose of British rule:** - **F**alse the Indian economy. They used the...

# Chapter 1: Status of Indian Economy - India is the fastest growing economy - India has tremendous progress in several fields in seven decades - Period from 1757-1947: Indian economy was subject to great exploitation - **Purpose of British rule:** - **F**alse the Indian economy. They used the Indian economy for the cheap raw materials market for the goods manufactured in British factory. - **In** the event of Independence Indian economy was in a state of under-development, backwardness and stagnation. - **State of Agriculture:** - 72% of labour force engaged in agriculture sector - Contribution of agriculture sector to Indian income was 50% above - 80% total cultivated area was under agriculture sector - India was occupied as second largest producer of cotton - 41% - jute, 27% - rice, 32% - groundnut - **State of Indian Industrial sector:** - Industrial development was insufficient and lopsided - 11% of total workforce was engaged in industrial sector - Contribution of Industrial sector to national income was 6.6% - Per Capita industrial output was very low - Industrial sector was extremely backward - **State of Infrastructure:** - Communication facilities were outdated and power generation was very low or negligible - Railway system was designed for movement of manufactured goods and raw materials - Export raw materials rather than their domestic use. So slow and lopsided growth had been seen in Indian industry infrastructure - Low per capita income. Per capita income refers to the income per head of population. It is obtained by dividing the national income by its population. - Per capita income = 238 rupees. Means 65 paise per day - Current per capita income = 1,89,000 (2256 dollars) - Odisha's per capita income = 21,46,213.62 (1741 dollars) - Wide spread poverty and low standard of living - Inadequate and unbalanced diet - Primitive and insufficient housing and unhygienic condition - Lack of education - Poor health - Stagnation in Indian economy annual compound rate of growth on average per capita income was 0.64% (1860-1890), then 0.16% (1920-1940), then 0.13% - Stagnation was due to slow growth of agriculture. 10% increase agricultural output (1983-84) - Per capita output of food grain declined by 32% - Massive unemployment - Mass illiteracy - 17% - Mass illiteracy - High birth rate and high mortality rate - Low level of urbanization - **Basic characteristics of contemporary Indian economy:** - Countries of the world can be broadly divided into two categories on the basis of her capita income: - *Developed* - *Under developed* - In its present stage the Indian economy exhibits the characteristics of backwardness and progressiveness as well. - Indian economy is regarded as developing economy - **Underdeveloped mature of the Indian economy:** - Very low per capita income - 1581.5 dollars (2014-15) (Indians) - 54,629.5 dollars (2014-15) (USA) - 50,235.4 dollars (2014-15) (Canada) - 6,000 dollars (2024) (India) - Low quality of life: - PQL Index - Physical quality of life index. Which is based on: - Life expectancy - Infant mortality - Literacy rate - Life expectancy - Statistical measure of the average time a person is expected to live. - 67 years of life expectancy of Indian. - 79 years of life expectancy of USA. - 81 years of life expectancy of UK. - 83 years of life expectancy of French. - 85 years of life expectancy of Japan - 77 years of life expectancy of China - Infant mortality - The number of deaths of infants aged less than 1 year per one thousand birth X 1000. - India - 25.797 - USA - 5.342 - China - 8.165 - UK - 3.251. - Literacy rate - According to UNESCO (1945). The literacy rate is defined by the percentage of the population of a given age group that can read and write. - WHO - For statistical purposes a person is literate who can with understanding, write a short simple statement on his/her everyday life. - 2011 - 72.98% (India) - (64.63%, 80.9%) (female, male) - 2022 - 76.32% - (82%, 65%) (female, male) - 2020-2021 - 74% - HDI - Human development index (Amartya Sen) - 134 rank out of 193 countries (India) - **Extreme inequality in the distribution of income:** - The distribution of income in economy is highly inequitable. - NCAER - National Council of Applied Economy Research states that 20% household cat lowest level of income. - Heavy population pressure. Population of a country is regarded as the development, well as the economy - In 2011 census population of India was 121.02 crore. - Rate of population growth is 1.58% - In India 17.31% of population is present out of world. - 0.7% population decreased. - Now population of India 141.72 crore. - Now population of China 141.22 crore. - Now population of USA 333.33 crore. - **Predominance of Agriculture:** - India is an agrarian economy where 49% of population depend on agriculture (2015). - USA - 12% to 5% Agriculture - GDP - Gross Domestic Product. The monetary value of all final goods and services produced within territory of a country in a financial year. - 17.4% GDP derive from agriculture. - Right now India has 3 trillion GDP. India needs 5 trillion GDP. - **Predominals of Agriculture:** - Predominals of agriculture is an indicator of backwardness of economy. - Large unutilized resources. - India has occupied 4th position in iron ore and 3rd position in manganese. - Wide spread of unemployment. - Job opportunity don't expand in keeping pace with labour. - 9.2% of unemployment (2024) - **Committee:** - Estimate made by planning commission in the basis of Suresh Tendulkar methodology 28% population in country more living in BPL (Below poverty line category (2009-2010). - 1st committee was V.K. Alagh committee in 1979. It was based on neutralization. - 2^nd committee was Lakdawala committee in 1993. It was based calorie consumption. - 3^rd committee was Suresh Tendulkar committee in 2005. Tendulkar adopted the cost of living as a basis of height of poverty. - In poverty line basket is setup point: - In rural area 227.2. - In urban area 233.3. - C. Rangrajan Committee - **According to World Bank (Head quarter - Washington DC):** - According to World Bank poverty is pronounced deprivation the well being and comprises many dimensions. It includes low income and inability to accrue the basic goods and resources necessary for survival with dignity. - V.M. Dandekar and N. Rath (1971). Poverty line can estimated from expenditure. - **Paucity of Capital:** - Adequate stock of capital is the most essential prerequisite for economic development. India is under equipped with both physical and human capital. - Physical capital such as tools, equipments factory and building. - Store grossly inadequate in relation to the vast labour force and huge natural resources in the country. - In respect of human capital knowledge skill and efficiency of the people. - India's position is still worse. This is mainly because of low level of education. - Inadequate healthcare facilities. - Government expenditure on education is 3.33% of GDP - 1,25,638 crore is spent on education - **Backward Technology:** - Use of traditional and primitive technology in the unorganised sector. - Agriculture allied activities - cottage, village industries. - Organised sector - Government registered. - **Progressive feature of Indian Economy:** - Today the goal of the country is Vikshit Bharat, Sakshat Bharat, we cannot stop until this dream of develop of India is fulfilled - Rapid rise in GDP. - Increase infproductirse. - Development of infrastructure. - Boost in export. - Record foreign exchange reserve. - Improvement in human capital - Structural change. - **GDP which is an important indicator is showing parising trend of the country upto end of 5 year filan till 1980 growth of GDP was not encouraging. - 3.7% GDP (1951-1980) - But during 5 year plan, GDP rate increase (6-7 five year plan). - GDP growth 5.4% (1991-2000) - USA Thas 20 trillion, GDP - NITI Sayog - National Institution for Transforming India was found on 1 January 2015. - B.V.R Subrahmanyam CEO NITI dayog. - Narendra Damodardas Modi (Prime Minister of India) Chairman NITI Ayoga - Suman Beriy, Vice Chairman, NITI Aayog. - Venkatramanan Amantha Nageswaran is an Indian economist and the 18^th Chief Economic Advisor to the Government of India. - **Some success in the field of Reliance:** - By the end of 5^th five year fplan, India became self sufficient in food grain production (1999 - 2001), i.e. - 2014-2015 - 257.07 million tonnes. - Capital good sector increases capacity to manufacture machinary and equipment for the capital goods. - LPG - Liberalisation Privatisation Globalisation After (1991) - Due to LPG exports have gone up. - Forex reserve 361 billion dollar. - **Some modernisation:** - Capital intensive tecnology used in industrial sector. - Modernisation under green revolution. - Institutional change - A lot of support to private sector. - Marketing facility to agriculture sector. - M.S. Swaminathan - Father of Green Revolution. - Increase in capital formation. - **Eight crore industry - Core sector of Indian economy:** - Petroleum and Refinery Production. (28.04%) weightage - Electricity generation. (19.85%) weightage - Steel production. (17.92%) weightage - Coal production. (10.33%) weightage - Crude oil production. (8.98%) weightage - Natural gas production. (6.88%) weightage - Cement production. (5.37%) weightage - Fertilizer production. (2.63%) weightage - **Increase in caftitabuifformation - The net capital accumulation during an accounting period for a particular country:** - Gross domestic saving increases 10.1%-32.2% in 2010 and 2011. - Physical capital formation rises in a country. This includes factory, building, machines, irrigation project, power plant for electricity generation. - **Rising trade in per capita cincome:** - In 2007 and 2008 $950. - In 2014 and 2015, $1581.5. - Per capita income at factor cost has gone $648 in 2006 and 2007. - $1142 in 2010 and 2011. - $1581.5 in 2013 and 2014. - NNP vat factor cost. NNPFC = NNP MP - Indirect tax + subsidies. - GDP growth rate 6.5% to 7%. (2023-24) - **Siginificant improvement in equality of consumption:** - Rise in per capita income has brought about significant improvement in equality of consumption of the people. - Cereals - Rural area-1987-98 (41%), 2009-10 (29-17) - Milk and Product - 1987-88 (13-4%), 2009-10 (16%) - Vegetables - 1987-88 (8.1%), 2009-10 (11-6%) - **Structural changes in the Indian Economy:** - 200 years wiled by British - Made Indians Economy aggranion in mature. - Indian economy could not compete with British manufacturing industry. - British Government made road and railway for trasforming raw material to their country - Policy formulatech by Boritish made Indian Economy beckwoord wand foor - **After: Independence:** - Adapted filanning for the lifting economy out of stagnation and caccerlerating the fpace of Indian economy in the count development country. - First 3 decades of planning. - GDP rate was 3.7% which was very lavoy. - In 1981 it started forogressing. - Remarkable achivement in the flagning erg change structure of total output. - entire 5% GDP increases. - Per capita - 3%. - Transfer of voy Indian vaggranjon economy to advanced industrial economy. - **Meaning of structural change:** - Usually economic growth is measured in terms of rise in national income, sometimes economic igrquoth is measured ey GDP because it easily computes. - Central statistical organisation GPP is the money valew of all final goods and services inside the country during a given year dey all the sectors. - Change in structure of froductio in the economy in the resprocess of development is ca structural change. - CSO - Central Stastical Organisation - MOSPI - Ministry of Statistics and Program, Implementation - There are three sector in leconomy. - **Primary sector:** - It refers to that sector of the economy which exploits natural opsources to frodus goods. It includes agriculture and allied activities like animal husbandry, fishery's, forestry, diary, poultry etc. are included in this sector. - **Secondary sector:** - The panufacturing sector which transfon one physical good to samother. It includes mining, manufacturing, electricity, gas, water supply, and construction. - **Tertiary sector:** - Tertiary sector is also called service sector. It includes trade, transport, communication, banking, insurance, education, health services etc. - According to CSO (Central Stastical Organisation) the Indian economy vis. divided into sisx sectors. - Primary Sector - Secondary Sector - Trade, Transport and Communication - Banking, insurance and real estates - Community and personal iservices - Foreign trade - Structural change means change in sperrostal structure of production. - **Structural changes:** - Decline in share of Primary Sector - It is found that the share of the foimary sector GDP has been steadily declining since 1950-51. - (1950-51) - 57.7% - (1980-81) - 39.8% - (2001-02) - 24.0% - (2014-15) - 17.4% - Rise in the Share of Secondary Sector - Share of sector steadily increasing since 1950-51. - GDP - (1950-51) - 14.8% - (1980-81) - 23.7% - (2001-02) - 26.5% - (2014-15) - 29.7% - According to World Development Refport (1995). - UK - 33% - Japan - 41% - Rise in the share of Yertiary Sector - GDP - (1950-51) - 27.5% - (1980-81) - 36.6% - (2001-02) - 49.5% - (2014-15) - 52.9% - (2024) - 59% - Compound annual rate of growth of GDP by industrial origin at factor cost. - (1950-51) - 3% (Agriculture and Allied) - (2014-15) - 1.1% - (1950-51) - 6.2% (Mining and manufacturing sector) - (2014-15) - 5.9% - (1950-51) - 3.9% (Service sector.) - (2014-15) - 7.4% - Growth rate of primary sector. - 1^st four decades of flanning (1950-51 to 1990-91) was 2.6% - (2013-14) - 2.7% - (2014-15) - 3.1% - Multipronged strategy for boosting cost of Agriculture - In the interest of fpod nutritional security we have to move to second green Revolution. - Growth rate of secondary sector. - Annual Growth - (1950-51 to 1980-81) declined - (2012-13) - 2.3% (Declina) - (2013-14) - 4.5% (Grooth) - (2014-15) - 5.9% (Growth) - **Cause of slow growth rate:** - Infrastructure vare incidequate. - Leye focus on heavy and capital intensive industry. - Restrictive environment for investment. Unsyitable macroeconomic policy and inhibit of government to push reforms. - **Growth rate of service sector** - Annual growth (1950-51) - 5.1% - (2013-14) - 8% - (2014-15) - 10.6% - **Assessment of Structural Change:** - Labour force - Those labour bodied worker from vage (15 to 59). According to 2011 sensus out of 121 crore frope 48 crore people vare labourers. - **Denoographic features of Indian Economy:** - 1872 Lord Mayo the 4^th Viceroy and 1^st person to start sensus on the basis of cast in India. - Good Viceroy of India was Lord Piper. - Population is regarded both means and end of economic development. - Ultimate aim of development is to maximize meelfare of the population. - While planping overall developmentire and providing service to people. The study of demographic features is important. - The demographic of the Indian Economy includes the size and trend of growth of population, jits density, age, structive, plastraction on distribution of population between riyal and urban area sex ratio, atrons level of literacy life, expectancy and infant mortality. - **Large Size of Population:** - High growth rate of population. - In 1901 annual growth rate of population was 0.57% - 1921 - 0.03% - 1961 - 3.16% - 2001 - 2.18% - 2011 - 1.58% - **PHASE - 1** 1901 (0.57%) - 1921 (0.03%). - Very slow and erractio phasenya. - **PHASE - 2** - 1921-1951 - (0.03%) (1.33%) - Steady growth - **PHASE-3** - 1951-1971 - (1.33%) (2.48%) - Rapid and high sheed growth. - **PHASE-4** - 1971-2011 - (2.48%) (1.58%) - High growth with definite sign of slowing down - 1921 - Great divede in growth rate of population. - 1921-1951 - Growth rate freaked. - 1951-1971 - Population explosion. - **High Growth Rate of Population:** - What is Density Population? It refers to the number of persons living per square kilometre per land area. - Total Population = Density of Pofulation Yotal land area. - Census Year - Density of Population - 1951 - 117 - 2011 - 382 - 2024 - 488 - **Age composition of population - Division of Yotal Population with age group:** - Year - 0-14 - 15-59 - 60+ - 1921 - 39.2% - 59.6% - 1.2% - 1951 - 37.4% - 56.9% - 5.7% - 2011 - 29.5% - 62.5% - 8.0% - 2022 - 25.31% - 67.8% - 6.9% - Heavy concentration of frofulating cin rural area. - 1951 - 82.7% - 2011 - 72.2%