TYBCom Business Economics V Compiled Notes 2024-25 PDF

BUSINESS ECONOMICS-V REFERENCE MATERIAL 2024-25 (For Private Circulation Only) [Type here][Type here]AC 08/02/2021 Sr.No. Modules/Units 1 Policy Regimes in India A. The evolution of economic plann...

BUSINESS ECONOMICS-V REFERENCE MATERIAL 2024-25 (For Private Circulation Only) [Type here][Type here]AC 08/02/2021 Sr.No. Modules/Units 1 Policy Regimes in India A. The evolution of economic planning in India- Planning Commissions to Niti Aayog ( The story of growth, self – reliance, employment generation, inequality reduction, poverty removal, modernization and competitiveness) B. New Economic Policy-1991 C. Policies to enhance Social Infrastructure with special reference to Education and health - NEP 2020 and Ayushman Bharat ( Features and Performance) D. Current Policies- Disinvestment Policy, Make in India, Invest in India. 2 Sector-wise Trends and Issues-I A. Indian agriculture- Agricultural reforms B. Agricultural pricing and Finance C. Industry: Relative roles of large scale industries post reforms. The role and forms of foreign capital (Foreign Institutional Capital, Foreign Direct Investment.) D. Micro, Small and Medium Enterprises [MSME sector] since 2007; Atmanirbhar Bharat Abhiyan, 2020 3 Sector-wise Trends and Issues -II A. Service Sector: role, trends and performance B. Banking Industry- recent trends, issues and challenges. C. Money Market – structure of Call money market, Commercial bills market, market for Commercial Papers and Commercial Deposits, Treasury bills markets, Repo and reverse repo markets; Reforms in the money market. D. Foreign Trade: Role and importance of foreign trade in India; The balance of trade and balance of payments situation. 4 Reading of the Economic Survey, Government of India (recent years) - Only for Internal Assessment Reading of the Economic Survey is essential to familiarise the students with basic concepts related to contemporary economic issues. The aim is to equip students with sufficient knowledge and skills so as to understand contemporary issues that feature in the Economic Survey. Such capability is essential to understand government policies and also to increase people’s participation in economic decision making. Economic Survey (recent years), Government of India, Ministry of Finance. 1. Volume-I- Relevant chapters to be determined each year by the Department 2. Volume-II- Relevant chapters to be determined each year by the Department MODULE I Class: TYBCom Semester-V Subject: B. Economics-V Economic planning in India Table of Contents Introduction 1 Planning in independent India 2 The Five year Plans 2 Shift to NITI Aayog 5 Introduction Planned economic development in India began in 1951 with the inception of the First Five Year Plan. However, theoretical efforts had begun much earlier, even prior to independence. Setting up of the National Planning Committee by Indian National Congress in 1938, The Bombay Plan & Gandhian Plan in 1944, Peoples Plan in 1945 (by post war reconstruction Committee of Indian Trade Union), Sarvodaya Plan in 1950 by Jaiprakash Narayan were steps in this direction. The Indian National Congress under the inspiration of Pandit Jawaharlal Nehru set up the National Planning Committee (NPC) towards the end of 1938. The Committee produced a series of studies on different subjects concerned with economic development. The Committee laid down that the state should own or control all key industries and services, mineral resources and railways, waterways shipping and other public utilities and in fact all those large scale industries which were likely to become monopolistic in character. Besides the NPC, eight Leading industrialists of India conceived “A Plan of Economic Development” which was popularly known as the Bombay Plan. There was also a Gandhian Plan which was prepared by Shriman Narayan. The world- famous revolutionary M.N. Roy formulated the People’s Plan. All these stimulated thinking about the various aspects of planning in India. Starting from the Soviet experiment in 1928, planning slowly swept over almost two thirds of the entire world. During the 1930s the whole world was affected by the great depression, only the USSR was exempted from effects of this great depression. It was because of their planning that the whole world was attracted towards the USSR because of its planning. Later on the resolutions of the Indian National Congress from 1929 onwards stressed the need for the revolutionary changes in the present economic structure of society and removal of great inequalities in order to remove poverty and improve the economic and social conditions of the masses. First systematic work came into existence in the year 1934 when the renowned engineer and statesman M. Visvesvaraya formulated a ten-year plan for economic Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 1 Class: TYBCom Semester-V Subject: B. Economics-V development of the country in his book “Planned Economy for India.” On the other hand, the Government of India Act – 1935, introduced provincial autonomy which led to the formation of Congress Government in eight provinces. In August 1937 the Congress Working Committee passed a resolution suggesting the committee of inter provincial experts to consider urgent and vital problems, the solution of which is necessary to any scheme of national reconstruction and social planning. Planning in independent India Post independence, India adopted a “Mixed Economy” approach to economic development. The Planning Commission was set up by a Resolution of the Government of India in March 1950 in pursuance of declared objectives of the Government to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production and offering opportunities to all for employment in the service of the community. The Planning Commission was charged with the responsibility of making assessment of all resources of the country, augmenting deficient resources, formulating plans for the most effective and balanced utilization of resources and determining priorities. Some of the functions of the Planning Commission: 1. Estimate the physical, capital and human resources of the country. 2. To prepare a plan for making effective and balanced utilization of human resources. 3. To determine various stages of planning and to propose the allocation of resources on priority basis. It was entrusted with the work of economic and social development as envisaged in the preamble, the fundamental rights as well as Directive Principles of State Policy of the Constitution. The Five year Plans The first Five-year Plan was launched in 1951 and two subsequent five-year plans were formulated till 1965, when there was a break because of the Indo-Pakistan Conflict. Two successive years of drought, devaluation of the currency, a general rise in prices and erosion of resources disrupted the planning process and after three Annual Plans between 1966 and 1969, the fourth Five-year plan was started in 1969. The central importance assigned to the public sector was first articulated in the Industrial Policy Resolution in 1956.and subsequently documented in the second five-year plan in 1956. The Eighth Plan could not take off in 1990 due to the fast-changing political situation at the Centre and the years 1990-91 and 1991-92 were treated as Annual Plans. The Eighth Plan was finally launched in 1992 after the initiation of structural adjustment policies. For the first eight Plans the emphasis was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced and the current thinking on planning in the country, in general, is that it should increasingly be of an indicative nature. Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 2 Class: TYBCom Semester-V Subject: B. Economics-V Summary of Five-Year Plans: First Plan (1951 - 56) Target growth: 2.1% Achieved growth: 3.6% It was based on the Harrod-Domar Model. In this planning period, Community Development Program was launched in 1952. Main focus was on agriculture, price stability, power and transport. It was a successful plan primarily because of good harvests in the last two years of the plan. Second Plan (1956 - 61) Target Growth: 4.5% Actual Growth: 4.27% Second Five Year Plan also called Mahalanobis Plan named after the well known economist. Focus was mainly on rapid industrialization. It Advocated huge imports through foreign loans. It Shifted basic emphasis from agriculture to industry far too soon. During this plan, prices increased by 30%, against a decline of 13% during the First Plan. Third Plan (1961 - 66) Target Growth: 5.6% Actual Growth: 2.84% At its conception, it was felt that Indian economy had entered a take-off stage. Therefore, its aim was to make India a 'self-reliant' and 'self-generating' economy. Based on the experience of the first two plans, agriculture was given top priority to support exports and industry. There was a complete failure in reaching the targets due to unforeseen events - Chinese aggression (1962), Indo-Pak war (1965), severe drought 1965-66. Three Annual Plans (1966-69) Plan holiday for 3years. Prevailing crisis in agriculture and serious food shortage necessitated the emphasis on agriculture during the Annual Plans. During these plans a whole new agricultural strategy was implemented. It involved wide-spread distribution of high-yielding varieties of seeds, extensive use of fertilizers, exploitation of irrigation potential and soil conservation. During the Annual Plans, the economy absorbed the shocks generated during the Third Plan It paved the path for the planned growth ahead. Fourth Plan (1969 - 74) Target Growth: 5.7%; Actual Growth: 3.30% Slogan of “Garibi Hatao” was given in 1971. Emphasis was on growth rate of agriculture to enable other sectors to move forward. First two years of the plan saw record production. The last three years did not measure up due to poor monsoon. Influx of Bangladeshi refugees before and after 1971 Indo-Pak war was an important issue. Fifth Plan (1974-79) Target Growth: 4.4%; Actual Growth: 3.8% The fifth plan was prepared and launched by D.D. Dhar. It proposed to achieve two main objectives: 'removal of poverty' (Garibi Hatao) and 'attainment of self reliance'. Promotion of a high rate of growth, better distribution of income and significant growth in the domestic rate of savings were seen as key instruments. The plan was terminated in 1978 (instead of 1979) when Janta Party Govt. rose to power. Rolling Plan (1978 - 80) Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 3 Class: TYBCom Semester-V Subject: B. Economics-V There were 2 Sixth Plans. Janta Govt. put forward a plan for 1978-1983. However, the government lasted for only 2 years. Congress Govt. returned to power in 1980 and launched a different plan. Sixth Plan (1980 - 85) Target Growth: 5.2% Actual Growth: 5.66% Focus – In this period there has been an increase in national income, modernization of technology, ensuring continuous decrease in poverty and unemployment, population control through family planning, etc. Seventh Plan (1985 - 90) Target Growth: 5.0% Actual Growth: 6.01% Focus was on rapid growth in food-grains production, increased employment opportunities and productivity within the framework of basic tenants of planning. First time the private sector got priority over the public sector. The plan was very successful, the economy recorded 6% growth rate against the targeted 5%. Eighth Plan (1992 - 97) Target growth:5.6% Actual growth:6.8%. Focus was on “Human Resource Development”. The eighth plan was postponed by two years because of political uncertainty at the Centre. Worsening Balance of Payment position and inflation during 1990-91 were the key issues during the launch of the plan. The plan undertook drastic policy measures to combat the bad economic situation and to undertake an annual average growth of 5.6%. Some of the main economic outcomes during the eighth plan period were rapid economic growth, high growth of agriculture and allied sector, and manufacturing sector, growth in exports and imports, improvement in trade and current account deficit. Ninth Plan (1997- 2002) Target Growth: 6.5% Actual Growth: 5.35% Aim was “Growth with Social Justice”. It was developed in the context of four important dimensions: Quality of life, generation of productive employment, regional balance and self-reliance. Tenth Plan (2002 - 2007) Target growth: 8.1% Growth achieved:7.7% Plan aimed at “Double the Per Capita Income '' in the next 10 years To achieve 8.1% GDP growth rate Reduction of poverty ratio by 5 percentage points by 2007. Providing gainful high quality employment to the addition to the labour force over the tenth plan period. Reduction in gender gaps in literacy and wage rates by at least 50% by 2007. Increase in literacy rate to 72% within the plan period and to 80% by 2012. Reduction of Infant Mortality Rate (IMR) to 45 per 1000 live births by 2007 and to 28 by 2012. Increase in forest and tree cover to 25% by 2007 and 33% by 2012. Cleaning of all major polluted rivers by 2007 and other notified stretches by 2012. Eleventh Plan (2007 - 2012) Target growth: 8.1% Growth achieved:7.9% Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 4 Class: TYBCom Semester-V Subject: B. Economics-V The Plan focused on “Faster and more Inclusive Growth”. Prepared by C Rangarajan to: Accelerate GDP growth from 8% to 10%. Increase agricultural GDP growth rate to 4% per year. Create 70 million new work opportunities and reduce educated unemployment to below 5%. Raise the sex ratio for age group 0-6 to 935 by 2011-12 and to 950 by 2016-17. Ensure direct and indirect beneficiaries of all government schemes are women and girl children Connect every village by telephone and provide broadband connectivity to all villages Attain WHO standards of air quality in all major cities by 2011- 12. Increase energy efficiency by 20 percentage points by 2016-17. Twelfth Plan (2012 - 2017) Target Growth :8% The Twelfth Plan focuses on “Faster and more Inclusive and Sustainable Growth”. Poverty rate to be reduced by 10% than the rate at the end of 11th plan. End gender gap and social gap in school enrolment. Reduce under nutrition of children in age group 0-3 to half of NFHS-3 levels. Increase green cover by 1 million hectare every year. Increase renewable energy during the Five Year Period. Shift to NITI Aayog The Planning Commission formed the backbone of the Indian economy at the time when we were a newly independent country. Its significance diminished vastly in the 1990s with Liberalization, Privatization, and Globalization but it was still involved in the allocation of funds to the states. As the Indian economy rapidly integrated with the global economy contradictions arose between central planning and increasing private capital flows. For a long time, there had been a feeling that for a country as diverse and big as India, centralised planning could not work beyond a point due to its one-size-fits-all approach. Moreover, since the Planning Commission used to be controlled by the Central government, it often ended up as a tool to punish states ruled by the opposition parties when it came to allocating funds. Due to the top-to-bottom approach in centralised planning, it was felt that the states needed to have greater say in planning their expenditures. The Planning Commission was imposing its decisions on states who could have taken better known what and how much they needed. An internal evaluation in Government revealed that the Planning Commission was witnessing policy fatigue necessitating structural changes in the central planning process. The assessment identified the collapse of public investment in the face of rising subsidies, huge demands on public resources from the Right to Education Act, the National Rural Employment Guarantee Act and a poorly targeted Public Distribution System. Further rigid labor laws were impeding progress, and there were difficulties in releasing land for public housing and other public projects. A new Institutional framework was becoming essential. The NITI Aayog, established in 2015, is one of Indian democracy’s youngest institutions. It has been entrusted with the mandate of re-imagining the development agenda by dismantling old-style central planning.The NITI Aayog was mandated to foster cooperative federalism, evolve a national consensus on developmental goals, redefine the reforms agenda, act as a Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 5 Class: TYBCom Semester-V Subject: B. Economics-V platform for resolution of cross-sectoral issues between Center and State Governments, capacity building and to act as a Knowledge and Innovation hub. It represented a huge mandate for a nascent organization. The demise of the Planning Commission shows the shift of the role of government from a “player” to an “enabler”. The Institutional framework and the composition of both the Institutions are the same at the top with the Prime Minister, the Chair and the Deputies at Cabinet Ministers ranks. But the change in the focus on Members from retired Bureaucrats to experts in the field marks a significant point of difference. While the Planning Commission focused on preparing and implementing Five Year Plans, NITI Aayog has no mandate to control resources. Functions of NITI Aayog 1. To evolve a shared vision of national development priorities sectors and strategies with the active involvement of States in the light of national objectives. 2. To foster cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognizing that strong States make a strong nation. 3. To develop mechanisms to formulate credible plans at the village level and aggregate these progressively at higher levels of government. 4. To ensure, in areas that are specifically referred to, that the interests of national security are incorporated in economic strategy and policy. 5. To pay special attention to the sections of our society that may be at risk of not benefitting adequately from economic progress. 6. To design strategic and long term policy and programme frameworks and initiatives, and monitor their progress and their efficacy. The lessons learnt through monitoring and feedback will be used for making innovative improvements, including necessary mid-course corrections. Contribution of the NITI Ayog The NITI Aayog was formed to bring fresh ideas to the government. Its first mandate is to act as a think tank. NITI Aayog is also bringing about a greater level of accountability in the system. It can be visualised as a funnel through which new and innovative ideas come from all possible sources — industry, academia, civil society or foreign specialists — and flow into the government system for implementation. Initiatives like Ayushmaan Bharat, our approach towards artificial intelligence and water conservation measures, and the draft bill to establish the National Medical Commission to replace the Medical Council of India have all been conceptualised in NITI Aayog, and are being taken forward by the respective Ministries. NITI Aayog acted as an action tank rather than just a think tank. By collecting fresh ideas and sharing them with the Central and State governments, it pushes frontiers and ensures that there is no inertia, which is quite natural in any organisation or institution. NITI Aayog also Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 6 Class: TYBCom Semester-V Subject: B. Economics-V works to cut across the silos within the government. For example, India still has the largest number of malnourished children in the world. NITI Aayog is best placed to achieve this convergence and push the agenda forward in the form of POSHAN ABHIYAAN. The NITI Aayog is also bringing about a greater level of accountability in the system. NITI Aayog has established a Development Monitoring and Evaluation Office which collects data on the performance of various Ministries on a real-time basis. The data are then used at the highest policy making levels to establish accountability and improve performance. This performance- and outcome-based real-time monitoring and evaluation of government work can have a significant impact on improving the efficiency of governance. Using such data, we also come up with performance-based rankings of States across various verticals to foster a spirit of competitive federalism. NITI Aayog plays an important role of being the States’ representative in Delhi, and facilitates direct interactions with the line ministries, which can address issues in a relatively shorter time. Improving innovation: The Atal Innovation Mission, which is also established under NITI Aayog, has already done commendable work in improving the innovation ecosystem in India. It has established more than 1,500 Atal Tinkering Labs in schools across the country and this number is expected to go up to 5,000 by March 2019. It has also set up 20 Atal Incubation Centres for encouraging young innovators and start-ups. NITI Aayog is mandated to monitor, coordinate and ensure implementation of the Sustainable Development Goals. NITI Aayog undertook the extensive exercise of measuring India and its States’ progress towards the SDGs for 2030, culminating in the development of the first SDG India Index. ********************* Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 7 Class: TYBCom Semester-V Subject: B. Economics-V New Economic Policy – 1991 Table of Contents New Economic Policy 1991...................................................................................................................2 Objectives of the New Economic Policy...............................................................................................2 Branches of the New Economic Policy, 1991.......................................................................................2 Liberalization.....................................................................................................................................3 Process of Liberalization...............................................................................................................3 Effects of Liberalization................................................................................................................4 Privatization.......................................................................................................................................6 Process of Privatization.................................................................................................................6 Effects of Privatization..................................................................................................................7 Globalization......................................................................................................................................9 Process of Globalization................................................................................................................9 Effects of Globalization.................................................................................................................9 Other elements of Globalization.................................................................................................12 Impact of Economic Reforms Process on Indian Agricultural Sector............................................13 Impact of Economic Reforms Process on Indian Social Infrastructure.........................................14 Impact on the Education Sector.....................................................................................................15 Impact on the Health Sector...........................................................................................................15 Background India’s post-independence development strategy showed all the signs of stagnation and a grave economic crisis. It was characterized by an unprecedented adverse balance of payment problem, inflation, a decline in the foreign exchange reserve, and the Gross Domestic Product (GDP) growth rate. India stared at a significant crisis led by the foreign exchange crunch, which, in turn, led to the country defaulting loans. The Balance of Payment crisis pushed the country to the brink of bankruptcy. Due to various controls, the Indian economy had become crippled. Indian entrepreneurs were unwilling to establish new industries because of regressive laws like the Monopolistic and Restrictive Trade Practice (MRTP) Act of 1969. The economy witnessed rising corruption, undue procedural delays, and extreme inefficiencies. It was inevitable to introduce significant economic reforms to reduce the restrictions imposed on the economy. India was among the developing Asian countries, which experienced slow economic growth or none at all in the 1980s. In cooperation with the IMF and World Bank, India undertook several Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 1 Class: TYBCom Semester-V Subject: B. Economics-V programs of structural reforms to make a macro and structural policy changes correcting the macro-economic imbalances in exchange for external assistance. Intending to develop the Social Infrastructure (SI), the Indian economy required a set of policies enabling economic growth, enhancing the productivity of the poor, improving equity and efficiency of social services, and compensating the poor for the nutrition and health service deficits. Among other initiatives to improve the social infrastructure (health, education, and family welfare), the New Economic Policy of 1991 aimed to transform the backward and predominantly agrarian economy, lacking in basic infrastructure, into a modern developed economy. New Economic Policy 1991 The New Economic Policy of India was launched in the year 1991 under the leadership of P. V. Narasimha Rao. This policy opened the door of the India Economy for global exposure for the first time. In this New Economic Policy, the government reduced the import duties, opened the reserved sector for the private players, and devalued the Indian currency to increase exports. The reforms were popularly known as ‘structural adjustments’ or ‘liberalization’ or ‘globalization.’ Objectives of the New Economic Policy The objectives of the new policy were: To bring down the rate of inflation and rectify the balance of payment position To allow the international flow of goods, services, capital, human resources and technology To stabilize the economy and convert the economy into a market economy by removing all kinds of unnecessary restrictions To achieve a higher economic growth rate To open the economy and encourage the participation of private industries in all sectors To fully utilize the capabilities of entrepreneurs and indigenous technologies Branches of the New Economic Policy, 1991 New Economic Policy, 1991 Liberalization Privatization Globalization Figure 1: Branches of New Economic Policy, 1991 The focus of the New Economic Policy has been towards creating a more competitive economic environment to improve the overall productivity and efficiency of the system. This Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 2 Class: TYBCom Semester-V Subject: B. Economics-V was to be achieved by removing the barriers to entry and the restrictions on the growth of firms. The new economic model was popularly known as Liberalization, Privatization and Globalization (LPG). Liberalization: It refers to the process of making policies less constraining for economic activity and reduction of tariff or removal of non-tariff barriers. Privatization: It refers to the transfer of ownership of property or business from a government to a privately owned entity. Globalization: It refers to the expansion of economic activities beyond the political boundaries of nation states. Let us now discuss all the three processes – liberalization, privatization and globalization and their impacts in detail. Liberalization The term “liberalization” in this context implies economic liberalization. Liberalization is the loosening of government control by putting an end to the restrictions hindering national development and growth. It is a situation where the means of production shifts in the hands of the market and the economic efficiency is measured in terms of market-defined objectives. Major economic activities are opened for private participation keeping only key issues of welfare and other regulatory mechanism with the state. This opening up of various sectors for private participation and allowing them to manage the businesses for maximizing the profits will clearly underline the freedom available for the market to have their own labour participation practices and deployment of human resources. Liberalization, thus, aims at minimizing the labour participation and downsizing the workforce in the industry in the name of removing the dead wood to maximize efficiency. Process of Liberalization Trade Liberalization involves removing barriers to trade between different countries and encouraging free trade. Trade Liberalization involves reducing tariffs, reducing/eliminating quotas and reducing non-tariff barriers. Non-tariff barriers are factors that make trade difficult and expensive. For example, having specific regulations on making goods can give an unfair advantage to domestic producers. Harmonising environmental and safety legislation makes it easier for international trade. In India, liberalization as part of the NEP included the following: Dismantling of industrial licensing system Reduction in physical restrictions on imports and import duties Reduction in controls on foreign exchange, both current and capital account Reform of financial system Reduction in levels of personal and corporate taxation Reduction in restrictions on foreign direct and portfolio investments Opening up public sector domains like power, transport, banking etc. Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 3 Class: TYBCom Semester-V Subject: B. Economics-V Partial privatization of public sector units Change in approach towards industrial sickness Softening of MRTP regulations Effects of Liberalization The economic reforms of the 1990s swept away the oppressive licensing controls on industry and foreign trade, allowed the market to determine the exchange rate, drastically reduced protective customs tariffs, opened up to foreign investment, modernized the stock markets, freed interest rates, and strengthened the banking system. The liberalization process has helped the free movement of goods and services and led to better industrial performances. The consequences have been far-reaching. Free flow of capital Structural unemployment Boost in exports, services and inward remittances Destabilization of the economy Rise of strong Indian firms Impact of FDI in Banking sector Increased competition Threat from MNCs Economies of scale Technological impact Inward investment Mergers and Acquisitions Restored growth momentum Environmental costs Improved economic and political profile Infant-industry argument Figure 2: Effects of Liberalization Positive effects of Liberalization Free flow of capital: Liberalization has improved flow of capital into the country, making it inexpensive for the companies to access capital from investors. Lower cost of capital enables to undertake lucrative projects which may not have been possible with a higher cost of capital pre-liberalization, leading to higher growth rates. Boost in exports, services and inward remittances: The opening up of foreign trade and investment (and a competitive exchange rate) boosted exports, services and inward remittances enormously. Today, they account for around 40 per cent of the GDP compared to 10 per cent in 1990. Flourishing external commerce and rising foreign investment dethroned the baleful deity of ‘foreign exchange scarcity’, which had justified four decades of dreadful economic policy and draconian, corruption-spawning controls. Today’s open economy is more productive and more resilient to global shocks like high oil prices. With over $500 billion of forex reserves, strong exports and low external debt, the recent surge in global oil prices has not derailed the economy’s forward momentum. Rise of strong Indian firms: The mix of industrial decontrol, greater foreign competition and a modernised capital market fostered the rise of strong Indian firms, built by unshackled Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 4 Class: TYBCom Semester-V Subject: B. Economics-V entrepreneurs able to compete globally. Industrial organizations have now become more efficient and market responsive. Increased competition: Trade Liberalization means firms will face greater competition from abroad. This should act as a spur to increase efficiency and cut costs, or it may act as an incentive for an economy to shift resources into new industries where they can maintain a competitive advantage. Economies of scale: Trade Liberalization enables greater specialisation. Economies concentrate on producing particular goods. This can enable big efficiency savings from economies of scale. Inward investment: If a country liberalises its trade, it will make the country more attractive for inward investment. For example, former Soviet countries who liberalise trade will attract foreign multinationals who can produce and sell closer to these new emerging markets. Inward investment leads to capital inflows but also helps the economy through diffusion of more technology, management techniques and knowledge. Restored growth momentum: The post-crisis reforms of the early 1990s restored (then improved) the growth momentum of the 1980s and ensured nearly 6 per cent economic growth for a quarter of a century. With average living standards rising at almost 4 per cent a year, the poverty ratio dropped below a quarter of the population and the catch phrase of “a rising middle class” gained substance. Improved economic and political profile: The strong improvement in the country’s external finances and sustained growth over 25 years also raised India’s economic and political profile in the world. In a real sense, the 1990s’ economic liberalization freed India’s foreign and defence policies from economic weakness and dependence on foreign aid. A more assertive strategic policy became possible. Negative effects of Liberalization: Structural unemployment: Trade Liberalization often leads to a shift in the balance of an economy. Some industries grow, some decline. Therefore, there may often be structural unemployment from certain industries closing. Trade Liberalization can often be painful in the short run, as some industries and some workers suffer from the decline in uncompetitive firms. Though net economic welfare has improved, it is difficult to compensate those workers who lose out to international competition. Destabilization of the economy: Tremendous redistribution of economic power and political power could have destabilizing effects on the entire Indian economy. Impact of FDI in Banking sector: Foreign direct investment allowed in the banking and insurance sectors resulted in decline of government’s stake in banks and insurance firms. Threat from Multinationals: Prior to 1991 MNC’s did not play much role in the Indian economy. In the pre-reform period, there was domination of public enterprises in the economy. On account of Liberalization, competition has increased for the Indian firms. Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 5 Class: TYBCom Semester-V Subject: B. Economics-V Multinationals are quite big and operate in several countries which has turned out a threat to local Indian Firms. Technological Impact: Rapid increase in technology forces many enterprises and small- scale industries in India to either adapt to changes or close their businesses. Mergers and Acquisitions: Acquisitions and mergers are increasing day-by-day. In cases where small companies are being merged by big companies, the employees of the small companies may require exhaustive re-skilling. Re-skilling duration will lead to non- productivity and would cast a burden on the capital of the company. Environmental costs: Trade Liberalization triggered a greater exploitation of the environment, e.g. greater production of raw materials, trading toxic waste to countries with lower environmental laws. Infant-industry argument: Trade Liberalization may be damaging for developing economies who cannot compete against free trade. The infant industry argument suggests that trade protection is justified to help developing economies diversify and develop new industries. Most economies had a period of trade protectionism. It is unfair to insist that developing economies cannot use some tariff protectionism. Because of this argument, some argue that trade Liberalization often benefits developed countries more than developing countries. Privatization Privatization is a process that reduces the involvement of the state or the public sector in the economic activities. Privatization simply means permitting the private sector to set up industries, which were previously reserved for the public sector. Public sector enterprises have traditionally received criticism for certain drawbacks in their processes, including: Low return on investment Insufficient growth in productivity Poor project management Lack of continuous technological up-gradation Inadequate attention to research and development and human resources development Mounting losses Low profitability Underutilization of capacity Privatization implies that control of several sectors shifts from the government to the private sector, enabling able private players to shape the industries’ growth. Process of Privatization The main reason for Privatization in India was that the PSU’s ran into losses due to political interference. The managers could not work independently, and production capacity remained under-utilized. To increase competition and efficiency Privatization of PSUs was inevitable. The following steps were taken for Privatization: Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 6 Class: TYBCom Semester-V Subject: B. Economics-V Sale of shares of PSUs: Indian Government started selling shares of PSU’s to public and financial institution. The private sector started acquiring ownership of these PSU’s. The share of private sector has been increasing over the years. Disinvestment in PSU’s: The Government started the process of disinvestment in those PSU’s which had been running into loss. The Government sold these industries to the private sector opening up new avenues that were earlier reserved only for public sector investments. Minimisation of Public Sector: Previously Public sector was given the importance with a view to help in industralisation and remove of poverty. But these PSU’s were unable to achieve this objective and the policy of contraction of PSU’s was followed under new economic reforms. Number of industries reserved for public sector was reduces from 17 to 2. Effects of Privatization The private sector has effective policies to solve the problem of externalities, through costless bargaining, driven by individual incentives. The effects of Privatization vary depending on the industries privatized, quality of regulation, market conditions, and incentive creation to list a few. Improved efficiency Negligence of social objectives Profit maximization and Transparency Unfair trade practices Increased competition Consumer exploitation Adoption of global best practices Employee turnover Other microeconomic advantages Conflict of interest Other macroeconomic advantages Price inflation Figure 3: Effects of Privatization Positive effects of Privatization Improved efficiency: Private companies have a profit incentive to cut costs and be more efficient. If you work for a government run industry managers do not usually share in any profits. Profit maximization and Transparency: Since the system becomes more transparent all underlying corruption are minimized and owners have a free reign and incentive for profit maximization. Increased competition: Often Privatization of state-owned monopolies occurs alongside deregulation – i.e. policies to allow more firms to enter the industry and increase the Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 1 Class: TYBCom Semester-V Subject: B. Economics-V competitiveness of the market. It is this increase in competition that can be the greatest spur to improvements in efficiency. Adoption of global best practices: Privatization leads to adoption of the global best practices along with management and motivation of the best human talent to foster sustainable competitive advantage and improvised management of resources. Other Microeconomic Advantages: o Effectively minimises corruption and optimises output and functions o Development of the general budget resources and diversifying sources of income o It frees the resources for a more productive utilisation Other Macroeconomic Advantages o Helps in escalating the performance benchmarks of the industry in general o Enables growth and prosperity of the employees and eliminates employment inconsistencies o Provides better and prompt customer services and helps in improving the overall infrastructure of the country Negative effects of Privatization Negligence of social objectives: Private sector focuses more on profit maximization and less on social objectives unlike public sector that initiates socially viable adjustments in case of emergencies and criticalities. Unfair trade practices: Privatization has provided the unnecessary support to the corruption and illegitimate ways of accomplishments of licenses and business deals amongst the government and private bidders. Lobbying and bribery are the common issues tarnishing the practical applicability of privatization. Consumer exploitation: Privatization loses the mission with which the enterprise was established, and profit maximization agenda encourages malpractices like production of lower quality products, elevating the hidden indirect costs, price escalation, ultimately exploiting the consumers. Employee turnover: Privatization results in high employee turnover due to the working environment and competitive setup. A lot of investment is required to train the lesser qualified staff and even making the existing manpower of PSU abreast with the latest business practices. Conflict of interest: There can be a conflict of interest amongst stakeholders and the management of the buyer private company and initial resistance to change can hamper the performance of the enterprise. Price inflation: Privatization escalates price inflation in general as privatized enterprises do not enjoy government subsidies after the deal and the burden of this inflation affects the common man. Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 8 Class: TYBCom Semester-V Subject: B. Economics-V Globalization Broadly speaking, the term ‘globalization’ means integration of economies and societies through cross-country flows of information, ideas, technologies, goods, services, capital, finance and people. Cross-border integration can have several dimensions – cultural, social, political and economic. Focusing on economic integration only, globalization consists of the following channels trade in goods and services movement of capital flow of finance movement of people Process of Globalization Globalisation means to make Global or worldwide, otherwise taking into consideration the whole world. Broadly speaking, Globalisation means the interaction of the domestic economy with the rest of the world with regard to foreign investment, trade, production and financial matters. Following are the steps taken for Globalisation: Reduction in tariffs: Custom duties and tariffs imposed on imports and exports are reduced gradually just to make India economy attractive to the global investors. Long term Trade Policy: Forcing trade policy was enforced for longer duration. Main features of the policy are: o Liberal policy o All controls on foreign trade have been removed o Open competition has been encouraged Partial Convertibility of Indian currency: Partial convertibility can be defined as to convert Indian currency (up to specific extent) in the currency of other countries. So that the flow of foreign investment in terms of Foreign Institutional Investment (FII) and foreign Direct Investment (FDI). This convertibility stood valid for following transaction: o Remittances to meet family expenses o Payment of interest o Import and export of goods and services. Increase in Equity Limit of Foreign Investment: Equity limit of foreign capital investment has been raised from 40% to 100% percent. In 47 high priority industries foreign direct investment (FDI) to the extent of 100% will be allowed without any restriction. In this regard Foreign Exchange Management Act (FEMA) will be enforced. Effects of Globalization The new economic policy resulted in radical change in the structure and direction of Indian economy. Globalization, a new key word of the 21st century to an economic event, a unifying Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 9 Class: TYBCom Semester-V Subject: B. Economics-V process that has drawn lives all around that world into its fold. Globalization is best understood in terms of developing markets, deregulating business activities, privatizing state enterprises, lowering national barriers and expanding world trade and investment, all creating world community. Greater access to global markets Slow Growth of Agriculture Employment opportunities Rise in Rural-Urban Divide Access to advanced technology Adverse Impact on Autonomy of State Increase in compensation Adverse Impact on Culture Improvement in standard of living Adverse Impact on Environment Multilateral trade agreements Bankruptcy of many Employment Blurring of physical and geographical Generating Firms boundaries Rising Unemployment Interlinked Global Economy Human Rights Violation Figure 4: Effects of Globalization Positive Effects of Globalization Greater access to global markets: Physical and geographical boundaries are crumbling, and the world is becoming a global village. Nation states today no longer have to play market- making role, so wool, wine, perfumes can belong to any market anywhere in the world. Post- globalization, Indians had better access to global markets and similarly, global markets had easier access to the Indian markets. Employment opportunities: The increased access and reach, in turn, resulted in generation of substantial employment opportunities in India. Another additional factor in India is cheap labour. This feature motivates big companies in the west to outsource employees from other region and cause more employment. Access to advanced technology: By opening up the economy, the existing industries received substantial exposure to advanced global technologies. Leveraging these technologies provided an opportunity for enhanced growth, improved productivity and optimum efficiency. Increase in compensation: With global players entering the Indian markets, a spirit of healthy competition arose in the economy, resulting in heightened performance by the Indian players. Improvement in standard of living: With enhanced exposure to technology, better industrial productivity and sectoral output, improved economic performance, and the increased employment opportunities led to an overall improvement in the standard of living. Multilateral trade agreements: Multilateral agreements in trade, taking on such new agendas as environmental and social conditions. New multilateral agreements for services, Intellectual Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 10 Class: TYBCom Semester-V Subject: B. Economics-V properties, communications, and more binding on national governments than any previous agreements. Blurring of physical and geographical boundaries: Physical and geographical boundaries are crumbling, and the world is becoming a global village. Nation states today no longer have to play market-making role, so wool, wine, perfumes can belong to any market anywhere in the world. Interlinked Global Economy: Globalization has created an economically interdependent international Environment. Each country’s prosperity is interlinked with the rest of the world and no nation can exist in isolation solely dependent on its domestic market. In an interlinked global economy, the key success factor shifts from resources to the marketplace. Negative Effects of Globalization Slow Growth of Agriculture: The agricultural sector has been and still remains the backbone of the Indian economy playing a vital role in providing food and nutrition to the people, and in the supply of raw material to industries and to export trade. In 1951, agriculture provided employment to 72 per cent of the population and contributed 59 per cent of the gross domestic product. However, by 2001 the share of agriculture in the GDP went down drastically to 24 per cent and further to 22 per cent in 2006-07. This has resulted in a lowering the per capita income of the farmers and increasing the rural indebtedness. The agricultural growth of 3.2 per cent observed from 1980 to 1997 decelerated to two per cent subsequently. With more than half the population directly depending on this sector, low agricultural growth has serious implications for the inclusiveness of growth. Rise in Rural-Urban Divide: Globalization has widened the gap between the rich and poor, rises inequalities and mounts debt of developing countries. Globalization benefits only those who have the skills and technology to ride the wave. The higher growth rate achieved by an economy can be at the expense of declining incomes of people who may be rendered redundant. In this context, it has to be noted that while globalization may accelerate the process of technology substitution in developing economies, these countries even without globalization will face the problem associated with moving from lower to higher technology. Adverse Impact on Autonomy of State: Globalization is also known to constrain the authority and autonomy of the state. Free trade limits the ability of states to set policy and protect domestic companies. Capital mobility makes generous welfare states less competitive. Global problems exceed the grasp of any individual state, and global norms and institutions end up becoming more powerful. Adverse Impact on Culture: Globalization leads to cultural homogeneity. Many cultural flows, such as the provision of news, reflect exclusively western interests and control. This influence tends to adversely impact the local culture towards loss of identity and potential extinction. Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 11 Class: TYBCom Semester-V Subject: B. Economics-V Adverse Impact on Environment: Globalization has also contributed to the destruction of the environment through pollution and clearing of vegetation cover. With the construction of companies, the emissions from manufacturing plants are contributing to environmental pollution which further affects the health of many individuals. In India, Chlorine, petro- chemicals, caustic soda and such other chemical industries have sprung up in large number since 1991-92. This has encouraged import of chemicals polluting the environment. Bankruptcy of many Employment Generating Firms: Globalization has rendered many companies and their operations redundant. So, either they are closed, wholly or partly, or are hived off or their ancillary units are declared sick. For example, the decision of Hindustan Organic Chemicals to cease its benzene operations has caused closure of many related units. This in turn adversely affected the lives of its employees. Rising Unemployment: Another con of globalization has been the widespread unemployment either due to technological innovations, diversifications, relocations or closure of companies. Employees have also been retrenched because of the companies’ cost cutting measures due to the recent global slow down. Human Rights Violation: As the supremacy of many states decline and that of corporations rise, capacity of the latter to violate the rights of people or to create conditions in which rights become harder to exercise or protect, has increased tremendously. Against this backdrop several shocking reports have surfaced about MNCs making considerable profits at the expense of its people. Other elements of Globalization From about the end of 19th century, key technological developments in transportation and communication as well as of trade have contributed to the increasing economic integration of the world. Some fundamental aspects of globalization include: Post Industrialism: According to David Harvey, there has been a transition (shift) from ‘fixed’ industrial system to regime of ‘flexible accumulation’ characterized by flexibility in labour processes, products and patterns of consumption; and increasing mobility of capital and labour. This ‘post industrial’ system is marked by increasing centralization of capital in the hands of big corporations at one end, and flourishing of small business at the other, with the former dominating the latter. World Trade: World trade links geographically dispersed produces and consumers. While USA became the largest trading nation in 20th century, GATT established in 1947, aimed at freer trade through agreed reduced tariffs, which led to the growth of world trade and reduction in relative share of major industrial powers in world trade. Major push is towards globalization of markets. Multinational Corporations: Integration of global economy has given rise to MNC’s which are powerful not only economically but politically also. Overall, 51 of the largest economies Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 12 Class: TYBCom Semester-V Subject: B. Economics-V in the world are corporations. According to the UN Development Programme, 500 corporations now control 70% of the world’s trade and 80% of its foreign investment. New International Division of Labour: Internalization of capital since the 1970’s had led to economic restructuring reflected in deindustrialization of developed countries and a shift to tertiary (service) sector activities such as banking, finance, specialized administrative services, etc. while manufacturing and assembly operations are exported to less developed countries where labour is cheap and laws are lax. But it was noticed that with technological innovations such as automation, computerization, the question of cheap labour did not arise. Labour productivity could be enhanced with lesser number of workers. Hence major shift in industrial organization is to new systems of flexible specialization, just-in-time delivery TQM, etc. Rather than direct investment by first world MNC’s in third world through local subsidiaries, there is now a wide variety of negotiated agreements: joint ventures, marketing agreements, secondary sourcing, subcontracting various kinds of limited alliances. MNCs look at less developed countries mainly not as a source of cheap labour and raw materials but as expanding local markets and potential industrial partners. Financial Markets: IMF has started controlling the finance aspect. As a result of debt crisis, countries turn to IMF, which then imposes devaluation of currency, structural adjustment programme and other conditions. Global financial institutions exert enormous control over the domestic policies of member countries and in 1980’s, they started advocating liberalization, privatization and globalization. MNC’s have started demanding free capital movement and opening of capital and other markets. Impact of Economic Reforms Process on Indian Agricultural Sector Agricultural sector is the mainstay of the rural Indian economy around which socio-economic privileges and deprivations revolve. Any change in its structure is likely to have a corresponding impact on the existing pattern of social equality. No strategy of economic reform can succeed without sustained and broad-based agricultural development, which is critical for Raising living standards Alleviating poverty Assuring food security Generating buoyant market for expansion of industry and services Making substantial contribution to the national economic growth Studies also show that the economic liberalization and reforms process have impacted on agricultural and rural sectors deeply. Of the three sectors of economy in India, the tertiary sector has diversified the fastest, the secondary sector the second fastest, while the primary sector, taken as a whole, has scarcely diversified at all. Since agriculture continues to be a tradable sector, this economic liberalization and reform policy has far reaching effects on Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 13 Class: TYBCom Semester-V Subject: B. Economics-V agricultural exports and imports agriculture income and employment investment in new technologies and on agricultural prices rural infrastructure food security patterns of agricultural growth Reduction in Commercial Bank credit to agriculture, in lieu of this reforms process and recommendations of Khusro Committee and Narasimham Committee, might lead to a fall in farm investment and impaired agricultural growth. Infrastructure development requires public expenditure which is getting affected due to the new policies of fiscal compression. Liberalization of agriculture and open market operations will enhance competition in ‘resource use’ and ‘marketing of agricultural production’, which will force the small and marginal farmers to resort to ‘distress sale’ and seek for off-farm employment for supplementing income. Unfortunately, the reforms story is only half done. Large swathes of the economy remain stifled by old systems and heavy handed, corruption-breeding controls. Reform is still absent in the electricity sector, in the provision of roads, water and sanitation, in the decaying government primary education and healthcare, in the tragically anti-employment legacy of labour laws, in the bureaucratic machinery for agricultural support services, in municipal taxation and finances, and, above all in the creaky, unresponsive edifice of public administration and governance. Until reforms make headway in these areas, India’s “tryst with destiny” will remain elusively in the future. Impact of Economic Reforms Process on Indian Social Infrastructure In developing countries like India, development of Social Infrastructure is vitally important for achieving faster economic growth and alleviating poverty. India’s Five-Year Plans have failed to eliminate poverty for at least four reasons - malnutrition, poor health, a lack of learning opportunities, and limited choices. In a broad sense, health includes physical conditions, sanitation, as also health-related areas such as sanitation and water supply. Good education, health and nutrition and low fertility help reduce poverty by increasing opportunities to generate the right income. By the same token, an improved standard of living leads to gain in health and education, freeing people from the trap of ignorance and exposure to disease. However, Indian economy is still characterised by low levels of literacy and school enrolments and high levels of infant mortality, maternal mortality and malnutrition, relative to China and Indonesia and even other low- income countries. It will be difficult to reduce poverty substantially in the absence of major improvements in spending on and delivery of health and education services. The delivery of public services in health and education is fraught with problems related to limited accountability for performance, low management and worker incentives, inadequate materials and equipment for effective health care and education, demands for payment for public services and Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 1 Class: TYBCom Semester-V Subject: B. Economics-V poor targeting of services and subsides at the poor. As a result, private delivery of health and education is expanding rapidly-to the public in general and even to the poor. Impact on the Education Sector The average educational attainment has improved in India. Yet, India still lags behind other developing countries in average educational attainment—particularly among the poor. The data across decades shows improvement, yet, a lot remains to be achieved to reach optimal benefits of the reforms in the Education Sector. 2017/ Indicator 1991 2001 2011 2018 Literacy rate, adult total (% of people ages 15 and above) 48.2% 61.0% 69.3% 74.4% Literacy rate, adult female (% of females ages 15 and above) 33.7% 47.8% 59.3% 65.8% Literacy rate, adult male (% of males ages 15 and above) 61.6% 73.4% 78.9% 82.4% Literacy rate, youth total (% of people ages 15-24) 61.9% 76.4% 86.1% 91.7% Literacy rate, youth female (% of females ages 15-24) 49.3% 67.7% 81.8% 90.2% Literacy rate, youth male (% of males ages 15-24) 73.5% 84.2% 90.0% 93.0% School enrollment, preprimary (% gross) 3.2% 3.5% 7.7% 13.7% School enrollment, preprimary, female (% gross) 3.1% 3.3% 7.6% 13.1% School enrollment, preprimary, male (% gross) 3.3% 3.6% 7.8% 14.3% School enrollment, primary (% gross) 91.1% 94.1% 108.3% 113.0% School enrollment, primary, female (% gross) 79.0% 87.2% 110.3% 121.1% School enrollment, primary, male (% gross) 102.3% 100.4% 106.6% 105.6% School enrollment, secondary (% gross) - 45.2% 66.3% 73.5% School enrollment, secondary, female (% gross) - 37.8% 64.7% 74.1% School enrollment, secondary, male (% gross) - 51.8% 67.7% 73.0% School enrollment, tertiary (% gross) 6.0% 9.7% 22.8% 27.4% School enrollment, tertiary, female (% gross) 4.2% 7.8% 20.1% 28.0% School enrollment, tertiary, male (% gross) 7.8% 11.4% 25.2% 26.9% Impact on the Health Sector These have also improved but have a long way to go, particularly among the poor. The poor suffer from health and poverty related problems – high infant mortality rate, high mortality rates, high fertility rate and high rates of child malnutrition. Children and women are particularly affected. There have been only modest declines in the levels of severe and moderate malnutrition in children Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 15 Class: TYBCom Semester-V Subject: B. Economics-V in the last 20 years. The impact of the stubbornly high levels of disease and malnutrition is also due to poor sanitation and water supply, particularly in the poorer states. 1990/ 2000/ 2010/ 2017/ Indicator 1991 2001 2011 2018 Life expectancy at birth, total (years) 58.4% 62.9% 67.1% 69.4% Life expectancy at birth, female (years) 58.8% 63.7% 68.2% 70.7% Life expectancy at birth, male (years) 58.0% 62.1% 66.1% 68.2% Mortality rate, infant (per 1,000 live births) 88.6% 66.6% 45.1% 29.9% Mortality rate, infant, female (per 1,000 live births) 86.4% 66.8% 45.9% 29.9% Mortality rate, infant, male (per 1,000 live births) 90.6% 66.4% 44.4% 30.0% Maternal mortality ratio (modeled estimate, per 100,000 live births) - 354 197 145 Fertility rate, total (births per woman) 4.0 3.2 2.5 2.2 *Source: https://data.worldbank.org/country/india *************************** Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 16 Class: TYBCom Semester-V Subject: B. Economics-V Policies to enhance Social Infrastructure with special reference to Education and health - NEP 2020 and Ayushman Bharat Table of Contents Introduction....................................................................................................................................................1 Defining Social Infrastructure......................................................................................................................2 Trends in Social Infrastructure.....................................................................................................................2 Government Initiatives...................................................................................................................................2 National Education Policy 2020....................................................................................................................5 Salient features of the NEP 2020................................................................................................................................ 5 School Education......................................................................................................................................................... 5 Higher Education........................................................................................................................................................ 7 Ayushman Bharat.........................................................................................................................................10 Introduction The new Economic policy of 1991 introduced various macro economic stabilization measures and structural adjustment reforms in India. Phased disinvestment in PSU's, encouragement to private players to invest in various sectors of the economy led to high economic growth without the development of the marginalized and disadvantaged sections of the population. In this process India faced increased poverty, inequality and discrimination. Market led economy provided informal jobs with less security. Government began to reduce subsidies to support the social sector. Thus, in order to provide a safety net to India's population and to make growth inclusive, the government of India made legislations like (National Rural Employment Guarantee Act 2005), Right to Education 2008 and various health and education programs to improve human resources. In 2000, the UN came up with the Millennium Development Goals with measurable targets. These goals targeted food security, nutrition, gender equality and eradication of poverty among other goals. This led to the importance of social infrastructure among various developing and less developed countries. The 2030 Agenda for Sustainable Development as reflected in the 17 Sustainable Development Goals (SDGs) and 169 targets, calls for global partnership to ensure peace and prosperity for people and the planet, now and into the future. It is recognized that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality and spur economic growth in a sustainable manner. India is committed to achieve these SDGs and a strong social infrastructure is key to achieve them. The government has been focusing on provisioning of assets such as schools, institutes of higher learning, hospitals, access to sanitation, water supply, road connectivity, affordable housing, skills and livelihood opportunities. This gains significance given the fact that India is home to the world’s youngest population as half of its population is below the age of 25. It has also been estimated that demographic advantage in India is available for five decades from 2005-06 to 2055-56, longer than any other country in the world. This demographic advantage can be reaped only if education, skilling and employment opportunities are provided to the young population. D Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 1 Class: TYBCom Semester-V Subject: B. Economics-V Defining Social Infrastructure Social infrastructure refers to investment in areas of education, healthcare, family welfare, in order to enhance socio economic development of the country. In this context, it plays an important role in improving people's lifestyle through improved education, skill and employability. In order to ensure inclusive growth, social infrastructure focuses on human development which means the expansion and widening of people's choices and as well general well being. eg. Health care, hospitals, education (Schools and Universities), community housing transport, Social security, water supply, shelter and sanitation etc. The term social infrastructure refers to factors / facilities that contribute to human capital formation and human development. The central and the State Governments are increasingly providing public goods in crucial areas like education, health, sanitation, housing etc. These include universal facilities which lead to community development, targeted facilities that cater to all age groups and to those with special needs. (SCs, STs, OBCs etc.). Trends in Social Infrastructure The expenditure on social services (education, health and other social sectors) by Centre and States combined as a proportion of GDP increased from 6.2 to 8.8 per cent during the period 2014-15 to 2020-21 (BE). This increase was witnessed across all social sectors. For education, it increased from 2.8 per cent in 2014-15 to 3.5 per cent and for health, from 1.2 per cent to 1.5 per cent during the same period. Relative importance of social services in the government budget, as measured in terms of the share of expenditure on social services out of total budgetary expenditure, has also increased to 26.5 per cent in 2020-21 (BE) from 23.4 percent in 2014-15. The objective of a robust social infrastructure is to promote human development. The Human Development Index developed by the United Nations which considers a composite statistics of age expectancy, education and per capita Income, ranked India 129 among 189 countries in HDI in 2019. This represents a moderate human development level. Thus, investment in social infrastructure is crucial to improve human development in India. Government Initiatives The government has been committed to provision of social security which is evident in the initiation of major social sector schemes by the Government of India during the last five years as given below: Pradhan Mantri Suraksha Bima Yojana, 2015 - It offers a one-year accidental death and disability cover with annual premium of Rs. 12. It is available to people in the age group 18 to 70 years. Pradhan Mantri Jeevan Jyoti Bima Yojana, 2015 - It is government-backed life insurance scheme with annual premium of Rs. 330. It is available to people between 18 and 50 years of age. D Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 2 Class: TYBCom Semester-V Subject: B. Economics-V Pradhan Mantri Vaya Vandana Yojana, 2018 - It is a pension scheme exclusively for the senior citizens aged 60 years and above. PM-KISAN, 2019 - It offers income support of Rs. 6000 per annum in three equal instalments to all eligible farmers irrespective of land holdings. National Nutrition Mission (POSHAN Abhiyaan) - It ensure attainment of malnutrition free India by 2022. Targeted intervention in areas with high malnutrition burden. Mission Indradhanush (MI) and Intensified Mission Indradhanush (IMI) - To vaccinate unreached/ partially reached pregnant women and children so as to reduce vaccine preventable under-5 mortality rate. The drive is focused on pockets of low immunization average and hard to reach areas where proportion of unvaccinated and partially vaccinated children and pregnant women is high. Samagra Shiksha - A comprehensive programme subsuming Sarva Shiksha Abhiyan (SSA), Rashtriya Madhyamik Shiksha Abhiyan (RMSA) and Teacher Education (TE). For first time, it also includes provisions for support at preschool level, library grants and grants for sports and physical equipment. ICT Driven Initiatives - Shaala Sidhi (to enable all schools to self-evaluate their performance), e-Pathshala (providing digital resources such as textbooks, audio, video, periodicals etc.) and Saransh (an initiative of CBSE for schools to conduct self-review exercises). LaQshya - 'LaQshya - Quality Improvement Initiative' was launched in December, 2017 with the objectives of reducing preventable maternal and newborn mortality, morbidity and stillbirths associated with the care around delivery in Labour room and Maternity OT (Operation Theatre) and to ensure respectful maternity care. Pradhan Mantri Surakshit Matritva Abhiyan (PMSMA): PMSMA was launched in 2016 to provide comprehensive and quality Ante- Natal Care (ANC) to pregnant women on the 9th of every month. Under PMSMA, doctors from both the public and private sector examine pregnant women on 9th of every month at Government health facilities. Skilling Ecosystem - Skilling ecosystem in India is equipping the youth to meet the challenges of a dynamic labour market by providing various short term and long-term skilling under programmes like 'Pradhan Mantri Kaushal Vikas Yojana' (PMKVY). PMKVY has had positive impact on employment and incomes of the youth as per evaluation studies. Rural Infrastructure - Connectivity is critical for rural areas to improve quality of lives of the poor by enhancing access to various social services, education, health and access to markets. PMGSY has played a crucial role in connecting the unconnected in rural India and enhanced their livelihood opportunities. Government has accorded highest priority to rural housing, by providing dwelling with all basic facilities to the neediest under Pradhan Mantri D Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 3 Class: TYBCom Semester-V Subject: B. Economics-V Awas Yojana (Gramin) (PMAY-G). Government has also prioritized employment programmes like MGNREGS which is reflected in the upward trend in budget allocation and release of funds to the States in the last four years. Financial Inclusion - Financial inclusion of women is considered as an essential tool for empowerment of women as it enhances their self-confidence and enables financial decision- making to a certain extent. As far as financial inclusion in India is concerned, significant progress has been made during the last decade. At all India level, the proportion of women having a bank or saving account that they themselves use have increased from 15.5 per cent in 2005-06 to 53 per cent in 2015-16. Programmes and Schemes in School education The Department of School Education and Literacy has launched an Integrated Scheme for School Education – Samagra Shiksha w.e.f. 2018-19, which subsumes three erstwhile Centrally Sponsored Schemes of Sarva Shiksha Abhiyan (SSA), Rashtriya Madhyamik Shiksha Abhiyan (RMSA) and Teacher Education (TE). Central RTE Rules have been amended to include a reference on class-wise and subject-wise Learning Outcomes. The Navodaya Vidyalaya Scheme provides for the opening of one Jawahar Navodaya Vidyalaya (JNV) in each district of the country to bring out the best of rural talent. NISHTHA – National Initiative for School Heads’ and Teachers’ Holistic Advancement, under the Centrally Sponsored Scheme of Samagra Shiksha in 2019- 20 is being launched to improve learning outcomes at the elementary level Pradhan Mantri Innovative Learning Program (DHRUV) was launched to identify and encourage talented students to enrich their skills and knowledge. To broad-base technology-aided teaching and learning, States and UTs are being actively involved to contribute and use the Digital Infrastructure for Knowledge Sharing (DIKSHA) platform). Programmes and Schemes in higher education The government launched Pandit Madan Mohan Malaviya National Mission on Teachers and Teaching (PMMMNMTT) which aims at building a strong professional cadre of teachers by setting performance standards and creating top class institutional facilities for innovative teaching and professional development of teachers in higher education. Higher Education Financing Agency (HEFA) was established to provide a sustainable financial model for higher education institutions, Kendriya Vidyalayas, Navodaya Vidyalayas, AIIMS and other educational institutions of the Ministry of Health with the objective to fund projects to the tune of ` 1 lakh crore by 2022. National Educational Alliance for Technology (NEAT) announced a PPP Scheme for using technology for better learning outcomes in Higher Education. The objective is to use Artificial Intelligence to make learning more personalised and customised as per the requirements of the learner. D Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 4 Class: TYBCom Semester-V Subject: B. Economics-V The Department of Higher Education, in the Ministry of Human Resource Development, has finalized and released a five-year vision plan named Education Quality Upgradation and Inclusion Programme (EQUIP). SWAYAM 2.0 was launched to offer online degree programmes with enhanced features and facilities by top-ranking universities. ‘Deeksharambh’ a guide to student induction programme and ‘PARAMARSH’ scheme is to mentor institutions seeking National Assessment and Accreditation Council accreditation are some of the other major schemes of Department of Higher Education launched in 2019. National Education Policy 2020 The National Policy on Education was framed in 1986 and modified in 1992. Since then, several changes have taken place that calls for a revision of the Policy. The NEP 2020 is the first education policy of the 21st century and replaces the thirty-four- year-old National Policy on Education (NPE), 1986. Built on the foundational pillars of Access, Equity, Quality, Affordability and Accountability, this policy is aligned to the 2030 Agenda for Sustainable Development and aims to transform India into a vibrant knowledge society and global knowledge superpower by making both school and college education more holistic, flexible, multidisciplinary, suited to 21st century needs and aimed at bringing out the unique capabilities of each student. Salient features of the NEP 2020 School Education Ensuring Universal Access at all levels of school education NEP 2020 emphasizes on ensuring universal access to school education at all levels- preschool to secondary. Infrastructure support, innovative education centres to bring back dropouts into the mainstream, tracking of students and their learning levels, facilitating multiple pathways to learning involving both formal and non-formal education modes, association of counsellors or well-trained social workers with schools, open learning for classes3,5 and 8 through NIOS and State Open Schools, secondary education programs equivalent to Grades 10 and 12, vocational courses, adult literacy and life-enrichment programs are some of the proposed ways for achieving this. About 2 crores out of school children will be brought back into main stream under NEP 2020. Early Childhood Care & Education with new Curricular and Pedagogical Structure With emphasis on Early Childhood Care and Education, the 10+2 structure of school curricula is to be replaced by a 5+3+3+4 curricular structure corresponding to ages 3-8, 8-11, 11-14, and 14-18 years respectively. This will bring the hitherto uncovered age group of 3-6 years under school curriculum, which has been recognized globally as the crucial stage for development of mental faculties of a child. The new system will have 12 years of schooling with three years of Anganwadi/ pre schooling. NCERT will develop a National Curricular and Pedagogical Framework for Early Childhood Care and Education (NCPFECCE) for children up to the age of 8. ECCE will be delivered through a significantly expanded and strengthened system of institutions including Anganwadis and pre-schools that will have teachers and Anganwadi workers trained in the ECCE pedagogy and curriculum. The planning and implementation of ECCE will be carried D Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 5 Class: TYBCom Semester-V Subject: B. Economics-V out jointly by the Ministries of HRD, Women and Child Development (WCD), Health and Family Welfare (HFW), and Tribal Affairs. Attaining Foundational Literacy and Numeracy Recognizing Foundational Literacy and Numeracy as an urgent and necessary prerequisite to learning, NEP 2020 calls for setting up of a National Mission on Foundational Literacy and Numeracy by MHRD. States will prepare an implementation plan for attaining universal foundational literacy and numeracy in all primary schools for all learners by grade 3 by 2025.A National Book Promotion Policy is to be formulated. Reforms in school curricula and pedagogy The school curricula and pedagogy will aim for holistic development of learners by equipping them with the key 21st century skills, reduction in curricular content to enhance essential learning and critical thinking and greater focus on experiential learning. Students will have increased flexibility and choice of subjects. There will be no rigid separations between arts and sciences, between curricular and extra-curricular activities, between vocational and academic streams. Vocational education will start in schools from the 6th grade, and will include internships. A new and comprehensive National Curricular Framework for School Education, NCFSE 2020-21, will be developed by the NCERT. Multilingualism and the power of language The policy has emphasized mother tongue/local language/regional language as the medium of instruction at least till Grade 5, but preferably till Grade 8 and beyond. Sanskrit to be offered at all levels of school and higher education as an option for students, including in the three- language formula. Other classical languages and literatures of India also to be available as options. No language will be imposed on any student. Students to participate in a fun project/activity on ‘The Languages of India’, sometime in Grades 6-8, such as, under the ‘Ek Bharat Shrestha Bharat’ initiative. Several foreign languages will also be offered at the secondary level. Indian Sign Language (ISL) will be standardized across the country, and National and State curriculum materials developed, for use by students with hearing impairment. Assessment Reforms NEP 2020 envisages a shift from summative assessment to regular and formative assessment, which is more competency-based, promotes learning and development, and tests higher-order skills, such as analysis, critical thinking, and conceptual clarity. All students will take school examinations in Grades 3, 5, and 8 which will be conducted by the appropriate authority. Board exams for Grades 10 and 12 will be continued, but redesigned with holistic development as the aim. A new National Assessment Centre, PARAKH (Performance Assessment, Review, and Analysis of Knowledge for Holistic Development), will be set up as a standard-setting body. Equitable and Inclusive Education NEP 2020 aims to ensure that no child loses any opportunity to learn and excel because of the circumstances of birth or background. Special emphasis will be given on Socially and Economically Disadvantaged Groups (SEDGs) which include gender, socio-cultural, and geographical identities and disabilities. This includes setting up of Gender Inclusion Fund and also Special Education Zones for disadvantaged regions and groups. Children with D Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 6 Class: TYBCom Semester-V Subject: B. Economics-V disabilities will be enabled to fully participate in the regular schooling process from the foundational stage to higher education, with support of educators with cross disability training, resource centres, accommodations, assistive devices, appropriate technology-based tools and other support mechanisms tailored to suit their needs. Every state/district will be encouraged to establish “Bal Bhavans” as a special daytime boarding school, to participate in art-related, career-related, and play-related activities. Free school infrastructure can be used as Samajik Chetna Kendras Robust Teacher Recruitment and Career Path Teachers will be recruited through robust, transparent processes. Promotions will be merit- based, with a mechanism for multi-source periodic performance appraisals and available progression paths to become educational administrators or teacher educators. A common National Professional Standards for Teachers (NPST) will be developed by the National Council for Teacher Education by 2022, in consultation with NCERT, SCERTs, teachers and expert organizations from across levels and regions. School Governance Schools can be organized into complexes or clusters which will be the basic unit of governance and ensure availability of all resources including infrastructure, academic libraries and a strong professional teacher community. Standard-setting and Accreditation for School Education NEP 2020 envisages clear, separate systems for policy making, regulation, operations and academic matters. States/UTs will set up independent State School Standards Authority (SSSA). Transparent public self-disclosure of all the basic regulatory information, as laid down by the SSSA, will be used extensively for public oversight and accountability. The SCERT will develop a School Quality Assessment and Accreditation Framework (SQAAF) through consultations with all stakeholders. Higher Education Increase GER to 50 % by 2035 NEP 2020 aims to increase the Gross Enrolment Ratio in higher education including vocational education from 26.3% (2018) to 50% by 2035. 3.5 Crore new seats will be added to Higher education institutions. Holistic Multidisciplinary Education The policy envisages broad based, multi-disciplinary, holistic Under Graduate education with flexible curricula, creative combinations of subjects, integration of vocational education and multiple entry and exit points with appropriate certification. UG education can be of 3 or 4 years with multiple exit options and appropriate certification within this period. For example, Certificate after 1-year, Advanced Diploma after 2 years, Bachelor’s Degree after 3 years and Bachelor’s with Research after 4 years. An Academic Bank of Credit is to be established for digitally storing academic credits earned from different HEIs so that these can be transferred and counted towards final degree earned. Multidisciplinary Education and Research Universities (MERUs), at par with IITs, IIMs, to be set up as models of best multidisciplinary education of global standards in the country. The National Research Foundation will be created as an apex body for fostering a strong research culture and building research capacity across higher education. D Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 7 Class: TYBCom Semester-V Subject: B. Economics-V Regulation Higher Education Commission of India (HECI) will be set up as a single overarching umbrella body the for entire higher education, excluding medical and legal education. HECI to have four independent verticals - National Higher Education Regulatory Council (NHERC) for regulation, General Education Council (GEC) for standard setting, Higher Education Grants Council (HEGC) for funding, and National Accreditation Council (NAC) for accreditation. HECI will function through faceless intervention through technology, & will have powers to penalise HEIs not conforming to norms and standards. Public and private higher education institutions will be governed by the same set of norms for regulation, accreditation and academic standards. Rationalised Institutional Architecture Higher education institutions will be transformed into large, well resourced, vibrant multidisciplinary institutions providing high quality teaching, research, and community engagement. The definition of university will allow a spectrum of institutions that range from Research-intensive Universities to Teaching-intensive Universities and Autonomous degree- granting Colleges. Affiliation of colleges is to be phased out in 15 years and a stage-wise mechanism is to be established for granting graded autonomy to colleges. Over a period of time, it is envisaged that every college would develop into either an Autonomous degree-granting College, or a constituent college of a university. Motivated, Energized, and Capable Faculty NEP makes recommendations for motivating, energizing, and building capacity of faculty thorugh clearly defined, independent, transparent recruitment, freedom to design curricula/pedagogy, incentivising excellence, movement into institutional leadership. Faculty not delivering on basic norms will be held accountable Teacher Education A new and comprehensive National Curriculum Framework for Teacher Education, NCFTE 2021, will be formulated by the NCTE in consultation with NCERT. By 2030, the minimum degree qualification for teaching will be a 4-year integrated B.Ed. degree. Stringent action will be taken against substandard stand-alone Teacher Education Institutions (TEIs). Mentoring Mission A National Mission for Mentoring will be established, with a large pool of outstanding senior/retired faculty – including those with the ability to teach in Indian languages – who would be willing to provide short and long-term mentoring/professional support to university/college teachers. Financial support for students Efforts will be made to incentivize the merit of students belonging to SC, ST, OBC, and other SEDGs. The National Scholarship Portal will be expanded to support, foster, and track the progress of students receiving scholarships. Private HEIs will be encouraged to offer larger numbers of free ships and scholarships to their students. Open and Distance Learning D Department of Economics and Foundation Course, R.A.P.C.C.E. (Autonomous) 8 Class: TYBCom Semester-V Subject: B. Economics-V This will be expanded to play a significant role in increasing GER. Measures such as online courses and digital repositories, funding for research, improved student services, credit-based recognition of MOOCs, etc., will be taken to ensure it is at par with the highest quality in-class programmes. Online Education and Digital Education: A comprehensive set of recommendations for promoting online education consequent to the recent rise in epidemics and pandemics in order to ensure preparedness with alternative modes of quality education whenever and wherever traditional and in-person modes of edu