ESI adda paid lecture-1
Paper -I (ESI)
Syllabus
-----------------------------------------------------------------------------------------------------------------------------
Economics-
The science of scarcity and its implications for the use of resources, production of goods and services, growth and production, and welfare over time.
It is a subject concerned with the efficient utilization of available resources, to fulfill the needs of those living and operating within the economy.
Lionel Robbins articulated the scarcity definition of economics. In 1932, in his Essay - An Essay on the nature and significance of Economic Science.
According to this definition, economics is the study of how humans navigate trade-offs in deploying the limited means available to them (e.g. time) towards acquiring their multiplicity of desired ends (e.g. income, leisure).
Why do we study economics?
Goods are scarce and society must use its resources efficiently.
Societies use scarce resources to produce valuable commodities and distribute them among different people.
Questions involved in economics
What goods to produce
How to produce them
Who receives the goods that are produced
Ultimate goal of Economics-
To improve the living conditions of people in their everyday life.
Focus of Economics-
How individuals, families, firms and nations, behave and interact, how they make choices, how society uses its limited resources, and how economics work.
An economy indicates a region, a particular area or country, concerning production, distribution, consumption, and exchange of goods and services, and supply of money.
Branches of Economics
|
Micro-economics |
Macro-economics |
|
Studies individual
income |
Studies
national income |
|
Analyzes
demand and supply of labour |
Analyzes
total employment in the economy |
|
Deals with households
and firms decisions |
Deals with
aggregate decisions |
|
Studies
individual prices |
Studies
overall price level |
|
Analyzes
demand and supply of goods |
Analyzes
aggregate demand and aggregate supply |
Macro-economics is a separate branch of economics, emerge
after the British economist John Maynard Keynes published his celebrated book, “The General Theory of Employment, Interest and
Money in 1936.”
The dominant thinking in economics before Keynes was that all
the labourers who are ready to work will find employment and all the factories
will be working at their full capacity. This school of thought is called the classical
tradition.
Keynes asserted that free markets have no self-balancing
mechanisms that lead to full employment. Keynesian economists justify
government intervention through public policies that aim to achieve full
employment and price stability.
JM Keynes- Father of macroeconomics
Adam Smith- Father of economics
Keynes coined the term called ‘Animal spirits’. He speaks of
animal spirits as the human emotions that affect consumer confidence.
It describes how people arrive at financial decisions,
including buying and selling securities, in times of economic stress or uncertainty.
Keynes-
Macro-economics
Govt. intervention
Animal spirits
Keynes argued that investment and consumption are often
based on how people feel about the overall economy rather than unbiased, rational analysis of
facts.
Critics have argued that while people are not perfectly
rational, they are not completely guided by emotions either; hence, animal
spirits cannot sufficiently explain economic cycles.
Factors of Production
Factors of production is an economic term that describes the
inputs used in the production of goods or services to make an economic profit.
These include any resources needed for the creation of a
good or service.
Capital as a factor-
It typically refers to money but however it is not a factor
of production because it is not directly involved in producing a good or
service. Instead, it facilitates the processes used in production by enabling
entrepreneurs and company owners to purchase capital goods or to pay wages.
Entrepreneurship as a factor- Entrepreneurship combines all
the other factors of production into a product or service for the consumer
market.
A key component of entrepreneurship is risk. They take the
risk of organizing production before anything is produced and with no guarantee
that production will be successful.
Factor Payment
Remuneration paid to Factors of Production for their Factor
Service is called as Factor Payment.
|
Factor |
Characteristics |
Rewards |
|
Labour |
Physical +
Mental Input |
Wages |
|
Land |
Land + Extracted
Resources |
Rent |
|
Capital |
Fixed + Working
capital |
Interest |
|
Entrepreneurship |
Organization
of Factors |
Profit |
An economic agent is an entity that engages in economic activities
like buying, selling, or producing goods and services, etc.
There are four main types of economic agents:
Households
Business or Firms
Governments
External sector
Each type of economic agent has different objectives. For
example, individuals may seek to maximize their utility while firms may seek to
maximize their profit.
Household or individual
Economic agent is a group of people living under the same
roof who share common resources. This agent is the most basic in economic activity
as they are the consumers of goods and services.
Business Firms
Are defined as organizations that produce goods and services
to sell them to make profit by satisfying the wants and needs of the household
sector.
Government
Economic agent is responsible for providing public goods and
services and regulating business like employment, price stability, economic
growth.
External sectors
Includes anything and everything that lies beyond the
borders of a nation. In the goods markets, the external sector involves exports
and imports. In the financial markets it involves capital flow.
Economic systems
Economic systems are the methods societies and governments
use to organize, allocate and distribute goods, services and resources across
locations.
Traditional economy
It represents the oldest model, where societies are more
physically connected and socially satisfied through labour, farming, and other
simple processes.
Each member of a community of society has a specific role
that contributes to the whole progress of the community.
Command economy
Here, the government plays a key role in directing and
intervening in business processes that provide essential goods and services to
the community.
Many command economies consist of governments that have total
control over the distribution and use of valuable resources, like oil and gas.
Market Economy
In this type of economy, communities, firms and proprietors
acts in self-interest to decide how to allocate and distribute resources, what
to produce and who to sell to.
Governments in market systems typically have little
intervention in how businesses operate and generate income, however, can regulate
factors like fair trade, policy development and honest business operations.
Mixed Economy
It consists of a market and command economy combined to form
an economic system where the market is generally free from government or
national ownership.
Government controls or restricts some sectors.
Monopoly may or may not exist.
Various sectors of Economy
Sectors of Indian Economy
We can classify sectors of Indian Economy on the basis of three
factors:
On the basis of the nature of Economic Activities
Primary sector
Secondary sector
Tertiary sector
On the basis of employment condition
Organized sector
Unorganized sector
On the basis of ownership
Public sector
Private sector
Joint sector (Public + Private ownership)
Quarternary sector
Activities involved
Intellectual activities are often associated with
technological innovation
It is considered to be a part of a Tertiary sector only, but
based on knowledge economy.
Example:
Activities associated with this sector include culture,
libraries, scientific research, education, and Information Technology.
Quinary sector
Activities involved
Highest levels of decision-making in a society or economy.
Example
This sector includes top executives or officials in such
fields as government, science, universities, non-profits, healthcare, culture,
and the media.
Economists sometimes also includes domestic activities (duties
performed in the home by a family member or dependent) in the quinary sector.
Goods and their types
Economic and free goods
Consumer and producer goods
Public and private goods
Intermediate or final goods
Single use goods and durable goods
Normal and inferior goods
Substitute and complimentary goods
Goods
Goods are the backbone of an economy, and the supply and
demand of certain goods can be used as economic indicators to determine an
economy’s well being.
Economic goods
These goods are scarce and their demand is more than their
supply. They are limited in availability and man made.
Free goods
These goods are gifts
of nature, they are available in free and in free and in large quantity. They have
value in use but not in exchange.
Consumer goods
Used for consumption purposes, any tangible thing produced
and then purchased by final users to satisfy their needs.
Producer goods
These are raw material or semi-finished goods that are used
in the production of other final goods.
Capital goods
Goods needed to produce other goods and services- tangible
and physical goods used in further production. They are man-made, durable items
that businesses use to provide goods and services.
In accounting, they are treated as fixed assets.
Production is measured by the monthly durable goods report.
One of the most important leading economic indicators.
Example:
Tools
Buildings
Machinery
Equipment
Vehicles
|
Basis |
Capital
goods |
Consumer
goods |
|
Meaning |
Capital goods
are those goods which are used to make consumer goods and services |
Consumer
goods those goods which help to satisfy our needs and wants directly |
|
Serves for |
These
products serve to business |
These
products serve to consumers |
|
|
These
products help to increase the production capacity of a country. |
These
products helps with direct needs and wants of a customer. |
|
Demand |
Demand for these
goods are comparatively low |
Demands for
these goods are high |
|
Example |
Hardware,
machinery, buildings, etc. |
Pastries,
telephones. Shoes, fridge, etc |
Public goods
Available to everyone for free, provided without the motive
of earning profit. They are non-rivalrous and non-exclusive.
Private goods
Purchased to satisfy the utility, purchase by one will
reduce the availability to the other.
Free rider problem
Example: Govt makes highways but many people ride them and
do not pay taxes.
Private goods vs public goods:
Examples:
|
Private
goods |
Public
goods |
|
A pair of
shoes |
National
defense |
|
A cup of coffee |
Parks |
|
A car |
Street
lighting |
|
A house |
Environmental
protection |
|
A haircut |
|
|
A circus show |
|
Because of the free rider problem, government provides
public goods and finances through taxes.
Non-durable goods
These are any consumer goods in
an economy that are either consumed in one use or used up over a short period
of time and must be brought again in successive purchases.
These are of two types:
Single use
Multiple use
Durable goods
Durable goods are long-lasting
goods that are able to last for a really long time. These are a category of
tangible products that can withstand the test of time and can be used several
times before they start to deteriorate.
Durable products last for three
years.
|
Durable goods |
Non-durable goods |
|
These are tangible products that can withstand the test of time and
can be used several times before they start to deteriorate. |
These are consumable goods with a limited lifespan and are intended
to be used within three years. |
|
The use of durable goods is not limited to single use only |
Non-durable goods can be used only once and they lose their ability
to function after first use. |
|
The demand for durable goods
usually increases during economic growth and goes down during recession |
They demand for non durable goods remains constant throughout
economic growth and setback. |
Single Use Goods
These goods are purchased for immediate or almost immediate
consumption and have a life span ranging from minutes to three years. Common
examples of these are food, beverages, clothing, shoes, and gasoline.
Intermediate goods
Intermediate goods are referred to as those goods that are
used for producing final goods. These are goods that are partly prepared and
can be referred to as unfinished goods or partly finished goods.
Final goods
Final goods are those goods that are manufactured to be
consumed directly by the consumer. Final goods are finished goods.
Ex- Salt can be either an intermediate or consumer goods.
Intermediate goods- The baker buys salt. When the baker
makes bread, he adds salt. He sells the bread.
Consumer good- I buy salt. We consume it at home.
Normal goods-
Demand of these goods increases with the increase in the income
of consumers.
Inferior goods-
Demand of these goods decreases with the increase in the
income of consumers. They are opposite to normal goods.
Substitute goods-
If one good is not available and other good can be used
instead of it, then they are substituted goods. For example- coffee and tea.
Complimentary goods-
If one good is being used then other good is necessary for
its use, for example car and petrol.
Negative relation in between the price of one good and
demand of the other good.
Consumer good or final good is a commodity that is used by
the consumer to satisfy current wants or needs is known as final goods.
Intermediate goods are characterized as non-rivalrous and
non-exclusive.
Growth:
It focusses on the income of the people of the country,
hence it is considered single dimensional in nature.
Economic growth is a narrower concept than economic
development.
Development:
It focusses on the income of the people and on the improvement
of the living standards of the people of the country, hence it is considered a
multidimensional phenomenon.
Growth includes the indicators to measure the economic
health of a country.
Factors impacting economic growth
|
Economic
factors |
Non-economic
factors |
|
Natural
resources |
Political
factors |
|
Capital
formation |
Social and psychological
factors- social values and social institutions which change with the expansion
of education and transformation of culture from one society to the other. |
|
Technological
progress- results in an increase in productivity |
Education |
|
Human
Resource Development |
Desire for
material betterment- the societies that focus on self-satisfaction, self-denial,
faith in fate, etc, limit risk and enterprise and thus keep the economy
backward. |
|
Population
growth |
|
|
Social overheads-
schools, colleges, technical institutions, hospitals, and public health
facilities. |
|
Economic growth is achieved by increasing the economy’s
ability to produce goods and services. This goal is best indicated by measuring
the growth rate of production.
It occurs when there is a rise in the production of goods and
services for a certain period as compared with a previous one.
Economic growth is caused by two main factors:
An increase in Aggregate Demand (AD)
An increase in Aggregate Supply (Productive Capacity)
It is measured as a percentage increase in the real GDP.
Types of Economic Growth
|
Intensive/
Qualitative |
Extensive/Quantitative |
|
Generated by
improving skills and technology- Basically
improvement in the quality of factors of production. |
Generated by
adding more labour and capital- it is based on quantitative increases in
labour, capital and land. |
Difference between growth and development
|
Growth |
Development |
|
It is a short
term process |
It is a long
term process |
|
Brings in
quantitative changes and therefore includes quantitative terms like
consumption, expenditure, investment,
national income, etc. |
Brings in
qualitative as well as quantitative changes and therefore includes terms like
equity, quality of life, human development, etc |
|
Related to
developed countries of the world |
Related to
underdeveloped and developing countries of the world |
|
Accompanied
by the growth in income of the countries |
Accompanied
by the social, political, cultural growth and with economic growth |
|
Measured by
real GDP (not nominal GDP) |
Measured by
HDI |
Development includes growth.
Dimensions of growth and development
Growth focusses on the income of the people of the country,
hence it is considered as a single dimensional in nature.
Development focusses on the income of the people and on the
improvement of the living standards of the people of the country, hence it is
considered as a multi dimensional phenomenon.
Economic growth which is jobless, ruthless, voiceless,
rootless and future less is not conducive to human development.
GDP- Production of goods and services in a country.
In 2021, 10 pens are produced in a country. Each pen costs
Rs. 10.
So, total pens worth Rs 100 are produced.
In 2022, each pen costs Rs 12 and 10 pens are produced (Because
plastic needed to make pens has become costlier).
So, through Rs 120 worth goods have been produced, there has
been no growth.
In 2022, 12 pens have been produced (cost of plastic did not
increase) each for Rs 10.
Now, GDP is Rs 120. This is the real growth in economy.
In real GDP, base year is used.
In nominal GDP, current year is used.
Real Gross GDP
An inflation-adjusted measure that reflects the value of all
goods and services produced by an economy in given year.
Real GDP is inflation-adjusted so it gives the actual
production.
|
Real GDP |
Nominal
GDP |
|
When GDP is
calculated on the basis of fixed prices in some BASE year, it is called GDP
at constant prices or real GDP. |
When GDP is
measured on the basis of current price, it is called GDP at current prices or
nominal GDP. |
|
Current
production*base price (or reference price) (Base price
remains constant) Real GDP is a
better measure of production. |
Current
production*current price |
|
In calculating
real GDP, quantities of goods and services purchased in current year and multiplying
them by their base price. |
In
calculating nominal GDP, we only use current quantities at current year
prices. |
|
Used for
comparison of output across different years of the same country and even
across countries. |
Used for comparison of output in different
quarters of the same year of country. |
It is a measure of inflation.
It is used as an indicator of the economy’s average price
level.
It gives an idea of how the prices have moved from the base
year the year whose prices are being used to calculate the real GDP of the
current year.
Base year now is 2012-13.
This can change from time to time.
A base year is never chosen as a year that has seen too much
fluctuation in prices or production. For example, 2020 can never be the base
year because COVID slowed down production during this year. Similarly,
production suddenly increased post-COVID in 2021. So, 2021 can never be a base
year.
Economic development and its types
It is a process consisting of a long chain of interrelated
changes in fundamental factors of supply and in the structure of demand,
leading to a rise in the net national product of a country in the long run. (It
is a long-term process).
|
Sustainable
Development |
Human
Development |
|
The concept
is pro-people, pro-job and pro-nature. It gives the highest priority to poverty
reduction, productive employment, social integration, and environmental
regeneration. |
This concept
is concerned mainly with enabling people to enjoy a better life as the
ultimate goal of the human endeavor of living. |
Human development
This concept is concerned mainly with enabling people to
enjoy a better life as the ultimate goal of the human endeavor of living.
The essential choices for people include-
To live a long and healthy life
To acquire a better knowledge
To have access to resources needed for a decent standard.
Measurement of Development
In 1990, two economists- Prof. Mehbub Al Haque of Pakistan
and Prof. Amartya Sen of India introduced the concept of the Human Development Index
(HDI). Since 1993, UNDP has used HDI to calculate the Human Development.
In the geometric mean of normalized indices for each of the
three dimensions.
Long and healthy
Knowledge
A decent standard of living
Life Expectancy Index
Calculated from Life expectancy at birth.
Education Index
Calculated from mean years of schooling and expected years
of schooling.
GDP deflator = (Nominal
GDP/Real GDP)*100
It is a measure of inflation.
It is used as an indicator of the economy’s average price
level.
It gives an idea of how the prices have moved from the base
year the year whose prices are being used to calculate the real GDP of the
current year.
Base year now is 2012-13.
This can change from time to time.
Base year is never chosen as a year that has seen too much
fluctuation in prices or production. For example 2020 can never be the base
year because COVID slowed down production during this year. Similarly,
production suddenly increased post COVID in 2021. So, 2021 can never be a base
year.
Economic development and its types
It is a process consisting of a long chain of inter-related
changes in fundamental factors of supply and in the structure of demand,
leading to a rise in the net national product of a country in the long run. (It
is a long-term process).
|
Sustainable
Development |
Human
Development |
|
The concept is
pro-people, pro-job and pro-nature. It gives highest priority to poverty
reduction, productive employment, social integration and environmental
regeneration. |
This concept
is concerned mainly with enabling people to enjoy a better life as the
ultimate goal of human endeavour of living. |
Human development
This concept is concerned mainly with the enabling people to
enjoy a better life as the ultimate goal of human endeavour of living.
The essential choices for people include-
To live a long and healthy life
To acquire better knowledge
To have access to resources needed for a decent standard.
Measurement of Development
In 1990, two economists- Prof. Mehbub Al Haque of Pakistan
and Prof. Amartya Sen of India introduced the concept of Human Development
Index (HDI). Since 1993, UNDP uses HDI to calculate the Human Development.
In the geometric mean of normalized indices for each of the
three dimensions.
Long and healthy
Knowledge
A decent standard of living
Life Expectancy Index
Calculated from Life expectancy at birth.
Education Index
Calculated from mean years of schooling and expected years
of schooling.
Income Index
Calculated from GNI per capita (PPP USD)
Income Index
Calculated from GNI per capita (PPP USD)Types of unemployment
Involuntary unemployment (9 types)
Open unemployment-
It is a situation where in a large section of the labour
force does not get a job that may yield them regular income. People are able to
work and are willing to work but there is no work for them.
This may be because of multiple factors.
Thought process by SB- How is that
possible? It may be possible for a culture like Britain where all they know is
to hurt nature and fill their pockets. They have not learnt to respect mother
nature and the source of love and joy that comes to them free of cost. But, how
can that happen in India too? We know how to respect our mother nature and
lovingly harness every gift from her. We were never unemployed before the
British besmirched our pure minds with their dehumanizing, disrespectful ways. Then
do we really need to think about unemployment when Jharkhand has unexploited
mineral resources. Even the Mauryans got rich using these minerals but I don’t
think they ever disrespected the tribal population there. Then there were the
British who did the same. And now, even with all that mineral wealth, Jharkhand
is poor. Another example is the erstwhile Bengal province brimming with wealth
and trade before the British carried their curse here too. Why did Pandit Nehru
want to develop India along the lines of the sinful British people? Had our
government paid more attention towards developing our farms and fields, we
would again be brimming with wealth. Our cottage industries would prosper at
every home too. Even when the Green revolution graced our land, why did it leave
the eastern and southern parts of mother India untouched? Because Green Revolution
was done in a way that disrespected our Mother Nature. No, Britain’s curse has
to leave my motherland.
Structural
unemployment
Unemployment
arising from the mismatch between the jobs available in the market and the
skills of the available workers in the market.
It means
there are people who are educated and skilled but neither their education nor
their skill has any demand in the market.
Thought process by SB- Gandhiji
had said that the best way to learn something is by doing it. But, alas, there
comes the bottleneck of qualification and degrees. They have remained nothing
more than pieces of paper now, the schools and colleges have become safe havens
of death for students who are forced to go there, young and naïve minds who are
encouraged to go there, and embrace the death of their dreams, intellect, or bodies,
or souls in the worst case. So, there is a startup called ‘Coffee Doon?’
started by two young people in Delhi who have brought a thela and are selling
delicious coffee at a much cheaper rate than Starbucks. They have learned management
and are saying that their startup is teaching them lots more than what their
MBA degree could. And, after we saw MBA degrees selling like hot cakes and
students spending a lot of money to get these degrees, now the MBA degrees are available
100% online. Who has ruined our country? The British or the Prime Ministers?
Frictional unemployment
The time period between jobs when a worker is searching for,
or transitioning from one job to another.
It means a person wants to leave one job and enter another.
The time they took for job hunting or to get a certification course that could
guarantee them the job is called frictional unemployment.
It may be involuntary as well. Because many people leave
their jobs and go to study abroad and then again enter the workforce.
Thought process by SB- Why will
anyone want to leave their job and study anything? There is nothing to leave a
job and go study because studies have failed the youth since the time modern
universities began coming up. Scientific research has not alleviated global poverty,
rather, the British have introduced poverty in India and the big universities
in India like Jadavpur and IITs following the British model have been known
only to rip lives off their own students. Did similar things happen in Nalanda and
Vikramshila? No. Nalanda University produced great monks who and one of them
even cured Bakhtiyar Khilji of a deadly disease when all others failed. Which
AIIMS or any other medical college for that matter ever been able to cure cancer?
Why did Covid claim so many lives when these universities never had a dearth of
students and alumni? It is all a lie. Do that work which makes you feel happy
and never stop doing it. If you want to learn something then learn while doing
the work.
Cyclical unemployment
It occurs because of cyclical fluctuations in the economy,
which are phases of boom, recession, depression and recovery.
Representation of the phases of a
business cycle.
Question
by SB – Why does this boom and depression happen? Is it because of Covid? Let
us grow our own food and become self-sufficient.
Under employment
A situation where employed people
are contributing to production less than they are capable of.
Example-
A person wants a full time job but
only part time jobs are available.
A person has a lot of skills, they
know coding, but they are working as a bank clerk.
A firm has hired overqualified employees.
An employee is underpaid.
Disguised unemployment
When more people are engaged in a
job than actually required, a state of disguised unemployment is created.
Example- Most people live in rural areas in India. There is
a plot of land where if ten people work then there will be very good harvest.
But, the family has twenty people and every one is involved in agricultural
activities. The yield of the farm does not increase but ten people are excess
and they could be employed elsewhere. So, the income of this family could increase
if ten people worked elsewhere and the other ten worked in the farm. But, this
does not happen so it is called disguised unemployment.
Another example- There is a field and only 10 people are needed
to cultivate it. The owner of the field is ready to invest only Rs 1000 for the
entire season for labour expenses. If 15 people are ready to work for the field
then the owner of the field employees them all and is ready to pay a total
amount of Rs 1000 only. So, each person will earn less in this case. If the surplus
five persons could be employed elsewhere then the cumulative income of these 15
people will be higher in this case.
Thought process by SB- Improve agricultural
techniques. India can be a major exporter if the yield of the farm can be
increased by further Research and Development. And, it is also possible that
the by products of agriculture are used to produce some other products like
compost or biogas for dairy farms. GDP will increase and no one will have to
leave the comfort of their village homes. Besides, if the GDP of villages rise
then it will raise the living standard of the people and the villages will
develop.
Seasonal unemployment
It occurs only during seasonal months of the year. In India,
it is very common in agriculture sector.
Example-
In agricultural sector, people find a lot of employment
during the peak season or harvest season and there is very little employment
during other parts of the year.
People who make diyas have
a lot of work during Diwali but they do not have much work during other
parts of the year.
Thought process by SB- There
should be government funded schools where they teach children a lot of skills like
pottery, weaving, tailoring, etc. Each course should be so personalized that a
child after finishing a course is able to find various kinds of work throughout
the year because peak season of one sector precedes the peak season of another.
Voluntary unemployment
Government does not take care of it.
Demographic dividend-
Demography is related to population. Dividend is related to
profit.
Consider this example:
Case 1: There is a family of four members. The mother,
father, son and daughter are all working. So, they are supposed to be financially
more well off.
Case 2: There is a family where only the father is working
and mother is taking care of her two children. So, they are supposed to be
financially less well off.
Similar is the concept for a country. In a country, if there
are more people who are working then it is considered to be financially more
well off. India’s example is important because the Indian population is mainly young
and come in the working age group.
Thought process by SB- Japan
does not have the concept of retirement but the concept of ikigai does work
there. Britain has the concept of retirement and no concept of ikigai. Is it proper
to assume that only those people who fall in the working age group contribute
to the GDP? This concept of a working age group is valid only for those countries
which follow the model of treating humans like machines and their intellect
like AI. The countries like Britain lack the basic necessities of life. They
are neither physically nor emotionally well off. Most of all, there is the
concept of production by destroying nature and treating the workforce like a
bunch of people without any demand for satisfaction of emotions. Is it still
proper to allow set up factories which produce money but that money destroys
both the owner of the factory and the workers who help build it and its
consumers as well. The example of Lays and Jhuri Alu Bhaja are good contradictions.
While Jhuri alu bhaja is healthy and the maker does not try to hurt its customers
only to make profits, the makers of lays know that what they produce is
unhealthy. That is why Lays company has to hire celebrities to market it but
the age old Indian recipe does not need to spend a penny for its advertisement.
It is a staple at any Bengali bhoj or feast. So, what more parameters need to
be considered? There is a lot and lot to add in the study of working age, GDP,
employment, unemployment, etc.
MGNREGA has been started to make sure that people get assured
work for 100 days. It was made as an effort to alleviate seasonal unemployment
so that people might get employment even for hundred days when it is not the
peak season in their area of employment. Demerit- People have made it another
kind of seasonal unemployment. They are working only for these hundred days and
not working for the other days of the year.
Casual unemployment
It is a kind of unemployment occurring due to short term
contracts, which are terminable any time. This happens when the workers are
employed on a day to day basis.
It happens in industries such as building construction,
catering, or agriculture, where workers are employed on a day-to-day basis,
there are chances of casual unemployment occurring due to short term contracts,
which are terminable any time.
Example- ola drivers, gig workers
Chronic unemployment
It refers to prolonged unemployment in the economy. It
happens due to the long tern unemployment persisting in the economy.
Rapid growth of population and inadequate level of economic
development on account of vicious circle of poverty are the main causes for
chronic unemployment.
Open unemployment
means when a lot of people in the economy are facing unemployment. Open
unemployment extending the country for a prolonged period of time is called
Chronic unemployment.
Jobless economic growth was a fear for India few years back.
It was feared that India would fall into a the trap of chronic unemployment.
Rapid growth of population and inadequate level of economic
development on account of vicious circle of poverty are the main causes of
chronic unemployment.
Cyclical unemployment and cyclical unemployment are different-
Cyclical unemployment is related to the business cycle, it
is not dependent on any season or any other environmental or cultural factors
like the crop cycle or the festive season. Again, seasonal unemployment is related
to these environmental and cultural factors. It is not related to the business
cycle.
Unemployment rate formula
U= (Unemployed people/Labour force)*100
Labour force does not include voluntary unemployment.
Natural unemployment rate
It is the minimum unemployment rate resulting from real or
voluntary economic forces.
It reflects workers moving from job to job, to number of unemployed
replaced by technology, to those lacking skills to gain employment.
In the long run, the economy moves towards this rate.
100% employment is not possible in any economy because of
natural unemployment rate.
This is the acceptable rate of unemployment. There is no
such ideal percentage for it but even if there is proper economic growth, job generation,
skills are imparted to the workforce even then this will remain so it is
acceptable.
Thought process by SB- It is
possible to attain 100% employment if people have the freedom to work and join
those professions which makes them happy and professions for which they have
genuine respect. No one has any respect for the post of an IAS officer, for
instance, yet just take a look at the crowd of aspirants at Mukherjee Nagar
alone. If everyone respects their job then AI will aid them and not threaten to
replace them. Make AI a staple for every life. It is the best if someone can
make AI tools and if one can just learn to use AI then it is as good.
Unemployment- relation with inflation
The Philips curve is an economic theory that inflation and unemployment
have a stable and inverse relationship.
It was developed by William Phillips which claims that with
economic growth comes inflation, which in turn should lead to more jobs and
less unemployment.
Explanation- It says that if the cost of a samosa was Rs. 10
and it was increased to Rs. 15 then it means that the demand of samosas had increased.
It means the income of people had seen a rise. It means a decrease in
unemployment.
This theory was published in 1958 according to datea
collected from Britain.
This concept guided the macroeconomic policy in the 20th
century but was called into question by stagflation of the 1970s in the USA.
Then Economists developed a new concept from the Phillips
Curve, called as LONG RUN PHILLIPS CURVE.
Thought process by SB- People
will get richer and buy up a lot and die unsatisfied. O Krishna, let me walk out
of this vicious cycle and lead my country out of it too.
Stagflation
The economic growth comes to a standstill but the prices of
commodities and services keeps increasing.
Stagflation challenges Philllips curve.
The Phillips curve which was accepted during the fifties failed
in the later decades when stagflation hit. So, the Phillips curve was renamed
as the SHORT RUN PHILLIPS CURVE. It means that the Phillips Curve is valid only
for a short period of time.
What are the causes of unemployment?
1.
Lack of education/skills: Huge workforce
associated with informal sector due to lack of required education/skills, which
is not captured in any employment data. For example: Domestic helpers,
construction workers, etc.
2.
Issues regarding joint families: In big joint
families having business, many such people will be available who are not
employed and depend on the joint income of the family.
3.
Rapid growth of population: Constant increase in
population has been a big problem in India. As with an increase in the labour force, the rate of
unemployment also increases due to the unavailability of required jobs.
4.
Dominance of agriculture: Still in India nearly
half of the workforce is dependent on agriculture and agriculture is still underdeveloped
in India. Also, it provides seasonal employment.
Many people have very small plots of
cultivable lands and others have large plots of land.
Thought process
by SB- I could not find a more ridiculous reason for unemployment because we
live in India, not Britain. And, honestly, the economic development of India
cannot mirror that of Britian. The reason is loud and clear- Britain plundered
barbarically and stole wealth by the dirtiest methods from lands like Mother
India and developed its industries. They even forced the Indians to buy their goods
and led to the largescale closure of Indian industries. India was
industrialized more that Britain’s wildest dreams before the Battle of Buxar.
Ask any silk weaver from Murshidabad or Dhaka who witnessed the war. India
developed her cottage industries and prospered not because of looting and
plundering and being uncivilized in other foreign lands but by her own fertile
lands and rich source of knowledge. Even when the Muslims came to India, they
relied on our Sanatan tradition to give them wealth by every moral or immoral
means. Britain was poor when primary sector prevailed there, India was rich
when the primary sector prevailed here. Oh Krishna, what are these economists
thinking about?
5.
Defects in education system: Jobs in the
capitalist world have become highly specialized but India’s education system does
no provide the right training and specialisation needed for these jobs. Thus,
many people who are willing to work become unemployed due to lack of skills.
How is unemployment measured in India?
National Sample Survey Office (NSSO), an organization under
the Ministry of Statistics and Program Implementation (MoSPI) measures
unemployment in India on the following approaches:
1.
Usual status approach: This approach estimates
only those persons as unemployed who had no gainful work for a major time
during the 365 days preceding the date of survey.
2.
Weekly status approach: This approach records only
those persons as unemployed who did not have gainful work even for an hour on
any day of the week preceding the date of survey.
3.
Daily status approach: Under this approach, the
unemployment status of a person is measured for each day in a reference week. A
person who has no gainful work even for 1 hour in a day described as
unemployment for that day.
Thought process by SB- What is
gainful work? Please define it. If earning money in the form of cash is gainful
work then is working for a cigarette factory gainful work too? If so, then why is
the money earned from illicit activities not considered as gainful work? Working
for the fast-food industry, fast fashion industry, and cracker industry too is
considered gainful work. It is a surprise to me and I am confused. I don’t
understand what gainful work means.
Measuring Poverty
A common method used to estimate poverty in India is based
on the income or consumption levels.
If the income of consumption for any household falls below a
given minimum level, then the household is said to be Below Poverty Line.
Thought process by SB: When the
uncivilized western people arrived in the lush green and happy land of Asians,
the Asians asked- Sir, my forest fulfils all my needs then why do I need cash?
What is income and what to buy? Refrigerators or matkas? I opt for the latter.
How much then do I need to earn for my well being? And how much do I need to
earn to give myself a sore throat using refrigerated cold water and then buy medicines
for pneumonia? Hare Krishna.
Poverty line estimation in India is based on the consumption
expenditure and not on the income levels, due to reasons like variation in
income, additional income and data collection methodologies.
It is difficult to collect income of individuals because
many people have multiple or odd jobs. So, India measures how much a person can
spend.
Pre Independence Poverty Estimation
1901
Dadabhai Naoroji through his book, ‘Poverty and Unbritish
Rule in India’ made the earliest estimation of poverty line (16 to 35 per capita
per year).
It was based on the cost of a subsistence or minimum basic diet
(rice of flour, dal, mutton, vegatables, ghee, vegetable oil, and salt.)
1938-
The Indian leaders had realized that they could oust the
Britishers from India in the near future.
National Planning Committee was set up by Subhas Chandra
Bose under the chairmanship of Jawaharlal Nehru for the purpose of drawing up
an economic plan with the fundamental aim to ensure an adequate standard of
living for the masses.
This committee devised a poverty line (ranging from 15 to 20
per capita per month).
It was based on a minimum standard of living perspective,
where nutritional requirements were important.
1944- Bombay plan
The Indian leaders were prepared that the British would be
thrown out of India any moment.
The Bombay Plan (1944)
proponents suggested the poverty line of 75 per capita per year.
This line was much higher than that of the National Planning
Committee.
The Bombay Plan was set of a proposal of a small group of
influential business leaders in Bombay for the development of the
post-independence economy of India.
The name Bombay Plan was brought together by various
businessmen based on Bombay.
Post-Independence Poverty Estimation
Expert Committees
Planning Commission Working Group (1962)
It was a working group constituted by the Planning Commission.
It formulated the separate poverty lines for rural and urban
areas (20 and 25 per capita per year respectively), without any regional
variation.
The poverty line excluded expenditure on health and
education, both of which, were to be provided by the State.
Many people called Bapu a Sri
Vishnu avatar to which I agree as well. The problem is when you do not respect
Narayan, Vishnu-priya, Maa Laxmi is highly offended. So, when these Indian
leaders did not listen to Bapu, did not try to uplift the villages, cut down
villages and built industries drawing the anger and curse of the tribals who
had called them home and were inseparable from them, Maa Laxmi refused to grace
our country too. Had Pt. Nehru ever listened to Bapu, followed his Nai Talim
instead of CBSE and the other curricula, had he laid more importance to the
revival of Pre-barbarian-threatened Bharat Mata, revived Sanskrit education,
followed ‘back to the Vedas’, listened to our sacred figures, Bapu would be so
pleased and Vishnu-priya, Maa Laxmi would grace us again too. I agree to walk
away far, far away from all this.
Government schools and hospitals
failed completely because these teachers and doctors have their own families
too. Who wants to be loyal and faithful to an employer who does not care for
you? Bapu had said something about India living in her villages. Rapid growth
of urban areas and industries along the model of the dirty industrial revolution
of the British instilled a deep sense of neglect into Indian villages where
India herself lives. So, these teachers and doctors employed by the government itself
never hesitated to steal and make the entire system corrupt again.
VM Dandekar and N Nath (1971)
They both were of the view that poverty line must be derived
from the expenditure that was adequate to provide 2250 calories per day in both
rural and urban areas.
They found poverty lines to be Rs. 15 per capita per month for
rural households and Rs. 22.5 per capita per month for urban households at
1960-61 prices.
Expenditure based Poverty line estimation, generated a
debate on minimum calorie consumption norms.
They made the first systematic assessment of poverty in India,
based on National Sample Survey (NSS) data.
Alagh Committee (1979)
Official poverty counts began for the first time in India based
on the approach of this Task force.
Poverty line was defined as the per capita consumption
expenditure level to meet average per capita daily calorie requirement of 2400
kcal per capita per day in rural areas and 2100 kcal per capita per day in
urban areas.
Based on 1973-74 prices, the Task Force set the rural and urban
poverty lines at 49.09 and Rs. 56.64 per capita per month.
Lakdawala Committee (1993)
This Task Force was chaired by DT Lakdawala.
It did not redefine the poverty line and retained the separate
rural and urban poverty lines recommended by the Alagh committee at the
national level based on minimum nutritional requirements.
However, it disaggregated them into state-specific poverty
lines in order to reflect the inter-state price differentials.
Over the years, this
method lost credibility.
Lakdawala committee introduced the idea of state specific poverty lines. It is because food consumption is differnt in different states. In coastal areas, there is more consumption of fish while in other areas, there is so much consumption of vegetables.
But, this method lost credibility because it is difficult for any government to maintain the data for so many different states. It was difficult to make the prediction.
Suggestions made by Lakdawala committee-
Consumption expenditure should be calculated based on calorie consumption as earlier.
State specific poverty lines should be constructed and these should be updated using the CPI-W in urban areas and CPI-AL in rural areas.
CPI-W is for the workers because the workforce is mainly those of workers in the urban areas.
CPI-AL is for the agricultural labour in the rural areas.
Discontinuation of scaling of poverty estimates based on National Accounts Statistics.
Poverty Gap is defined as the difference between the poverty line and actual income level.
This reference can be drawn from the Laurence curve.
Tendulkar Committee-
Chaired by Suresh Tendulkar.
Constituted by Planning Commission.
Expert group was constituted to review methodology for poverty estimation and to address the shortcomings of the present methods.
It submitted its report in the year 2009.
Recommendations of Tendulkar Committee
It recommended a shift away from basing the poverty lines from calorie norms, towards target nutritional outcomes instead.
It recommended a uniform all India urban poverty line baskets (PLB) across rural and urban India, instead of two separate PLBs for rural and urban poverty lines.
It recommended using Mixed Reference Period (MRP) based estimates, as opposed to Uniform Reference Period (URP) based estimates used in earlier methods for estimation of poverty.
It recommended incorporation of private expenditure, health and education while estimating poverty.
This was a major shift because before this Committee was set up, health and education were not included in the estimation of poverty lines. But, 2005 onwards, the Tendulkar Committee gave a recommendation to include health and expenditure as a part of the private sector expenditure as well.
It validated the poverty lines by checking the adequacy of actual private consumption expenditure per capita near the poverty line on food, education and health by comparing them with normative expenditures consistent with nutritional, educational and health outcomes respectively.
Instead of monthly household consumption, consumption expenditure was broken up into per person per day consumption, resulting in the figure of Rs 32 and Rs 26 a day for urban and rural areas.
As a result, the national poverty line for 2011-12 was estimated as Rs 816 per capital per month for rural areas Rs 1000 per capita per month for urban areas.
Now new poverty line came forward after that.
The Tendulkar Committee gave an amount for the poverty line which was too small to even buy any food.
Rangarajan Committee
The government did not take a call on the report of the Rangarajan Committee.
Why was it set up?
Due to widespread criticism of Tendulkar Committee approach as well due to changing times and aspirations of people of India, the Rangarajan Committee was set up.
The idea of building a new India has started from 2000.
Its Recommendations-
It reverted to the practice of having separate all-India rural and urban poverty line baskets and deriving state-level rural and urban estimates from these.
Summary and learning aids
1962> Working group: Rs 20 for Rural and Rs 25 for urban- PER CAPITA PER YEAR
1972> Study by Dandekar and Nath: Rs 15 for rural and Rs 22.5 for urban- per capita per month
1979> Task force on 'Projections of Minimum Needs and Effective Consumption Demand' headed by Alagh: Rs 49.09 for Rural and Rs 56.64 for Urban per capita per month.
1993> Lakdawala Committee: Same as Alagh Committee
2009> Tendulkar Expert Group: Rs 26 for Rural and Rs 32 and for Urban- per Capita per Day
2014> Rangarajan Committee: Rs 32 for rural and Rs 47 for Urban per capita per day
Government schemes
MGNREGA-
It is the largest work guarantee programme in the world.
Launch year- 2005
Ministry- Ministry of Rural development
Primary objective- to guarantee 100 days of employment in every financial year to adult members of any rural household willing to do public work related manual work.
Now, it is being extended to 150 days in the drought prone areas.
The MGNREGA provides a legal guarantee for one hundred days of employment in every financial year to adult members of any rural household wiling to do public work related to unskilled manual work at the statutory minimum wage.
Features-
Roughly one third of the stipulated work force must be women.
The employment will be provided within a radius of 5 km: if it is above 5 km extra wage will be paid.
Within 15 days of submitting the application or from the day work is demanded, wage employment will be provided to the applicant.
Right to get unemployment allowance in case employment is not provided within fifteen days of submitting the application or from the date when work is sought.
Receipt of wages within fifteen days of work done.
Implementation-
Social audit of MGNREGA is mandatory, which lends to accountability and transparency.
The Gram Sabha is the principal forum for wage seekers to raise their voices and make demands. It is the Gram Sabha and the Gram Panchayat which approves the shelf of works under MGNREGA and fix their priorities. (Decentralization when a central govt scheme is helped to be implemented by the gram panchayat.)
MGNREGA provides 'green' and 'decent' work.
Their work should not cause pollution or their lives should not be at risk because of such work.
MGNREGA works address and climate change vulnerability and protect the farmers from such risks and converse natural resources.
It was created to combat seasonal unemployment but it has also become a reason behind seasonal unemployment. Why? Because many people rely only on MGNREGA and don't do any other work during the year.
Thought process by SB- Seasonal unemployment is a big problem but think of Falguni Pathak. She gets work only during the Navratri season and earns a few crore rupees. A seasonally unemployed crorepati!
Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
It is India's largest Skill Certification sheme
It was launched on 15th July, 2015- World Youth Skills Day.
Ministry- Ministry of Skill Development and Entrepreneurship
Aim- To encourage and promote skill development in the country by providing free short duration skill training and incentivizing this by providing monetary rewards to youth for skill certification.
Key components-
Short term training
Special projects
Recognition of prior learning (RPL)- If someone has a prior experience and wants to get a certificate then they need not go through any additional course, they just need to prove their ability and earn the certificate.
Kaushal and Rozgar Mela- Rozgar mela is like a job fair.
In line with the scheme objectives, the scheme is applicable to any candidate of Indian nationality-
An unemployed youth, college/school dropout
With a verifiable identity proof- Aadhar/Voter id and a bank account.
Implementation-
The scheme would be implemented through National Skill Development Corporation (NSDC).
In addition, Central/State Government affiliated training providers would also be used for training under the scheme.
All training providers will have to register on the SMART portal before being eligible for participating under this scheme.
Training would include soft skills, personal grooming, behavioral change for cleanliness, good work ethics.
Sector skill Councils and the State governments would closely monitor skill training that will happen under PMKVY.
Atal Pension Yojana
It is for poverty alleviation. Old people cannot work and if their families may or may not support them. It is mainly for people who have worked in the unorganized sectors.
Implementation- 1st June, 2015
The scheme aims to provide monthly pension to eligible subscribers not covered under any organized pension scheme.
APY is open to all bank and post office account holders in the age group of 18 to 40 years.
Under APY, any subscriber can opt a guaranteed pension of Rs 1000 to Rs 5000 (in multiples of Rs 1000) receivable at the age of 60 years.
The contributions to be made vary based on pension amount chosen. The key features of APY are as under:
The APY is primarily focused on all citizens in the unorganized sector, who join the NPS. However, all citizens of the country in the eligible category may join the scheme.
Any Indian Citizen between 18-40 years of age can join through their savings banks account or post office savings bank account.
Minimum pension of Rs 1000 or Rs 2000 or Rs 3000 or Rs 4000 or Rs 5000 is guaranteed by the government of India to the subscriber at the age of 60 years with a minimum monthly contribution (for those joining at age 18 of Rs 42 or Rs 84 or Rs 126 or Rs 168 and Rs 210 respectively).
After the subscriber's demise, the spouse of the subscriber shall be entitled to receive the same pension amount as the subscriber until death of the spouse.
If both the spouse and the subscriber dies then the govt will transfer the entire amount to their nominees.
After the demise of both the subscriber and the spouse, the nominee of the subscriber shall be entitled to receive the pension wealth, as accumulated till age 60 of the subscriber.
The subscribers in the eligible age, who are not income-tax payers and who are not covered under any statutory social security scheme, are entitled to receive the co-contribution by Central Govt of 50% of the total prescribed contribution, upto Rs. 1000 per annum, and this will be available for those eligible subscribers, who join APY before 31st March, 2016. The Central govt co-contributon shall be available for a period of 5 years, ie, from FY 2015-16 to 2019-20.
If the actual returns during the accumulation phase are higher than the assumed returns for minimum guaranteed pension, such excess will be passed on to the subscriber.
The contributions can be made at monthly/quarterly/ half yearly intervals through auto debit facility from savings bank account/ post office savings bank account of the subscriber. The monthly/quarterly/half yearly contribution depends upon the intended/ desired monthly pension and the age of subscriber at entry.
PM Suraksha Bima Yojana
launched iin 2015.
Insurance scheme
It helps in poverty alleviation- Many people are just above the poverty scheme and if they have any emergency reasons then these people can easily fall below the poverty line.
The coverage under the scheme is Rs 2 lakh for accidental death and full disability and Rs 1 lakh for partial disability.
The premium of Rs 20 per annum is to be deducted from the account holder's bank/ Post office account through 'auto-debit' facility in one instalment.
Ministry- Ministry of Finance
The Scheme is being offered by Public Sector General Insurance Companies or any other General Insurance Company who are offering the product on similar terms with necessary approvals and tie up with Banks and Post Offices for this purpose.
This scheme is available to people in the age group 18-70 years with a bank/ Post office account who give their consent to join/enabling debit on or before 31st May for the coverage period 1st June to 31st May on an annual renewal basis.
Aadhar would be the primary KYC for the bank account.
Sustainable Development and Environmental Issues
Development that will allow all future generations to have a potential average quality of life that is at least as high as that which is being enjoyed by the current generation.
The focus of sustainable development is far broader than just the environment.
Its also about ensuring a strong, healthy and just society.
Meeting the diverse needs of all people in existing and future communities.
Promoting personal wellbeing
Social cohesion and inclusion
Creating equal opportunity.
thought process by sb- the only form of development is sustainable development. Those who think otherwise are the chicken littles, the sky is always falling on their heads. The sky to them falls on their heads when they dont earn money and it also falls when they are.
If sustainable development focuses on the future, does that mean we lost out now?
Not necessarily.
Sustainable development is about finding better ways of doing things, both for the future and for the present. We might need to change the way we work and live now, but this does not mean quality of life will be reduced.
Sustainable development-
Development that meets the needs of the present generation without compromising the ability of the future generation to meet their own needs.
Environment and economy are interdependend and need each other. Hence, development that ignores its repercussions on the environment will destroy the environment that sustains life forms.
The concept of sustainable development was emphasized by UN Conference of Environment and Development (UNCED).
There are three pillars of sustainable development-
Economic
Social
Environmental
Viability comes from the combination of environment and economy.
Equitablity comes from the combination of economic and social (It refers to justice.)
Bearability comes from the combination of environment and social- A lot of people are displaced for the building of dams. It may not be bearable to them.
Environmental sustainability is the ability of the environment to support a defined level of environmental quality and natural resource extraction rates indefinitely.
Social sustainability is the ability of a social system, such as a country, family, or organization, to function at a defined level of social well-being and harmony indefinitely.
Economic sustainability is the ability of an economy to support a defined level of economic production indefinitely.
Since the Great Recession of 2008 this is the world's biggest apparent problem which endangers progress due to environmental sustainability problem.
Sustainable Development Goals
The Sustainable Development Goals (SDG), also called as the Global Goals, were adopted by the UN in 2015, as a universal call-
To action to end poverty
To protect the planet
To ensure that by 2030 all people enjoy peace and prosperity.
The 17 SDGs are integrated- they recognize that action in one area will affect outcomes in others, and that development must balance social, economic and environmental sustainability.
17 Sustainable Development Goals come with 169 targets.
They are integrated and indivisible and balance the three dimensions of sustainable development: the economic, social, and environmental.
Sustainable Development Goals are-
1. No poverty
2. Zero Hunger
3. Good health and well being
4. Quality education
5. Gender equality
6. Clean water and sanitation
7. Affordable and clean energy
8. Decent work and economic growth
9. Industry, innovation, and infrastructure
10. Reduced inequalities
11. Sustainable cities and communities
12. Responsible consumption and production
13. Climate actioni
14. Life below water
15. Life on land
16. Peace, justice, and strong institutions
17. Partnerships for the goals
Sustainable Development Report
The Sustainable Development Goals Report 2022 provides a
global overview of progress on the implementation of the 2030 agenda for
Sustainable development, using the latest available data and estimates.
It tracks the global and regional progress towards the 17
goals with in-depth analyses of selected indicators for each goal.
India was ranked at 121 out of 163 countries.
It was ranked 117 in 2020 and 120 in 2021.
India is not placed well to achieve the Sustainable
Development Goals (SDG) and its
preparedness has worsened over the years in comparison with other countries.
The country continues to face major challenges in achieving
11 our of the 17 SDGs.
Ensuring decent work (SDG 8) has become more challenging.
But India is on track to achieving SDG13 on climate action.
Thought process by SB- The cover
of 2022 report shows a mid-Aged Indian woman (She is wearing a saree) standing
knee deep in flood water. Actually, no one is going to do anything about it.
All talks of environment by the barbaric Western culture is only a way to
safeguard itself from global wrath and malign the image of India to prove their
superiority. No one else is as greedy as them.
17 SDGs and 169 targets
Important
conventions, alliances, and protocols
IUCN
is the world’s oldest and largest global environmental organization, founded in
1948.
It
is the largest professional global conservation network with more than 1200
member organizations including 200+ government and 900+ non-government
organizations.
Headquarter:
Gland, Switzerland.
Key
functions: Conserving biodiversity is central to the mission of IUCN. The main
areas of function are:
Science-
the IUCN Red List of Threatened Species.
Action-
hundreds of conservation projects all over the world.
Influence-
through the collective strength of more than 1200 government and
non-governmental member organizations.
International
Organizations are:
IPCC
IUCN
UNEP
GEF
GCF
International
Union for Conservation of India
IUCN
is the world’s oldest and largest global environmental organization, founded in
1948.
It
is the largest professional global conservation network with more than 1200
member organizations including 200+
government and 900+ non-government organizations.
Headquarter-
Gland, Switzerland
Key
functions: Conserving biodiversity is central to the mission of IUCN. The main area
of function are:
Science:
the IUCN Red List of Threatened Species
Action:
hundreds of conservation projects all over the world
Influence-
through the collective strength of more than 1200 government and non-government
member organizations.
Organizations and headquarters
Green
Climate Fund- Incheon City, Korea
Green
environment facility- Washington, USA
UNEP-
Nairobi, Kenya
IPCC-
Geneva, Switzerland
IUCN-
Gland, Switzerland
Intergovernmental
Panel on Climate Change
Established
in 1988 by two UN organizations- World Meteorological Organization (WMO) and UNEP.
Later
endorsed by UNGA.
HQ-
Geneva, Switzerland
Key
Functions-
The
IPCC produces reports that support the UN Framework Convention on Climate
Change (UNFCCC).
IPCC
reports cover all relevant information to understand the risk of human-inducted
climate change, its potential impacts and options for adaption and mitigation.
The
IPCC does not carry out its own original research.
Thousands of scientists and other experts contribute on a voluntary basis.
UN
Environment Programme (UNEP)
It
was founded as a result of the UN Conference on the Human Environment (Stockholm
Conference) in 1972.
Headquarter:
Nairobi, Kenya
Key
Functions:
It
coordinates UN’s environmental activities, assisting developing countries in
implementing environmentally sound policies and practices.
Its
activities cover a wide range of issues regarding the atmosphere, marine and
terrestrial ecosystems, environmental governance and green economy.
UNEP
has also been active in funding and implementing environment related development
projects.
It
has aided in the formulation of guidelines and treaties on issues such as the international
trade in potentially harmful chemicals, transboundary air pollution, and
contamination of international waterways.
It is
also one of several implementing agencies for the Global Environment Facility (GEF)
and the Multilateral Fund for the Implementation of the Montreal Protocol.
Global
Environment Facility
Established
in October 1991 during Rio Earth Summit.
It
was established as a $1 billion pilot program in the World Bank to assist in
the protection of the global environment and to promote environmental sustainable
development.
Headquarter:
Washington
Key
functions-
It
unites 183 countries in partnership with international institutions, civil
society organizations (CSOs), and the private sector to address global
environmental issues while supporting national sustainable development
initiatives.
It
provides grants for projects related to biodiversity, climate change,
international waters, land degradation, the ozone layer, and persistent organic
pollutants.
Green
Climate Funds
Established
by 194 countries party to the UN Framework Convention on Climate Change in
2010.
It
was designed as an operating entity of the Convention’s financial mechanism.
It
is governed by a 24 Board member Board, representing countries, and receives
guidance from the Conference of the Parties to the Convention (COP).
It
aims to support a paradigm shift in the global response to climate change.
Headquarter-
Republic of Korea
Key
functions
It
allocates its resources to low-emission and climate-resilient projects and
programmes in developing countries.
The
Fund pays particular attention to the needs of societies that are highly
vulnerable to the effects of climate change, in particular Least Developed Countries
(LDCs), Small Island Developing States (SIDS), and African States.
Though process by SB: A most developed place is the one which
has done the barbaric plundering, first physically and now mentally. A least
developed place is the one which has been plundered but it also means that it
has a very good potential to grow. Just look at the great and mighty barbarian
they call England before the times of Elizabeth the first. Spain plundered
America, Britain plundered India and even America. I cannot agree with this
terminology of developed and less developed because the ‘developed’ are falling
under their own weights. There is a difference between Dhan and Laxmi. This has
to be mitigated and the order of Krishna’s karuna has to be restored everywhere.
Important
Conventions, Alliances and Protocols
A convention
begins as an international meeting of representatives from many nations that
results in general agreement about procedures or actions they will take on
specific topics (eg. Wetlands, endangered species, etc)
Ramsar
convention- on Wetlands
Stockholm
convention- on persistent organic pollutants
Convention
on Biological Diversity (CBD)
Important
conventions, protocols, and treaty
A
protocol is an agreement that diplomatic negotiators formulate and sign as the
basis for a final convention or treaty. The treaty itself may not be completed
for many years.
Montreal
Protocol
Kyoto
Protocol
Cartagena
Protocol on Biosafety
Nagoya
Protocol
A
treaty is an agreement where the parties to it negotiate to reach common ground
and avoid further conflict or disagreement.
It
is normally ratified by the lawmaking authority of the government whose
representative has signed it.
UNCED
CBD
TRAFFIC
UNFCCC
CITES
The UN Conference on Environment and Development
(UNCED) is also called ‘Earth Summit’, was held in Rio de Janeiro, Brazil, in
June, 1992.
It
was held on the occasion of 20th anniversary of the first Human Environment
Conference on Stockholm, Sweden (in 1972).
It
brought together political leaders, diplomats, scientists, representatives of the
media and NGOs from 179 countries for a massive effort to focus on the impact
of human socio-economic activities on the environment.
Outcomes
of the Earth Summit-
It
concluded that the concept of sustainable development was an attainable goal
for all the people of the world, regardless of whether they were at the local,
national, regional or international level.
Agenda
21: It was adopted by more than 178 Governments at UNCED.
It
is a comprehensive plan of action to be taken globally, nationally, and locally
by organizations of the United Nations System, Governments, and Major Groups in
every area in which human impacts the environment.
Achievements
of UNCED
1. Kyoto Protocol: It
operationalizes the UN Framework Convention on Climate Change by committing
industrialized countries and economies in transition to limit and reduce
greenhouse gases (GHG) emissions in accordance with agreed individual targets.
The
Kyoto Protocol was adopted on 11 Dec 1997. Owing to a complex ratification
process, it entered into force on 16 Feb 2005. Currently, there are 192 Parties
to the Kyoto Protocol.
2. World Oceans Day: The idea
for World Oceans Day was first presented during this conference, and it has
been celebrated ever since on June 8. Theme for the year 2022- “Revitalization:
collective action for the ocean”.
3. Convention on Biological
Diversity
4. UNFCCC
UN
Framework Convention on Climate Change(UNFCCC)
It
is the UN entity tasked with supporting the global response to the threat of
climate change.
·
The UNFCCC, signed in 1992 at the Earth Summit.
·
It entered into force on March 21, 1994.
·
The Convention has near universal membership (197 parties)
and is the parent treaty of the 2015 Paris Agreement.
·
The original secretariat was in Geneva. Since 1996, the
secretariat has been located in Bonn, Germany.
It
is for reductions in greenhouse gas emissions, that all countries that signed
the UNFCCC were asked to publish in the lead-up to the 2015 UN Climate Change
Conference held in Paris, France in December 2015.
·
INDCs are the post-2020 climate action commitments by parties
to increase the ability to adapt to the adverse impacts of climate change and
foster climate resilience and low greenhouse gas emissions.
·
INDCs are the primary means for governments to communicate
internationally the steps they take to address climate change in their own
countries.
·
They reflect each country’s ambition for reducing emissions,
taking into account its domestic circumstances and capabilities.
Convention on Biological Diversity (CBD)
Another
key agreement adopted at Rio was the Convention on Biological Diversity.
The
Convention on Biological Diversity is the international legal instrument for “the
conservation of biological diversity, the sustainable use of its components and
the fair and equitable sharing of the benefits arising out of the utilization
of genetic resources” that has been ratified by 196 nations.
India
is also a party to the Convention and ratified this convention in 1994.
TRAFFIC
TRAFFIC
is an acronym for Trade Records Analysis of Flora and Fauna in Commerce.
It
is a collaboration initiative of WWF and IUCN.
TRAFFIC
International, is centered in Cambridge, UK.
Since
its inception, TRAFFIC has expanded to become the largest wildlife trade monitoring
program in the world and a leading authority on issues related to wildlife trade.
It
is a non-governmental organization that works closely with governments and the
Convention on International Trade in Endangered Species of Wild Fauna and Flora
(CITES) Secretariat to carry out its activities.
CITES
The
Convention on International Trade in Endangered Species of Wild Fauna and Flora
(CITES) is an international agreement to which States and regional economic
integration organizations adhere voluntarily. Currently there are 184 Parties (include
countries or regional economic integration organizations).
Aim:
To ensure that international trade in specimens of wild animals and plants does
not threaten their survival.
The
CITES Secretariat- administered by UNEP and is located at Geneva, Switzerland.
It
plays a coordinating, advisory and servicing role in the working of the
Convention (CITES).
The
Conference of the Parties to the CITES, is the supreme decision-making body of
the Convention and comprises all its parties.
Although
CITES is legally binding on the Parties, it does not take the place of national
laws.
Rather,
it provides a framework to be respected by each Party, which has to adopt its
own domestic legislation to ensure that CITES is implemented at the national
level.
Organizations
and Headquarters
CITES-
Geneva, Switzerland
TRAFFIC-
Cambridge, UK
UNFCCC-
Bonn, Germany
Green
Climate Fund- Incheon City, Korea
Green
Environment Facility- Washington, USA
UNEP-
Nairobi, Kenya
IPCC-
Geneva, Switzerland
IUCN-Gland,
Switzerland
National
Missions
Sustainable
agriculture
Green
India
Energy
Efficiency
Mission
for sustainable habitat
National
Water Mission
Mission
for sustaining the Himalayan Ecosystem
Strategic
Knowledge for Climate Change
National
Solar Mission
What is required for SUPER WRITING
CONTENT>>
STRUCTURE AND LINKING >> TYPING SPEED>> NO GRAMMAR/SPELLING ERROR>> PRACTICE
FORMAT-
Intro>>Body>>Conclusion
Topic
wise-
1. Reforms
2. Challenges
3. Current Developments
4. Reports/Data/Facts
5. Schemes
6. Example
7. Definitions
Q>
GDP of a country cannot be taken as an index of the welfare of the people of
the country. Do you agree with this and why? (10 marks, 400 words)
A> Gross Domestic Product (GDP)
is the total monetary or market value of all finished goods and services
produced within a country’s borders in a specific time period. As a broad
measure of overall domestic production, if functions as a comprehensive
scorecard of the country’s economic health.
It is a good indicator to depict the living conditions of
people in a country, as it includes a number of factors such as consumption and
investment. However, it cannot be taken as an index of the welfare of the
people of a country.
(It is the introduction
portion. It should have a word limit which is 10-12% of the word limit of the
complete answer. The ‘however’ part connects the introduction to the answer
that follows.)
It cannot be taken as an index of the welfare because of the
following reasons-
1. It does not measure equity
in income distribution: If GDP of a country is rising, its social indicators
may not rise as a consequence. This is because rise in GDP may be concentrated in
the hands of a few individuals or firms.
2. Non-monetary exchanges: Many
activities in an economy are not evaluated in monetary terms. For example, the
domestic services that women perform at home are not paid for.
3. Externalities: They refer to
the benefits (or harms) a firm or an individual cause to another or which they
are not paid (or penalised). For instance, while calculating GDP, pollution caused
by industries is not accounted for. So, if we take GDP as a measure of welfare
of the economy, we will overestimate the actual welfare.
4. Type of goods produced:
Since GDP measures the value of all finished goods and services within an
economy, it also includes products that may have negative effects on social
welfare. For example, tobacco, armaments etc. sold and used within the country,
would adversely impact the overall social welfare.
In view of the shortcomings
mentioned above, there have been various attempts to develop more accurate and
reliable indicators in order to measure social well-being. Among others, these
alternative approaches include the HDI, the Gross National Happiness Index (GNH),
and the Social Progress Index (SPI).
Q> India’s
concern with poverty alleviation has mostly been at the rhetorical level.
Explain.
A> Poverty rate can be said to
be stagnant over the period of time. For instance, as per the Lakdawala
committee, the headcount ratio for the year 2004-5 was 27.5% whereas, it was
37.2% as per Tendulkar Committee report. Again, for the period 2011-12, the
headcount ratio was 29.5% as per the report of the Rangarajan Committee. So, it
can be concluded that level of incidence of poverty is somehow stagnant in the
country.
So, the question arises why, despite various measures,
poverty alleviation remained a key challenge for the country.
-
Inadequate resource allocation: Corpus of resources allocated
for these programmes is not sufficient. Moreover, these programmes depend
mainly on government and bank officials for their implementation.
-
Corruption: Officials are ill-motivated, inadequately
trained, corruption-prone and vulnerable to pressure from a variety of local
elites. So, the resources are inefficiently used and wasted.
-
Inefficient implementation: There is also non-participation
of local level institutions in programme implementation.
-
Ignorance of poor: Govt schemes have also failed to address
the vast majority of vulnerable people who are living on or just above the
poverty line. It also reveals that high growth alone is not sufficiently to reduce
poverty. Without the active participation of the poor, successful implementation
of any programme is not possible.
-
Issue of targeting beneficiary: The poverty alleviation
programme may not properly identify and target the exact number of poor
families in rural areas. As a result, some of the families who are not
registered under these programmes are benefited by the facilities rather than
the eligible ones.
-
Rising population: Overpopulation of the country increases
the burden of providing the benefits of the schemes to a large number of people
and thus reduces the effectiveness of the programmes.
-
Lack of potential will: Lack of political will has been a
major hurdle in poverty alleviation. Removing poverty seem to be just a
political propaganda. Various programmes, initiatives are just changed nomenclature
of the earlier ones.
Despite
various strategies to alleviate poverty, hunger, malnourishment, illiteracy and
lack of basic amenities continue to be a common feature in many parts of India.
Though the policy towards poverty alleviation has evolved in a progressive
manner, over the last seven decades, it has not undergone any radical
transformation. Continuous economic growth is a prerequisite for the removal of
poverty. Ultimately, political will is necessary to eradicate poverty from the
country through the implementation of various schemes. Investment in infrastructure,
overall, is needed to reduce the cost of utilities.
Q>
“Union budget is a key policy document that outlines the priorities of the
government”. Comment on it. Also, describe the initiatives announced in Union
Budget for the fiscal year 2023-24 that aims at fostering economic growth and
development.
The
Union Budget refers to the annual financial statement presented by the govt in
the Parliament. It outlines the govt’s revenue and expenditure for the upcoming
financial year, from April 1st to March 31st.
It
serves as a crucial policy document that delineates the govt’s priorities in
light of both immediate and long-term considerations, taking into account
domestic and global economic realities. As India assumes the G20 presidency and
strengthens its position on the global stage, it embarks on a transformative
phase referred to as the ‘Amrit Kaal’.
The
Budget for 2023-24 places great emphasis on the ‘Saptarishi’ approach, which
entails the development of world-class infrastructure and inclusive growth.
It
underscores the significance of-
·
Inclusive development
·
Extending services to the last mile
·
Bolstering infrastructure and investment
·
Unleashing untapped potential
·
Promoting sustainable and environmentally friendly growth
·
Harnessing the power of the youth
·
Strengthening the financial sector
The
Union Budget for the fiscal year 2023-24 introduces several key provisions and
reforms aimed at fostering economic growth and development. These initiatives
include:
·
A substantial 33% increase in the Capital Expenditure (Capex)
outlay, creating a ‘crowing in effect’ to encourage private sector participation.
·
Significantly higher allocations for capital investment in
road, railways, and defense infrastructure, highlighting their strategic
importance.
·
Introduction of a 50 year interest-free loan scheme for
states to boost capital investment, which will contribute to a 4.5% increase in
the share of capital investment in the GDP.
·
Emphasis on urban governance and tax collection reforms,
along with the expansion of urbanization. The establishment of the Urban
Infrastructure Development Fund (UIDF) aims to address infrastructure development
shortfalls in tier 2 and tier 3 cities.
·
Streamlining compliance norms by elimination over 39,000
compliances and repealing 1400 outdated laws. The budget introduces various
reforms to further simplify the compliance process.
·
Special focus on Micro, Small, and Medium Enterprise (MSME)
sectors, with the provision of IT infrastructure and tax-related assistance
through the Udyam portal. Additionally, schemes like Vivad se Vishwas 1 and 2 provide
relief to MSME sectors, and a revamped credit guarantee scheme worth 9000
crores aims to provide collateral free credit of 2 lakh crores to small businesses.
·
Strengthening the IT infrastructure and digital revolution in
India through initiatives like the Unified Payment Interface (UPI) and other
digital initiatives.
·
Transition towards a greener economy through initiatives such
as the National Green Hydrogen Mission, Green Credit Programme, PM-PRANAM, and
GOBARdhan Scheme.
·
Emphasis on environmentally friendly development through the
implementation of India’s “Panchamitra
promise” and the “Lifestyle for Environment or LiFe” strategy.
In conclusion, the Budget for 2023-24, presented
during India’s Amrit Kaal, sets the stage for sustained and sustainable
economic growth. It aims to ensure an affordable and high-quality standard of
living for citizens, aligning with India’s centenary of independence.
Explanation-
A
lot of people who deserve food grains actually die of hunger while due to
faulty registration processes, a rich person may get very cheap food grains. A
lot of food grains get wasted.
The
population is a crisis because people who will implement the benefits for the
poor are just unavailable or mismanaged.
The
poor people are convinced to give their votes by politicians before elections
by tall and eventually unfulfilled promises of poverty alleviation.
Economic
History of India
·
India’s independence was a turning point in its economic
history. Before that, the country was hopelessly poor as a result of steady
deindustrialization by Britain.
·
Less than a sixth of Indians were literate.
·
There existed abject poverty and sharp social difference.
·
India’s share of world income shrank from 22.6% in 1700 –
almost equal to Europe’s share of 23.3% - to 3.8% in 1952.
Former PM Manmohan Singh put it: The brightest jewel in the
British Crown was the poorest country in the world in terms of per capita
income at the beginning of the 20th century.
Thought structure by SB: Baap re! In Congress
wale toh humko bhiksha patra lekar Britain ke samne khada karwa rahe the sirf kuchh
approval ke liye. Britain ka ek hissa hum kabhi hue hi kab? Nehru ji ki jungle
kaato, dooshan karne wale PSU banao humko raas aya hi kab? He Bhagwan! Barbar
akrantaon aur Bharatvarsha ke beech kabhi koi sambandh bana hi kab? Humne nahi
karwaya inka raaj-tilak to Victoria humari rani bani hi kab?
India after Independence (1950-1979)
The Industrial Policy Resolution of 1948 proposed a mixed economy.
First Finance Minister, RK Shanmukham Chetty tabled the
country’s first Union Budget in Parliament on 26 November 1947.
India set up the Planning Commission in 1950 to oversee the
entire range of planning, including resource allocation, implementation and
appraisal of five-year plans.
First five year for the development of Indian economy came
into implementation in 1952.
India’s independence was a turning point in its economic history. Before that, the country was hopelessly poor as a result of steady deindustrialization by Britain.
Less than a sixth of Indians were literate.
There existed abject poverty and sharp social differences.
India’s share of world income shrank from 22.6% in 1700-
Almost equal to Europe’s share of 23.3%- to 3.8% in 1952.
1947-1991-2023 are the important years in the history of
India.
After Independence (1950-1979)
The Industrial Policy Resolution of 1948 proposed a mixed
economy.
First Finance Minister, RK Shanmukham Chetty tabled the
country’s first Union Budget in Parliament on 26 November 1947.
India set up the Planning Commission in 1950 to oversee the
entire range of planning, including resource allocation, implementation and
appraisal of five-year plans.
First five year plan for the development of Indian economy
came into implementation in 1952.
India started the mixed economy system because they neither
wanted to accept capitalism nor socialism. For a capitalist economy, the
private bodies would mainly be responsible to do most of the things which may
or may not be for the welfare of the people. For a socialistic economy, the
state should be rich. But, after independence, the Indian government was not
rich either. So, the concept of a mixed economy was accepted.
This phase of Indian economy saw India investing and making
efforts in various directions. Sometimes
in setting up new industries, sometimes in agriculture, sometimes in the
direction of space research. But, till 1979, India won’t see much economic
growth despite its efforts. The nation will still remain poor till this time.
India’s growth in economy was only 4%. So, mockingly, the
world began to call it the Hindu rate of growth. Those countries whose economies
grew at that rate began to be called the ‘Hindu rate of growth’.
Being largely an agrarian economy, investments were made in
creation of irrigation facilities, construction of dams and laying infrastructure.
Due importance was given to establishment of modern
industries, modern scientific and technological institutes, development of space
and nuclear programmes.
However, despite all efforts on economic front, the country
did not develop at a rapid pace largely due to-
Lack of capital formation
Cold war politics
Defense expenditure
Rise in population
Inadequate infrastructure
From 1951-1979, the economy grew at an annual rate of 1.0
percent per capita.
Industrial growth rate- 4.5 percent
Agriculture growth rate- 3.0 percent
There were three wars that India had to face during this
phase of economic growth –
Two with Pakistan
One with China
Both caused an economic drain in an economy which could not
grow anyway.
Tertiary sector is the major contributor for India’s economy
now but during that time period, the tertiary sector almost did not exist.
The Primary sector is now growing at the same rate at which
it was during that time period so India could not witness much growth.
1980-1990
The rate of growth improved in the 1980s.
From FY 1980-89, the economy grew at an annual rate of 5.5
percent.
Industry grew at an annual rate of 6.6 percent and agriculture
grew at a rate of 3.6%.
A high rate of investment was a major factor in improved
economic growth, which went from about 19% of GDP in the early 1970s to nearly
25 percent in the early 1980.
Private savings had financed most of India’s investment, but
by the mid 1980s further growth in private savings was difficult because they were
already quite a high level.
As a result, during the late 1980s India relied increasingly
on borrowing from foreign sources. This trend led to a balance of payments
crisis in 1990.
India mainly borrowed money from abroad and grew its
industries. The rate of economic growth showed a great rise and crossed the
mocking word, ‘Hindu rate of growth’. But, just a decade later, there was a balance
of payments crisis. Because India was only importing, there were no exports. So, to pay the existing loans,
newer loans had to be taken by the Indian government.
In the year 1991, for the first time, India had to sell 20
tonnes of gold to investment bank USB to secure a $240 million loan.
It pledged gold three more times after that sale, shipping
46.8 million tonnes of the yellow metal to secure $400 million in loans from
Bank of England and Bank of Japan.
All this gold was repurchased by December that year. The
Narasimha Rao led government with Manmohan Singh as Finance Minister took over
on 21st June 1991 and launched a raft of economic reforms.
India was selling her gold to international banks as a
security to accept loans from other countries.
Now, India will go to IMF and World Bank who promised that
India would get help to both repay the old loans and get new ones at one condition-
India would have to open its economy. It paved way for the LPG reforms.
In the year 1991, for the first time, India had to sell 20
tonnes of gold to investment bank UBS to secure a $240 million loan.
It pledged gold three more times after that sale, shipping
46.8 million tonnes of the yellow metal to secure $400 million in loans from
Bank of England and Bank of Japan.
All this gold was repurchased by December that year. The
Narasimha Rao-led government with Manmohan Singh as finance minister took over
on 21st June 1991 and launched a raft of economic reforms.
The Indian government used the be the producer of goods before
the reforms. But, after the reforms, the government no longer remained the
producer and it became a policy maker. It began to encourage people to make
their own produce. So, private bodies now became the producers.
India’s Post -1990 Economic Strategy
Controls and permits that dominated the economic system were
removed.
Role of the state was redefined as a facilitator of economic
transactions and a neutral regulator rather than the primary provider of goods
and services.
It led to-
Moving away from a regime of import substitution.
Integrate fully with the global trading system.
Effect of reforms-
The 1991 reforms unleashed the energies of Indian
entrepreneurs, gave untold choice to customers and changed the face of Indian
economy.
Far from poverty increase, for the first time, there was a
substantial reduction in it.
Agriculture Sector
One of the most important sectors of the Indian economy
remains agriculture.
Its share in the GDP of the country has declined and is
currently at 14%. However, more than 50% of the total population of the country
is still dependent of agriculture.
Thought process by SB: Why just more than 50%?
Even if more than 90% of the Indian economy is dependent on agriculture then India
can grow. However, that agriculture should mainly depend on people who want to
do hydroponics. Neither does it use more space, nor does it use a lot of land.
And, it will make sure that every locality has enough food so that the problem
of transport, cold storage, etc can be mitigated. It will also help fight
hunger because everyone can use their own terrace in their village home to grow
vegetables. The concept still remains the same- villages prosper and produce a
lot of food which then helps to form cities. Cities produce goods and services
which in turn help these villages to prosper. Now, every part of India can be
both a village and a city.
Industry Sector
Another important part of the Indian economy is the Industry
sector.
Changes such as the end of the ‘Permit Raj’ and opening up of
the economy were welcomed in the country with great enthusiasm and optimism.
As a result of these changes, the industrial potential of the
economy has increased since 1991.
Permit Raj- People who wanted to start industries no matter
how small, had to wait for the government permit which rarely ever got approved.
The government thought that if the private players begin to do production then
they will not care about the welfare of the people. So, production processes
should remain under govt control to ensure social well being. But, the scenario
is different now. The present govt wants more and more people to become
entrepreneurs so that they can create jobs for others. He says that one person
should become an entrepreneur and create a job for another person.
Services Sector
The sector that benefited most from the New Economic Policy was
the services sector. Banking, Finance, Business Operation Outsourcing- and most
importantly Information Technology services- have seen double digit growth.
·
Indian IT giants such as Infosys, WIPRO and TCS have made
their mark on the global platform.
·
India, with its huge demographic dividend potential, has
emerged as the IT hub of the world.
·
New employment opportunities are being created in this
sector.
·
Opening of transportation, tourism and medical sectors have led
to the growth of service sector competencies.
·
Considerable improvement in forex reserves.
India
now has one of the largest forex reserves in the world. But, the 1991, the forex
reserve was so dismal that India might not have been able to import petrol for
even two weeks.
Sectors
of our Economy-
Indian
economy first relied on the primary sector but now it is relying on the tertiary
sector. That phase never came when the Indian economy relied mainly on the Secondary
sector. Though the secondary sector of Indian economy is strong now, the main
dependence is on the Tertiary Sector.
Economic Survey 2022-23
GDP forecast for FY24 to be in the range of 6 to 6.8%.
India’s GDP growth is expected to remain robust in FY24.
Private consumtion across H1 highest since FY15.
Boost to production activity leading to enhanced capacity
utilization.
Retail inflation back within RBI’s target range in Nov 2022.
Pickup in private capex.
Indian Retail Performs well compared to other EME’s in Apr-Dec
2022.
Direct Tax collections for the period Apr-Nov 2022 remains buoyant.
Top Performing Sectors of Indian Economy
The adoption of the New Economic Policy in 1991 saw a
landmark shift in the Indian economy, as it ended the mixed economy model and
license raj-system- and opened the Indian economy to the world. An overview of
the top performing sectors of the Indian economy is given below-
1. Agriculture sector
2. Industry Sector
3. Services Sector
Trends
in the primary sector-
Growth
rate of agriculture sector during 2019-20: 5.5% (Agriculture proved to be the
silver lining of our economy during the COVID times because all people were returning
back to their village homes and most other means of employment had seen a
decline. They helped in agriculture during those times.)
But
the growth rate of the economy has been around 3.5% since then.
Service
sector growth
2019-20:
6.3%
2020-21:
-7.8% (The service sector saw a decline during the COVID times.)
2021-22:
8.4%
2022-23:
9.1%
India
has become the 5th largest economy in 2023 as compared to the 10th
largest economy in 2014.
Achievements
since 2014
India
has become from 5th to 10th largest economy in the world
in the last 10 years.
11.7
cr household toilets under Swachh Bharat Mission.
9.6
cr LPG connections under Ujjwala Yojana.
220
cr COVID vaccinations of 102 crore persons.
47.8
cr bank accounts under PM Jan Dhan Yojana.
44.6%
crore persons covered under PM Suraksha Bima and PM Jeevan Jyoti Yojana.
2.2
Lakh Crore cash transferred to over 11.4 cr farmers under PM Kisan Samman Nidhi.
Per
capita income more than doubled to Rs. 1.97 lakh.
Features of Indian economy
Low
per capita income
Planned
economy
Higher
level of capital formation
Poverty
and inequality income distribution
Dependence
of population on agriculture
Heavy
population pressure.
Almost
45% of our population depends on agriculture. But, its growth rate is only
3-3.5% and contributes only to about 16-17% in our economy.
Low
Per Capita Income
Per
capita income is defined as the ratio of national income over population.
It
gives the idea about the average earning of an Indian citizen in a year, even
though this may not reflect the actual earning of each individual.
In
the year 2023, it is around 1,72,000 which is 14,300 Rupees approximately.
If
we compare India’s per capita income with other countries of the world, then it
can be seen that India is well behind many of them.
For
example, the per capita income of USA in 15 times more that of India while
China’s per capita income is more than three times of India.
Dependence
of population on agriculture
Majority
of India’s working population depend on agricultural activities to pursue their
livelihood.
In
2011, about 58 percent of India’s working population was engaged in agriculture
BUT the contribution of agriculture to India’s GDP is a little over 17 percent.
All
this is correlated to the heavy population pressure and the heavy dependence of
the population on agriculture.
Rural
people tend to have many children because they think that more population means
more earning members in the family. They may not know about the contraceptive
measures.
A
major concern of agriculture in India is that productivity in this sector is
very less.
There
is heavy population pressure on land to sustain huge number. Majority of people
are forced to become agricultural labour working at low wages.
Indian
agriculture suffers from lack of better technology and irrigation facilities.
Mostly people who are not educated or not trained properly, are engaged in
agriculture. So, it adds to low productivity in agriculture.
Heavy
population pressure
India
is currently the second-most populous country in the world after China.
According
to the UN report, World Population Prospects 2023: India is projected to
surpass China as the world’s most populous country in July 2023.
There
are so few cities with so little job opportunities. And, the population
pressure on cities is also very high.
There
is an expectation that population will soon come to a standstill because
fertility rate will be stable in the near future in India.
A
population can be an asset if the youth of the country has access to education,
skill development, increased employment opportunities, etc.
Many
in the Indian population are illiterate and don’t have access to education.
It
is estimated that India is currently producing 25 million job seekers but
provides jobs to only 7 million.
It
this is not addressed soon, the Indian population may become a liability.
Skill
India, Kaushal Vikas Yojana, etc are steps by govt to address this issue.
Poverty
and Inequality Income Distribution
State
of Inequality in India’s Report was released by the Economic Advisory Council
to the PM (EAC- PM).
The
report compiles information on inequities across sectors of health, education, household
characteristics and the labour market.
Inequities
in these sectors makes the population more vulnerable and trigger a descent
into multidimensional poverty.
Inequality
means the poor who can’t afford healthcare services will prefer to go to govt
hospitals where the services are poor. They will send their children to govt
schools where the quality of education is dismal. To own a car or an
air-conditioner are still considered very elite. So, the poor soon descend into
multi-dimensional poverty and this cycle continues.
Urban
areas have a 44.4% wealth concentration in the highest quintile (20%) compared
to a meager 7.1% concentration in rural areas.
India’s
unemployment rate is 4.8% (2019-20), and the worker population ratio is 46.8%.
Higher
level of capital formation
Capital
formation is the net accumulation of capital goods, such as equipment, tools,
transportation assets, and electricity, during an accounting period for a
particular country.
Generally,
the higher the capital formation of an economy, the faster an economy can grow
its aggregate income.
To
accumulate additional capital, a country needs to generate savings and
investments from household savings or based on government policy.
Higher
level of capital formation
A
research report from the SBI’s Economic Research Department, SBI Ecowrap has been
released in March 2023.
Gross
Capital Formation (GCF)- GCF of the government touched a high of 11.8% in
2021-22, up from 10.7% in 2020-21.
Private
sector investment- This also had domino effect on private sector investment
that jumped from 10% to 10.8% over the same period.
Gross
savings- In 2021-22, gross savings have risen to 30% from 29% in 2020-21.
If
a rail coach factory starts in an area then employees will gather there. They
will try to search for houses on rent. The landowners of that area benefited
from it. Now, a market place will expand because more buyers will come. More
children means more schools open, more shopping malls started. This is called
crowding in. So, govt investment leads to private investment which in turn
leads to growth.
Planned
economy
Since the economy has limited resources but
the need to grow is unlimited, five year plans became important.
India
adopted a system of five yearly planning, starting from first year plan in 1951
development, to address its various socio-economic problems.
This
was done to solve the problems of Indian economy at the time of its
independence, which include-
Mass
poverty and inequality
Low
productivity in agriculture and storage of food grains
Lack
of industrial and infrastructure development etc.
The
idea was to make a list of important problems to be solved keeping in view the
given resources and the capacity to arrange the resources.
Then
make a review after five years of what has been done after a period to rectify
the mistakes accordingly in the next
five year plan period and so on.
Capital
formation- A place where there are no schools or hospitals, the govt should
start schools and hospitals to develop the surrounding areas. This is called
capital formation.
Challenges
faced by the Indian economy
Lesser
economic growth
Lack
of education
Un-employment
Tackling
poverty
Lack
of health care
Controlling
price rise
Economic
Reforms in 1991
Economic
reforms refer to the changes made in the economy with a view to deregulate it
and to solve the prevalent economic problems of the country. In India, economic
reforms were introduced in 1991, with the implementation of New Economic policy.
There
reforms can be categorized as:
Stabilization
reforms: short term measures which intended to correct disequilibrium in BoP to
check inflation.
Structural
reforms: Long term measures which intend to bring efficiency into the economic
system.
A decrease in foreign exchange reserves: imports grew faster than exports.
The
unfavourable balance of payments gave rise to a repayment crisis.
The
budget deficit worsened as public expenditure increase faster than receipts.
Prices
increased, with a negative impact on investment.
The
collapse of the soviet block.
The
Gulf crisis has led to a rise in crude oil prices, which has had a negative impact on the balance of payments.
Failures
of state-owned enterprises- very small high return on investment.
The
strategy of reforms introduced in India in July 1991 presented a mixture of
macroeconomic stabilization and structural adjustment. It was guided by
short-term and long-term objectives.
Stabilization
was necessary in the short run to restore balance of payments equilibrium and
to control inflation.
Changing
the structure of institutions themselves through reforms was equally important
from long term point of view.
The
government moved urgently to implement a programme of macroeconomic stabilization
through fiscal correction.
Besides
this, structural reforms were initiated in the field of trade, industry and the
public sector.
Industrial
sector reforms
Contraction
of public sector
Abolition
of Industrial licensing
Freedom
to import capital goods
Financial
sector reforms
De-regulation
of interest rates
Reducing
various ratios like SLR and CRR.
Change
in the role of the central bank or the RBI from the regulator to facilitator of
the economy and banks.
Foreign
exchange reforms
Devaluation
of rupee
(Earlier-
1 dollar=80 rupees, then- 1 dollar=90 rupee. It was done due to the pressure
from international bodies)
Trade
and investment
Fiscal
reforms
Tax
reforms
These
policies were followed for privatisation of India
Contraction
of the public sector
Abolishing
the ownership of the government in management of public enterprises
Sale
of share of public enterprises
Objectives
of Privatisation
Improve
the govt’s fiscal situation
Reduce
the workload on public sector firms
Raise
capital through divestment
Increase
the effectiveness of governmental agencies
Provide
the customer with higher quality and improved goods and services
Develop
healthy competition in society
Encouragement
of foreign direct investment in India
A
country which is considered stable, progressive, and hospitable is considered
good for starting companies. FDI inflow means a country has proved its stability
and progressive nature on the global platform.
License
raj then and now- Govt used to believe back then that private owners of
factories may want to exploit the poor for their own profit. Now, govt only
checks and promotes competition because govt wants to give license to more and
more private owners. So, there is no license raj now. Licenses are just seen as
a medium to check wrong practices.
Ex-
If Amazon says that I will sell only those products which will give me a huge
share of their profits. It will harm the small sellers so govt will put a check
on it and will not allow that.
The
main policies that were adopted by the govt of India to promote and implement globalisation
were:
1. Increase in the equity limit
for foreign investments
2. Partial convertibility
3. Long-term business and trade
policy
4. Reduction of tariffs
Advantages
of globalization
The
biggest advantage of globalization and its outcome outsourcing is that large
multinational corporations or even small businesses can benefit from good
services at a lower rate than their country’s standards.
Thought
process by SB: The Indians can provide goods at cheaper rates. But, whom will it
benefit? Neither the manufacturer, nor the buyer, and definitely not the
seller. Time and again, the tribal poem comes into my mind: Why do I need money
sir, if I don’t have anything to buy? My forest and community takes care of all
my needs. O Krishna, I am distraught by thinking of this money which buys and
money which sells everything, even the soul.
Read
‘Poverty and Unbritish rule in India’ by Dadabhai Naoroji.
The skill set and the availability of human resource capital in abundance in India are regarded as the most dynamic and effective throughout the world.
The
low wage rate and highly skilled personnel have made India the most favourable
global outsourcing destination in the subsequent phase.
It
has helped in the growth and development of the tertiary sector of the economy and
the creation of more jobs and employment for the people.
The
Planning Commission was set up by a Resolution of the Govt of India in March
1950.
It
was set up to promote a rapid rise in the standard of living of the people by
efficient exploitation of the resources of country, increasing production and
offering opportunities to all for employment in the services 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.
Planning
Commission of India
The
Planning Commission was set up by a Resolution of the Govt of India in March 1950.
It
was set up 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.
The
planning commission was an autonomous body, which worked closely with union and
state cabinets and had full knowledge of their policies.
Institutionally
it was a part of the cabinet organization and the ‘demands for grants’ for the
PC was included in the budget for the cabinet secretariat.
Members of the Planning Commission
PM
was the ex officio chairman of the planning commission assisted by a deputy
chairman.
It
included 6 union cabinet ministers as its ex officio members. There was also a
member secretary.
Failure
of Planning Commission
Designed
plans with ‘one size fit for all’ approach. Hence, many plans failed to show
tangible results.
Weak
implementation, monitoring evaluation.
No
structural mechanism for regular engagement with states.
Ineffective
forum for the resolution of center-state and itner-ministerial issues.
Inadequate
capacity expertise and domain knowledge; weak networks with think tanks and
lack of access to expertise outside govt.
It
was not able to make union/states/UTs answerable for not achieving the targets.
Planning
Commission is an autonomous body which means it is not answerable to anyone.
Ex
officio- The PM would by default become the chairman of Planning Commission
Planning
Commission does not understand that J&K
needs different policies from Andaman and Nicobar Islands.
Planning
Commission was not an elected body so PM put its favourites into the Planning Commission.
Indian
economy did not grow much between 1950-1979. So, in 1980, the Planning
Commission was declared a failure.
Pt.
Nehru had made Planning Commission with his friends. So, it was considered a
very dear body to the Congress Govt. When a new govt came in 2014, the 12th
five year plan was being carried out. The new Modi govt said that no new five
year plans would be made and the Planning Commission would be replaced by NITI
Aayog.
The
govt of India, in keeping with its reform agenda, constituted the NITI Aayog to
replace the Planning Commission instituted in 1950.
This
was done in order to better serve the needs and aspirations of the people of
India.
The
National Institution for Transforming India, also called NITI Aayog, was formed
via a resolution of the Union Cabinet on January 1, 2015.
It
is the premier policy ‘Think Tank’ of the Govt of India, providing both
directional and policy inputs.
While
designing strategic and long-term policies and programmes for the govt of
India, NITI Aayog provides relevant technical advice to the Centre and States.
Composition
of NITI Aayog
Chairperson-
PM of India
Governing
council- CM of all the states and Lt. Governors of Union Territories
Regional
Councils- Formed for a specific tenure to address specific issues and
contingencies impacting more than one state or a region.
The
Regional Councils will be convened by
the PM and will comprise of the CM of States and Lt Governors of Union Territories
in the region.
These
will be chaired by the Chairperson of the NITI Aayog or his nominee.
Experts,
specialists and practitioners with relevant domain knowledge as special
invitees nominated by the PM.
The
full-time organizational framework will comprise of, in addition to the PM as
the Chairperson.
Vice-Chairperson:
To be appointed by the PM
Members:
Full-time
Part-time
members: Maximum of 2 from leading universities research organizations and
other relevant institutions in an ex-officio capacity. Part time members will
be on a rotational basis.
Ex
officio members: Maximum of 4 members of the Union Council of Ministers to be
nominated by the PM.
CEO:
To be appointed by the PM for a fixed tenure, in the rank of Secretary to the
GoI.
Secretaries
are deemed necessary.
Banker to Banks and Government
Legal provisions guiding RBI to act as a Banker to the Banks
·
Sec 17 of RBI Act, 1934- Business which the bank can transact
including transactions with banks
·
Sec 42 of RBI Act, 1934- Maintainence of cash reserves by
banks with RBI
Banker
to the Govt
·
Under Sections 20 and 21 of the RBI act, the RBI shall have an
obligation and right respectively to accept monies of the Central Govt and to
make payments up to the amount standing to the credit of its account, and to
carry out its exchange, remittance and other banking operations, including the
management of the public debt of the Union.
·
In terms of Sec. 21A of the Act, the RBI can transact the
banking business of State Govt through an agreement with the respective State
govt.
·
Sec 45 of the RBI act, 1934, empowers RBI to appoint
agency banks for conduct of Govt Business as RBI has limited presence across
the country.
·
Accounts of Institutions incorporated outside India: In terms
of Section 17 (13) of RBI Act 1934, RBI is authorised to act as agents/correspondents of
banks and institutions incorporated outside India and can open Rupee Accounts
for them.
Regulation
and supervision of Non-Banking Financial Companies in India
An
NBFC is defined under Section 45 I (f) the RBI, 1934 (‘RBI Act’) as a:
1. A financial institution,
which is a company
2. A non-banking institution
which is a company, and its principal business is receiving of deposits, or
lending
3. Such other non-banking
institution, as RBI may, with the previous approval of the Central Govt specify
Briefly,
a financial institution meany any non-banking institution that carries on any
of the following financial activities:
1. Lending or financing for
activities other than its own
2. Acquisition of
shares/stocks/bonds/debentures/securities issued by govt or local authority
3. Leasing or hire purchase
4. Insurance business
5. Chit business
6. Collection of monies
7. Acceptance of deposits
But
does not include any institution, which carries on its principal business in
1. Agriculture operations
2. Industrial activity
3. Purchase or sale of any
goods (other than securities)
4. Providing any securities
5. Sale/purchase/construction
of immovable property
Principal
business criteria
Financial
activity as principal business is when a company’s financial assets constitute
more than 50% of the total assets and income from financial assets constitute
more than 50% of the gross income. A company which fulfils both these criteria
will be registered as NBFC as RBI.
|
Types of NBFCs/Activities |
Regulated by |
|
Venture Capital Fund Merchant Banking Companies Stock Broking Companies Mutual Funds Collective Investment Schemes (CIS) |
SEBI |
|
Insurance Companies |
Insurance Regulatory and Development
Authority (IRDA) |
|
Pension Funds |
PFRDA |
|
Mutual Benefit Companies Nidhi Companies |
Ministry of Corporate Affairs (MCA) |
|
Chit Funds |
State Govt |
Shadow
banking- Bank
like activities (mainly lending) that take place outside the traditional
banking sector.
Shadow
bank lending is like traditional bank lending
Also
called-
Non
bank financial intermediation
Market
based finance
Difference
between banks and NBFCs-
1. NBFCs cannot accept demand
deposits
2. NBFCs do not form a part of
the payment and settlement system and cannot issue cheques drawn on itself
3. Deposit insurance facility
of DICGC is not available to depositors of NBFC., unlike banks.
|
Type of NBFC |
Nature of activity/Principal Business |
Key Qualifying Criteria |
|
Account Aggregators (AA) |
Providing under contract the service of
retrieving, consolidating, organising and presenting financial information to
its customer. |
Can only provide account aggregation
services. Only those financial assets that are under the regulatory ambit of
financial sector regulators can be aggregated. These aggregators cannot
support the transactions of customers and cannot take services of third-party
service providers. |
|
Peer-to-Peer (P2P) Lending Platforms |
Carries on the business of a P2P lending
platform, ie, providing loan facilitation services to participants on the
platform. |
Can only provide platform. No lending from
its own books. |
|
Housing Finance Company (HFC) |
Registered under section 29A the NHB Act to
carry on the business of providing finance for housing and housing projects. |
Minimum NOF= 20 crores |
|
Standalone Primary Dealers |
Primary Dealers are supposed to play an
important role in the G-Sec market, both in its primary and secondary market
segments through various obligations like participating in Primary auction,
market making in G-Secs, predominance of investment in G-secs, achieving
minimum secondary market turnover ratio, etc. |
Minimum NOF of Rs. 150 crore for
undertaking core activities and Rs. 250 crore for undertaking diversified
activities. |
|
NBFC- Factors |
Factoring business ie, financing of
receivables. Registered under section 3 of the Factoring Act. |
1.
Minimum
NOF of Rs 5 crore 2.
Financial
assets in factoring business at least 50 per cent of total assets and income
derived there from not less than 50% of the total income. |
Asset
Reconstruction Companies (ARC):
·
These are registered and regulated under the Securitisation
and Reconstruction of Financial Assets and Enforcement of Security Interest
(SARFAESI) Act, 2002 for acquiring and dealing in financial assets sold by
banks and financial institutions.
·
The mini[SB1] mum NOF stipulated for these companies was increased from Rs 2
crore to Rs. 300 crore in Oct 2022.
·
Prudential guidelines on maintenance of capital adequacy,
deployment of funds, asset reconstruction, asset classification norms,
disclosure norms, etc have been stipulated for these companies also by RBI.
Regulation
and Supervision of NBFCs
Regulation
of NBFCs-
·
RBI acquired regulatory and supervisory powers over NBFCs
with the insertion of Chapter III-B in the RBI Act in 1963.
·
In 2019, certain amendments enumerated below were again
carried out to Chapter III-B of the RBI Act, which has inter-alia strengthened
RBI’s supervisory powers.
Contents
Economic Planning
Meaning of Economic Planning
Types of Economic Planning
Objectives of Economic Planning
History of Economic Planning in India
Five Year plans
Meaning of Economic Planning
India is a vast country with multiple problems faced by its
population. The British ruled the country for nearly two centuries and exploited
its resources for their benefit leaving the country reeling under absolute
poverty.
·
There was the problem of food shortage and
inflation.
·
Illiteracy, lack of health care, lack of
infrastructure, etc. were other serious problems facing the country.
·
As a long term strategy- ‘Planning for economic
development was the answer to solve these problems.
How is Economic
Planning
1. Preparing a list of the problems
facing the economy.
2. Rearranging the list on the
basis of priority> issue which needs to be addressed immediately is required
to be at the top.
3. Identify the problems which
are to be solved in the immediate short run and the other problems which are to
be addressed over the long period.
4. Fixing a target to achieve
the desired goal. The target could be a specified time period within which the
problem must be solved.
Secondly the target could be a certain quantity to be
achieved.
Targets needed to be measured in a quantitative manner and the
quantities must be calculated in numbers.
5. Estimating the amount of
resources needed for achieving the target, which include financial resource,
human resource, physical resource, etc.
6. Mobilizing the resources is
another important task, important is to know the source of arranging the required
resources.
7. Once the resource are
arranged, implementation and execution process starts in an organize manner to
achieve the desired goal periodic review must be done till the final achievement
is realised.
Types of
Economic Planning
|
Indicative planning |
Comprehensive
planning |
|
Rolling plans |
Fixed plans |
|
Centralized plans |
Decentralized
plans |
|
Democratic plans |
Totalitarian
plans |
Indicative plans
It proposes/indicates a set of broad principles and recommendations
for achieving a set of objectives.
The private sector is not rigidly controlled to achieve the
targets and priorities of the plan.
Comprehensive plans
This refers to centralized planning and implementation, as
well as resource allocation.
It is utilized by socialist countries, where the state has
complete control over all aspects of planning.
Rolling plans
In a rolling plan, every year plans are drawn up and acted upon-
one is an annual plan, the second is a 5-year plan, while the third is a 15
year plan in which broader goals and objectives are listed, which are in consonance
with the previous year planning.
Fixed plans
A fixed plan refers to planning for a certain period of time.
It lays down definite goals and objectives that are to be met in the due course
of time. Except under an emergency situation, the annual objectives are met (those
listed in the fixed plan).
Centralized planning
Planning is made a restrictive prerogative of the central
planning authority. This authority is solely responsible for the formulation of
the plan, and fixing its objectives, targets, and priorities. There is no
economic freedom; and the entire economic planning is under bureaucratic
control.
Decentralized planning
The plan is executed from the grassroot.
The central authority formulates the plan in consultation
with different administrative units for the central and state schemes.
The state planning authority formulates the plan for district
and village levels.
NITI Aayog is not completely decentralized. A
village panchayat formulates plans for the villages and so does the urban local
body for the urban areas in a decentralized planning which is not the case with
India. Decentralized planning is a better option for a diverse country like India
where the resources and aspirations of different areas are different.
Democratic Plans
Authority is in the state but is based on the support of
common masses.
The plan is fully debated in the Parliament, state legislature
and in the private forums.
People enjoy economic, social, and religious freedom.
Totalitarian Plans
The planning is adopted under dictatorship.
State fully controls the economic affairs, productivity of
resources and economic decisions.
During practical implementation, a country follows many different types of planning while making the same plan.
Comments
Post a Comment