Nature Of Indian Economy

PERFORM C P T E C O M A T H S T A T COURSE BEST IN TOWN! CALL 9331261452 NATURE OF INDIAN ECONOMY COURSE COMPLIMENT •

The star marked terms are defined in the TERMINOLOGY section provided at the end of the document.

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This is course compliment on macro economics. Unlike Maths and Statistics Course Compliments, this is quite comprehensive

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Please study macro economics with passion (that is an opinionated take on the subject is prescribed). This will help not only to memorize the facts and figures, it will also serve the greater cause of making a good citizen (and that is really important).

Topic Main Occupation

Argument for Underdeveloped Economy

1. Shift of labour force from Primary to Secondary and Tertiary Sector.

Agriculture CASE OF INDIA 1950 72.00% 2004 60.00%

Argument for Developing Economy

Majority is involved in Agriculture or agriculture dependent industries.

2. Change in sectoral distribution of products – shift from Primary to Secondary and Tertiary Sector.

Instructor: Ashani Dasgupta

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PERFORM C P T E C O M A T H S T A T COURSE BEST IN TOWN! CALL 9331261452 NATURE OF INDIAN ECONOMY COURSE COMPLIMENT Poverty

Wide Spread

1. Rise in per capita income over the years

CASE OF INDIA

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22% population below poverty line Per Capita Income - $620 in 2004 (very low – lower than Sri Lanka, Indonesia, China etc.)

2. Percentage of population under poverty line decreasing

3. Rise in NNP over the years 1950 – 1951

Rs. 1,32,367 crore

2004 – 2005

Rs. 21,41,776 crore

15 times rise in 5 decades Savings and Low savings and Low capital formation . Capital Formation CASE OF INDIA

Instructor: Ashani Dasgupta

1. Growing Capital Base especially after the 2nd Five Year Plan where large number of industries were installed by the government.

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Gross Domestic Savings – 29% Gross Domestic Capital Formations – 30%

(both are quite low compared to other countries) Human Low Development CASE OF INDIA 127th rank (among 177 countries) in HDI

Improved social overhead capital • roads, railways, irrigation, electricity have improved considerably • Health conditions improved Year

Bed population ratio

Number of Doctors

1950

3.2 per 10000

61.8 thousand

2004

9.5 per 10000

625.1 thousand

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Inequality

Literacy Rate Improved Year Literacy rate 1950

18.33%

2001

65.38%

Banking and Financial Sector ◦ NATIONALIZED IN 70'S ◦ Forwards loans to small farmers and small scale industrialists ◦ Have grown considerably over the past years.

High CASE OF INDIA Inequality is quite high in India. Gini Coefficient - 0.33

Employment Underemployment and unemployment high. CASE OF INDIA High and the rate is increasing. Population growth rate

High CASE OF INDIA

Instructor: Ashani Dasgupta

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PERFORM C P T E C O M A T H S T A T COURSE BEST IN TOWN! CALL 9331261452 NATURE OF INDIAN ECONOMY COURSE COMPLIMENT Very High. More than 2% per annum. Others

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Backward production techniques Orthodox outlook Low participation in foreign trade Low investment in R&D INDIA – A MIXED ECONOMY

Topic Ownership

Market Mechanism

Free Market System Agriculture, most of industries and services sector under private ownership. • •

Other

Demand and Supply mostly fixes the price Less government regulations

State Controlled System Large public sector especially for strategic resources like atomic energy, ammunition, transport. Indicative economic planning

Monopoly houses like Tata, Birla, Reliance, DLF, Infosys, Wipro are growing.

IMPORTANT: India is a mixed economy since here the means of production partly owned by private sector and partly by private sector

Instructor: Ashani Dasgupta

are

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PERFORM C P T E C O M A T H S T A T COURSE BEST IN TOWN! CALL 9331261452 NATURE OF INDIAN ECONOMY COURSE COMPLIMENT TERMINOLOGY TERM

EXPOSITION

Bed Population Ratio

the number of available hospital beds for every 10000 population

Capital Formation

See Gross Domestic Capital Formation

CDS

Current Daily Status

Five Year Plan

The economy of India is based in part on planning through its five-year plans, developed, executed and monitored by the Planning Commission. With the Prime Minister as the ex officio Chairman, the commission has a nominated Deputy Chairman, who has rank of a Cabinet minister. Montek Singh Ahluwalia is currently the Deputy Chairman of the Commission. The tenth plan completed its term in March 2007 and the eleventh plan is currently underway.

Gini Coefficient

The Gini coefficient measures the inequality of income distribution within a country. It varies from zero, which indicates perfect equality, with every household earning exactly the same, to one, which implies absolute inequality, with a single household earning a country's entire income. Latin America is the world's most unequal region, with a Gini coefficient of around 0.5; in rich countries the figure is closer to 0.3.

Gross Domestic Capital Formation

Statistically it measures the value of additions to fixed assets purchased by business, government and households less disposals of fixed assets sold off or scrapped.

HDI

The Human Development Index (HDI) is an index used to rank countries by level of "human development", which usually also implies whether a country is developed, developing, or underdeveloped.

Means of production

Means of production (abbreviated MoP; German: Produktionsmittel), are things used by human labourers to create products. They include two broad categories of objects: instruments of labour (tools, factories, infrastructure, etc.) and subjects of labour (natural resources and raw materials). People operate on the subjects of labour, using the instruments of labour, to create a product; or, stated another way, labour acting on the means of production creates a product.

Nationalization

Nationalization, also spelled nationalisation, is the act of taking an industry or assets into the public ownership of a national government or state.

NNP

Net national product (NNP) is the total market value of all final goods and services produced by residents in a country or other polity during a given period (gross national product or GNP) minus depreciation. The net domestic product (NDP) is the equivalent application of NNP within macroeconomics, and NDP is equal to gross domestic product (GDP) minus depreciation: NDP = GDP - depreciation.

NSSO

National Sample Survey Organisation

Per capita income

Per capita income means how much each individual receives, in monetary terms, of the yearly income generated in the country. This is what each citizen is to receive if the yearly national income is divided equally among everyone.

Instructor: Ashani Dasgupta

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PERFORM C P T E C O M A T H S T A T COURSE BEST IN TOWN! CALL 9331261452 NATURE OF INDIAN ECONOMY COURSE COMPLIMENT Poverty Line

Rs. 368 monthly income in rural area and Rs. 560 monthly income in urban area,

Primary Sector

The primary sector of the economy extracts or harvests products from the earth. The primary sector includes the production of raw material and basic foods. Activities associated with the primary sector include agriculture (both subsistence and commercial), mining, forestry, farming, grazing, hunting and gathering, fishing, and quarrying. In developed and developing countries, a decreasing proportion of workers are involved in the primary sector.

R&D

Research and Development

Secondary Sector

The secondary sector of the economy manufactures finished goods. All of manufacturing, processing, and construction lies within the secondary sector. Activities associated with the secondary sector include metal working and smelting, automobile production, textile production, chemical and engineering industries, aerospace manufacturing, energy utilities, engineering, breweries and bottlers, construction, and shipbuilding.

Sectoral Distribution

Participation of labour in different sectors.

Social overhead capital

Capital spent on social infrastructure, such as schools, universities, hospitals, libraries.

Tertiary Sector

The tertiary sector of the economy is the service industry. This sector provides services to the general population and to businesses. Activities associated with this sector include retail and wholesale sales, transportation and distribution, entertainment (movies, television, radio, music, theater, etc.), restaurants, clerical services, media, tourism, insurance, banking, healthcare, and law. In most developed and developing countries, a growing proportion of workers are devoted to the tertiary sector.

Underemployment

Underemployment or disguised unemployment means apparently people are employed but their contribution to the production is very very low. In other words their productivity is nil or negative. Such type of unemployment is more common in agricultural sector. Here many people work in small farm land but their contribution is almost nil.

Instructor: Ashani Dasgupta

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