unit 3 INDIAN ECONOMICS
INDIAN ECONOMICS
A)INTRODUCTION TO INDIAN ECONOMICS
- Indian is a developing country and our economy is a mixed economy where the public sector co-exists with the private sector.For an overview of Indian economy,we should first go through the strengths of Indian economy.
- Indian economy growth rate is estimated to be around seven to eight percent by year 2015-2016 and the population is 140.76 cr according to 2021 census.
- India is likely to be the third largest economy with the GDP size of 15 trillion by 2030.The economy of India is currenty the worlds fourth largest in terms of real GDP.
INDIAN ECONOMY
- Rapidly growing population with 1.2% annual change.
- Chronic unemployment (A person is considered employed if he / she works for 273 days of a year for eight hours every day.)Unemployment in India is mainly structural in nature.
- Low rate of capital formation due to less saving rate.
- Dualistic Nature of Economy (features of a modern economy, as well as traditional).Mixed Economy
- Follows Labour Intensive Techniques and activities.
- Low per capita income.
- Inequalities in income distribution.
- Predominance of agriculture. (More than 2/3rd of India’s working population is engaged in agriculture. But in USA only 2% of the working population is engaged in agriculture.)
Sectors of Indian Economy:-
- Primary Sector: When the economic activity depends mainly on exploitation of natural resources then
- that activity comes under the primary sector. Agriculture and agriculture related activities are the primary sectors of economy.
- Secondary Sector: When the main activity involves manufacturing then it is the secondary sector. All industrial production where physical goods are produced come under the secondary sector.
Tertiary Sector: When the activity involves providing intangible goods like services then this is part of
- the tertiary sector. Financial services, management consultancy, telephony and IT are examples of service sector
- Other Classifications of Economy:-
In Indian economy introduction, the sectors of economy based on other basis is also required to get a clear picture of the strengths of Indian Economy.
- Organized Sector: The sector which carries out all activity through a system and follows the law of the
land is called organized sector. Moreover, labour rights are given due respect and
wages are as per the norms of the country and those of the industry. Labour working organized sector get the
benefit of social security net as framed by the Government. Certain benefits like provident fund, leave
entitlement, medical benefits and insurance are provided to workers in the organized sector. These security
provisions are necessary to provide source of sustenance in case of disability or death of the main
breadwinner of the family without which the dependents will face a bleak future. - Unorganized Sector: The sectors which evade most of the laws and don’t follow the system come under
unorganized sector. Small shopkeepers, some small scale manufacturing units keep
all their attention on profit making and ignore their workers basic rights. Workers don’t get adequate salary
and other benefits like leave, health benefits and insurance are beyond the imagination of people working in
unorganized sectors. - Public Sector: Companies which are run and financed by the Government comprises the public sector.
After independence India was a very poor country. India needed huge amount of money to set up
manufacturing plants for basic items like iron and steel, aluminium, fertilizers and cements. Additional
infrastructure like roads, railways, ports and airports also require huge investment. In those days Indian
entrepreneur was not cash rich so government had to start creating big public sector enterprises like SAIL
(Steel Authority of India Limited), ONGC(Oil & Natural Gas Commission). - Private Sector: Companies which are run and financed by private people comprise the private sector.Companies like Hero Honda, Tata are from private sectors.
- Organized Sector: The sector which carries out all activity through a system and follows the law of the
Economy before British Rule
To understand the present level of the Indian economy, it is important to understand the economic system of India during the British rule and post-independence economic development policies.
Before the advent of British rule, India had an independent economy. It was largely primary sector economy and the major occupations were agriculture, handicrafts, and many other primary sector works.
The economy was full of resources and a prosperous one. Therefore, high quality agricultural products and handicrafts made by the Indians were traded across the world.
Economy during British Rule
- During the British rule, India’s economy became a net raw material supplier and a net importer of finished products.No British economist attempted to measure the per capita income and national income of India.
- Some of the Indian economists Dadabhai Naoroji, V.K.R.V. Rao, R.C. Desai and British Findlay Shirras and William Digby attempted to measure India’s national income. Among all, V.K.R.V. Rao was the most successful
- Before independence, India’s economy was solely dependent upon agriculture.
- 85 percent of the Indian population were rural and their main source of subsistence was agriculture.
- During the British colonial period, agriculture (in spite of being the main occupation) was suffering from many problems and hence the effective growth was zero percent.
- Land settlement system was totally in favour of the British.
- Agricultural system was stagnant; however, later there was a gradual growth, but that was not because of improvement and development of the agricultural system, but because of the expansion of agricultural land.
Zamindari System
Many parts of India (especially Bengal region of east India, today’s West Bengal and Bangladesh) were practising Zamindari system (Land-lordship).
The main work of the Zamindars was to collect the land tax/rent. They almost did nothing either to improve the agriculture system or the conditions of the farmers.
Zamindars’ inhumane attitude affected farmers’ lives very badly. Most of the regions of the country were facing famine and many other social issues and problems.
Some of the regions, during the Zamindari system, evidenced growth that was only because of the commercialisation of agriculture. In these regions, the farmers had been forced to produce cash crops instead of staple food crops.
Major Problems
The major problems were −
- Drought,
- Flood,
- Poor irrigation system,
- Desalination of soil,
- Absence of technology, and
- Poverty.
- India did not undergo any industrialisation as all the raw materials were exported to the UK.
- Handicrafts and other small-scale industries suffered badly.
- The main intention of British rule was to make India, a market of their finished products.
Other Facts
The surplus income of India was used in setting up the official infrastructure for the British officers.
- During the British period, some of the infrastructure such as road, rail, telegraph, ports, water transport, etc. were developed, but all these were developed not for the benefit of Indians, but, rather to serve the interests of British officials.
- The railway, which was developed in the 1850s broke the barrier of long distance travel and trade. It also fostered the commercialisation of Indian agriculture. But this could hardly be of any help to the farmers.
- The population growth was negligible between 1891 to 1921.The epidimics,frequent faminies kept the death rate equally high as the birth rate.
- At current rate of growth ,the population of India will double every thirty years.With the advent of planning ,there were extensions of medical facilities and there was a sharp decline of death rate to a level of 15 per thosand during this period.
- Population exploison means rapid growth of population.When the decline in death rate has not been balanced by similar decline in the birth rate ,the net addition to the population has been growing year after year.
- IN India,prior to 1921they increase in population was very fast since 1921.Hence the census year 1921 was described by tbha census commisioner as'the year of big divide.'
- Prior to 1921, India was in the first stage of demographic transition.In this stage, both birth and death rates are high. Hence the population remains more or less stable even if there is moderate increase in the population because birth rate is somewhat higher.Then death rate. It does not pose any serious problem.But from 1921 onwards, India entered into the second stage of demographic transition, characterized by the rapid growth of population.
The three possible causes of an increase in population of a country are.when they're getting it
- A high birth rate.
- A relatively low death rate.
- Immigration
#Causes of high birth rate in India.
*Economic factors:
- Poverty-Poor people have more children because they do not.Bother or worry about their own standard of living.When life is.Already miserable.And there are virtually.No stakes in it.Cynical indifference to the size of the family.
- Predominance of agriculture-During the periods.Of harvest, bleeding and sowing.Child labor is required in agriculture.Agriculture has an economic relation for a relatively bigger family.
- Slow urbanization-Urbanization and these problems often run force each other in bringing down the birth rate.In India due to staggering.Industrial industrialization.The process of urbanization has been slow.And it has failed in bringing down the birth rate.
*Social factors.
- Universal marriages-Marriages in India is almost a universal institution and everyone sooner or later marries woman who cannot.Beer children are also looked down in the society.
- Lower age of the time of marriage-The relatively lower age of the time of marriage in the country is also believed to be.Responsible.For high fertility.
- Joint family system-The joint family system induces young couples to have children.
- Tracy and ignorance-Majority of people being illiterate, ignorant and superstitious. There is absence of wide spread of family planning methods.Most people Most people regard children as a gift of God, and uncontrolled procreation is regarded as one of the laws of normal family.
Religious. Superstitious.
- Tropical conditions-India being a tropical country, the girls attain puberty and boys attain maturity, quit early in their life.Marriage at an early age will provide the couple a long period of childbearing.
- Improvement in health facilities-The decline in infant mortality, maternal mortality and decrease in life expectancy have also led to higher birth rate in India.
- Demographic features of India.
- density of population-The density of population refers to the average number of persons per square kilometer.The figure of the density is arrived at by dividing the total population of a country by its area.Refers to the land man ratio.
- Sex composition of population-The number of females per thousand males is called sex ratio. It is generally adverse to women in India. It also declined over the year expect in 1981 when it's slightly improved.
- Age composition-The average composition of the population helps us to find out the dependency ratio in the population of a country.It is Expressed in terms of the percentage of the young population and the old population to the active working population of the country.
- control of epidemics-Cholera and smallpox were the two major causes of epidemics. Over the years, death due to cholera have declined.Smallpox accounted for a large number of deaths in the 19th century, and early 20th century has not been known as a major killer in the present.The epidemics were controlled and no epidemic occurred as a major killer.
- Elimination of famines-Recurrence of famines in India under the British rule was a major cause of high mortality rate.The famines have not occurred on a large scale, and the problems created by drought have been met to such an extent that only stay.Cases of starvation deaths have been reported.
- Decline in the incidence of malaria and tuberculosis-Tuberculosis was considered a major killer in India now.Malaria accounted for 16% of total deaths.These two diseases are under control and no major incidents of death due to these two diseases.Control of malaria by DDT spray.Has had a spectacular effect in reducing the death rate.
- Supply of pure drinking water-They are believed to have made some impact on the mortality due to supply of pure drinking water.
- Improved sanitary conditions-Quotation and hygiene in cities and villages brought about by public health programs have helped to reduce the incidence of death.
#Causes for the failure of population control in India.
Has not yet received sufficient success in controlling the increase in population due to the following reasons.
- False rumours and exaggerated statements about the after effects of loop insertions.
- Hostility from private doctors and midwives? Sorry.
- Of follow up treatment and pain relieving medicines for women who were given the loop Insertions.
- In adequate preparation and education of women.
- Campaign of vilification against the loop mounted by vested interest, particularly the manufacturers of pills.
- Inexperience of family planning personnel.
- Religious beliefs among public.
- Wide gap between profession and practice.
- Lack of disincentives for not following the family planning methods.
- Failure of providing facilities for rural people.
- Slogan should be one or none.
- Allocation of funds.At large scale.Further raising the minimum marriage age for women and men.
#Suggestions to boost The Family planning program.
- Greater incentives for stranger.
- Stoppage of maternity leave after two births.
- Exemptions 2 doctors on earnings from family welfare program.
- Making family welfare program part of the content of the People's Education Program.
- Involving all communities to make the family welfare program a success.
- Special incentives for workers in the tribal areas.
- Continuous monitoring of the family welfare program at the highest level.
- Intensified propaganda using various electronic media channels.
- Emphasis on rapid increase in family literacy and population education.
- Enforcement of the law relating to minimum age for marriage of boys and girls.
- Preference in providing educational facilities, scholarships, etc to the effectors of family welfare families.
National income is the flow of goods and services which becomes available to our nation during an accounting period, generally one year.
The national income for any.Period consists of the money value of the goods and services becoming available for consumption during that period, record at their currently selling value, plus additions to capital record at the prices actually paid for the new capital goods, depreciation and obsolescence.Of existing capital goods and adding the net assertion of, or deducting the net drawings upon stocks also reckoned at current prices.
#The national income data is useful in the following ways:
- They help us to understand the performance of the economy at a particular period of time.
- They present the economic picture of a country, portraying all aspects and structures of the economy.
- They serve as useful indicator of economic welfare of the people.
- they play a very useful role in the formulation of plans for economicDevelopment.
- They show variations in the growth of various sectors of the economy.
- The national income is generally estimated following the procedures and methods of statistics.
- Methods of estimation of national income in India.
- The Central Statistical Organization, CSO.Adopted the following procedure in estimating India's national income.
#Difficulties in national income estimation in India:
- Lack of reliable statistics.Correct statistical information regarding agriculture and allied occupations is not available.There is also no information available regarding consumption expenditure and saving of either ruler or urban population.That data supplied by village officers is on the basis of guesswork.
- Difficulty to estimating the output of non monetized sectors.-A considerable portion of the agriculture output does not come to the market for sale, but it's either consumed by the procedures.Themselves or is bartered away with other procedure is exchanged for their goods and services.
- Lack of accounting habit.-Of the people leads to the absence of the practice of keeping accounts.They are not.Habituated to maintaining the account books.hence the data available is Inadequate.
- Inability to estimate.Most of the Indian procedures are not capable of supplying the correct values of their product.
- Unorganised producing units.-For the most part, production in agricultural and industrial sectors is unorganized and scattered. It is not easy to calculate the value of product.
- Lack of proper classification.A major part of Indian economy consists of household enterprises and it is difficult to calculate as they perform functions belonging to the different occupational categories.
- Unreported.Illegal income.-A sizable part of the economy operates a black economy. Productive activities in this sector are either concealed or underreported, and as a result, the income generated in it remains either entirely unreported or is only partially reported.
- Regional disparities.-India is a subcontinent with large geographical and economic diversities.Information based on samples taken from certain districts in a particular state may or may not be valid for the whole state.
- Limitations of including certain services.Which are monetarily major are included in the national income in India.The exclusion of the services of housewife.Driving ones, own car etc. Make national income estimates as imperfect measure of economic activities.As most housewives do not work for Wages.
#Suggestions for improving the national income estimates:
- Perfect accuracy in the estimates cannot be achieved as it is partially impossible to have the required data on each and every economic activity.But improvement can be made following the suggestions given below:
- Regular and continuous data collection:Data required.Ford preparing national income estimates are to be collected regularly.A number of agencies must be set up with specially trained persons for doing the jobs assigned to them.
- Filling the gaps.-Many gaps exist in the data on activities in the unorganized small sector. The statistics of agricultural prices are more or less in a chaotic condition.There are a number of prices.Haphazardly collected, which often affect estimates of the income generated in the agricultural sector.A. Fresh data should be collected.Pertaining to production and price information about minor crops, agriculture by product, poultry and fishery, etc.
- Data on consumption.Consumption is an important magnitude of national income.Current information of consumption is required from the point of view of analysis, as nonessential consumption, demand, elasticities, future demand.
- Personal procedure.The organs of Ueno gave the guidelines for the calculation of national income from time to time and if we follow the same procedure, we can compare our national income with that of other countries.
#Post independence economic policies:
1.land resources:
The vast geographical area. It is 7th largest country in the world.The soils of India have been classified mainly into four categories.
- Alluvial soil.
- Black soil.
- Red soil.
- Laterite soil.
Most of these soils of India are deficient in nitrogen and other chemical contents.Through the use of fertilizers becomes quite essential.
Climate of a country determines the productivity of land and its natural vegetation.India's climate is Said 2V.Of the tropical monsoon type.Since India is a vast country, a variety of climate is found in India.
2.Forest resources:
Forest are an important renewable natural resources of India.The country is losing about 1.3 million hectares of forest cover every year due to extension of cultivation, mining, wood based industry etc.
Forestation is directly responsible for greater frequency and intensity of floods.Soil erosion and change.Of climate.Continuing deforestation has bought a face to face with a major ecological and socioeconomic crisis.
Moment of India declared a.Forest policy resolution for purpose of scientific management and development of forests.
The National Forest policy resolution of Government of India, 1952.
According to this policy, it was decided to raise steadily the area under.Forest 200 million hectares, or 33% of the country as a whole.The government has proposed the following programs.
1.Afforeststation
2.Social forestry
3.Community Board lots
Government planned to promote and Expand forests and manage them scientifically:
- To protect land from floods, soil erosion and unfavorable climate conditions.
- Where is the production of timber and other raw materials which are needed for industry
- To use timber for building construction, for railways and for defense purposes.
- To supply forest product to all customers.
- To maximize Revenue from forests.
- Mineral resources.
- minerals play a crucial role in economic development of a country
- Ferrous metallic minerals.like iron ore
- Non ferrous metallic minerals.Like gold and silver.
- Nonmetallic minerals.like limestone salt
- Minerals, fuel.coal oil petroleum
- Atomic minerals.Uranium. Thorium.
- Chemical minerals.Like sulfur phosphate.
- Other minerals.Like diamonds.Lignite.
3.Water resources:
India receives.Rainfall mainly from the Monsoon winds.Rainfall in India varies greatly from one region to another.The quality of rainfall varies greatly from year to year.This results either in flood or in droughts.
Due to uncertainty of rainfall.Irrigation becomes quite essential for an agricultural country like our.
*Government policies on water resources:
- Construction of huge dams and reservoirs.Distribution, canals etc.There were also known as multi-purpose projects.
- The government launched a new agricultural study strategy in 1962 With high yielding varieties seeds.
- National water policy.2002.
- Adopted in April 2002, it provides a framework within which water resource planning should be done.The policy lays emphasis on integrated water resources development and management for optional and sustainable utilization of both surface and groundwater.
#Power resources:
Energy is an important factor of economic growth. Energy may be classified as commercial and non commercial energy.Commercial energy includes coal, crude oil.Natural gas, nuclear energy, etc.
Non commercial energy includes firewood, animal waste like dung, vegetable waste, animal power and human physical power.There are other forms of energy, like solar energy, geothermal energy, tidal power and wind power.
*Energy policy of India:
- Increased production of crude oil
- Substitution of oil by coal
- On electric power
- Non conventional source of energy
- Rural energy projects
- BioGas plant
- Agricultural waste
- Firewood
Comments
Post a Comment