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ECONOMICS_11_INDIAN ECONOMIC DEVELOPMENT, ECONOMICS_11_IED_Chapter 06:…

- - - - CAUSED UNEMPLOYMENT
      - NO SUPPLY OF LOCAL GOODS
      - DEMAND INCREASED FOR GOODS IMPORTED FROM BRITAIN
    - - TO REDUCE INDIA TO JUST EXPORTER OF RAW MATERIAL
      - TO TURN INDIA INTO MARKET OF FINISHED PRODUCTS MADE IN BRITAIN
    - - RAILWAYS, POWER GENERATION, COMMUNICATION, PORTS
  - - - ARTIFICIAL WATERWAY RUNNING FROM N TO S CROSS ISTHMUS OF SEUZ IN NE EGYPT
      - DIRECT TRADE ROUTE B/W EUROPEAN AND ASIAN PORTS
      - NO NEED TO SAIL AROUND AFRICA
      - OPENING IN 1869
      - CONNECTS PORT SAID ON THE MEDITERRANEAN SEA WITH GULF OF SEUZ, AN ARM OF THE RED SEA
  - - - ENABLED PEOPLE TO UNDERTAKE LONG DISTANCE TRAVEL WHICH BROKE GEOGRAPHICAL AND CULTURAL BARRIERS
      - INCREASED THE PACE OF COMMERCIALISATION OF INDIAN AGRICULTURE WHICH BADLY AFFECTED THE SELF SUFFICIENCY OF THE VILLAGE ECONOMIES
    - - EXAMPLE BEING COAST CANAL ON ORISSA COAST. BUILT AT HUGE COST BUT FAILED TO COMPETE WITH RAILWAYS
- - - - GROWTH
        
        INCREASE IN THE COUNTRY CAPACITY TO PRODUCE THE OUTPUT OF GOODS & SERVICES WITHIN COUNTRY
        
        STEADY INCREASE IN GDP IS A GOOD INDICATOR OF GROWTH
        
        GDP IS MARKET VALUE OF ALL GOODS & SERVICES PRODUCED IN THE COUNTRY DURING A YEAR
        
        GDP OF A COUNTRY IS DERIVED FROM THE DIFFERENT SECTORS i.e. AGRICULTURAL SECTOR , INDUSTRIAL SECTOR AND SERVICE SECTOR :
        
        CONTRIBUTION BY THESE 3 SECTORS MAKE UP THE STRUCTURAL COMPOSITION OF ECONOMY
      - MODERNISATION
        
        TO INCREASE THE PRODUCTION OF GOODS AND SERVICES THE PRODUCERS HAVE TO ADOPT NEW TECHNOLOGY
        
        ALSO, CHANGES IN SOCIAL OUTLOOK SUCH AS THE RECOGNITION THAT WOMEN SHOULD HAVE THE SAME RIGHTS AS MEN
      - SELF RELIANCE
        
        MEANS AVOIDING IMPORTS OF THOSE GOODS WHICH COULD BE PRODUCED IN INDIA ITSELF.
        
        THIS POLICY WAS NECESSITY IN ORDER TO REDUCE OUR DEPENDENCE ON FOREIGN COUNTRIES, ESPECILLY FOR FOOD
      - EQUITY
        
        ENSURING THAT THE BENEFITS OF ECONOMIC PROSPERITY REACH THE POOR SECTIONS AS WELL
        
        EVERY INDIAN SHOULD BE ABLE TO MEET HER/HIS BASIC NEEDS SUCH AS FOOD, A DECENT HOUSE, EDUCATION AND HEALTH CARE
    - - PRASANTA CHANDRA MAHALANOBIS
      - SIGNIFICANT CONTRIBUTOR IN THE FORMULATION OF INDIA'S FIVE YEAR PLANS
      - SECOND FIVE YEAR PLAN. A LANDMARK CONTIBUTION TO DEVELOPMENT PLANNING. THIS WAS BASED ON MAHALANOBIS IDEAS. IN THAT SENSE , HE CAN BE REGARDED AS THE ARCHITECT OF INDIAN PLANNING
      - BORN IN 1893 IN CALCUTTA, EDUCATED AT PRESIDENCY COLLEGE IN CALCUTTA & AT CAMBRIDGE UNIVERSITY IN ENGLAND
      - IN 1945 HE WAS MADE A FELLOW (MEMBER) OF BRITAIN'S ROYAL SOCIETY, ONE OF THE MOST PRESTIGIOUS ORGANISATIONS OF SCIENTISTS
      - ESTABLISHED INDIAN STATISTICAL INSTITUTE (ISI) IN CALCUTTA AND STARTED A JOURNAL, SANKHYA
      - HE IS REMEMBERED FOR PLAYING A VITAL ROLE IN PUTTING INDIA ON THE ROAD TO ECONOMIC PROGRESS, AND STATISTICIANS CONTINUE TO PROFIT FROM HIS CONTRIBUTION TO STATISTICAL THEORY
  - - - INTERMEDIARIES LIKE ZAMINDARS, JAGIRDARS COLLECTED RENT AND PAID NO ATTENTION ON PRODUCTIVITY OF LAND
      - LOW PRODUCTIVITY FORCED INDIA TO IMPORT FOOD
      - EQUITY IN AGRICLTURE CALLED FOR LAND REFORMS, WHICH PRIMARILY REFER TO CHANGE IN THE OWNERSHIP OF LAND
      - A YEAR AFTER INDEPENDENCE, INTERMEDIARIES WERE ABOLISHED AND TILLERS BECAME THE OWNER OF THE LAND
      - IDEAS WAS THAT TILLER WILL TAKE MORE INTEREST NOW TO IMPROVE PRODUCTIVITY
    - - POLICY TO PROMOTE EQUITY IN THE AGRICULTURAL SECTOR
      - FIXING THE MAXIMUM SIZE OF LAND WHICH COULD BE OWNED BY AN INDIVIDUAL
      - THIS DOES NOT SERVED THE PURPOSE AS THERE WERE CASES WHERE TENANTS WERE EVICTED AND THE LANDOWNERS CLAIMED TO BE SELF CULTIVATORS
      - LAND REFORMS WERE SUCCESSFUL IN KERALA AND WEST BENGAL BECAUSE OF GOVERNMENTS COMMITMENT
    - - AT THE TIME OF INDEPENDENCE, 75% POPULATION WAS DEPENDENT ON AGRICULTURE
      - PRODUCTIVITY WAS LOW BECAUSE OF OLD TECH. AND INFRASTRUCTURE FOR FARMERS
      - AGRICULTURE WAS DEPENDENT ON MONSOON
      - GREEN REVOLUTION BROKE THE STAGNATION IN AGRICULTURE WITH THE HELP OF HYV SEEDS, FERTILIZERS AND PESTICIDES
      - FIRST PHASE OF GREEN REVOLUTION MID 1960s TO 1970s- THE USE OF HYV SEEDS WAS RESTRICTED TO MORE AFFLUENT STATES SUCH AS PUNJAB, A.P., T.N.
      - IN THE SECOND PHASE MID 1970s TO MID 1980s, THE HYV TECHNOLOGY SPREAD TO MORE STATES AND THIS ENABLED INDIA TO ACHIEVE SELF SUFFICIENCY IN FOOD GRAINS
      - GROWTH IN AGRICULTURE OUTPUT WAS NOT ENOUGH AS THERE WAS NO MARKETED SURPLUS. HENCE NO GROWTH IN ECONOMY.
      - PORTION OF AGRICULTURE PRODUCE WHICH IS SOLD IN THE MARKET BY THE FARMERS IS CALLED MARKETED SURPLUS
      - USUALLY, RICE AND WHEAT WAS SOLD IN MARKET. HENCE PRICES CAME DOWN AND LOW INCOME GROUPS BENEFITTED.
      - GR ALSO HELPED GOVERNMENT IN PROCUREMENT OF FOOD GRAINS
      - RISK FROM TECHNOLOGY INVOLVED - 1. DISPARITIES BETWEEN SMALL & BIG FARMERS 2. HYV WERE MORE PRONE TO PESTS
      - DUE TO ACCESS TO LOANS AND SUBSIDISED FERTILIZERS, SMALL FARMERS ALSO PROVIDED GOOD OUTPUT
      - THIS WAS ONLY POSSIBLE BECAUSE OF STATE. OTHERWISE GR WOULD HAVE ONLY FAVOURED RICH FARMERS
    - - Against subsidies
        
        Economists believe that once technology is widely adopted, subsidies should be phased out
        
        Substantial amount of fertilizers subsidy also benefits fertilizers industry
        
        Also they benefit the farmers in more prosperous region
        
        So it does not benefit the target group and it is huge burden on the govt.
        
        Subsidies were important for adoption of the new HYV technology for farmer's encouragement
        
        Subsidies incentivize wasteful use of resources without any concern
        
        subsidies also do not allow prices to indicate the supply of a good
      - For subsidies
        
        Farming is risky business in India
        
        Farmers are poor and cannot afford required inputs without subsidies
        
        Eliminating subsidies will increase the inequality b/w poor and rich hence violate the goal of equity
        
        Measures should be taken to benefit the target group not the subsidies to be eliminated
      - Conclusion
        
        productivity increased by late 1960s
        
        self sufficient in food grains
        
        when nation becomes prosperous, contribution of agriculture and population involved in agriculture in GDP declines considerably
        
        agriculture output could have grown even with less people involved But service sector did not absorb the people working in agriculture.
        
        economists call this as an important failure of our policies during 1950-1990
  - - - Private industrialists did not had the capital
      - market was not big enough to encourage industrialists
      - govt. had to play extensive role in promoting industrial sector
      - Socialist way also led the government to control the important industries vital for the economy
      - policies of the private sector would have to be complimentary to those of the public sector, and public sector lead the way
    - - IPR 1956 formed the basis of 2nd 5 year plan which build the basis of socialist pattern of society
      - IPR 1956 classified industries into 3 categories
        
        exclusively owned by govt.
        
        In which private sector could support govt. But govt only can start new units
        
        for private sectors
        
        govt. controlled them through system of licences
        
        no new industry was allowed without licence
        
        IPR 1956 was used to promote industries in backward regions
        
        tax benefits were given and electricity at low tarrif
        
        purpose was to promote regional equality
    - - In 1955, Village and Small-Scale Industries Committee, called Karve Committee
      - noted the possibility of using small-scale industries for promoting rural development
      - ‘small-scale industry’ is defined with reference to the maximum investment allowed on the assets of a unit.
      - In 1950 a small -scale
        industrial unit was one which invested a maximum of rupees five lakh BUT now it is one crore
      - ‘labour intensive’
        i.e., they use more labour than the large-scale industries
      - generate more employment
      - development of small-scale industry
        requires them to be shielded from the large firms
  - - - This policy aimed at replacing
        or substituting imports with domestic production
      - In this policy the government
        protected the domestic industries from foreign competition
      - Protection
        from imports took two forms:
        
        Tariffs
        
        Tariffs are a tax on imported goods; they make imported goods more expensive and discourage
        
        Quotas
        
        Quotas specify the quantity
        of goods which can be imported.
    - - The proportion of GDP contributed by the industrial sector increased in the period from 13 % in 1950 51 to 24.6 % in 1990-91.
      - rise in industry’s share of GDP is an
        important indicator of development.
      - permit license raj prevented
        certain firms from becoming more efficient
      - economic policy in 1991.
  - - - CAPITALIST
      - SOCIALIST
      - MIXED ECONOMY
- - - - FISCAL POLICY
      - FOREIGN INVESTMENT REFORM POLICIES
      - EXPORT-IMPORT POLICY
    - - REGULATORY MECHANISMS
        
        (i) industrial licensing under which every entrepreneur had to get permission from government officials to start a firm, close a firm or decide the amount of goods
        that could be produced
        
        (ii) private sector was not allowed in many industries
        
        (iii) some goods could be
        produced only in small-scale industries
        
        controls on price fixation and
        distribution of selected industrial products.
      - REMOVED RESTRICTIONS
        
        Industrial
        licensing was abolished for almost all but product categories — alcohol,
        cigarettes, hazardous chemicals industrial explosives, electronics,
        aerospace and drugs and pharmaceuticals
        
        Many goods produced by
        small-scale industries have now been dereserved
    - - The financial
        sector in India is regulated by the Reserve Bank of India (RBI).
      - major aims of financial sector reforms
        is to reduce the role of RBI from regulator to facilitator of financial sector
      - Foreign Institutional Investors (FII)
      - Financial sector includes financial
        institutions, such as commercial banks, investment banks, stock
        exchange operations and foreign exchange market.
    - - There are two types of taxes: direct and
        indirect
      - corporation tax
      - In 2016, the Indian Parliament
        passed a law, Goods and Services Tax Act 2016, to simplify and introduce a
        unified indirect tax system in India.
      - ‘one
        nation, one tax and one market’.
    - - the rupee was
        devalued against foreign currencies
    - - India was following a regime
        of quantitative restrictions on imports
      - tariffs
      - The trade policy reforms aimed at
        
        dismantling of quantitative restrictions
        on imports and exports
        
        reduction
        of tariff rates
        
        removal of
        licensing procedures for imports
      - Import licensing was abolished except
        in case of hazardous and environmentally sensitive industries
      - Export
        duties
  - - - (i) by
        withdrawal of the government from ownership and management of
        public sector companies
      - (ii) by
        outright sale of public sector companies.
    - - (i) Maharatnas
        
        (a) Indian Oil Corporation Limited
        
        (b) Steel Authority of
        India Limited
      - (ii) Navratnas
        
        (a) Hindustan Aeronautics Limited,
        
        (b) Mahanagar Telephone Nigam Limited
      - (iii) Miniratnas
        
        (a) Bharat
        Sanchar Nigam Limited
        
        (b) Airport Authority of India
        
        (c) Indian Railway
        Catering and Tourism Corporation Limited.
  - - - WTO was founded in 1995 as
        the successor organisation to the General Agreement on Trade and
        Tariff (GATT)
      - GATT was established
        in 1948 with 23 countries as the global trade organisation
        to administer all multilateral trade
        agreements
      - international trade
        (bilateral and multilateral)
      - tariff & non-tariff
        barriers
      - The objective of the WTO is to establish a rule based trade regime to ensure
        optimum utilisation of world resources.
- - - - CHRONIC POOR
        
        ALWAYS POOR
        
        USUALLY POOR
      - TRANSIENT POOR
        
        CHURNING POOR
        
        OCCASSIONALLY POOR
      - NON-POOR
        
        NEVER POOR
    - - DETERMINING POVERTY BY THE MONETARY VALUE
      - GOVERNMENT USES MONTHLY PER CAPITA EXPENDITURE (MPCE) AS PROXY FOR INCOME OF HOUSEHOLDS TO IDENTIFY THE POOR.
      - AMARTYA SEN HAS DEVELOPED AN INDEX KNOWN AS SEN INDEX FOR ESTIMATION OF POVERTY
      - OTHER POVERTY ESTIMATION TOOLS ARE POVERTY GAP INDEX AND SQUARED POVERTY GAP
  - - - (i) social, economic and political
        inequality
      - (ii) social exclusion
      - (iii)
        unemployment
      - (iv) indebtedness
      - (v)
        unequal distribution of wealth
  - - - LEVEL OF INCOME & COMSUMPTION
      - SOCIAL INDICATORS
      - INDICATORS OF VULNERABILITY TO RISKS
      - SOCIO POLITICAL ACCESS
- - - - Preventive medicine
        (vaccination)
      - curative
        medicine (medical intervention during
        illness)
      - social medi-
        cine (spread of health literacy)
  - - - expenditure by the
        government is expressed in two ways
        
        (i) as a percentage of ‘total government
        expenditure’
        
        (ii) as a percentage of
        Gross Domestic Product (GDP)
    - - appointed by
        the Government of India in 1999
    - - Indicators
        
        adult literacy level
        
        primary
        education completion rate
        
        youth
        literacy rate
  - - - In 1950, when the
        Constitution of India was passed by the Constituent Assembly, it was noted in
        the Directive Principles of the Constitution that the government
        should provide free and compulsory education for all children up to the age
        of 14 years within 10 years from the commencement of the Constitution.
    - - NSSO data
      - Periodic Labour Force Survey 2017-18.
- - - - literacy, more specifically, female
        literacy, education and skill development
      - health, addressing both sanitation
        and public health
- - - - (i) assurance of
        minimum support prices (MSP) for agricultural products
      - (ii) maintenance
        of buffer stocks of wheat and rice by Food Corporation of India
      - (iii) distribution of food grains and sugar
        through PDS.
- - - - agro-processing industries,
        food processing industries, leather industry, tourism, etc
    - - traditional home-based
        industries like pottery, crafts, handlooms etc
  - - - cattle, goats, fowl
        are the widely held species