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Indian Economy

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Indian Economy

Uploaded by

mouli jain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Indian Economy

Structure of Indian Economy


1. Geographical
2. Natural resource
3. Human resources
4. Power
5. Mineral
6. Water
7. Forest
Characteristics of Indian Economy
1. Underdeveloped
2. Developing
3. Agriculture
4. Economics Disparity
5. Population density
6. Conservative Society
7. Unemployment
8. Lack of technical education
9. Mixed Economy
10. Poor per capital
11. Poverty
India is rich country with
poor people living in it.
• Richness  Poverty
 Extensive Fertile land  Low standard of living
 Mineral resources  Lack of capital Income
 Forest wealth  Low level of
consumption
 Man power
 Unemployment

• Poor
Introduction of Economic Planning
• Planning is an economic mechanism for
resource allocation and decision-making.
• Economic planning refers to any directing or
planning of economic activity outside the
mechanisms of the market.
• The Economic Planning has been going on
great since independence.
• This has played a major role in the
development of the country and led India
become self sufficient.
Essential Objectives of Planning

• High Rate of Growth


• Economic Self-Reliance
• Social Justice
• Modernization of the Economy
• Economic stability
Factors Affecting GDP
• Agriculture
• Investments
• Services
• Textiles
• Tourism
• Banking and Finance
• Foreign Direct Investments
Transition in GDP
• The goal of GDP is to measure the
total production of goods and
services produced in the economy
each year.

• GDP is important because it gives an


indication of how successfully society
is addressing the scarcity problem.
Economic Growth VS. Development
1.1 Growth and development has traditionally been
subject of economics since Adam Smith and it is
still focused by theoretical, methodological
practical experts as well.
1.2 Mainstream theories of the 20th century often
do not distinguish ‘growth’ (the increase of the GDP)
and ‘development’: the two words are used as
synonyms.
1.3 According to other authors (e.g. THIRLWALL
(2000)), economic development is more complex
than mere growth.
2. Development means:
2.1Generally Development is the gradual growth of a situation
that becomes more advanced and strong than previous one.
2.2 Development more likely related with economic growth

2.3 Development is a process where by the entire social system of


a country more upward.

2.4Development incorporates the notion of a measure/ measures


of human welfare
2.5 Development is a unfolding of human potentials for
meaningful participation in economic, social, political
and cultural process and institutions, so that people can
improve their conditions.

3. Development Includes
Growth
4.1 Generally growth refers to an increase in
some quantity over time. The quantity can be:
•Physical (e.g., growth in height, growth in an
amount of money)
•Abstract (e.g., a system becoming more
complex, an organism becoming more
mature).
4.2 Growth
Economic Growth
Economic growth is an increase (or decrease) in the
value of goods and services that a
geographic area produces and sells compared to
an earlier time.
Types of Economic Growth
Positive growth: If the value of an area's goods
and services is higher in one year than the year
before, it experiences positive growth,
usually simply called "economic growth."

Negative economic growth: In a year when less


value than the year before is produced and sold, it
experiences "negative economic growth,"
also called "recession" or "depression."
Measures of Economic Growth
Using measures of economic performance in
terms of the value of income, expenditure
and output
• GDP – Gross Domestic Product
– The value of output produced within a country
during a time period
• GNP – Gross National Product
– The value of output produced within a country
plus net property income from abroad
• GDP/GNP per head/per capita
– Takes account of the size of the population
• Real GDP/GNP
– Accounts for differences in price levels in
different countries
7.2Using measures of economic growth can give distorted
pictures of the level of income in a country – the income
distribution is not taken into account.
7.3A small proportion of the population can own a large
amount of the wealth in a country. The level of human
welfare for the majority could therefore be very limited.

This might be a common


picture…… But this could be just around the
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Economic Growth

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• High economic growth fuelled through capital spending


can hide a number of underlying economic problems –
how is the income and wealth distributed? Who is doing
the spending and will it ‘trickle down’ to the poor?
National Income Accounting –
Problems with using GDP/GNP
8.1 Reliability of data?
• How accurate is the data that is collected?
8.2 Distribution of income?
• How is the income distributed – does a small proportion of
the population earn a high percentage of the income or is
income more evenly spread?
8.3 Black/informal economy?
• Some economic activity not recorded – subsistence farming and
barter activity, for example
• Some economic activity is carried out illegally – building work ‘cash
in hand’, drug dealing, etc.
• Work of the non-paid may not be considered but may contribute to
welfare – charity work, housework, etc.
Growth versus Development
9.1 Economic growth may be one aspect of economic
development but is not the same
9.2 Economic growth:
• A measure of the value of output of goods and
services within a time period
9.3 Development:
• A measure of the welfare of humans in a society
Conditions for Development:
• “ The concepts of freedom, participation in
decision making towards fulfilling one’s
potentials and rights to organize are all
essential conditions for development process.
---A. Sen (Development as freedom:1998)
11. Core values of Development:

11.1 There are three core values of


Development
– Sustenance- The Ability to meet basic needs
– Self-esteem-To be a Person
– Freedom of choice- To be able to Chose
12. Where Should be Developed?
12.1 The development process has multiple interface and
these are between following issues:
a) Population and development
b) Poverty and development
c) Environment and development
d) Cultural values and development
e) Natural resources and development etc.
13. Human Development:
13.1 The concept of HD first introduced publicly in
1990 by the UNDP’s global Human Development
Report (HDR).
13.2 HD is a process of enlarging peoples choice.
13.3 Wide ranging choice are—
a. to live a long and healthy life.
b. to be educated
13.4 To have access to resources needed for a
decent standard living.
13.5 Political freedom
13.6 Guaranteed human rights and
13.7 Personal self respect
Human Development Index
Development
• Iraqis have supposedly
been given their
freedom following the
American led
‘Operation freedom’ but
has it improved
welfare?
Copyright: Photolibrary Group
14. Other Measures
15. Population growth &
Natural Resources

15.1 In demography, population


growth is used informally
for the more specific term
population growth rate, and is
often used to refer specifically
to the growth of the human
population of the world.
15.2 There are about 6.6 billion people in the world and
over 95 million babies are born per year – that is an
average of three babies per second!
What are Development Indicators?
Development indicators are statistics which can help to
determine the level of development of a country or
region.
The development indicators are:
1. Population Density : The amount of people per square kilometre (p / km 2).
The higher the number, the more developed an area is supposed to be – eg
Japan
2. Birth Rate : The amount of babies born per thousand of the population per
year (B. R. / 1000). The higher this is, the less developed a country is
supposed to be.
3. Death Rate : The amount of deaths per thousand of the population per year
(D. R. / 1000). The higher this figure is, the less developed a country is
supposed to be.
• Infant Mortality Rate.
• Levels of Malnourishment

4. Urbanisation : The percentage of the population that lives in urban areas


(%). The higher the figure, the more developed a country is supposed to be.
5. Agricultural Percentage : The amount of the working population that
works in agriculture or PRIMARY SECTOR. The higher the figure, the
less developed the country.
6. Life Expectancy : This is the average age to which everyone in a country
is supposed to live. It is measured in 'years'. The higher the figure, the
more developed a country is supposed to be.
7. Health : This is measured in number of people per doctor. The higher the
number is, the less doctors there are and therefore the less developed the
country is.
8. Education : The percentage of people who can read and write
(LITERACY RATE). The less the numbers are, the less developed the
country is likely to be.
9. Gross National / Domestic Product (GNP / GDP) : This is a measure of
the average amount of income of a person in a country and the amount
the country itself earns. It is measured in US $. The higher these figures,
the more developed a country is.
10. Economic Development Rate (EDR) : This measures the rate of
economic growth of a country. The higher the figure, the more a country
is developing.
11. Average Calorie Intake : A measure of how malnourished a country is
• 17% of children die before reaching 5yrs old due
to:

• Lack of food
• Disease
• Poor healthcare and vaccinations
• Not many hospitals and doctors

• 30% of children are malnourished (UK 2%)


• Average family size is 7! (UK is 2.4)
• Adult literacy is 18% (UK is 99%)
• Doubling rate of population is 23 years!
• Clean water is available to only 56% of people
(UK 98%)
• Life expectancy 48 (UK 78 yrs)

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