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Semester 4: INDIAN ECONOMY
Introduction, Features and Issues, Planned Economic Development, Economic Crisis, NEP 1991, NITI Aayog
Indian Economy
Introduction
Indian economy is a mixed economy characterized by both private and public sectors. It has shown remarkable growth over the past few decades, transforming from a primarily agrarian economy to one that is diverse and industrialized.
Features and Issues
Main features include a large labor force, significant agricultural output, and a growing services sector. Current issues comprise income inequality, unemployment, inflation, and the need for sustainable development.
Planned Economic Development
India's economic development is driven by five-year plans initiated after independence, focusing on industrialization, infrastructure development, and social welfare. Each plan has aimed to address specific economic goals.
Economic Crisis
The economic crisis of 1991 was triggered by a balance of payments crisis, leading to devaluation of the currency and adoption of liberalization measures. Government intervention was required to stabilize the economy.
NEP 1991
The New Economic Policy introduced in 1991 marked a significant shift toward market-oriented reforms. It aimed to reduce government control, attract foreign investment, and increase competitiveness in various sectors.
NITI Aayog
NITI Aayog, established in 2015, replaced the Planning Commission. Its focus is on cooperative federalism and sustainable development, aiming to provide a more dynamic governance framework for economic planning.
National Income, Poverty, HDI, Poverty and Inequality, Gini/Sen Index, Regional Inequalities, Unemployment
Indian Economy
National Income
Definition of national income as the monetary value of all final goods and services produced within a country in a given period. Methods of calculating national income include production, income, and expenditure approaches. Significance of national income as an indicator of economic performance and standards of living.
Poverty
Understanding poverty as a multifaceted issue that includes economic, social, and political dimensions. Types of poverty include absolute poverty and relative poverty. Measurement of poverty through poverty lines and indices. Government measures to alleviate poverty in India.
Human Development Index (HDI)
Introduction to HDI as a composite index measuring average achievement in three basic aspects of human development: health, education, and standard of living. Importance of HDI as a tool for assessing social and economic development compared to GDP. Analysis of India's HDI ranking in the global context.
Poverty and Inequality
Exploration of the relationship between poverty and inequality in India. Discussion on income inequality trends and their implications on economic growth. Examination of various government initiatives aimed at addressing inequality.
Gini/Sen Index
Explanation of the Gini coefficient as a measure of income distribution and inequality. Introduction to the Sen index which incorporates aspects of poverty and inequality. Application of these indices in the Indian context and their implications for policy.
Regional Inequalities
Analysis of disparities in economic development across different regions in India. Factors contributing to regional inequalities, including historical, geographical, and socio-economic factors. Discussion on governmental policies aimed at promoting balanced regional development.
Unemployment
Definition and types of unemployment, including structural, frictional, and cyclical unemployment. Current trends in unemployment rates in India, contributing factors, and challenges faced in job creation. Government measures to tackle unemployment and promote employment generation.
Sectors: Agriculture, Green Revolution, Marketing, Industrial Development, MSMEs, Industrial Policy 1991, Services Sector
INDIAN ECONOMY
B.A.
ECONOMICS
4
PERIYAR UNIVERSITY
Core Course - VIII
Sectors of Indian Economy
Agriculture
Agriculture is a vital sector in India, employing a significant portion of the population. It contributes to food security and is pivotal to rural development. Key issues include productivity, sustainability, and the need for modernization.
Green Revolution
The Green Revolution was a period of agricultural transformation in the 1960s and 1970s, marked by the introduction of high-yielding variety seeds, fertilizers, and irrigation techniques. It significantly increased food grain production but also raised concerns regarding environmental sustainability and socio-economic inequalities.
Marketing
Marketing in agriculture involves the strategies and processes through which agricultural products are bought and sold. Effective marketing techniques are essential for ensuring farmers receive fair prices and connecting them to larger markets.
Industrial Development
Industrial development in India focuses on enhancing the manufacturing sector's contribution to the economy. It emphasizes technological advancement, infrastructure improvement, and policy support to foster industrial growth.
MSMEs
Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in the Indian economy by promoting entrepreneurship, generating employment, and contributing to industrial output. Government initiatives aim to support MSME growth through financial assistance and skill development.
Industrial Policy 1991
The Industrial Policy of 1991 marked a significant shift in India's economic approach, transitioning from a closed economy to a more liberalized market. It aimed to deregulate the industry, encourage foreign investment, and promote competition.
Services Sector
The services sector is a rapidly growing segment of the Indian economy, encompassing various industries such as IT, finance, healthcare, and tourism. It has become a major driver of economic growth and employment, emphasizing the need for skilled labor and innovation.
Foreign Trade, Composition & Direction, FDI, BOP Crisis, Trade Policy
Foreign Trade
Foreign trade refers to the exchange of goods and services between countries. It plays a critical role in the economic development of a nation. The value of imports and exports significantly influences a country's GDP. Foreign trade enables countries to specialize in the production of goods where they have a comparative advantage.
Composition and Direction of Foreign Trade
The composition of foreign trade refers to the types of goods and services that are traded, such as agricultural products, manufactured goods, and services. The direction of trade indicates the countries with which a nation conducts trade. For instance, India has significant trade relations with the USA, China, and the Gulf countries.
Foreign Direct Investment (FDI)
FDI is an investment made by a company or individual in one country in business interests in another country, in the form of establishing business operations or acquiring business assets. FDI is vital for economic growth as it brings in capital, technology, and expertise, which can help boost productivity and create jobs.
Balance of Payments (BOP) Crisis
The BOP crisis refers to a situation where a country cannot meet its international payment obligations. It is usually caused by a deficit in the current account, leading to a depletion of foreign exchange reserves. Countries facing a BOP crisis may seek assistance from international organizations, implement austerity measures, or adjust their currency values.
Trade Policy
Trade policy consists of the regulations and agreements that govern international trade. Policies can include tariffs, trade agreements, import quotas, and export subsidies. In India, trade policy has evolved from a protectionist stance to a more liberalized approach to facilitate foreign trade and attract FDI, particularly after the 1991 economic reforms.
Fiscal Federalism, Imbalances, Finance Commission Reports
Fiscal Federalism
Fiscal federalism refers to the financial relations between different levels of government. It involves the distribution of tax revenues, the allocation of expenditures, and the responsibilities of each level of government in an economy. In India, fiscal federalism is characterized by a division of responsibilities between the central and state governments. Key objectives include enhancing fiscal efficiency, equity, and accountability.
Imbalances in Fiscal Federalism
Imbalances in fiscal federalism can arise due to unequal distribution of resources, disparities in revenue generation capabilities, and differences in expenditure needs among states. These imbalances can lead to financial stress in states that are less economically developed and require support from the central government to meet their expenditure obligations.
Finance Commission Reports
The Finance Commission in India is a constitutional body tasked with recommending the distribution of taxes between the central and state governments. The reports provide comprehensive analysis and recommendations on vertical and horizontal distribution of revenue. They aim to reduce fiscal imbalances and enhance the financial health of states. Periodic reviews by the Finance Commission address shifting economic conditions and ensure equitable distribution of resources.
