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Semester 1: ELECTIVE - I INDIAN ECONOMIC DEVELOPMENT
Economic Development and Growth Concepts of Economic Growth and Development. Measurement of Economic Development Per Capita Income, Basic Needs, Physical Quality of Life Index, Human Development Index and Gender Empowerment Measure.
Economic Development and Growth Concepts of Economic Growth and Development
Definition of Economic Growth
Economic growth refers to the sustained increase in a country's output of goods and services, typically measured by the rise in Gross Domestic Product (GDP). It signifies the capacity of an economy to produce more and improve living standards.
Definition of Economic Development
Economic development encompasses broader aspects than growth, including improvements in living standards, education, health, and the overall quality of life. It aims for sustainable and equitable progress.
Measurement of Economic Development
Assessment of economic development includes various indicators that reflect the quality of life and standard of living in a nation.
Per Capita Income
Per capita income is calculated by dividing a country's total income by its population. It indicates the average income earned per person and serves as a key indicator of economic performance.
Basic Needs Approach
The basic needs approach focuses on ensuring that all individuals have access to fundamental necessities such as food, shelter, health care, and education. It addresses poverty and inequality.
Physical Quality of Life Index (PQLI)
PQLI is a composite index measuring the quality of life through indicators such as life expectancy, infant mortality rate, and literacy rate. It emphasizes non-economic factors contributing to well-being.
Human Development Index (HDI)
HDI is a composite index that assesses countries based on health, education, and per capita income. It ranks nations to reflect overall human development progress.
Gender Empowerment Measure (GEM)
GEM evaluates the extent of gender equality within a nation by analyzing women's participation in economic and political life. It assesses disparities in opportunities and outcomes between genders.
Economic Development Factors affecting Economic Development - Characteristics of Developing Countries- Population and Economic Development- Theories of Demographic Transition. Human Resource Development and Economic Development
Economic Development Factors affecting Economic Development
Economic Growth
Economic growth is critical for development and is often measured by increases in GDP. Factors influencing growth include investment in infrastructure, industrialization, and innovation.
Political Stability and Governance
Political stability promotes economic development by creating a conducive environment for investments. Good governance and reducing corruption enhance the efficiency of resource allocation.
Education and Human Capital
A well-educated workforce increases productivity and innovation. Investment in education and training is essential for developing human capital.
Access to Resources
Natural resources, such as land, minerals, and energy, can drive economic development if managed properly. Access to these resources affects agricultural productivity and industrial capacity.
Technological Advancement
Technological progress can enhance productivity and efficiency. Adoption of new technologies is vital for economic development.
Foreign Direct Investment (FDI)
FDI brings capital, technology, and expertise to developing countries, fostering economic growth.
Trade Policies and Globalization
Open trade policies encourage international trade, allowing countries to benefit from comparative advantages.
National Income Meaning, Importance, National Product-Concept, types of measurement, Comparison of National Income at Constant and Current Prices. Sectorial Contribution to National Income. National Income and Economic Welfare
National Income
Meaning
National income refers to the total monetary value of all final goods and services produced within a country in a specific period, usually a year. It encompasses various components such as wages, profits, rents, and taxes, minus subsidies.
Importance
National income is crucial for understanding the economic performance of a country. It serves as an indicator of economic health, aids in policy formulation, helps in international comparisons, and informs investment decisions.
National Product - Concept
National product is a measure of economic activity that reflects the total value of goods and services produced by a nation. It can be assessed in terms of Gross National Product (GNP) or Gross Domestic Product (GDP).
Types of Measurement
National income can be measured through various approaches: the production approach (total output), the income approach (total income earned), and the expenditure approach (total spending on the nation's final goods and services).
Comparison of National Income at Constant and Current Prices
National income at current prices reflects the value in terms of current market prices, including inflation. In contrast, national income at constant prices adjusts for inflation and provides a clearer picture of real growth over time.
Sectorial Contribution to National Income
Different sectors contribute variably to national income. The primary sector includes agriculture, the secondary sector involves manufacturing, and the tertiary sector covers services. Analyzing these contributions helps understand economic structure and shifts.
National Income and Economic Welfare
While national income indicates economic activity, it does not necessarily reflect the welfare of the population. Economic welfare considers factors like income distribution, quality of life, and environmental sustainability. Thus, high national income does not always equate to high welfare.
Public Finance Meaning, Importance, Role of Public Finance in Economic Development, Public Revenue-Sources, Direct and Indirect taxes, Impact and Incidence of Taxation, Public Expenditure-Classification and Cannons of Public Expenditure, Public Debt-Need, Sources and Importance, Budget- Importance, Types of Deficits -Revenue, Budgetary, Primary and Fiscal, Deficit Financing.
Public Finance
Meaning of Public Finance
Public finance refers to the study of the role of the government in the economy. It encompasses the collection of revenue and the allocation of that revenue into various government programs and services. Public finance aims to manage the economic resources of a country to achieve socio-economic objectives.
Importance of Public Finance
Public finance is crucial for maintaining economic stability, distributing resources equitably, and providing essential public goods and services. It helps in the regulation of the economy, redistributing income, and fostering economic development.
Role of Public Finance in Economic Development
Public finance plays a pivotal role in economic development by funding infrastructure, education, and healthcare. It promotes investment, supports social welfare, and consolidates social peace by addressing inequalities.
Public Revenue Sources
Public revenue is generated through various sources including taxes, fees, fines, and grants. The two main types of public revenue sources are direct and indirect taxes.
Direct and Indirect Taxes
Direct taxes are levied directly on individuals or organizations such as income tax and property tax. Indirect taxes are imposed on goods and services, such as sales tax and value-added tax.
Impact and Incidence of Taxation
The impact of taxation refers to who bears the burden of the tax, while incidence refers to the actual division of the burden between different groups. Understanding both is essential for effective tax policy.
Public Expenditure Classification
Public expenditure can be classified into developmental and non-developmental, as well as capital and revenue expenditure. Capital expenditure refers to spending on assets that will last over time, while revenue expenditure is on day-to-day operations.
Cannons of Public Expenditure
The cannons of public expenditure include the principles that guide government spending such as economy, efficiency, and equity. These principles ensure that public funds are utilized effectively.
Public Debt: Need, Sources, and Importance
Public debt is incurred by the government to finance budget deficits. It is essential to fund projects that stimulate economic growth. Sources of public debt include loans from international organizations, bonds, and treasury bills.
Budget: Importance
A budget is a financial plan that outlines expected revenues and expenditures over a specific period. It is crucial for financial management, resource allocation, and accountability.
Types of Deficits
The primary types of budget deficits are revenue deficit, budgetary deficit, primary deficit, and fiscal deficit. Each type indicates different levels of government overspending and financial health.
Deficit Financing
Deficit financing is the process of funding budget deficits by borrowing or creating money. This can stimulate economic growth but must be managed carefully to avoid long-term debt problems.
Money Supply Theories of Money and Its Supply, Types of Money-Broad, Narrow and High Power, Concepts of M1, M2 and M3. Inflation and Deflation -Types, Causes and Impact, - Price Index- CPI and WPI, Role of Fiscal Policy in Controlling Money supply.
Money Supply Theories and Its Supply
Theories of Money
Money serves as a medium of exchange, a unit of account, and a store of value. Theories of money include the Quantity Theory of Money, which suggests that price levels are directly proportional to the money supply. The Keynesian view emphasizes the liquidity preference and its role in determining the interest rate.
Types of Money
Money can be classified into several types based on its usability and liquidity. Broad money includes all forms of money and is used for economic analysis. Narrow money refers to physical cash and demand deposits. High power money represents central bank money that influences the overall money supply.
Concepts of M1, M2, and M3
M1 includes all physical currency, demand deposits, and other liquid assets. M2 includes M1 plus savings accounts and time deposits, representing a broader money supply. M3 encompasses M2 along with large time deposits and other larger liquid assets.
Inflation and Deflation
Inflation is the rate at which the general price level of goods and services rises, eroding purchasing power. Deflation is the decrease in price levels. Types of inflation include demand-pull and cost-push inflation, while stagflation describes high inflation combined with stagnant economic growth.
Price Indices - CPI and WPI
The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The Wholesale Price Index (WPI) measures the rate of price changes for wholesale goods, providing insight into inflation at the producer level.
Role of Fiscal Policy in Controlling Money Supply
Fiscal policy involves government spending and taxation decisions. By adjusting these, governments can influence economic activity and manage money supply indirectly. Increased spending can stimulate demand, while reducing spending can help control inflation.
