Unit - 4
Indian Economy
Q1) What are the main aims of first five-year plan?
A1) First Plan (1951-56):
In fact, the first five-year plan paved the way for the country's planned economic development. It had two main purposes. First, to get the Indian economy out of the stagnation caused by World War II and the division of the country. Second, to initiate a process of full-balanced development of the Indian economy to ensure a steady improvement in people's living standards over a period of time.
The first plan gave agriculture a top priority, with particular emphasis on land reform, including rural reconstruction programs and the start of various irrigation and electricity projects. About 44.6% of total Rs spending. 2,069 /-Crore has been assigned for its development. The plan, quite optimistically, predicted that savings and investment as a percentage of national income would rise from an estimated 5 to 6 percent in the early 1950s to 20 percent by 1968-69 and then stabilize at that level. Total income was expected to double in about 20 years, and per capita income was expected to double in 27 years.
Second Year Plan (1956-61)
In 1954, Parliament declared that economic policy must achieve the socialist patterns of society with a view to equality of income and wealth. Therefore, the main purpose of the Second Plan was to promote development patterns that could lead to the establishment of socialist social patterns in India.
The purpose of the second plan is to:
25 percent increase in national income.
I. Rapid industrialization with a particular emphasis on the development of basic and heavy industries.
ii. Significant expansion of employment opportunities
iii. Reduction of income and wealth inequality and more equal distribution of economic power.
The second plan focused on industrialization and also aimed to increase national income by 11% annually by 1960-61. The development strategy for economic growth through modern industrialization was taken over by the Third Plan.
Third Year Plan (1961-66)
The immediate objectives of Plan 3, which aims to be self-sufficient, are as follows.
I. Secure an annual increase in national income of over 5% and at the same time secure an investment pattern that can sustain this growth rate during the subsequent planning period.
ii. Achieve self-sufficiency in edible grains and increase agricultural production to meet industrial and export requirements.
iii. Expand basic industries such as steel, chemicals, fuels and electricity, establish machine manufacturing capacity and enable them to meet further industrialization requirements, mainly from national resources, within a period of about 10 years.
iv. Make full use of the country's human resources and ensure significant expansion of employment opportunities. And
v. Gradually increase equality of opportunity, narrow the gap between income and wealth, and distribute economic power more evenly.
Therefore, in this development strategy, the public sector was expected to promote the growth of infrastructure facilities such as basic industry and heavy industry, while reducing the concentration of economic power through the expansion of public ownership of means of production.
The first phase of development over the first three five-year planning periods is characterized by a fairly sustainable growth in per capita income, a compound annual growth rate of 8-10% of industrial production, and 3 ~ of edible grain production. Compound annual growth rate of 3.5% Per capita income has increased by approximately 1.75%, indicating a steady improvement over the pre-independence past.
Annual Plans (1966-69):
During the fifties and sixties, there was a stable government, thus paving the right way of planning and development. However, the Indo- Pakistan conflict of 1965, two successive years of severe drought, devaluation of the currency, general rise in prices and erosion of resources available for Plan purposes delayed finalisation of the Fourth Plan. Therefore, instead of the Fourth Plan, three Annual Plans were formulated between 1966 and 1969.
Fourth Plan (1969-74):
The fourth plan emphasized improving the condition of the less privileged and vulnerable parts of society through the provision of employment and education. It aimed to raise the standard of living of people through various programs to promote equality and social justice.
Plan 5 (1974-79):
During this period, the economy faced severe inflationary pressure. The main purpose of the plan was to adopt measures to increase self-reliance and consumption levels for people below the poverty line, but it also focused on controlling inflation and achieving stable economic conditions.
Plan 6 (1980-85):
The 6th Five-Year Plan was developed taking into account the outcomes and shortcomings of the last 30 years of the plan. The main purpose of the plan was to eliminate poverty. Therefore, this strategy was adopted to strengthen both agricultural and industrial infrastructure. Emphasis was also placed on increasing employment opportunities, especially in rural areas.
Plan 7 (1985-90):
The main purpose of the Seventh Plan was to provide employment opportunities and increase productivity and grain production growth, with a focus on reducing poverty and improving the quality of life of poor villages and towns.
Eighth (1992-97) and Ninth Plan (1997-2002):
The 7th Five-Year Plan was uninterrupted, but unstable political conditions such as the assassination of former Prime Minister Rajiv Gandhi shortened the life of the government and caused an economic crisis due to a lack of foreign exchange. did. Therefore, the 8th Five-Year Plan (1992-97) returns to normal in 1992 with a focus on creating adequate employment near full employment and achieving self-sufficiency by the turn of the century. It started after.
The 8th plan was started with the introduction of economic liberalization and the structural adjustment program. This plan proved to be a turning point when the role of the plan in development was questioned and analyzed from various perspectives. Therefore, Plan 9 was formulated with the roles of the state and the private sector as complementary, both of which were considered essential. The plan prioritized agriculture and rural development with the aim of accelerating economic growth.
10th Plan (2002-2007):
The 10th Five-Year Plan is currently in place, closing the gap, achieving a target growth rate of 8.0 per year and focusing on expanding social and economic opportunities for all individuals and groups.
The 10th Five-Year Plan is currently in place, closing the gap, achieving a target growth rate of 8.0 per year and focusing on expanding social and economic opportunities for all individuals and groups.
Q2) What are the main objectives of third year plan?
A2) The immediate objectives of Plan 3, which aims to be self-sufficient, are as follows.
I. Secure an annual increase in national income of over 5% and at the same time secure an investment pattern that can sustain this growth rate during the subsequent planning period.
ii. Achieve self-sufficiency in edible grains and increase agricultural production to meet industrial and export requirements.
iii. Expand basic industries such as steel, chemicals, fuels and electricity, establish machine manufacturing capacity and enable them to meet further industrialization requirements, mainly from national resources, within a period of about 10 years.
iv. Make full use of the country's human resources and ensure significant expansion of employment opportunities. And
v. Gradually increase equality of opportunity, narrow the gap between income and wealth, and distribute economic power more evenly.
Q3) What is Economic inclusion?
A3) Economic inclusion, the opening of economic opportunities to underserved social groups, is important to realize a transition to sustainable market economies.
An inclusive market economy ensures that anyone, regardless of gender, birthplace, family background, age or other circumstances, over which they have no control, has full and fair access to labor markets, finances and entrepreneurship and, more generally, to economic opportunities. Inclusion is therefore an intrinsic element of a sustainable market economy.
Promoting an inclusive market-based system is about efficient (human) resource allocation rather than being a social policy option.
But there's also a political dimension to inclusion. Beyond its contribution to efficient markets, fair and equitable access to economic opportunities is essential to foster broad support for market reforms and, ultimately, sustainable market economies.
Therefore, economic inclusion is an important transition quality. If people have a chance to be successful, they are more likely to participate in the workforce, get educated, or get involved in other activities that lead to economic growth. This, in turn, strengthens the transition process.
Q4) What is urbanization?
A4) Urbanization (or urbanization) refers to the migration of population from rural to urban areas, the corresponding decline in the proportion of rural people, and the way societies adapt to this change. It is primarily the process by which towns and cities are formed and grown as more people live and work in the center.
Q5) What are the causes or issues of Urbanization?
A5) Causes or issues of Urbanization
Expansion of government services as a result of World War II
Movement of people during division of India [14] [15] [16]
Industrial Revolution [citation needed]
11th Five-Year Plan for Urbanization for India's Economic Development [17]
Economic opportunities are just one of the reasons people move to cities
Urban infrastructure [18]
Growth in the private sector since 1990. [19]
Employment growth in cities is attracting people from rural areas to small cities to large towns. According to McKinsey, India's urban population will increase from 340 million in 2008 to 590 million in 2030.
Therefore, it is driven by the economic urge to move for economic progress to areas where people offer better employment opportunities.
It is also caused by the disappearance of villages due to land fragmentation, road and highway construction, dam construction and other activities.
Q6) Write a short note on Informal employment.
A6) Informal, on the opposite hand, is what doesn't respect forms. This adjective is usually wont to describe what's not governed by the principles or regulations effective.
With these clear ideas, we will advance to the definition of informal work. This is often what refers to figure whose conditions aren't regulated by law. This particularity leaves the worker during a situation of lack of protection.
Informal work is additionally referred to as undeclared work or irregular work. The worker, during this context, isn't registered with the state. this enables the employer to save lots of money by not paying the corresponding charges, for instance, for supplementary benefit and retirement. the worker, on his part, doesn't pay the taxes like his income.
Due to the characteristics of employment relationships, the worker is that the one who is harmed by informal work. Not only does he not have supplementary benefit or pays for his retirement, but he also doesn't have insurance, vacation, bonuses, allowances et al. rights provided for by the legislation.
In addition to the above, it should be emphasized that the one that carries out informal work isn't entitled to compensation within the event of dismissal, that he will have difficulty in claiming his salary if the employer dismisses him without paying one or more salary, which if had suffered an accident at work wouldn't even be entitled to the corresponding compensation.
It should even be borne in mind that if an individual is discovered that he's completing informal work by the competent bodies, he will need to assume several important consequences: yes, not only will he need to return the sums perceived as unemployment benefit but, moreover, he is often convicted of a Social Security fraud offense. within the latter case, you'll be punished with imprisonment from six months to 3 years.
Q7) Who is called as an unorganized worker?
A8) Under Section 2 (m) of the Unorganized Workers Social Security Act, 2008, the term "unorganized worker" means a home worker or self-employed or paid worker within the unorganized sector. It includes an organized sector worker who is not covered by any of the welfare-related acts as mentioned in the Schedule - II of Unorganized Workers Social Security Act, 2008. Unorganized workers take control of the Indian labor market and represent 90% of the total Indian workforce. The unorganized sector in India is one of the largest in the post-industrial world.
Q8) What are the tools of monetary policy?
A8) The tools of monetary policy used by the Fed include reserve requirement, the open market operation and the federal funds interest rate.
Q9) What are the tools of fiscal policy?
A9) The tools of fiscal policy used by the government include taxing and spending.
Q10) What do you mean by Money neutrality?
A10) Total production is determined by factors of production, not financial variables, so changes in monetary or fiscal policy do not affect total production. This is called money neutrality.
