ECONOMY-CRASHCOURSE

Economics - is the social science that studies the production, distribution, and
consumption of goods and services.

Types of Economics

Macroeconomics:

It analyses the entire economy (meaning aggregated production, consumption, saving,

and investment) and issues affecting it, including unemployment of resources (labour,
capital, and land), inflation, economic growth, and the public policies that address
these issues (monetary, fiscal, and other policies).

Microeconomics:
The study of the economic behaviour of individual “agents” such as particular
companies, workers, or households

INTRODUCTION OF INDIAN ECONOMY

Indian economy is primarily an agricultural economy with major emphasis on service

sector. Two-third of Indian people earn their living directly or indirectly through
agriculture. Indian economy is the 5th largest economy in the world measured by
nominal GDP and the 3rd largest by Purchasing Power Parity (PPP).

Main characteristics of Indian economy are as follows:

Agrarian Economy - In an Agrarian economy, agriculture dominates in both the

Gross National Product (GNP) and employment. More than half of India’s working
population is engaged in agriculture
ii. Mixed Economy It is an economy where both public and private sector co-exist.
The nature of Indian economy is a mixed economy. The term was coined by JM
Keynes. India opted for ‘Mixed Economy’ in the industrial policy of 1948.
iii. Developing Economy Following features shows that

Indian economy is a developing economy’

• Low per capita income and occupational pattern is biased towards primary sector.

• Heavy population pressure and prevalence of chronic unemployment and under

employment.

• Steadily improving rate of capital formation.

• Low capital per head and unequal distribution of

wealth/assets.

Broad Sectors of Indian Economy

There are three sectors of Indian economy, which are as follows

Primary Sector It is directly related to the extraction or utilisation of natural

resources. Agriculture, mining, fishing, quarrying, dairy sector and many other such
functions come under the primary sector
Secondary Sector It utilises the end product of the primary sector, to manufacture
finished goods, through the refinement and processing of the primary products.
Construction, manufacturing, electricity, gas and water supply come under the
secondary sector.

SECONDARY SECTOR

iii. Tertiary Sector Tertiary sector generally provides services, instead of goods to
other sector. It is also called as service sector. Business, transport,
telecommunication, banking, insurance, real estate, community and personal services
come under the
 Tertiary Sector

Other Sector of Economy

Quaternary Sector This sector consists of the intellectual and knowledge based
abilities. Research and development, culture, information technology, consulting,
financial planning, education etc come under the quaternary sector.

Quinary Sector This sector includes highest level of decision-making. It includes top
officials of government, media, universities etc.
SOCIAL AND ECONOMIC DEVELOPMENT INDEX

Various economists have proposed different methods to measure economic growth

and development. One of the important method is Human Development Index.

Human Development Index (HDI)

• The United Nations Development Programme (UNDP) introduced the HDI in its
first Human Development Report

(HDR), prepared under the stewardship of Mahbub-ul-Haq in 1990.

• HDR, 1990 defined human development as the process of widening people’s

choices as well as raising the level of well-being achieved.

Indicators of HDI
Three main indicators of HDI are as follows

i. Life Expectancy Index (LEI) Infant mortality is not considered as a separate

indicator in this index. Thus, life expectancy refers to life expectancy at birth, not at
age one.

ii. Education Index (EI) This index is measured by mean of years of schooling for
adults aged 25 years and above and expected years of schooling for children of
school entering age.

iii. Income Index (II) The standard of living dimension of human development index
is measured by gross national income per capita. The index uses the logarithm of
income, to reflect the diminishing importance of income with increasing GNI.

NATIONAL INCOME OF INDIA

• National Income (NI) is the net value of all the final goods and services
produced by its nationals during a financial year. It is a flow concept. In India, the
financial year is from

1st April to 31st March. The national income is calculated annually.

• According to National Income Committee (1949), “A national income estimate

measures the volume of commodities and service turned out during a given period
counted without duplication”.

• NI = C + G + I + (X −M) + (R − P) − Depreciation − Indirect tax +

Subsidies.

Where, C = Total Consumption Expenditure

G = Total Government Expenditure

I = Total Investment Expenditure

X = Export

M = Import

(R-P) = Net Factor Income from Abroad

R ⇒ Received, P ⇒ Payment

Methods of Measuring National Income

There are three types of methods, which are as follows

i. Product Method

In this method, net value of final goods and services produced in a country during
a year is obtained, which is called Total Final Product. This represents Gross
Domestic Product (GDP).

ii. Income Method In this method, a total of net income earned by working people
in different sectors and commercial enterprises is obtained.

iii. Consumption Method

It is also called expenditure method. Income is either spent on consumption or

saved. Hence, national income is the addition of total consumption and total
savings. In India, a combination of production method and income

method is used for estimating national income.

Estimates of National Income in India

• In 1868, the first attempt was made by DadabhaiNaoroji in his book ‘Poverty and
Un-British Rule in India’. He estimated the per capita annual income to be` 20.

• The first scientific attempt to measure national income in India was made by
Professor VKRV Rao in 1931-32. He divided the Indian economy into 13 sectors.

• In 1949, National Income Committee under the Chairmanship of Professor PC

Mahalanobis was constituted. The other members were Professor VKRV Rao and
Professor DR Gadgil.

PLANNING IN INDIA

Economic planning refers to the path of actions in terms of policy measures to be

followed in future, in pursuance

of pre-determined objectives.

• The first attempt to initiate economic planning in India was made by Sir M

Visvesvaraya, a noted engineer and politician, in 1934 through his book, ‘Planned
Economy for India’.

• In 1938, National Planning Commission was set-up under the Chairmanship of

Jawaharlal Nehru by the Indian National Congress.
• Its recommendation could not be implemented because of the beginning of the
World War II and changes in the Indian political situation. In 1944, Bombay Plan
was presented by eight leading industrialists of Bombay.

• Gandhian Plan was given by Shriman Narayan Agarwal in this year. In 1945,
People’s Plan was given by MN Roy and in 1950, Sarvodaya Plan was given by
Jai Prakash Narayan. A few points of this plan were accepted by the government.

National Development Council

All the plans made by the Planning Commission was to be approved by National
Development Council (NDC) first. It was constituted to build cooperation between the
states and the Planning Commission for economic planning. It is an extra-
constitutional and extra-legal body.

Planning Commission

• The Planning Commission was set-up on 15th March, 1950 under the
Chairmanship of Pt Jawaharlal Nehru. It was to formulate plans for the economic
development of the country

on the basis of the available physical, capital and human resources.

• It was a non-statutory and non-constitutional advisory body. On 1st January, 2015,

Government of India established NITI Aayog (National Institution for Transforming
India Aayog) to replace planning commission. NITI Aayog

• NITI Aayog or National Institution for Transforming India Aayog

Came into existence on 1st January, 2015. A policy-making think-tank of government

that replaces Planning Commission and aims to involve states in economic policy-
making.

• It will provide strategic and technical advice to the central and the state
governments.

Structure under NITI Aayog

• NITI Aayog will be headed by the Prime Minister and will have a Governing
Council, comprising Chief Ministers of States and Heads of all the Union Territories.
TheGovernment Council replaces the earlier National Development Council (NDC).
• In addition, there will also be a Regional Council comprising of Chief Ministers
and Lieutenant Governors of Union Territories, which will be mandated to develop
plans that are region specific.

• The Aayog will have 7-8 full time members and two well-known and accomplished
part-time members, drawn from leading research organisations and major universities.

• Four Union Ministers, nominated by the Prime Minister, will also be included in
ex-officio capacity. Difference Between NITI Aayog and Planning Commission
Parameter NITI Aayog Planning Commission Financial Clout To be an advisory
body, or a think-tank.

The powers to allocate funds might be vested in the Finance Ministry. Enjoyed the
powers to allocated funds to Ministries and State Governments. Full-time Members

The number of full-time members could be fewer than Planning Commission..

States role was limited to the National Development Council and annual interaction
during plan meetings. Member Secretary To be known as the CEO and to be
appointed by the Prime Minister. Secretaries or Member Secretaries were
appointment through the usual process. Part-time Members To have a number of
part-time members, depending on the need from time-to-time

. FIVE YEAR PLANS

First Five Year Plan (1951-56)

• This was based on Harrod Domar model. Highest priority accorded to agriculture
in view of large import of foodgrains and inflation.

• Target growth 2.1% and achieved 3.6%.

• Many irrigation project were initiated including the Bhakra, Hirakud and Damodar
Valley dams.

Second Five Year Plan (1956-61)

• Rapid industrialisation with particular emphasis on the development of basic and

heavy industry, also called Nehru Mahalanobis Plan.

• To increase the rate of investment from 7% to 11% of GDP. Atomic Energy

Commission came into being and TIFR was set-up
. • Targeted growth rate was 4.5% but achieved 4.1%. • Durgapur (UK), Bhilai
(USSR) and Rourkela (Germany) steel plant was set-up with foreign help.

Third Five Year Plan (1961-66)

• This is also known as Gadgil Yojana. The basic goal was to make India a self-
reliant and self-generation economy.

• To increase the national income by 30% and per-capita income by 17%.

Targeted growth 5.6%, achieved growth 2.8%.

• The situation created by Indo-Pakistan conflict (1965), two successive years of

severe drought, devaluation of currency by 57%, general rise in prices and erosion
of resources caused delay in subsequent plan.

Annual Plan (1966-69)

• Due to unfortunate failure of the Third Plan, the production in various sectors of
the economy became stagnant.

• In 1966, the Government of India declared the devaluation of rupee with a view
to increase the exports of the country. •

Fourth Plan was postponed and three Annual Plan were implemented. Some of the
economists called this period (1966 to 1969) as plan holiday.

Fourth Five Year Plan (1969-74)

• Objective was growth with stability and progressive achievement of self-reliance.

Targeted growth 5.7% however, achieved growth 3.3%

. • First 2 years of the plan were successful with record foodgrain production on
account of Green Revolution.

• Also known as Ashok Rudrah Manne Model. Fifth Five Year Plan (1974-1979) •
Original approach to plan was prepared by C Subramaniam, who proposed
economic growth alongwith direct attack on poverty. Target growth 4.4% and
achieved growth 4.8%

. • The Twenty-Point Programme was launched in 1975.

Rolling Plan (1979-80)

• Rolling plan (Gunnar Myrdal) was brought out by Janata Party Government under
Morarji Desai in 1978.

• The focus of the plan was enlargement of the employment potential in agriculture
and allied activities to raise the income of the lowest income classes.

Sixth Five Year Plan (1980-85)

• The emphasis was laid on greater management, efficiency and monitoring of

various schemes. Targeted growth 5.2%, achieved growth 5.4%.

• Indian economy made on all round progress and most of the targets fixed by
the plan was achieved.

Seventh Five Year Plan (1985-1990)

• It saw the beginning of liberalisation of Indian economy. • Average annual growth

rate was 6.0% as against the targeted 5.0%.

Annual Plan (1990-92)

• The Eighth Plan could not take off due to fast changing political situations at
the centre. Therefore, in 1990-1991 and 1991-1992 two Annual Plans were
formulated.

Eighth Five Year Plan (1992-1997)

• To provide a new dynamism to the economy and improve the quality of life of
the common man.

• Also called as Rao and Manmohan Singh Model of economic development. •

Higher economic growth rate of 6.68% achieved as against the targeted 5.6%.

Ninth Five Year Plan (1997-2002)

• Emphasis on seven basic minimum services which included safe drinking water,
universalisation of primary education, streamining PDS among others.

• Growth rate of 5.4 achieved as against targeted 6.5%. • Empowerment of

women, SC/STs/OBCs was initiated.

Tenth Five Year Plan (2002-2007)

• It aimed at increasing domestic saving rate from 23.52%. to 29.4%. Target

growth of 8.1% achieved was 7.7%.
• Reduction in gender gap in literacy and wage rates by atleast 50%.

Eleventh Five Year Plan (2007-2012)

• Sex ratio for age group of 0-6 years to be raised to 9.35 by 2011-12 and to
9.50 by 2016-17. Targeted growth rate was 8.1% and achieved 7.9%.

• As against the target of 4% growth in the agricultural sector only 3.1 was
achieved.

Twelfth Five Year Plan (2012-17)

• This plan is based on the theme ‘‘faster, sustainable and more inclusive growth”.

• The paper indicates 14 key areas to be focussed by the Twelfth Five Year Plan.
Some of these are energy, transport, natural resources, rural transformation, health,
transport, education and skill development.

Key Targets There are twelve key targets of Twelfth Five Year Plan, which are as
follows

i. Real GDP growth rate-8% (down from earlier 8.2%).

ii. ii. Agricultural growth rate-4%.
iii. iii. Manufacturing growth rate-10%.
iv. iv. Consumption poverty to be reduced by 10%.
v. v. Employment 50 million new work opportunities in the non-farm sector
vi. vi. Mean years of schooling-Increase it to 7 years by 2017. vii. Infant
Mortality Rate (IMR)- Reduce to 25 per 1000 live births.
vii. viii. Maternal Mortality Rate (MMR)-Reduce to 1 per 1000 live births.
viii. ix. Child (0-6) sex ratio-Raise it to 950 by 2017.
ix. x. Total fertility rate-Reduce it to 2.1.
x. xi. Gross irrigated area-Increase it from 90 million hectare to 103 million
hectare by 2017.
xi. xii. Renewable energy capacity-Add 30000 MW of new power capacity.

VISION DOCUMENT The first 15 years vision document will come into effect from
2017-18 after the end of the Twelfth Five Year Plan

It will be formulated with central objective of eradication of poverty. It will come

alongwith 7 years National Development Agenda which will lay down the
programmes, schemes and strategies to achieve a long-term vision.
Factor cost is the 'Price' of the commodity from the producer's side.

Market cost is derived after adding the indirect taxes to the factor cost of the
product. The formula to calculate is

Market Cost= Factor Cos t- Subsidies + Indirect Taxes.

Gross Domestic Product (GDP)

Gross domestic product is the value of all final goods and services produced within
the boundary of a nation during one year. In India one year means from 1st April
to 31st March of the next year.
GDP calculation includes income of foreigners in a Country but excludes income of
those people who are living outside of that country.
Net Domestic Product (NDP)
NDP is calculated by deducting the depreciation of plant and Machinery from GDP.
NDP = Gross Domestic Product – Depreciation

Gross National Product (GNP)

GNP is the value of all final goods and services produced by the residents of a
country in a financial year
While Calculating GNP, income of foreigners in a country is excluded but income of
people who are living outside of that country is included. The value of GNP is
calculated on the basis of GDP.

GNP = GDP + X – M
Where,
X = income of the people of a country who are living outside of the Country
M = income of the foreigners in a country

Net National Product (NNP)

Net National Product (NNP) in an economy is the GNP after deducting the loss
due to depreciation.

NNP = GNP – Depreciation

NNP at Factor Cost:
It is the value of NNP when the value of goods and services is taken at the
production cost.

NNP at Market Price:

It is the value of NNP at consumer cost.

NNP at market cost = NNP at factor cost + Indirect taxes – Subsidies

Personal Income:
Personal income is the total income received by the individuals of a country from
all sources before payment of direct taxes in one year. Personal income is never
equal to the national income, because the former includes the transfer payments
whereas they are not included in national income.

Personal income is derived from national income by deducting undistributed corporate

profits, profit taxes, and employees’ contributions to social security schemes. These
three components are excluded from national income because they do reach
individuals.

But business and government transfer payments, and transfer payments from abroad
in the form of gifts and remittances, windfall gains, and interest on public debt
which are a source of income for individuals are added to national income. Thus
Personal Income = National Income – Undistributed Corporate Profits – Profit Taxes –
Social Security Contribution + Transfer Payments + Interest on Public Debt.

Personal income differs from private income in that it is less than the latter
because it excludes undistributed corporate profits.
Thus Personal Income = Private Income – Undistributed Corporate Profits – Profit
Taxes.
Disposable Income:

Disposable income or personal disposable income means the actual income which
can be spent on consumption by individuals and families. The whole of the
personal income cannot be spent on consumption, because it is the income that
accrues before direct taxes have actually been paid. Therefore, in order to obtain
disposable income, direct taxes are deducted from personal income. Thus Disposable
Income=Personal Income – Direct Taxes.
But the whole of disposable income is not spent on consumption and a part of it
is saved. Therefore, disposable income is divided into consumption expenditure and
savings. Thus Disposable Income = Consumption Expenditure + Savings.

If disposable income is to be deduced from national income, we deduct indirect

taxes plus subsidies, direct taxes on personal and on business, social security
payments, undistributed corporate profits or business savings from it and add
transfer payments and net income from abroad to it.
Thus Disposable Income = National Income – Business Savings – Indirect Taxes +
Subsidies – Direct Taxes on Persons – Direct Taxes on Business – Social Security
Payments + Transfer Payments + Net Income from abroad.

f it goes to the richer sections of the society and thus income received by the
common man is lower than the per capita income.

Nominal and Real GDP:

When GDP is measured on the basis of current price, it is called GDP at current
prices or nominal GDP. On the other hand, when GDP is calculated on the basis
of fixed prices in some year, it is called GDP at constant prices or real GDP.
Nominal GDP is the value of goods and services produced in a year and
measured in terms of rupees (money) at current (market) prices. In comparing one
year with another, we are faced with the problem that the rupee is not a stable
measure of purchasing power. GDP may rise a great deal in a year, not because
the economy has been growing rapidly but because of rise in prices (or inflation).
On the contrary, GDP may increase as a result of fall in prices in a year but
actually it may be less as compared to the last year. In both 5 cases, GDP does
not show the real state of the economy. To rectify the underestimation and
overestimation of GDP, we need a measure that adjusts for rising and falling prices.
This can be done by measuring GDP at constant prices which is called real GDP.
To find out the real GDP, a base year is chosen when the general price level is
normal, i.e., it is neither too high nor too low. The prices are set to 100 (or 1) in
the base year.

GDP Deflator:
GDP deflator is an index of price changes of goods and services included in GDP.
It is a price index which is calculated by dividing the nominal GDP in a given year
by the real GDP for the same year and multiplying it by 100. Thus,

Types of unemployment

• Cyclical unemployment
o Cyclical unemployment exists when individuals lose their jobs as
a result of a downturn in aggregate demand (AD)
▪ If the decline in aggregate demand is persistent, it is
either called demand deficient, general, or Keynesian
unemployment
o When companies experience a reduction in the demand for their
products or services, they respond by cutting back on their
production, making it necessary to reduce their workforce within
the organization. In effect, workers are laid off.
▪ Example: Unemployment caused by the recession of 2008-
2010
o Cyclical unemployment is normally a shot-run phenomenon; and
are subject to trade cycles
• Structural unemployment
o Structural unemployment occurs when certain industries decline
because of long term changes in market conditions
o Drastic changes in the economic structure, affect either the supply
of a factor or demand for a factor of production
o Structural employment is a natural outcome of economic
development, technological advancement and innovation that are
taking place rapidly all over the world in every sphere
 o For example, as old industries have declined, new industries
have emerged, such as higher tech manufacture, IT, computing,
insurance, and internet based companies. However, these new
industries may require a different skill set to previous
manufacturing jobs, and it is this that can cause structural
unemployment

• Classical unemployment
o Classical unemployment is caused when wages are ‘too’ high.
o This explanation of unemployment dominated economic theory
before the 1930s, when workers themselves were blamed for not
accepting lower wages, or for asking for too high a wage
o Classical unemployment is also called real wage unemployment
• Seasonal unemployment
o Seasonal unemployment exists because certain industries only
produce or distribute their products at certain times of the year.
o Industries where seasonal unemployment is common include
farming, tourism, and construction

•
o Ex: Workers in a ski resort will become unemployed after winter
ends, while tourist guides in a hill station in India are likely to
lose work after summer when the influx of tourists is low
o Other example could be in the agricultural sector where the
demand for workers is more during harvesting than is required in
other months in a year

• Frictional unemployment
o Frictional unemployment, also called search unemployment, occurs
when workers lose their current job and are in the process of
finding another one.
o There may be little that can be done to reduce this type of
unemployment, other than provide better information to reduce the
search time.
 o This suggests that zero unemployment is impossible at any one
time because some workers will always be in the process of
changing jobs.

Voluntary unemployment

o Voluntary unemployment is defined as a situation when workers

choose not to work at the current equilibrium wage rate.
o For one reason or another, workers may elect not to participate
in the labour market
▪ There are several reasons for the existence of voluntary
unemployment including excessively generous welfare
benefits and high rates of income tax

Disguised Unemployment

o It is a situation in which more people are doing work than

actually required
o Even if some are withdrawn, production does not suffer. In other
words it refers to a situation of employment with surplus
manpower in which some workers have zero marginal productivity
o Overcrowding in agriculture due to rapid growth of population and
lack of alternative job opportunities may be cited as the main
reasons for disguised unemployment in India

Educated Unemployment

o Among the educated people, apart from open unemployment,

many are underemployed because their qualification does not
match the job
o Shortfalls in education system, mass output, preference for white
collar jobs, lack of employable skills and dwindling formal salaried
jobs are mainly responsible for unemployment among educated
youths in India
 • Technological Unemployment
o It is the result of certain changes in the techniques of production
which may not warrant much labour
o Modern technology being capital intensive requires fewer labourers
and contributes to this kind of unemployment
• Casual Unemployment
o When a person is employed on a day-to-day basis, casual
unemployment may occur due to short-term contracts, shortage of
raw materials, fall in demand, change of ownership etc.
• Chronic Unemployment
o If unemployment continues to be a long term feature of a
country, it is called chronic unemployment.
o Rapid growth of population and inadequate level of economic
development on account of vicious circle of poverty are the main
causes for chronic unemployment

Reserve Bank of India (RBI)

• RBI is the Central Bank of the country. It was set-up on the basis of Hilton
Young Commission recommendation in April, 1935, with the enactment of RBI Act,
1934. Its first Governor was Sir Osborne Smith.

• The main purpose of creating RBI was to separate currency and credit from GOI.
RBI was nationalised in 1949 and its first Indian Governor was CD Deshmukh. The
22nd RBI Governor is Urijit Patel. He was appointed in September, 2016.

• There are 14 Directors in Central Board of Directors besides the Governor, 4

Deputy Governors and 1 Government official. The Headquarter of the RBI is
situated in Mumbai

Role of the RBI

Following are the roles of the Reserve Bank of India

• RBI has the obligation to transact the banking business of the union and state
governments. Hence, it is banker to the government.

RBI provides the broad parameters within which the banking and financial system of
India functions.
• As the custodian of foreign reserves, RBI is responsible for managing the
investment and utilisation of the country’s foreign reserves in the best possible
manner.

• Credit control is an important tool used by RBI, a major weapon of the monetary
policy used to control the demand and supply of money (liquidity) in the economy

Methods of Credit Control

There are two types of methods of Credit Control

(i) Quantitative/General Credit Control

Quantitative credit control is used to control the volume of credit and indirectly to
control the inflationary and deflationary pressures caused by expansion and

contraction of credit. The quantitative credit control consists of

• Bank Rate It is also called the rediscount rate. It is the rate at which the RBI
gives finance to Commercial Banks.

• Cash Reserve Ratio (CRR) It is the amount of funds that the banks are bound
to keep with the RBI as a proportion of their net demand and time liabilities.

• Statutory Liquidity Ratio (SLR) It is the ratio of liquid asset, which all
Commercial Banks have to keep in the form of cash, gold and unencumbered
approved securities equal to not more than 40% of their total demand and time
deposits liabilities.

• Repo Rate It is the rate at which RBI lends short-term money to the banks
against securities. Repo rate injects liquidity in the market.

• Reverse Repo Rate It is the rate at which banks parshort-term excess liquidity
with the RBI. Reverse repo rate withdraws liquidity from the market. This is always
100 base point/ 1% less than Repo rate.

• Open Market Operations (OMOs)Under OMOs, when the RBI sells Government
securities in the market, it withdraws money liquidity from the market and thus,
reduces volume of credit leading to controlof inflation. When it buys government
securities, it injects liquidity into the market and thus, increasescredit-volume leading
to higher economic growth.
(ii) Qualitative/Selective/Direct Credit Control Qualitative measures are used to
make sure that purpose, for which loan is given is not misused. It is done through
credit rationing and regulating loan to consumption etc

Money Supply:

The total stock of money in circulation among the public at a particular point of
time is called money supply.

It needs to be noted that total stock of money is different from total supply of
money.
Supply of money is only that part of total stock of money which is held by the
public at a particular point of time.
The circulating money involves the currency, printed notes, money in the deposit
accounts and in the form of other liquid assets.
RBI publishes figures for four alternative measures of money supply, viz. M1,
M2, M3 and M4.

• M1 = CU + DD

• M2 = M1 + Savings deposits with Post Office

savings banks
• M3 = M1 + Net time deposits of commercial
banks
• M4 = M3 + Total deposits with Post Office
savings organisations (excluding National Savings
Certificates)
CU is currency (notes plus coins) held by the public and DD is net demand
deposits held by commercial banks.
The word ‘net’ implies that only deposits of the public held by the banks are to
be included in money supply.

The interbank deposits, which a commercial bank holds in other commercial

banks, are not to be regarded as part of money supply.
M1 and M2 are known as narrow money. M3 and M4 are known as broad
money.
These gradations are in decreasing order of liquidity.

M1 is most liquid and easiest for transactions whereas M4 is least liquid of all.

M3 is the most commonly used measure of money supply. It is also known

as aggregate monetary resources.

INFLATION

It is that state in which the prices of goods and services rise on the one hand
and value of money falls on the other.When money circulation exceeds the
production of goods and services, thestate of inflation takes place in the

economy.

Types of Inflation

Four types of inflation are as follows

1. Creeping Inflation - When Inflation exist in very low rate (between 0 to 9%)

2. Galloping Inflation - When Inflation is large and accelerating

E.g. Russia Economies in late 1980's

3. Bottleneck Inflation- When Inflation is due to fall in supply side

E.g. Due to crop failure / Qlyksa ds cjckn gksus ls

4. Core Inflation - When Inflation is calculated by excluding food articles and

energy. It is calculating inflation for long term

5. Headline Inflation - When Inflation is calculated by including food articles and

energy. It is calculating inflation for short term

6 Demand Pull Inflation Inflation created and sustained by excess of aggregate

demand for goods and services over the aggregate supply. In other words, demand
pull inflation takes place when increase in production lags behind the increase in
money supply.
7.Cost Push Inflation Inflation which is created and sustained by increase incost of
production which is independent of the state of demand(e.g. trade unions can
bargain for higher wages and hence, contribute toinflation).

8. Stagflation In this type, there is fall in the output and employment levels. Due
to various pressures, the entrepreneurs have to raise the price to maintain their
margin of profit. But as they only partially succeed in raising the prices, they are
faced with a situation of declining output and investment. Thus, on one side there
is a rise in the general price level and on the other side, there isa fall in the
output and employment.

9. Hyper Inflation It is very rapid growth in the rate of inflation in which money
loses its value to the point where alternative mediums of exchanges-such as barter
or foreigncurrency are commonly used. Also called Galloping Inflation.

DEFLATION

It is that state in which the value of money rises and the price of goods

and services falls. The state of deflation may appear in the economy due to the
following

reasons

• When the government withdraws money from circulation.

• When government imposes heavy direct taxes or takes heavy loans

from the public (voluntary or compulsory or both).

• When the Central Bank sells the securities in open market (which reduces the
quantity of money in circulation).

• When the Central Bank increases the bank rate (which curtails the quantity of
credit in the economy

Types of Poverty The poverty has two aspects, which are as follows i. Absolute
Poverty Low level of income, which is not sufficient to fulfil required basic minimum
needs. ii. Relative Poverty It refers to poverty on the basis of comparison of per
capita income of different countries.
 Measurement of Poverty A common method used to measure poverty is based on
the income or consumption level. Generally, an average calorie intake of 2400
calorie for rural person and 2100 calorie for urban person is taken as a
determining value.

Poverty Estimation by Committees in India Various economists and organisations

have studied on the extent of poverty in India. Some of them are as follows

. Lakdawala Committee In September, 1989, the Planning Commission constituted

an Expert Group to consider methodological and computational aspects of estimation
of proportion and number of poor in India.

The Chairman of the Expert Group was Professor DT Lakdawala.

ii. Tendulkar Committee Report Tendulkar Committee submitted its report in

December, 2009, to the Planning Commission. In its findings, this committee has
moved away from just calorie criterion definition to a broader definition of poverty
that also includes expenditure on health, education, clothing in addition to food.

The updated poverty estimates of the Tendulkar Committee have lowered the
poverty line from ` 32 a day to ` 28.

iii. SR Hashim Committee The Planning Commission had constituted an expert

group under the Chairmanship of SR Hashim on 13th May, 2010, to recommend
detailed methodology for identification of BPL families in urban areas in the context
of the Twelfth Five Year Plan

. The panel has suggested that the government should use three-stage approach–
automatic exclusion, automatic inclusion and scoring index to identify urban poor.

iv. Rangarajan Report on Poverty The Expert Group under the Chairmanship of
Dr C Rangarajan has submitted its report on 30th June, 2014. The report retained
consumption expenditure estimates of NSSO as the basis for determining poverty.

On the basis of this, it pegged the total number of poor in India at 363 million or
29.6% of the population which is higher than the report of Suresh Tendulkar
Committee.

State of Poverty (World Bank Report) World Bank on 18th April, 2013, in its report
entitled ‘Where are the Poor and Most Poor’, observed that
• One-third of the global poor are in India and the poor in India live on less than
US$ 1.25 a day. There are around 120 crore extremely poor persons in the world
today.

Between 1981-2010, the developing countries have witnessed a decline in poverty

rate from 50% to 21%.

• Despite development in Africa, poverty is still widespread.

UNEMPLOYMENT According to National Sample Survey Organisation (NSSO), a

person who, owing to lack of work, had not worked, but either sought work
through employment exchanges, intermediaries, friends or relatives or by making
applications to prospective employers or expressed his willingness or availability for
work under the prevailing conditions of work and remuneration, is considered as
those seeking or available for work (or unemployed).

Types of Unemployment Generally, unemployment can be classified into two types,

which are as follows 1. Voluntary Unemployment This type of unemployment is on
account of persons not interested to take the employment i.e. jobs are available,
but the persons are not interested in being employed. 2. Involuntary Unemployment
It refers to a situation in which the persons are interested to work, but the jobs
are not available. Under this, there are various categories of unemployment

• Structural Unemployment It refers to a mismatch of job vacancies with the

supply of labour available, caused by shifts in the structure of the economy.

• Disguised Unemployment This is a situation in which more people are available

for work than shown in the unemployment statistics.

• Open Unemployment It is a condition in which people have no work to do.

They are able to work and are also willing to work, but there is no work for
them.

• Seasonal Unemployment It is on account of the seasonal nature of the

productive activities i.e. some productive activities are carried out only for certain
duration of a year.

• Cyclical Unemployment This type of unemployment is due to the recession in

the economy. This type of unemployment is prevalent in the developed countries.
This is also known as Keynesian Unemployment.
• Frictional Unemployment It occur when a worker is shifting from one job to the
other. It is temporary phenomenon. WELFARE PROGRAMMES AND SCHEMES
Indian state is a welfare state, which takes steps to do away the human sufferings
and provides an infrastructure that is condusive to development.

The Indian Government, since Independence, has been launching various multi-
dimensional social welfare programmes.

Rural development schemes are as follows Pradhan Mantri Gramin Digital

Saksharta Abhiyan (PMGDISHA) PMGDISHA was launched on 8th October, 2017. It
aims at imparting digital literacy to citizens in rural areas free of cost. It aims to
provide access to information, knowledge, education and healthcare. It will create
avenues for livelihood generation and financial inclusion through digital payments
and help bridge the digital divide

. Deendayal Upadhyay Gram Jyoti Yojana This scheme is designed to provide

continuous power supply to the entire rural India. It is one of the flagship scheme
of power ministry and will facilitate 24×7 supply of electricity. This scheme will
replace Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) but features of
RGGVY have been subsumed in this scheme. Major component of this scheme
includes separation of agriculture and non-agriculture feeder facilitating judicious
supply of electricity to consumers in rural areas.

Sansad Adarsh Gram Yojana It is a rural development and cleanliness programme

broadly focusing upon the development in the villages, which includes social
development, cultural development and spread motivation among the people on
social mobilisation of the village community. The goal is to develop three Adarsh
Grams by March 2019, of which one would be achieved by 2016. Thereafter, five
such Adarsh Grams (one per year) will be selected and developed by 2024.

MGNREGA The National Rural Employment Guarantee Act (NREGA) was enacted
in 2005. It was implemented in three phases, starting with 200 districts on 2nd
February, 2006 to cover the whole country by 2008. On 2nd October, 2009, it was
renamed as Mahatma Gandhi National Rural Employment Guarantee Act
(MGNREGA). India’s rural employment guarantee programme MGNREGA has been
ranked as the world’s largest public work programme. The features of MGNREGA
are as follows
• It seeks to provide at least 100 days (150 days for tribals) of guaranteed wage
employment in one financial year to at least one adult member of every rural
household who volunteers to do unskilled manual work.

• At least 33% of the beneficiaries are to be women

. • Originally, it promised a wage rate of ` 100 per day. From January, 2011,
wages have been linked to increase with Consumer Price Index for Agricultural
Labour (CPI-AL) for each state

. • It provides time bound employment guarantee and wage payment within 15

days.

The urban development schemes are as follows Heritage City Development and
Augmentation Yojana (HRIDAY) Union Government has launched a Heritage City
Development and Augmentation Yojana (HRIDAY) scheme to preserve and
rejuvenate the rich cultural heritage of the country. The scheme aims to preserve
and revitalise soul of the heritage city to reflect the city’s unique character by
encouraging aesthetically appealing, accessible, informative and secured environment.

AMRUT Under Atal Mission for Rejuvenation and Urban Transformation (AMRUT),
the government is targeting 500 cities. It aims to transform cities and towns into
efficient urban living spaces with special focus on a healthy and green environment
for children. 500 cities and towns will be selected on the basis of population i.e.
one lakh and above, while the other criteria of selection will apply for certain
locations like tourist popularity, certain popular hill towns and some selected islands.

Rural Development Schemes Urban Development Schemes Social Security

Schemes are schemes imposed and controlled by government units for the purpose
of providing social benefits of particular sections of the community.

The social security schemes are as follows Pradhan Mantri Vaya Vandana Yojana
for Senior Citizens

The Pradhan Mantri Vaya Vandana Yojana (PMVVY) was launched on 22nd July,
2017. It is a pension scheme exclusively for senior citizens aged 60 years and
above. Under this scheme, senior citizens will get a guaranteed interest of 8% for
10 years depending upon the investment made by them.

Tele-Law Initiative ‘Tele-Law’ Initiative was launched in collaboration with the

Ministry of Electronics and Information Technology on 12th June, 2017. The aim of
this scheme is to provide legal aid services to the marginalized communities and
citizens living in rural areas through the Common Service Centres (CSC) at the
Panchayat level, spread across the country.

Inclusive India Initiative The conference “Inclusive India Initiative: Towards an

Inclusive India” for Intellectual and Developmental Disabilities (IDDs) was launched
on 6th June, 2017. The initiative is specifically catering to persons with intellectual
and developmental disabilities; with an objective to include these people in the
mainstream and in all important aspects of social life.

Rashtriya Vayoshri Yojana The Union Ministry of Social Justice and Empowerment
has launched Rashtriya Vayoshri Yojana in Nellore District of Andhra Pradesh on
4th April, 2017.

The scheme aims at providing physical aids and assisted-living devices for senior
citizens belonging to Below Poverty Line (BPL) category.

The scheme will be distribute free of cost physical aids and assisted-living devices
for senior citizens belonging to BPL category in Camp mode.

Pradhan Mantri Jeevan Jyoti Bima Yojana The PMJJBY is available to people in
the age group of 18 to 50 and having a bank account. People who join the
scheme before completing 50 years can, however, continue to have the risk of life
cover upto the age of 55 years subject to payment of premium. Aadhar would be
the primary Know Your Customers (KYC) for the bank account.

Pradhan Mantri Suraksha Bima Yojana Under PMSBY, the insurance subscriber will
get annual life insurance in case of accidental death, partial disability or full
disability. The insurance is available to any person in the age group of 18 to 70
years. For accidental death and full disability ` 2 lakh and for partial disability ` 1
lakh will be provided. Atal Pension Yojana

The Atal Pension Yojana (APY) will focus on all citizens in the unorganised
sector, who join the National Pension System (NPS) administered by the Pension
Fund Regulatory and Development Authority (PFRDA) and who are not members of
any statutory social security scheme. The minimum age of joining APY is 18 years
and maximum age is 40 years. Therefore, minimum period of contribution by the
subscriber under APY would be 20 years or more. This scheme is mainly targeted
at unorganised sector workers. ‘
Swasth Bachche, Swasth Bharat’ Programme This programme was launched on
22nd August 2017. The programme will provide a comprehensive and inclusive
report card for children covering all age groups and children of different abilities. It
will make students, teachers and parents aware about the importance of good
health and fitness and encourage 60 minutes of play each day.

Intensified Mission Indradhanush The Union Ministry of Health and Family Welfare
has launched Intensified Mission Indradhanush (IMI) on 8th October 2017 to
accelerate full immunization coverage to more than 90% by December 2018.
Through this programme, Government aims to reach each and every child under
two years of age and all those pregnant women who have been left uncovered
under the routine immunisation programme.

NITI Aayog’s SATH Programme National Institution for Transforming India (NITI)
Aayog’s SATH (Sustainable Action for Transforming Human capital) programme was
launched on 22nd September 2017. The SATH programme aims to provide
structured support to Assam in identifying key health priorities and implement the
solutions towards transforming the health and improving the well-being of people of
state.

Kilkari Project The government launched Kilkari (literally baby noises), a mobile
voice message service that delivers weekly messages to families about pregnancy,
family planning, nutrition, childbirth and maternal and childcare. The Bill and Melinda
Gates Foundation has provided the mobile phone application for Kilkari and mobile
academy; the latter is a 240-minute free training module for ASHAs. In the first
phase, the Kilkari application is expected to benefit 1.84 crore pregnant
women/newborns in Jharkhand, Odisha, Uttar Pradesh, Uttarakhand and in some
districts of Madhya Pradesh and Rajasthan.

Mission Indradhanush Mission Indradhanush aims to achieve full immunisation

coverage for all children by 2020. The mission aims to cover all those children
who are either unvaccinated or are partially vaccinated against seven vaccine
preventable diseases including diphtheria, whooping cough, tetanus, polio,
tuberculosis, measles and hepatitis-B. Health Oriented Programmes Social Security
Schemes Under the programme, 201 high focus districts in the country having
nearly 50% of all unvaccinated or partially vaccinated children have been identified
and will be covered in the first phase of the mission.
National Ayush Mission The basic objective of National Ayush Mission is to
promote AYUSH medical systems through cost effective AYUSH services,
strengthening of educational systems, facilitate the enforcement of quality control of
Ayurveda, Siddha, Unani and Homeopathy drugs and sustainable availability of raw
materials for drugs. It contemplates establishment of a National Mission as well as
corresponding missions at state level. Empowerment of women is a major social
phenomenon which requires an understanding of its multi-dimensional influence,
including our family structures and units. ‘

Beti Bachao Beti Padhao’ Scheme (BBBP) Alarmed by sharp decline in child sex
ratio, the government has introduced Beti Bachao, Beti Padhao (BBBP) programme
in 100 gender critical districts. The overall goal of this scheme is to celebrate the
girl child and enable her education. It aims to prevent gender biased sex selective
elimination, ensure survival and protection of the girl child and ensure education of
the girl child. The Beti Bachao Beti Padhao initiative has two major components–
mass communication campaign and multi-sectoral action in 100 selected districts.

National Mission for Empowerment of Women (NMEW) This mission aims to

achieve holistic empowerment of women through covergence of schemes of different
ministeries/department of Central and State Government. It aims to strengthen the
conceptual and programmatic basis of women centric schemes implemented by
ministry of women and child development, other ministeries and State Government
with the mechanism for covergence.

Ujjawala Scheme It is a comprehensive scheme for prevention of trafficking and

rescue, rehabilitation and re-integration of victims of trafficking for commercial sexual
exploitation. The objective of the scheme include social mobilisation and involvement
of local communities, awareness generation programmes, generate public discourse
through workshop and seminars. Target group include women and children who are
vulnerable for trafficking for commercial sexual exploitation.

Swadhar Scheme The Swadhar Scheme was launched by the Union Ministry of
Women and Child Development in 2002 for rehabilitation of women in difficult
circumstances. The scheme provides shelter, food, clothing and care to the
marginalised women/girls who are in need. The beneficiaries include widows
deserted by their families and relatives, women prisoners released from jail and
without family support, women survivors of natural disasters, women victims of
terrorist/extremist violence etc. The implementing agencies are mainly NGOs. An
Evaluation Study conducted through Centre for Market Research and Social
Development to assess the performance of the scheme observed that the scheme
is successful for which it was formulated/implemented.

The education oriented programmes are as follows “

JIGYASA” – Student-Scientist connect Programme This programme has been

launched by the government on 7th July, 2017. The programme would be
implemented by the Council of Scientific and Industrial Research (CSIR) in
collaboration with Kendriya Vidyalaya Sangathan (KVS). The main focus of the
programme is to connect school students and scientists as well as to extend
student’s classroom learning to a very well-planned research laboratory based
learning.

Global Initiative of Academic Network Planning (GIAN) GIAN aims at tapping the
talent pool of scientists and entrepreneurs to engage with the institutes of higher
education in India, to augment the country’s existing academic resources,
accelerated the pace of quality reforms, and further strengthen India’s scientific and
technological capabilities.

Nai Manzil Scheme Under the scheme, girls from minority communities will be
imparted three-month skill development training in seven identified sectors relevant
to the region. It is a bridge course to fill the academic and skill development gaps
of the deeni Madarsa passouts with their mainstream counterparts. It will be
introduced in all Madarsas in phased manner.

ACCREDITED SOCIAL HEALTH ACTIVISTS (ASHAs) ASHAs are community health

workers instituted by the Government of India’s Ministry of Health and Family
Welfare (MoHFW) as a part of the National Rural Health Mission (NRHM). The
mission, begun in 2005, full implementation, was targeted for 2012. Once fully
implemented there would be an ASHA in every village in India, a target that
translates into 250000 ASHAs in 10 states. ASHAs are local women trained to act
as health educators and promoters in their communities.

Pradhan Mantri LPG Panchayat Country-wide Pradhan Mantri LPG Panchayat

scheme was launched on 22nd September, 2017 to distribute LPG connections
among rural areas where conventional fuel is used for domestic purposes. It is
backup scheme to existing Pradhan Mantri Ujjwala Yojana.
Sampoorna Bima Gram (SBG) Yojana It was launched to expand coverage of
Postal Life Insurance (PLI) in a bid to provide affordable life insurance services to
people particularly those living in rural areas. Under SBG Yojana, at least one
village (having a minimum of 100 households) will be identified in each of revenue
districts of country to cover all households of identified village with minimum of one
RPLI (Rural Postal Life Insurance) policy each.

Saubhagya Scheme Sahaj Bijli Har Ghar Yojana –“Saubhagya” was launched on
25th September, 2017 with an aim at providing last mile electricity connectivity to
all rural and urban households. Under the scheme, government will provide free
electricity to all households identified under Socio-Economic and Caste Census
(SECC) data 2011.

Mentor India Campaign The National Institution for Transforming India (NITI) Aayog
has launched Mentor India Campaign on 22nd August, 2017. It is a strategic nation
building initiative to engage leaders for guiding and mentoring students at Atal
Tinkering Labs. The Mentor India Campaign aims at maximising the impact of Atal
Tinkering Labs by engaging leaders who will nurture and guide students in the Atal
Tinkering Labs.

National Biopharma Mission The Union Ministry of Science & Technology has
launched National Biopharma Mission on 1st July 2017. It is a first ever Industry-
Academia mission to accelerate biopharmaceutical development in India. Under this
mission, the ministry also launched Innovate in India (i3) program to create an
enabling ecosystem to promote entrepreneurship and indigenous manufacturing in the
sector.

Pravasi Kaushal Vikas Yojana (PKVY) It is a skill development programme

launched on 9th January, 2017. It is targeted at Indian youth seeking overseas
employment to make India the Skill Capital of the World. PKVY will provide training
and certify Indians who are seeking overseas employment in selected sectors that
have high demand in the global labour market in line with international standards.
Pradhan Mantri Yuva Yojana This scheme was launched to scale up an ecosystem
of entrepreneur for youngsters. It will provide entrepreneurship education and training
to over 7 lakh students in 5 years through 3,050 institutes. It will provide easy
access to information and mentor network, incubator, credit and accelerator and
advocacy to create a pathway for the youth.
Urja Ganga Yojana It is the highly ambitious gas pipeline project in Varanasi, Uttar
Pradesh. The gas pipeline project aims to provide Piped Cooking Gas (PNG) to
residents of the Eastern region of the country and CNG gas for the vehicles.

Udan Scheme Regional Connectivity Scheme (RCS)-UDAN (Ude Desh ka Aam

Nagrik) scheme was launched on 21st October, 2016. It will provide connectivity to
un-served and under-served airports of the country. The primary objective of RCS
is to facilitate and stimulate regional air connectivity by making it affordable.

Pradhan Mantri Ujjwala Yojana The objective of the scheme is to provide cooking
gas connections to 5 million beneficiaries below the poverty line in the next 3
years (till the year 2019). Main objectives of this scheme are as follows – Free
LPG gas connection in the name of the female members. It will be a cylinder and
regulator. – The scheme will include the rural and urban BPL family. ` 1600 will be
sent to Pradhan Mantri Jan Dhan Yojana bank as subsidies.

Ujala Yojana The UJALA scheme is being implemented by Energy Efficiency

Services Limited (EESL), a joint venture of PSUs under the Union Ministry of
Power. The scheme will help reduce electricity bills of consumers, contribute to the
energy security of India and also help in environment protection. The main motive
of this policy is energy efficiency in the country. Consumers can buy the bulbs
from distributor by showing any identification card.

POPULATION Population is the dynamic factor of an economy.

• Demography is a statistical study of human population. There are four stages of

the demographic transition i.

The first stage, birth and death rates are both high, population growth is slow and
fluctuating

. ii. In the second stage, birth rate remains high, death rate falls. Population
begins to rise rapidly

. iii. In the third stage, birth rate starts to fall, death date continues to fall.
Population continues to rise.

iv. In the fourth stage, birth and death rates both are low. Population is steady
or declining. It is called a stage of stationary population.
 v. The period 1911-1921 is known as the great divide in the demographic history
of India. Other Programmes Census of India We got the evidence of Census in
India from Kautilya’s Arthashastra.

During the Mughal era, ‘Ain-e-Akbari’, written by Abul Fazal also mentions about
census. Sequential census was started by Lord Rippon in the year 1881. Since
then, after every ten years, the work of census is undertaken by the Government
of India. Census of India, 2011

• The Census 2011, was the 15th National Census of India (since 1872) and 7th
Census after Independence.

The motto of census 2011 was ‘Our census, Our future’.

• Total Population - 1210.19 million • Males - 623.7 million (51.54%) • Females -

586.46 million (48.46%) • Population of 0-6 age group - 164.4 million • Literacy -
74.04% • Decadal Growth Rate - 17.64% • Population Increase (2001-2011)- 181
million • Sex Ratio - 943 • Population Density – 382

AGRICULTURE

• Agriculture is the largest sector of the Indian economy and has a crucial role to
play in the country’s economic development by providing food, raw materials and
employment to a very large proportion of population, capital for its own
development and surpluses for national economic development.

• This is the biggest unorganised sector of the economy accounting for more than
90% share in total unorganised labour force (93% of the total labour force of the
economy i.e. 39.7 crore, is employed in the unorganised sector). The sector,
thus, presents challenging opportunities for the plant farmers in India, as much as
these workers represent an enormous pool of labour that can fuel labour intensive
industrialisation over the coming decades. Green Revolution

• The introduction of high-yielding varieties of seeds after 1965 and the increased
use of fertilizers and irrigation are known collectively as the Green Revolution,
which provided the increase in production needed to make India self-sufficient in
foodgrains.

• The term ‘Green Revolution’ is a general one that is applied to successful

agricultural experiments in many third world countries. It is not specific to India, but
it was most successful in India.
 • There were three basic elements in the method of the Green Revolution

i. Continued expansion of farming areas.

ii. ii. Double-cropping existing farmland.
iii. iii. Using seeds with improved yields. Second Green Revolution
• Second Green Revolution consist of a number of different programmes
working towards the same goals.
Some of the initiatives, which will help in this direction are as follows –
Increasing crop yields in Eastern states. – Organic farming and contract
farming. – Amending the Agricultural Produce Marketing Committee (APMC)
Acts. – Investing in research to drought proof crops as well as to tackle
climate change. – Use of plant breeding and biotechnology. – Rainwater
harvesting and watershed development. – Improving credit availability. –
Refocusing on land reforms. – Improving soil quality and reclaiming degraded
land.

MAJOR AGRICULTURAL REVOLUTIONS

Green Revolution : Cereals, wheat and leguminous plants
White Revolution : Milk and dairy products
Silver Revolution : Egg and poultry
Yellow Revolution : Edible oil Blue Revolution :
Fishery Pink Revolution : Prawns/Meat processing
Golden Revolution : Honey
Golden Fibre Revolution : Jute
Silver Fibre Revolution : Cotton

Important Industries of India Iron and Steel Industry

• First Steel industry was set-up at Kulti (West Bengal) ‘Bengal Iron Works
Company’ in 1870.

• First large scale steel plant TISCO was set-up at Jamshedpur in 1907 followed
by IISCO at Burnpur in 1919. Both belonged to private sector.

• The first public sector unit was ‘Visveshvaraya Iron and Steel Works’ at
Bhadrawati.
• All these are managed by SAIL. (At present all important steel plants except
TISCO, are under Public Sector).

• Steel Authority of India Limited (SAIL) was established in 1974 and was made
responsible for the development of the steel industry.

Public Sector Steel Plants

Location Assistance

Rourkela (Odisha) Germany

Bhilai (Chhattisgarh) Russian Government

Durgapur (West Bengal) Britain Government

Bokaro (Jharkhand) Russian Government

Burnpur (West Bengal) Acquired by Private Sector in 1976

Visakhapatnam (Andhra Pradesh) Russian Government

• Bhilai, Durgapur and Rourkela were established during the Second Five Year
Plan. Bokaro was established during the Third while the steel plants at Salem, Vijai
Nagar and Visakhapatnam were established in the Fourth Five Year Plan.

• Presently India is the 5th largest steel producing country in the world, ranked
behind China, Japan, US and Russia in that order

Cotton and Textile Industry

• Oldest industry of India and employs largest number of workers. It is the largest
organised and broad-based industry which accounts for about 4% of GDP, 20% of
manufacturing value added and one-third of total export earnings.

• The first Indian modernised cotton cloth mill was established in 1818 at Fort
Gloaster near Calcutta, but this mill was not successful. The second mill named
Bombay Spinning and Weaving Company was established in 1854 at Bombay by
KGN Dabe

Core Industries

• Eight core industries in the index of industrial production consist of (with their
weightage)

– Cement (2.41%)
– Coal (4.38%)

– Crude oil (5.22%)

– Natural gas (1.71%)

– Electricity (10.32%)

– Fertilizer (1.25%)

– Steel (6.68%)

• They have a combined weight of 37.9% in overall index of industrial production

Maharatnas

• In 2009, the government established the Maharatna status, which raises a

company’s investment ceiling from ` 1000 crore to ` 5000 crore.

• The Maharatna firms can now decide on investments of upto 15% of their net
worth in a project. In terms of turnover, ONGC is the largest PSU in

India.

The six criteria for eligibility as Maharatna are as

follows :

i. Having Navratna status.

ii. Listed on Indian stock exchange with minimum prescribed public shareholding
under SEBI regulations.

iii. An average annual turnover of more than `20000 crore during the last 3 years.
Earlier it was ` 25000 crore.

iv. An average annual net worth of more than ` 10000 crore during the last 3
years. Earlier it was ` 15000 crore.

v. An average annual net profit after tax of more than ` 2500 crore during the last
3 years. Earlier it was ` 5000 crore.

vi. Should have significant global presence/international operations.

List of Maharatnas

i. Coal India Limited (CIL)

ii. Indian Oil Corporation Limited (IOCL)

iii. National Thermal Power Corporation Limited

(NTPCL)

iv. Oil and Natural Gas Corporation Limited

(ONGCL)

v. Steel Authority of India Limited (SAIL)

vi. Bharat Heavy Electrical Limited (BHEL)

vii. Gas Authority of India Limited (GAIL)

Navratnas

• Navratnas was the title given originally to nine Public Sector Enterprises or PSE
identified by the Government of India in 1997 as its crown jewels of the most
prestigious

PSEs, which allowed them greater autonomy to complete in the global market.

• The number of PSEs having Navratna status has now been raised to 18, the
most recent addition being Coal India

Limited.

List of Navratnas

i. Bharat Electronics Limited (BEL)

ii. Bharat Petroleum Corporation Limited (BPCL)

iii. Hindustan Aeronautics Limited (HAL)

iv. Hindustan Petroleum Corporation Limited (HPCL)

v. Mahanagar Telephone Nigam Limited (MTNL)

vi. National Aluminium Company Limited (NALCO)

vii. National Mineral Development Corporation (NMDC)

viii. Oil India Limited (OIL)

ix. Power Finance Corporation Limited (PFC)

x. Power Grid Corporation of India Limited (PGC)

xi. Rural Electrification Corporation Limited (REC)

xii. Shipping Corporation of India Limited (SCL)

xiii. Neyveli Lignite Corporation Limited (NLCL)

xiv. Container Corporation of India Limited (CONCOR)

xv. Engineers India Limited (EIL)

xvi. National Buildings Construction Corporation Limited

(MBCCL)

xvii. Rashtriya Ispat Nigam Limited (RINL)

Finance Commission (Art 280)

Finance Commission is constituted to define financial relations between the Centre

and the States. Under the provision of Article 280 of the Constitution, the President
appoints a Finance Commission for the specific purpose of devolution of non-plan
revenue resources. KC Niyogi was the chairman of first finance commission.

International Organisation /

World Bank :From under Recommendation of Bretton woods meeting

Est. → 27 Dec. 1945

Also known As IBRD → International bank for reconstruction and development.

H.Q → Washington D.C.,

Started with 44 members countries /

Now has 189 member countries

Last country to join as 189th In Pacific Ocean Member Nauru Island

Main objective of world Bank is Social Development l

It also known as long term credit institution

World Bank group has 4 division

1. IFC → International Finance Corporation

Est. → 1956

H.Q. → Washington D.C.

2. IDA → International Development Association

Est. → 1960

H.Q.→ Washington D.C.

Also known as soft window of world bank.

Because if give loan free interest for receving poverty of under developed country

3. ICSID → International centre for settlement of investment dispute.

Est.→ 1966

H.Q. → Washington D.C.

4. MIGA → Multilateral investment guarantee Agency.

Est. → 1988

H.Q. → Washington D.C.

IMF

International Monetary Fund

From under Recommendation of Bretton woods meeting 1945

Est. → 27 Dec. 1945

Also known As Twin organization of World Bank

H.Q → Washington D.C.,

Started with 31 members countries Now has 189 member countries

Last country to join as 189th In Pacific Ocean Member Nauru Island

Main objective of IMF is Economical Development

World Trade Organisation [WTO]

Establishment → 1st Jan 1995

It replaces GATT → general agreement on Tariff & Trade / blus GATT →

general agreement on Tariff & Trade

GATT → General agreement on Tariff and Trade

Est. → 1 Jan 1948

GATT was signed by 23 nations in Geneva on 30th Oct. 1947.

123 nations of GATT signed a agreement on 14 April 1994 in morocco to

convert GATT into WTO.

H.Q. → Geneva District of Switzerland

Present member countries → 164

Main Objective is trade development