Indian Eco

Unit 1 (PART A)

q) give a detailed account of the occupational distribution of the working population in India.
Also show the relationship between occupational structure and economic development

ans: Broadly we divide occupations into three types. Agriculture, animal husbandry, forestry,
fishery, etc., are collectively known as "primary" activities or industries. They are primary
because their products are essential or vital for human existence. They are carried on with the
help of nature. Manufacturing industries, both small and largescale, are known as
"secondary" activities. Mining is sometimes included under secondary activities, but properly
speaking, it is a primary activity. Transport, communications, banking and finance and
services are "tertiary" activities which help the primary and secondary activities in the
country. The occupational structure of a country refers to the distribution or division of its
population according to different occupations.

Let us analyse the occupational distribution of the working population in India with the
following tables

Table 1: Contribution of each sector to the GDP at factor cost

Year Agricultural and Industry and allied Services

allied sectors sectors

1950-51 53.1 16.6. 30.3

1990-91 29.6 27.7 42.7

2013-14 13.9 26.2 59.9

Table 2: occupational distribution of working population in India

Occupation 1951 1991 2011-12

Agriculture and 72.1 60.8 48.9

allied activities

Industry and allied 10.7 12.7 24.4

activities
 Services 17.2 20.5 26.7

The data in table 1 clearly indicates that GDP from the primary sector declined from 53.1% in
1950-51 to 13.9% in 2013-14 In the same time period, i.e. 1950-51 The contribution of the
industrial and services sector was 16.6 percent and 30.3 percent respectively. In 2013-14 the
contribution of the agricultural sector to the GDP amounted to a mere 13.9 percent whereas
the contribution of the Industrial sector and Service sector had risen to 26.2% and 59.9%
respectively.

The data in table 2 shows that there has been a structural shift in the occupational distribution
of the working population India. For instance, we observe from the table that in 1951, 72.1%
of India’s population was employed in agriculture and allied activities. This percentage fell to
48.9% in 2011-12. Yet, despite this fall, a majority of Indians are still employed in the
agricultural sector. The main takeaway from this analysis is that whereas GDP share of
agriculture declined sharply, the corresponding decline in employment share did not take
place in India. Meanwhile GDP share of Industry saw an increase from 16.6% in 1950-51 to
26.2% in 2013-14. However, the corresponding increase in employment in the secondary
sector was not adequate. In 1951, 10.7 percent of India’s workforce was employed in the
industry and allied sector. This rose to 24.4% in 2011-12. This only indicates that the process
of industrialization failed to absorb excess labour in agriculture in the expansion of industry.
Lastly, share in gdp of service sector rose from 30.3% in 1950-51 to 59.9 % in 2013-14. But,
this rise in share of GDP did not lead to a sharp increase in employment in the service sector.
In 1951, 17.2% of India’s working population was engaged in the service sector, this
increased to 26.7% in 2011-12.

q) basic features of Indian economy.

Ans: At the time of Independence the Indian economy was stagnant and highly
underdeveloped. Agriculture was the backbone of the economy but agricultural activities
were undertaken through obsolete technology. Industrial sector contributed very little to gross
domestic product (GDP). In order to give a direction to the economy the government initiated
economic panning in the form of Five Year Plans in 1951. Over the years the economy has
witnessed increase in GDP, the composition of GDP has changed, standard of living of people
has improved, and there has been up gradation in level of technology. The important features
of the Indian economy are as follows :

A) Rise in Per Capita Income: Developing economies are marked by the existence of low
per capita income. Barring a few countries, the per capita income of the Indian people
is the lowest in the world. During 1960-80, developed economies grew at a faster rate
than the Indian economy, but during 1990-2014, Indian economy has grown at a faster
rate than the developed economies. This growth in the Indian economy is also
reflected with a rise in its per capita income which is considered to be a better index
of growth and the standard of living of people than a growth in the national income.
As per the estimates of the Central Statistics Office (CSO), the per capita net national
income of the country at 2011-12 prices in the year 2012-13 is Rs. 65,664/-. The per
capita income at 2011-12 prices in the year 2014-15 rose to …Rs. 72889/-
B) Rise in National income: India’s Net National Income was Rs. 2,69,724 crore in 1950-
51. Since then it rose to Rs 92, 35, 025 crore in 2014-15.
C) Significant changes in sectoral distribution of domestic product: one of the basic
feature of any developing economy is a shift in the sectoral distribution of the
domestic product. In the same time period, i.e. 1950-51, the agricultural sector
contributed 53.1 percent to the country’s GDP. In the same time period, i.e. 1950-51
The contribution of the industrial and services sector was 16.6 percent and 30.3
percent respectively. In 2013-14 the contribution of the agricultural sector to the GDP
amounted to a mere 13.9 percent whereas the contribution of the Industrial sector and
Service sector had risen to 26.2% and 59.9% respectively.
D) Growth in rate of capital formation: capital formation is playing an imperative role in
accelerating the pace of economic growth of the country. Capital formation is possible
with high rate of savings in the economy. It would be of high interest to look into the
estimates of gross domestic saving in India since he inception of planning. As per the
World Development Indicators published by the World bank, the gross capital
formation as percent of gross domestic product in India has risen from 24 % in 1990
to 31.4 % in 2014. Likewise the gross domestic saving as percent of gross domestic
product has risen from 23% in 1990 to 29% in 2014.
E) Infrastructure: Under the 2nd 5 year plan, a high priority was accorded to Capital
goods industries as their development was considered a prerequisite to overall growth
of the economy. This strategy of development was at the heart of India’s economic
 planning for about 2 and a half decade. Consequently, a large number of basic
industries which produce capital equipment and useful raw materials have been set up
making the countries industrial structure pretty strong. In the second five-year plan,
steel mills were built in Bhilai, Durgapur, and Rourkela. This plan included increased
coal production and the addition of extra railway lines.
F) Low technology: In a developing economy like India, the most modern technique
exists side by side with the most primitive in the same industry The sharp differences
in productivity between developed and underdeveloped nations can be traced to a
considerable degree to the application of superior techniques by the former. Since new
Since new techniques are expensive and require a considerable degree of skill for
their application in production, the twin requirements for the absorption of new
technology are the availability of capital and training of an adequate number of
personnel. Deficiency of capital hinders the process of scrapping off the old
techniques and the installation of the up-to-date and modern techniques. Illiteracy and
the absence of a skilled labour force are the other major hurdles in the spread of
technology in the economy.

q)explain two role played by natural resources on India’s economic development

(PART B)

q) what are the major employment generating programs of the government

ans: 86 of Indian economy its development experience

q) policies and programs towards poverty alleviation

q) why are natural resources important for the development of a country like India?

Ans: The existence or the absence of favourable natural resources can facilitate or retard the
process of economic development. Natural resources determine the course of development.
The extent of a country’s resources is quite obviously a limit on the amount and type of
development which it can undergo. Underdeveloped countries, embarking on programmes of
economic development, "usually have to begin with and concentrate on the development of
locally available natural resources as an initial condition for lifting local levels of living and
purchasing power, for obtaining foreign exchange with which to purchase capital equipment,
and for setting in motion the development process.
Let us discuss, India’s natural resource wealth and the role it plays in India’s development:

a) Land Resources: The total geographical area of India is about 329 million hectares,
but statistical information regarding land classification is available for only about 306
million hectares; this information is based partly on village papers and partly on
estimates. Land resources are crucial for the economic development of any country,
and India is no exception. The utilization of land impacts agriculture, forestry, and
various other sectors, significantly contributing to the nation's GDP and employment.
Below is a detailed explanation of how different land resources aid in India's
economic development:
i) Barren Land: 43 million hectares (14% of total reporting area) are classified as
barren land or used for non-agricultural purposes such as buildings, roads,
railways, rivers, and canals. While this land is not directly usable for
cultivation, its importance in supporting infrastructure and urban development
cannot be overstated. Infrastructure development is a backbone of economic
growth, facilitating transportation, communication, and urbanization, which in
turn spur industrial and service sector growth.
ii) Area under forest: 70 million hectares (23% of the total land area) are under
forests. Forests are an important natural resource of India. They help control
floods and thus they protect the soil against erosion. They supply timber, fuel
wood, fodder and a wide range of non-wood products. They are the natural
habitat for bio-diversity and repository of genetic wealth. Forests, thus, play an
important role in environmental and economic sustainability.
iii) Pastures and grazing lands: Permanent pastures and other grazing lands
include all grazing lands such as permanent pastures and meadows and village
common grazing land These lands are vital for the livestock sector, which
supports a significant portion of the rural economy. Livestock provides dairy
products, meat, wool, and other by-products, contributing to both subsistence
and commercial activities.
iv) Agricultural land: out of the total reported area of 306 million hectares, net
sown area is only 140 million hectares or 46 percent of the total land area. Net
area sown includes the total area sown with crops and orchards, counting area
sown more than once in the same year, only once. Agriculture remains a
cornerstone of India's economy, providing employment to a large portion of
 the population. The efficient use of agricultural land through multiple cropping
and improved farming techniques can enhance food production, ensure food
security, and support the agrarian economy.

b) Mineral resources: The Tenth Plan correctly asserted: "The development and
management of mineral resources plays a major role in the industrial growth of a
nation." Coal and iron, for instance, are the basic minerals needed for the growth of
iron and steel industry which in turn, is vitally necessary for the country's
development Then, we have mineral fuels like petroleum, coal, thorium and uranium
which are of national importance. Let us discuss the role of these resources in greater
detail below

i) Steel and Infrastructure development: Iron ore and coal are essential for the iron and
steel industry, which forms the backbone of infrastructure development. The
production of steel facilitates the construction of buildings, bridges, roads, and other
infrastructure projects that are crucial for economic development. Steel is also used
extensively in machinery, manufacturing, and transportation, supporting industrial
growth across various sectors.

ii) Energy production: Coal accounts for about 67% of India’s total energy
consumption, making it a critical resource for electricity generation. Reliable energy
supply is essential for the functioning and growth of industries, businesses, and
households. Petroleum and natural gas are vital for powering industries,
transportation, and as feedstock for the chemical and fertilizer industries. The
availability of these resources supports industrial operations and economic activities.

iii) employment generation: These mineral resources need to be mined and the mining
sector directly employs millions of workers in mining activities and associated
industries. The sector also generates indirect employment opportunities in
transportation, equipment manufacturing, and various service industries that support
mining operations.

q) causes of poverty in india

ans: Poverty can be defined as a social phenomenon in which a section of the society is
unable to fulfil even its basic necessities of life. When a substantial segment of a society is
deprived of the minimum level of living and continues at a bare subsistence level, that society
is said to be plagued with mass poverty. The countries of the third world exhibit invariably
the existence of mass poverty, although pockets of poverty exist even in the developed
countries of Europe and America. The poverty line has been developed by economist to
define a poor person. It refers to the cutoff point (in terms of per capita expenditure) that
divides people of a region as poor and non poor. In simple terms, the poverty line is the
monetary income that one must have to afford the basic amenities of life. Globally, the
poverty line is set at $2.15 per day. This amount was recently updated by the World Bank in
2022. In India, the poverty line lies at 1,286 rupees per month for urban areas and 1,059.42
rupees per month for rural areas.

a) low productivity in agriculture: A major reason for poverty in the low productivity in the
agriculture sector. The reason for low productivity is manifold. Chiefly, it is because of
fragmented and subdivided land holdings, lack of capital, illiteracy about new technologies in
farming, the use of traditional methods of cultivation, wastage during storage, etc.

b) lack of inclusive growth: India has achieved impressive economic growth in recent
decades, but it has not been equally distributed among different segments of
society. The Gini coefficient, which measures income inequality, has increased from
0.32 in 1983 to 0.36 in 2019. Moreover, India’s growth has been largely driven by the
service sector, which employs only a small fraction of the workforce.
c) low net national income:
d) Lack of Capital and Entrepreneurship: The shortage of capital and entrepreneurship
results in low level of investment and job creation in the economy
e) Climatic Factors: Most of india’s poor belong to the states of Bihar, UP, MP,
Chhattisgarh, odisha, Jharkhand, etc. Natural calamities such as frequent floods,
disasters, earthquake and cyclone cause heavy damage to agriculture in these states.
f) Unemployment: Unemployment is another factor causing poverty in India. The ever
increasing population has led to a higher number of job-seekers. However, there is not
enough expansion in opportunities to match this demand for jobs.
g) Population growth:
h) Poor infrastructure: Energy, transport and communication are the vital components of
economic infrastructure as well as of social infrastructure, are grossly deficient. Poor
infrastructure perpetuates poverty by limiting market access, increasing transportation
costs, and discouraging investment, which reduces job opportunities and income
potential. Inadequate healthcare and educational facilities hinder human capital
 developmentq) various types of unemployment prevalent in India. Additionally, poor
living conditions, insufficient sanitation, and lack of reliable energy access degrade
quality of life, trapping communities in a cycle of poverty.

Q) kinds of unemployment in India

ans: Unemployment is a situation when a person actively searches for a job and is unable to
find work. Unemployment indicates the health of the economy.

Types of unemployment prevalent in India

a) Industrial Unemployment: this kind of unemployment is mainly prevalent in the urban

areas of India. The exact size of industrial unemployment in India is not known
because the necessary data for its estimation are not available. However, it is
generally expected that with economic growth, the industrial sector expands and
generates more and more employment opportunities. Whilst its share in GDP has
increased, the Industrial sector has failed to provide adequate employment. It is often
contended that industrial unemployment has increased in the country especially
because of the low industrialization process and inappropriate technology. Near
stagnation in the industrial sector from the mid 1960s to the early 1980s rendered
various remedial measures ineffective. Concentration of industries in big cities is
another major source of the malady. Industrial concentration attracts labor force to
cities in a big way, much more than what the industries can absorb at any point of
time. If the policy of dispersal of industries is adopted and industries are set up in
rural and semi urban areas this problem can be tackled satisfactorily.
b) Educated unemployment: Educated unemployment is, by and large, a part of urban
unemployment. It is a very serious and menacing problem, yet the size of educated
unemployment remains largely unmeasured. There are many causes of educated
unemployment. The defective educational system with its theoretical bias, lack of aptitude
and technical qualifications for various types of work among job seekers and
maladjustments between demand and supply of educated workers are some well known
cause of educated unemployment
c) Seasonal unemployment: Seasonal unemployment is very prevalent in India’s agricultural
sector. Seasonal unemployment occurs when people are unemployed at particular times of
the year when demand for labour is lower than usual. Agricultural labourers in India
rarely have work throughout the year. According to the second agricultural labour enquiry
 committee, agricultural labour in this country had 237 days employment in 1956-57. In
other words, on an average their unemployment was approximately for 3 to 4 months.
The planning commission in its mid term appraisal of the forth plan had pointed out that
leaving aside the green revolution belt, in all other areas, seasonal unemployment during
the early 1970s was at least as much as during the 1950s if not more. However,
considered the decline in employment elasticity, measured as the ratio of employment
growth to the growth of value added, in the agricultural sector during the 1990s and
2000s, there is every reason to believe that the seasonal unemployment should have
increased in recent years.
d) Disguised unemployment: This is a type of unemployment where people employed are
more than actually needed. Disguised unemployment is generally traced in unorganised
sectors or the agricultural sectors. The Indian agriculture is characterized by the existence
of considerable amount of surplus labour. However no firm estimates of its size are
available. But, some attempts to measure surplus labour in agriculture were made. One of
these attempts was made by Shakuntala Mehra who attempted to provide estimates of
disguised unemployment in agriculture for the country as a whole. She estimated that
17.1% of the workforce in agriculture was surplus during the 1960s.

Q) employment generation programmes:

a) Swarnajayanti Gram Swarozgaz Yojna (SGSY): This programme was launched by
restructuring the IRDP and its allied schemes. SGSY seeks to bring the self employed rural
poor above the poverty line by providing them with income generating assets via bank credit
and government subsidy. This programme was eventually restricted as the National Rural
Livelihood Mission (NRLM) also known as Aajeevika. NRLM was to be implemented
through scheduled commercial banks (Including RRBs). First of all, it was to ensure that one
member (preferably women) from each identified rural poor family would be brought under
the Self Help Group Network in a time bound manner. Furthermore the rural poor would be
facilitated to achieve increase access to their rights, entitlements, public services, diversified
risk and better social indicators of empowerment.

b) Pradhan Mantri Rozgar Yojana (PMRY): The PMRY targeted the educated unemployed
youth and sought to provide self employment opportunities to almost a million educated
unemployed youth by setting of 7 lakh micro enterprises under the 8th five year plan
c) Swarna Jayanti Shahari Rozgar Yojna (SJSRY): this programme subsumed the Nehru
Rozgar Yojana, Prime Minister’s integrated urban poverty eradication programme, and the
Urban Basic Services programme. The programme aimed at provided gainful employment to
the poor urban unemployed and underemployed persons by encouraging the setting up of self
employment ventures as well as by providing wage employment and utilizing their labour to
produce socially and economically useful public assets

d) Training of Rural Youth For Self Employment (TRYSEM): under this, the government
aims to provide adequate technical and basic training to the rural youth belonging to families
below the poverty line so that they may seek self employment in various fields

e) National Rural Employment Programme(NREP): this Programme targeted the wage

earning rural laborer who virtually had no source of income during the agricultural lean
period. The programme aims to provide additional gainful employment to the unemployed
and underemployed poor rural persons and to create productive community assets which
could provide direct and continuing benefits to the poverty groups as well as increase the
overall quality of life of the rural areas.

f) Rural Landless Employment Guarantee Progamme(RLEGP): this programme seeks to

guarantee upto 100 days of employment in a year to one member from every rural landless
laborer household.

g) Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): the main aim
of this is to guarantee 100 days of employment in a financial year to adult members of every
rural household if they are willing to engage in unskilled manual labor.

Q) POVERTY ALLEVIATION PROGRAMMES:

a) SGSY

b) PMRY

c) SJSRY

d) MGNREGA: The primary objective of the scheme is to guarantee 100 days of employment
in every financial year to adult members of any rural household willing to do public work-
related unskilled manual work.
e) Pradhan Mantri Gramodaya Yojana (PGY): this program seeks to improve the standing of
life of the rural people by focusing development on five key areas. Namely, health, primary
education, drinking water, housing and roads

f) Pradhan Mantri Gram Sadak Yojana (PMGSY): this programme aimed at providing rural
connectivity to unconnected rural areas if they had a population of not less than 500 people
by the end of the 10th plan period.

(PART C)

q)what are the impacts of rising price on the economy

Ans: The prices of commodities fluctuate, responding to the pulls and pushes of demand and
supply. A failure of a particular crop or trend for a certain kind of clothing can cause the price
of that crop and the cost of that kind of clothing to rise, just as an unexpected surplus in the
production of onions will cause the price of onions to fall. Inflation, on the other hand, has
little to do with these changes in relative prices of goods and services. It refers, instead, to a
significant rise in the general price level in a country over a long period of time. It is the
opposite of price stability. In economics, price stability is not used in a rigid sense to mean
price fixity. A modest increase of 2 to 3 per cent per annum in the price level is a compatible,
sometimes even desirable, in the context of economic development. However, when the
general price rise appreciates (say in double digit figure) and experienced over a long period
of time, it gets the dreaded name inflation.

Let us discuss the impacts of rising prices:

a) Rising prices adversely affect the economic conditions of fixed-income groups,

particularly wage earners. When prices are high, the value of money is low and vice
versa. There is always a lag between price rise and money wage adjustment. Poor
people in the unorganised sector are hit the worst because their income are not linked
with price index. However, business firms gain during price rise because the money
value of goods in their stock rises continually.
b) Inflation encourages hoarding of essential commodities, leading to speculation and
generation of black money
c) Impact of inflation on exports depends on many factors and the sector. It may
discourage exports as domestic sales are attractive due to higher prices. Inflation may
 erode the external competitiveness of our products if it leads to higher production
costs such as wage increases, and higher interest rate. It may also stimulate exports if
the rupee depreciates as a result of domestic inflation being relatively high. However,
if exports are import-intensive, advantage of depreciation may be neutralized
d) Adverse Effect on Production. As a result of inflation, prices of certain important
articles of consumption such as textiles had increased to very high levels forcing
demand for such goods to decline specially from the poorer sections of the country.
With increasing expenditure on essential goods, the expenditure on the other goods
had declined. While demand had declined, production too had declined due to
shortage of raw materials, transport, power, and so on. Production had also been
adversely affected by frequent labour troubles such as strikes and lockouts. These
strikes and lockouts may be caused due to wages not keeping pace with rising prices.
e) Inflation can benefit borrowers/debtors: During inflation, the purchasing power of
money decreases. Therefore, if the borrower is paying a rate of interest which is less
than the inflation rate, then he gains in the process. This is because the real value of
the money that the borrower returns is actually less than that of the money borrowed.
f) Inflation also has an adverse affect on transfer payments such as pensions. Inflation
reduces the purchasing power of money, meaning that the real value of transfer
payments diminishes if they are not adjusted for inflation. For recipients, this means
that the fixed amount they receive buys fewer goods and services over time.
Furthermore as the cost of living rises due to rising prices, recipients of fixed transfer
payments find it harder to maintain their standard of living. This is particularly
challenging for those who rely heavily on these payments, such as retirees