Introduction
Date created @May 13, 2024 12:42 PM
Revisions 8
Start date @May 13, 2024 * May 15, 2024
Status Complete
Parts of the UPSC syllabus
Main exam answer writing
Division of newspaper notes
Indian economy lesson plan
Root word and origin
Classification of economics
Economic Growth and Development
Economic Growth and development
Introduction 1
Inclusive development
Inclusive development
Sustainable development
Sustainable development
Types of Economies
Model questions
Next chapter 💸 Inflation(म¸5ा T K)
Parts of the UPSC syllabus
1. Indian economy 7. Ethics
2. Indian society and social justice 8. International relations
3. Geo+Environment and ecology 9. Internal security
4. Polity and governance 10. Disaster management
5. Science and tech 11. Current affairs
6. History + Art and culture
Prelims is a recognition test. Thereʼs a difference between writing the correct answer and
recognising the correct answer.
Sources must be limited and reading unlimited.
Syllabus tells what UPSC expects from you and PYQs tell what you can expect from UPSC
For optimum benefit of the class, presence in the class and continuous revision of notes is
required
How to read PYQs:
1. Read PYQs and mention topics next to them
2. After the subject is completed attempt the PYQs * Identify the grey areas
3. Work on the grey areas
📌 Pre and main exam questions will be given after the chapter completion. Get it checked on the app.
Main exam answer writing
Take off and landing analogy for the Main exam answers. Both start and end of the answer must
be soft and smooth.
Three aspects of an answer
1. Content
Kitchen masala analogy for knowledge and contents in a question.
2. Structure
3. Presentation
underline and put keywords in box
Draw diagrams
Introduction 2
Tailwords can be divided primarily into two categories— descriptive and analytical
Division of newspaper notes
1. General news 5. People in news
2. Market and economy 6. Awards
3. Science and tech 7. Books and authors
4. Places in news 8. Sports
Indian economy lesson plan
Introduction* Foreign investment and trade **
Inflation ** Balance of payments **
Monetary policies ** Agriculture **
Banking system in India — one of the longest part of Industry **
the syllabus **
International organisations
Money market *
WTO** , WB* , IMF*
Capital market **
Investment models *
National income **
Fiscal system **
Taxation **
*Main questions only
**Pre+Main questions
Root word and origin
Oikonomia Oikos(Household) + Nomos(Management)
The word economics is derived from a Greek word ‘Oikonomiaʼ. The word is a combination of two other Greek words oikos
and nomos. Oikos means household or family. Whereas nomos means management hence Oikonomia means household
management. It refers to how a family manages its expenditure using its limited resources.
As economics is derived from the word Oikonomia it can be defined as a discipline or a subject which deals with the study
of the process of household management. However, it is the simplest definition of economics which is possible. The scope
of Economics is much wider than that. In other words, economics can be defined as a systematic discipline which deals
with the study of the process of production, distribution and consumption of goods and services.
The process of production distribution and consumption of goods and services can be termed as the economic activities
which constitute an economy. Hence, these economic activities or the economy is the subject matter whereas economics
is the subject which deals with study of this subject matter.
Introduction 3
🩳
Classification of economics
As a discipline economics can be broadly classified into following two parts—
1. Micro economics
2. Macro economics
This classification of economics into micro and macro was given by a Norwegian economist Ragnar Frisch. Along with Jan
Tinbergen of Holland, Ragnar Frisch was the first recipient of Nobel Prize in economics in 1969. Nobel Prize in economics
is its popular name, officially it is termed as Sveriges Riksbank Pirze in Economic Sciences. Sveriges Riksbank is the
central bank of Sweden which is the oldest central bank in the entire world. When this bank completed three hundred years
of its existence on this occasion this award was announced.
Micro economics and macro economics are different from each other but they are very closely associated with each other.
They both influence each other. Micro is a Greek word which means small and hence micro economics deals with study of
the smaller aspects of the economy. It deals with the study of those individual units with which the economy is constituted.
In other words, micro economics deals with the study of the economic activities at the level of a family and at the level of a
firm. It deals with the study of demand and supply which are the basic units of economic activities. It also deals with the
study of the market where goods and services are bought and sold.
Macro is another Greek word which means large hence it can be said that macroeconomics deals with the study of larger
aspects of the economy. In other words, macroeconomics deals with the study of economic activities at the level of the
entire society/country/state etc. It includes study of gross domestic product, national income, economic growth, economic
development, economic policies, inflation, unemployment and so on.
📎 GDP refers to the total value of finally marketable goods and services produced within the boundary of a country
Ragnar Frisch is known for his contributions to econometrics and mathematical economic modelling, including the first mathematical model to
describe fluctuations in the business cycle.
Introduction 4
🩳
Topics: demand, supply, market dynamics
Macroeconomics:
Topics: GDP, national income, economic growth, development, policies, inflation, unemployment
Economic Growth and Development
Economic growth is a quantitative concept whereas economic development is a qualitative concept. Quantitative concept
means it is related to quantity and change in production whereas qualitative means something that brings about qualitative
change in oneʼs life.
Economic growth can be defined as increase in GDP over a period of time. For instance, when the production in any
economy increases over a period of time then itʼs economic growth.
On the other hand, growth with equity is economic development. Along with increase in production when equitable
redistribution of resources takes place leading to improvement in the standard of living then it is economic development.
When the benefits of increase in production or economic growth reach the common people then it is economic
development. Because of increase in production employment is generated, the people are made capable enough to
procure the necessities of life such as food, shelter, clothes, education and healthcare then it is termed as economic
development.
It can be concluded that economic growth is essential for economic development but only growth cannot be sufficient in
order to ensure development. Development also requires proper redistribution of the resources. For example, Green
Revolution enhanced food grain production in India. It made India food sufficient. However, even after that starvation
continues to exist. It means that India is yet to become food secure. It can be concluded that because of green revolution
economic growth took place but economic development still lags behind. In terms of GDP India is the fifth largest economy
in the world but it is still categorised as a developing country.
Introduction 5
Introduction 6
🩳
Economic Growth and development
Economic growth: Quantitative concept, related to increase in GDP over time
Example: Production increase in economy signifies economic growth
Economic development: Qualitative concept, brings qualitative change in life
Growth with equity: Equitable redistribution of resources, leading to improved standard of living
Benefits reaching common people signify economic development
Employment generation, access to necessities (food, shelter, clothes, education, healthcare) denote
economic development
Relationship: Economic growth essential for development, but not sufficient. Development requires proper
redistribution of resources
GDP-wise, India ranks fifth globally, but classified as a developing country
Inclusive development
Development is a value laden concept. It means when the term development is used it can be concluded that something
positive is taking place. Development refers to gradual unfolding of the society in a positive direction. Inclusive
development is a combination of two important aspects — development of all and development in all the aspects.
Development of all means that every single member in the society should be made a party to the process of development.
It means the benefits of development reach every single individual. It is based on the concept of ‘Antyodayaʼ to
‘Sarvodayaʼ. ‘Antyodayaʼ refers to development of those/upliftment of those who are at the bottom of the rank order. If it is
done continuously the goal of ‘Sarvodayaʼ can be achieved which means upliftment of all.
It is said that no chain is stronger than its weakest link. Similarly, no society is stronger than its weakest member. Hence,
for social empowerment the empowerment of the weakest has to be ensured. This is development of all.
Development in all the aspects means economic development, socio-cultural development and political development.
Economic development refers to making people capable enough to procure the basic necessities of life. On the other hand,
socio-cultural development refers to elimination of discrimination based on gender, caste, race, religion, region etc.
Political development refers to democratisation of the society. It refers to people being provided opportunities for political
participation which includes the right to contest elections and the right to choose our representatives. When all such forms
of development take place then it is development in all the aspects.
Development of all along with development in all the aspects leads to inclusive development.
Introduction 7
🩳
development
Inclusive development: Development for all, in all aspects
'Sarvodaya': Upliftment of all
Socio-cultural: Elimination of discrimination
Political: Democratization, political participation
Sustainable development
Development is a positive concept however the consequences of development may not be always positive. It may have a
number of side effects. Development always comes at a cost. This cost of development is not only monetary but may even
be social and environmental.
In the process of development such as construction of dams, thermal power plants, airports etc. the local people are
displaced. They are the one who pay the cost of development but the benefits are taken away by the others. This may lead
to a feeling of relative deprivation(when we compare our condition with someone else and in comparison when we feel
deprived then it is termed as relative deprivation). This relative deprivation may become a cause behind conflict in society.
In the process of development even the exhaustible resources are extracted in a reckless manner. Because of this it
becomes obvious that these resources maybe exhausted completely and they may no longer remain available to the next
generations. In the process of development land under cultivation is used for different economic activities affecting
production of food. In the process of development even deforestation takes place. We also cause environmental pollution
in different ways.
If this is how development takes place, this process of development may not be continued for long. That process of
development which can be continued generation after generation is termed as sustainable development. In the process of
development if the resources are used in a judicious manner they can be preserved even for future. In the process of
development if we take care of the environment it will benefit not only the present generation but even the generations to
come. Development should take place with a human face. It means that those who are displaced are compensated
adequately and they are rehabilitated properly. This process of development can be termed as sustainable development.
Sometimes, even the objective of inclusive development may lead to rapid process of development which may compromise
the objective of sustainable development. The idea of sustainable development is based on the belief that this earth and its
resources have not been inherited by us from our ancestors but they are something that we owe to our next generations.
Introduction 8
🩳
Sustainable development
Cost of development can be monetary, social, environmental
Development projects (dams, power plants, airports) displace local people, leading to relative deprivation
and societal conflict
Reckless extraction of exhaustible resources threatens future availability
Land use changes affect food production, deforestation, environmental pollution
Sustainable development: Continuable across generations
Environmentally conscious development benefits present and future generations
Development with a human face: Adequate compensation and rehabilitation for displaced
Conflict: sometimes inclusive development may compromise sustainability
🎯 SDGs and Millennium Goals
Types of Economies
Based on the fact that how exactly an economy functions and who exactly owns and controls the forces of production the
economies can be classified into different types:
1. Capitalist economy
Capitalism is an ideology which propounds a particular type of economic arrangement known as the capitalist
economy. In this type of economy the forces of production are owned and controlled by individuals who are the
capitalists. The capitalists are those who have resources. Investment and re-investment are the means whereas
maximisation of profit is the objective.
In a capitalistic economy the government has a limited role. It acts as a facilitator and provides a conducive
environment for investment and business. The interference of the government is minimum. Since the government
keeps itʼs hands away from the economy it is also known as ‘hands off economyʼ. In French it is termed as ‘laissez-
faireʼ. A capitalist economy is driven by market forces that is demand and supply. Hence, it is also known as ‘free
marketʼ economy.
2. Socialist economy
In socialist economy the role of the government is maximum. In this type of economy the forces of production are
owned and controlled by the state and it is the responsibility of the state to ensure equitable redistribution of resources.
3. Mixed economy
It refers to that type of economy which has co-existence of public as well as private investment. Here public
investment means the investment done by the government and private investment means the investment done by the
individuals.
India is an example of mixed economy. It has public as well as private investment. Post-independence during the first
five-year plan India adopted Harrod-Domar model of development. Harrod and Domar were two different economists
who suggested that for a developing country labour and capital are the most important factors for development. Such
countries have sufficient labour but in absence of the investors capital is not sufficient. Therefore, the government
must play the role of an investor. Based on this model the government in India started investing in business along with
the private investors. Hence, indian economy became a mixed economy. However, gradually even the Indian economy
is moving towards capitalistic arrangement.
Introduction 9
🩳
Capitalist economy:
Government: Limited role, acts as facilitator, minimal interference
Driven by market forces (demand and supply), known as 'free market' economy or 'laissez-faire'
Socialist economy:
Government plays maximum role, owns and controls forces of production
Mixed economy:
Coexistence of public(government) and private(individualsʼ) investment
Initially followed Harrod-Domar model, emphasizing labor and capital for development
Government started investing alongside private investors, leading to mixed economy
Model questions
1. Explain the concept of economic growth and economic development. Critically analyse the fact that economic growth
alone may not lead to economic development.
2. Explain the concept of inflation and its impact over the economy. Mention the drawbacks of WPI because of which it
was replaced by CPI as the main index.
Next chapter Inflation( )
Introduction 10
