@ Indian Economy ©} Adam Smith’s Book - “The Wealth of Nations” (1776) Considered the origin of capitalist economy. USSR followed socialist economy. © PPP — Purchase Power Parity Used to compare the global poverty line UN’s HDI (Human Development Index) - Based on: 1. Life expectancy 2. Education 3. Per capita income © India based on PPP : 3" largest economy $11.75 trillion © Indian Economy is a mixed economy (Agricultural + Industrial)©} Economic Survey - shows per capita income, only for economically active population ©} Economic Development = Quantitative + Qualitative Growth © PQLI- Physical Quality of Life Index ©} NEW (New Economic Welfare) by Daly & Cobb > NNP - [Value of production — Environmental damage - Resource depletion + Leisure time + Household labor] ~} Human Development Index (HDI) - UNDP (since 1990) Not used in 2012 Min: 0, Max: 1 © Economic Policies: Fiscal Policy > Ministry of Finance Monetary Policy > RBI © National Income Calculation:Earlier by CSO (Central Statistical Office) Now by NSO (National Statistical Office) Father of National Income - Simon Kuznets © Factor Cost = Market Price - Taxes + Subsidies © Market Price = Factor Cost + Taxes - Subsidies © Since 2015 - India calculates National Income at Market Price © Real National Income - Calculated at Constant Prices Current Price = Nominal Income Services of Housewives are not included in National Income © Key Terms: Economic Output > GDP Economic Prosperity > Per Capita Income © GNP=GDP+X-M (X = Exports, M = Imports) (Indians earning abroad — Foreigners earning in India)GNP at market price - NNP- GDP * Gross Domestic Product GNP > Gross National Product NNP > Net National Product (used for National Income) Per Capita Income = NNP / Population (Base Year: 2011-12) Net Foreign Income = GNP - GDP (+ve or -ve) > Calculated by RBI © Gross National Income (GNI) = National Income > Calculated by production & income method © Per Capita Income: 21.7 lakh (2023) 2.14 lakh (expected in 2024) “Planned Economy for India” > Visvesvaraya © Sarvodaya Plan — Jai Prakash Narayan (1950)© GDP Deflator = (Nominal GDP / Real GDP) x 100 5-Year Plans © 1% Plan (1951-56) - Harrod Domar Model Bhakra Dam, Hirakud, Damodar Community Development Programme — 1952 ©} 2"™ Plan (1956-61) - Mahalanobis Model Inspired by Socialist Economy 3 Industries Established: 1. Rourkela (Germany help) - Odisha 2. Durgapur (England help) - West Bengal 3. Bhilai (Russia help) - Chhattisgarh © 3" Plan (1961-66) Goal: Self-reliant Economy Failed due to 1962 China War, 1965 Pakistan War & Drought 3 Annual Plans during gap years: 1966, 1967, 1968 1978, 1979 1990, 1991Total: 7 One-Year Plans Max Growth: 11" Plan - 8.3% Total Five-Year Plans: 12 © 4" Plan (1969-74) - R. Gadgil Model Max growth rate Rolling Plan started - 1970 Poverty Eradication Program ©} 5 Plan (1974-78) - Focused on: Poverty Removal Employment Generation 20-Point Programme - 1975 Terminated by Morarji Desai Government, started Rolling Plan (1978-1980) © 6'" Plan (1980-85) Poverty Alleviation Technological & Energy Development© 7" Plan (1985-90) Motto: Employment, Production, Productivity © 1990-91 - Plan failed > 1991 onwards: Transition from Closed Economy to Open Economy Start of Liberal Economy © 8'" Plan (1992-97) Focus: Human Resource Development Stress on Education & Health PM Rozgar Yojana - 1993 Special schemes for women 9" Plan (1997-2002) - Not important © 10 Plan (2002-07) Target: Double Per Capita Income in 10 Years © 11" Plan (2007-12) Max growth rate - 8.3% Aim: Inclusive and Equitable DevelopmentFocus: Compulsory Elementary Education © 12" Plan (2012-2014) © From 1 Jan 2015 - Five-Year Plans abolished > Replaced by NITI Aayog National Institution for Transforming India Chairman: PM of India 1% Vice Chairperson: Arvind Panagariya CEO: Sindhushree Khullar Vision: 15 Years Policy: 7 Years Action Plan: 3 Years © NITI Aayog: 4 Cabinet Ministers nominated by PM 2 Part-time members (from universities/think tanks) [i] Economic Census 11977 6" — 2014 (Started in 2019)©} Economic Survey - Released by Finance Ministry © Income Inequality Measurement: 2 Methods: 1. Lorenz Curve 2. Gini Coefficient Lorenz Curve: More deviation from perfect equality = More inequality Gini Coefficient: Ranges from 0 (equal) to 1 (unequal) © Welfare Formula: Where G = Gini coefficient © Poverty Line in India (R. Rangarajan Committee): Poverty = Lack of Access Calorie-based criterion: Rural — 2400 calories Urban - 2100 calories©} Lakdawala Committee — Poverty Measurement © COLI - Cost of Living Index (by Suresh Tendulkar Committee) ©} NREGA - National Rural Employment Guarantee Act Started: 02-02-2006 (Andhra Pradesh) Renamed MGNREGA in 2009 Max Wage: Haryana - %374 Work: 100 days/year, 7 hours/day, 6 days/week Launched in Sirsa, Haryana - 90:10 funding (Centre:State) Act Passed: 2005 Right to Work: Fundamental Right © Insurance Schemes: PM SBY (Suraksha Bima Yojana) Age: 18-70 %20/year — ®2 lakh (Accident) PM JY (Jeevan Jyoti Yojana) Age: 18-50 %436/year — %2 lakh (Death)APY (Atal Pension Yojana) Age: 18-40 Premium: =1000-5000 Govt. Contributes 50% for 5 years (up to 1000) PM JDY (Jan Dhan Yojana) - 28 Aug 2014 31 lakh accident cover 230k life insurance © Schemes: Free Education Act (6-14 years) - 1 April 2010 Sarva Shiksha Abhiyan - 2001 Mid-Day Meal-15 Aug 1995 NHM - National Health Mission (2013) NRHM - Rural Health Mission (2005) Swachh Bharat Abhiyan - 2 Oct 2014 ASHA Workers - Accredited Social Health Activists Digital India -1 July 2015 PMFBY — Crop Insurance Scheme (13 Jan 2016) Namami Gange - 07 July 2016 Van Dhan Yojana - 14 April 2018PMJAY — Ayushman Bharat (25 Sep 2018) PMKMDY - Kisan Maandhan Yojana (30 May 2019) SMILE - For Transgenders and Beggars MUDRA - Microfinance Agency (2015) PM Kusum Yojana — 2019 (Solar Pumps) PM Matru Vandana Yojana — 2021 (6k aid for pregnant women, age 19+) ©} New Education Policy — 29 July 2020 Structure: 5+3+3+4 Years © FDI Limits: Public Banking - 49% Private Banking - 74% Insurance - 74% Telecom, Pharma, Defence — 100% Stock Exchange - 49% © Only 2 Sectors Reserved for Government: 1. Railways 2. Atomic Energy NEP - New Economic Policy (1991)LPG: Liberalization, Privatization, Globalization © Disinvestment - Govt. Reduces ownership in industries © RBI -Established: 1 April 1935 (with $5 crore capital) Nationalized: 1949 HQ: Mumbai Role: Controls Monetary & Credit Policies 1% Governor: Osborne Smith 1* Indian Governor: C.D. Deshmukh Bank Nationalization (2 times): 1. 1969 - 14 Banks (50 crore) 2. 1980 -6 Banks (%200 crore)