CU-BBA-SEM-III-Indian Economy-Second draft

BACHELOR OF BUSINESS ADMINISTRATION SEMESTER-III INDIAN ECONOMY BBA113

CHANDIGARH UNIVERSITY Institute of Distance and Online Learning Course Development Committee Prof. (Dr.) R.S.Bawa Pro Chancellor, Chandigarh University, Gharuan, Punjab Advisors Prof. (Dr.) Bharat Bhushan, Director – IGNOU Prof. (Dr.) Majulika Srivastava, Director – CIQA, IGNOU Programme Coordinators & Editing Team Master of Business Administration (MBA) Bachelor of Business Administration (BBA) Coordinator – Dr. Rupali Arora Coordinator – Dr. Simran Jewandah Master of Computer Applications (MCA) Bachelor of Computer Applications (BCA) Coordinator – Dr. Raju Kumar Coordinator – Dr. Manisha Malhotra Master of Commerce (M.Com.) Bachelor of Commerce (B.Com.) Coordinator – Dr. Aman Jindal Coordinator – Dr. Minakshi Garg Master of Arts (Psychology) Bachelor of Science (Travel &Tourism Management) Coordinator – Dr. Samerjeet Kaur Coordinator – Dr. Shikha Sharma Master of Arts (English) Coordinator – Dr. Ashita Chadha Bachelor of Arts (General) Coordinator – Ms. Neeraj Gohlan Academic and Administrative Management Prof. (Dr.) R. M. Bhagat Prof. (Dr.) S.S. Sehgal Executive Director – Sciences Registrar Prof. (Dr.) Manaswini Acharya Prof. (Dr.) Gurpreet Singh Executive Director – Liberal Arts Director – IDOL © No part of this publication should be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording and/or otherwise without the prior written permission of the authors and the publisher. SLM SPECIALLY PREPARED FOR CU IDOL STUDENTS Printed and Published by: TeamLease Edtech Limited www.teamleaseedtech.com CONTACT NO:01133002345 2 CU IDOL SELF LEARNING MATERIAL (SLM)

First Published in 2021 All rights reserved. No Part of this book may be reproduced or transmitted, in any form or by any means, without permission in writing from Chandigarh University. Any person who does any unauthorized act in relation to this book may be liable to criminal prosecution and civil claims for damages. This book is meant for educational and learning purpose. The authors of the book has/have taken all reasonable care to ensure that the contents of the book do not violate any existing copyright or other intellectual property rights of any person in any manner whatsoever. In the event the Authors has/ have been unable to track any source and if any copyright has been inadvertently infringed, please notify the publisher in writing for corrective action. CONTENTS Unit - 1 Introduction To Indian Economy................................................................................4 Unit - 2 Demographic Features Of Indian Economy.............................................................27 Unit – 3 Economic Planning..................................................................................................41 Unit – 4: Five Year Plans.......................................................................................................47 Unit – 5: Agriculture..............................................................................................................82 Unit – 6: Agricultural Finance.............................................................................................103 Unit – 7: Industries...............................................................................................................129 Unit – 8: Indian Public Finance...........................................................................................155 3 CU IDOL SELF LEARNING MATERIAL (SLM)

Unit – 9: India’s Foreign Trade............................................................................................175 Unit – 10: India’s Balance Of Payments..............................................................................197 Unit – 11: India’s Foreign Trade Policy..............................................................................214 Unit – 12: Multi-National Companies..................................................................................223 Unit – 13: Export Import Policy Of India............................................................................234 Unit – 14: Indian Economy-Emerging Issues......................................................................241 Unit – 15: Emerging Issues In International Trade..............................................................254 Unit – 16: Foreign Direct Investment..................................................................................266 4 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 1INTRODUCTION TO INDIAN ECONOMY Structure 1.0 Learning Objectives 1.1 Introduction 1.2 Structure of Indian Economy 1.3 Important Sectors of Indian Economy 1.3.1 Agricultural Sector: 1.3.2:.Industrial sector: 1.3.3: Services sector: 1.3.4:.Food Processing: 1.3.5: Manufacturing Sector: 1.4 Salient features of Indian Economy 1.5 Poverty 1.6 Unemployment 1.6.1 Meaning and Definition 1.6.2 Causes of Unemployment 1.6.3 Government Measures 1.7 Government Measures 1. 8 Summary 1.9 Keywords 1.10 Learning Activity 1.11Unit End Questions 1.12References 1.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Explain the nature of Indian Economy  Identify the structure of Indian Economy  Recognize the problems of poverty and unemployment. 5 CU IDOL SELF LEARNING MATERIAL (SLM)

 Describe the features of Indian economy. 1.1 INTRODUCTION The Indian economy was in distress at the time of country’s independence. During the half century before India’s independence, the world was seeing accelerated development and expansion in agriculture and industry. Being a colony, India was fulfilling the development needs not of herself, but of a foreign land.British rulers never made any significant changes for the benefit of the social sector, and this hampered the productive capacity of the Indian Economy. During independencetime, India’s literacy was only 17 percent, with a life expectancy of 32.5 years. Hence after independence, systematic organisation of the economy was a real challenge for the government of that time. The need for delivering growth and development was in huge demand in front of the political leadership - as the country was riding on the promises and vibes of national fervour. From independence in 1947 until 1991, successive governments promoted protectionist economic policies with extensive state intervention and economic regulation, in the form of the License Raj. The acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India. Many important and strategic decisions were taken and as of today India is the world's sixth-largest economy by nominal GDP and the third largest by purchasing power parity (PPP). According to the International Monetary Fund (IMF), on a per capita income basis, India ranked 142nd by GDP (nominal) and 124th by GDP (PPP) in 2020. India had rapid Economic growth despite the Great Recession. It grew 6.8% in 2018, 7.2% in 2017, and 8.2% in 2016. From 2008 through 2014, it grew between 3% and 8.5%. That phenomenal growth rate reduced poverty by nearly 10% in the 2010s. In India, the problems of unemployment and poverty have always been major obstacles to economic development. Regional disparity is also crucial in this context. Economic reforms, changes in the industrial policy and better utilization of available resources are expected to reduce the problem of unemployment and poverty. The governmental bodies are also required to initiate long term measures for poverty alleviation. Generation of employment opportunities and equality in income distribution are the two key factors that are of utmost important to deal with the dual problem of unemployment and poverty India has a mixed economy. Half of India's workers rely on agriculture, the signature of a traditional economy. One-third of its workers are employed by the services industry, which contributes two-thirds of India's output. The productivity of this segment is made possible by India's shift toward a market economy. Since the 1990s, India has deregulated several industries. It has privatized many state-owned enterprises, and opened doors to foreign direct investment. 6 CU IDOL SELF LEARNING MATERIAL (SLM)

Despite the various recent challengesstarting from World Recession, Coronainfections, the US presidential electionetc Indian Economy is striving hard to boost the positive trend in Economy which has been strengthened by Covid Vaccine development in India itself. The day is not far off when Indian Economy will surpass even Chinas Economic growth achievement. 1.2 STRUCTURE OF INDIAN ECONOMY Fig 1.1 Structure of Indian Economy Fig1.1 shows the main structure of Indian Economy. It is mainly divided into 3 major sectors.: 1. Primary Sector 2. Secondary Sector 3. Tertiary Sector India is mainly an Agrarian Economy which has lot of potential and resources with respect to Agriculture. This does not imply that other sectors are not given emphasis or the development in those sectors are low. Government has been focusing and striving for all round development. There has been a growing interest in Economic Development rather than just Economic Growth. 7 CU IDOL SELF LEARNING MATERIAL (SLM)

Economic growth refers to the rise in National Income and per capita income which becomes an indicator for improvement. It is mainly targeted and used in Developed Countries. Economic Development refers to “A process of development in the economy, whereby there will be a development in agriculture,industry,trade,transport,etc.” 1.3IMPORTANT SECTORS OF INDIAN ECONOMY 1.3.1 Agricultural Sector: One of the most important sectors of the Indian economy remains Agriculture. Its share in the GDP of the country has come down and is currently at 14%. However, more than half of the total population of the country is still dependent on agriculture.Hence,The Union Budget 2017 - 18 gave high priority to the agricultural sector and aimed to double farmers’ incomes by2022.  Government subsidies to agriculture are at an all-time high.  Further, cropping patterns have shifted in favour of cash crops such as sugarcane andrubber.  Introduction of cooperative farming.  Agricultural land is being brought under industrial and commercial use, thereby straining the remaining agricultural land.  Rise of Self Help Groups  Many export sectors have been opened for agricultural goods.  Food processing is emerging as a ‘Sunrise Industry’ 1.3.2 Industrial sector: Another important part of the Indian economy is the Industry sector. Due to changes such as the end of the ‘Permit Raj’ and opening up of the economy, boom in the industries sector was seen. The changes were accepted by people of the country with great enthusiasm and optimism. As a result of these changes, the industrial potential of the economy has increased since 1991.   Proliferation of industries, from traditional iron and steel to jute and automobiles.  Autonomy in production, marketing and distribution.  Reduced red –tapes: Red tapism refers to lengthy and cumbersome paper works and procedures before official action can be taken or considered.  Encouragement to private investments, both domestic as well as FDI.  Transfer of technology and benefits of research and development to the advantage of the economy. 8 CU IDOL SELF LEARNING MATERIAL (SLM)

 Arrival of investment models such as joint ventures, public-private partnerships, MNCs.  Private players got an opportunity to enter new sectors, which were earlier under government monopoly. 1.3.3Services sector: The sector that benefited most from the New Economic Policy was the services sector. Banking, Finance, Business Process Outsourcing - and most importantly Information Technology services - have seen double - digit growth.   Indian IT giants such as Infosys, WIPRO and TCS have made their mark on the global platform.   60 percent of the GDP contribution comes from the services sector.   India, with its huge demographic dividend potential, has emerged as the IT hubof the world.  New employment opportunities are being created in this sector.  Opening of transportation, tourism and medical sectors have led to the growth of service sector competencies.  RBI has transitioned from being a regulator to a facilitator.  Product diversity of financial investments.  Wider penetration of services such as insurance, banking, stock market etc.  Considerable improvement in forex reserves. 1.3.4 Food Processing: Food processing has emerged as a high - growth, high - profit sector. Food processing refers to all methods which are used toturn fresh foods or agriculture produce or products into food products. This can involve one or a combination of various processes including washing, chopping, pasteurising, freezing, fermenting, packaging, cooking and many more. It is one of the focus sectors of the ‘Make in India’ initiative. The vast availability of raw materials, resources, favourable policy measures and numerous incentives have led India to be considered as a key attractive market for the sector. India is the second largest producer of food grains in the world, second only to China. Therefore India has greater potential due to increasing urbanization, income levels and a high preference for packaged and processed food. .  1.3.5 Manufacturing Sector: The manufacturing sector is the second largest contributor to India’s GDP after the Services sector. 9 CU IDOL SELF LEARNING MATERIAL (SLM)

Various government initiatives like Make in India, MUDRA,Start-up India, Freight Corridors, will raise the share of the manufacturing sector in the near future. However, if India aims to raise its share of manufacturing in GDP to around 25%, the industry will have to significantly step up its research and development expenditure. The quantum of value addition will have to be increased at all levels.The government needs to offer attractive remuneration to motivate people to join the manufacturing sector. Fig 1.2Shares in GDP and Employment Table 1.1 Share of GDP by Industry Table 1.1 and Figure 1.2clearly indicates 2 things: 1. The contribution of Agriculture to overall GDP has decreased over the years and the contribution of Tertiary Sector and secondary sector has increased manifold. 2. Inspite of decreased share of Agriculture to GDP, it has remained the main sector for providing employment opportunities in India. This means that majority of the people 10 CU IDOL SELF LEARNING MATERIAL (SLM)

in India still depend on Agriculture and agriculture based industries for survival and income. 3. Sector-wise Indian GDP composition in 2017 is as follows: Agriculture (15.4%), Industry (23%), and Services (61.5%). With the production of agriculture activity of $375.61 billion, India is 2nd larger producer of agriculture products. India accounts for 7.39 percent of total global agricultural output. India is way behind China, which has $991 bn GDP in the agriculture sector. GDP of the Industry sector is $560.97 billion, and world rank is 6. India's world rank is eight in the Services sector, and its GDP is $1500 billion. 4. The Agriculture sector's contribution to the Indian economy is much higher than the world's average (6.4%). The industry and services sector's contribution is lower than the world's average 30% for the Industry sector and 63% for the Services sector. 1.4SALIENT FEATURES OF INDIAN ECONOMY Low Per Capita Income: Per capita income of India is low when compared to other developed countries.At present a new modified system of comparing and calculating per capita income has been adopted at international level in which the per capita income of a country is calculated on the basis of purchasing power of currency of that particular power of currency of that particular country; while old traditional method was based on exchange rate of currencies. Increasing population India is the 7th largest country by land area but second most populous country in the world.Government in its various Five-Year plans, formed strategies and introduced programmes like ‘Family Planning’ and introduced various schemes to bring down population by spreading awareness.Growing population will be a boon for the Economic Growth and development only when it is converted into skilled manpower. Existence of chronic unemployment and under-employment *In India, unemployment is structural one, unlike in developed countries, which is ofcyclical type. *The literacy rate in India has increased and is increasing but the problem of unemployment has still not gone as the demand for skilled labour in various sectors are not met. *The expansion of industries and its growth rate is very less compared to the growingliterate working population. *Government has tried and is trying to generate employment by introducing various indigenous projects and JV projects with foreign companies. Underutilized Natural resources. 11 CU IDOL SELF LEARNING MATERIAL (SLM)

*Resources are abundant in India but it has not been properly or widely utilized. Lack of infrastructure facility Lack of infrastructural facilities is one of the problems of Indian economy.These infrastructural facilities include transportation and communicationfacilities,electricity generation and distribution, banking and credit facilities, economic organisation, health and educational institutes etc. India has a mixed economy  Indian economy is a true example of complete mixed economy. This means both private and public sectors co-exist and function here, simultaneously.  On one side, some of the fundamental and heavy industrial units are being operated under the public sector.  Whereas, due to the liberalization factors of the economy, the private sector has gained further enhancements in terms of scope.  This makes it a perfect amalgamation of both public and private sectors being operated and supported under a single economic cloud. An Emerging Market: *Being a developing country with great level of economic well-being, India is an emerging market for the other players. *Holding a constant GDP rate even in the downfall situations, it has kept its position intact making it a lucrative spot for the other economies to invest. This has in turn also helped the Indian economy exist as a robust economy among the other leaders. Federal in Character: Bearing a federal character in the economy, in India both the centre and state governments play important role. They equally act as the operators of the economies at their own levels.In fact, the Indian constitution gives the clear permissions and guidelines to both centre and state to operate and regulate the economies Fast growing Service Sector: With growth in the service sector, Indian economy has formulated its growth in the service sector as well.There has been a high growth in the technical sectors like-e of Information Technology Sector, BPO, etc. The business in these sectors has not only added and enhanced the contribution to the economy, but has also helped in the multi-fold growth of the country as well. These emerging service sectors have helped the country go global and helped in spreading its branches around the world. In equal distribution of Income and economic disparities: 12 CU IDOL SELF LEARNING MATERIAL (SLM)

There exists a huge economic disparity in the Indian economy.  There is a huge difference in the distribution of income among the various categories of people on the basis of income. This has led to an increase in the poverty level in the society and a maximum percentage of individuals are thus living under the – Below Poverty Line (BPL). This unequal distribution of income has created a huge gap and economic disparity among the various categories of people in the Indian economy. Unstable prices: Even though there has been a constant growth rate in the GDP and growth opportunities in the Indian economy, but there have been fluctuations in the prices. Being depended on the other bigger economic giants the price of the products and services keep on fluctuating for decades. At times the inflation grows high rising the prices of the commodities. This clearly indicates the instability of the prices in the Indian economy. Large Domestic consumption: With the escalating growth rate in the economy the standard of living has grown a lot. This in turn has resulted in increasing the domestic consumption in the country. With the growing advancements and globalization, the domestic consumption rate within the people of the country is very high. Rapid growth of Urban areas: Urbanization and planned development is a key ingredient towards the growth of any of the economy around the world. There has been a rapid growth of urban areas in India after independence. The growth acceleration in the rate of urbanization after independence was due to the country’s adoption of a mixed economy. This has given rise in complete development and rise of the private sector that has played a key role in constituting the Indian economy. Thus, urbanization is taking place at a quite faster rate in India changing the shape of the Indian economy. The constant urbanization is a key to the growth of the Indian economy. Stable macro economy The Indian economy has been projected and considered one of the most stable macro economies around the world. A survey represents the Indian economy to be a “heaven of macroeconomic stability, resilience and optimism.  According to a survey in the year 2014- 15, 8%-plus GDP growth rate has been predicted, with actual growth turning out to be a little less (7.6%). This is a clear indication of a stable macro-economic growth rate. 1.5 POVERTY Poverty is difficult to define but it can be said as “the denial of access to the basic necessities of human existence.”Generally, the income of the people is taken as an indicator 13 CU IDOL SELF LEARNING MATERIAL (SLM)

of poverty and also the spending or per capita expenditure.It is a social phenomenon in which a section of the society is unable to fulfil even its basic necessities of life.In India poverty has been defined as that situation in which an individual fails to earn income that is sufficient to buy him the means of subsistence. Nature and Causes of Poverty: The nature and causes of Poverty can be classified as given below Vicious Circle of Poverty: It is said that “a country is poor because it is poor. The problem of the vicious circle of poverty is due to low level of saving which reduces the scope for investment and the low level of investment yields low income and thus the circle of poverty goes on indefinitely. Low Resources Endowment A household is poor if the sum total of income earning assets which it commands,including land, capital and labour of various levels of skills, cannot provide anincome above the poverty line. The poor mainly consists of unskilled labour, whichtypically does not command a high enough level of wage income. Inequality in the Distribution of Income and Assets: The distribution of income and assets also determine the level of income. Theeconomic inequalities are the major cause of poverty in India. It means the benefitsof the growth have been concentrated and have not “trickled down” sufficientlyto ensure improved consumption among the lower income groups. Lack of Access to Social Services The lack of access to social services such as health and education compound theproblems arising from inequality in the ownership of physical and human assets.These services directly affect household welfare. The poor typically get much lessthan a fair share of such services. This is partly because governments do not investenough to ensure an adequate supply of these services and the limited supply ismainly availed by non-poor households. Further, the poor may not have adequateaccess for a variety of other reasons like lack access to information about theexistence of such services, lack of knowledge and corruption. Lack of access to Institutional Credit The banks and other financial institutions are biased in the provision of loans to thepoor for the fear of default in the repayment of loans. Further, the rules regardingcollateral security, documentary evidences etc. present constraints to the poor toavail loan facility from banks. The inaccessibility to institutional credit may forcepoor to take credit from the landlord or other informal sources at a very highinterest rate and which in turn may weaken their position in other areas, leading,for example, to the payment of abnormally high rental shares for land, oracceptance of abnormally low wages in various types of “bonded labour” 14 CU IDOL SELF LEARNING MATERIAL (SLM)

arrangements or selling their crop at a very low price. In some cases poor peoplecannot make themselves free from the clutches of moneylenders. Their poverty isfurther accentuated because of indebtedness. Such indebted families continue toremain under the poverty line for generations because of this debt-trap. Price Rise The rising prices have reduced the purchasing power of money and thus havereduced the real value of money income. The people belonging to low incomegroup are compelled to reduce their consumption and thus move below thepoverty line. Lack of Productive Employment The magnitude of poverty is directly linked to unemployment situation. Thepresent employment conditions don’t permit a reasonable level of living causingpoverty. The lack of productive employment is mainly due to problems ofinfrastructure, inputs, credit, technology and marketing support. The gainfulemployment opportunities are lacking in the system. Rapid Population Growth: The faster population growth obviously means a slower growth in per capitaincomes for any given rate of growth of gross domestic product (GDP), andtherefore a slower rate of improvement in average living standards. Further theincreased population growth increase consumption and reduces national savingsand adversely affects the capital formation thereby limiting the growth in thenational income. Low Productivity in Agriculture The level of productivity in agriculture is low due to subdivided and fragmentedholdings, lack of capital, use of traditional methods of cultivation, illiteracy etc.This is the main cause of poverty in the rural India. Social Causes (i) Education: Education is an agent of social change. Poverty is also said to beclosely related to the levels of schooling and these two have a circularrelationship. The earning power is affected by investment in individual’seducation and training. However, poor people do not have the funds forhuman capital investment and thus it limits their income. (ii) Caste system: Caste system in India has always been responsible for ruralpoverty. The subordination of the low caste people by the high caste peoplecaused the poverty of the former. Due to rigid caste system, the low castepeople could not participate in various economic activities and so remainpoor. (iv) Social customs: The rural people generally spend a large percentage ofannual earnings on social ceremonies like marriage, death feast etc. andborrow largely to meet these requirements. As a result, they remain in debt andpoverty. 15 CU IDOL SELF LEARNING MATERIAL (SLM)

Need for removal of poverty: Poverty removal is considered as an essential condition for self-sustaining growth. The reasons advanced in support of this argument are as follows: A raise in the incomes and levels of living of the poor would contribute not only to their material well-being but also to the productivity and income of the economy as a whole. Raising the income levels of the poor will stimulate an overall increase in the demand for locally produced necessity products, which in turn stimulates local production, employment and investment. This results in rapid economic growth. A more equitable distribution of income achieved through the reduction of mass poverty can stimulate healthy economic expansion by acting as a powerful economic material and incentive to widespread public participation in the development process. Technological breakthroughs have made the reduction of poverty and growing awareness and ambitions will help the poor to enjoy better standards of living. Poverty Alleviation andEmployment Generation Programs in India: Poverty and unemployment are inseparable, hence the policy measures for reducing unemployment are equally applicable for the removal of poverty. Poverty alleviation was a gradual and automatic process as the economy grew. So, the emphasis was on increasing the growth rate of the economy. The government is following a focused approach through various flagshipschemes in the areas of poverty alleviation and employment generation to achieveinclusive development. Mahatma Gandhi National Rural Employment Guarantee Work (MGNREGA): This flagship programme of the government aims at enhancing livelihood securityof households in rural areas by providing at least one hundred days of guaranteedwage employment in a financial year to every household whose adult membersvolunteer to do unskilled manual work with the stipulation of one-third participationof women. The MGNREGA provides wage employment while also focusing onstrengthening natural resource management through works that address causes ofchronic poverty like drought, deforestation, and soil erosion and thus encouragesustainable development. National Rural Livelihood Mission (NRLM)- Aajeevika: The Swarnjayanti Gram Swarozgar Yojana (SGSY)/ NRLM a self-employmentprogramme implemented since April 1999 aims at lifting the assisted rural poorfamilies (swarozgaris) above the poverty line by providing them income-generatingassets through a mix of bank credit and government subsidy. The rural poors areorganized into self-help groups (SHGs) and their capacities are built throughtraining and skill development. Swarna Jayanti Shahari Rozgar Yojana (SJSRY): 16 CU IDOL SELF LEARNING MATERIAL (SLM)

The SJSRY launched on 1 December 1997 aims at providing gainful employment to the urban unemployed and underemployed, by encouraging them to set up self- employmentventures or creating wage employment opportunities. Integrated Rural Development Programme (IRDP)! IRDP is described officially as a major mechanism for the alleviation of rural poverty. The main objective of IRDP is to raise families of identified target group below poverty line by creation of sustainable opportunities for self-employment in the rural sector.Assistance is given in the form of subsidy by the government and term credit advanced by financial institutions (commercial banks, cooperatives and regional rural banks.) The programme is implemented in all blocks of the country as centrally sponsored scheme funded on 50:50 basis by the centre and the states. TRYSEM: The Training of Rural Youth for Self-Employment or commonly abbreviated as TRYSEM is a scheme launched by the government of India through the Department of Rural Development on the 15th of August 1979. This scheme basically aims to provide youngsters of the nation with facilities and opportunities, especially to those from the rural and backward parts of the country. JAWAHAR ROZGAR YOJANA (JRY) The Government of India has made and keeps making provisions to improve the quality of life for rural India through its five year plans and many other schemes generally termed as Yojana’s. Rozgar Yojana is an important move towards wage employment programme. Jawahar Rozgar Yojana was introduced by the Indian government with an agenda of attaining self-sufficiency in providing sustainable employment to the rural population and helps remove poverty to the extent possible in less time.  Pradhan Mantri Rozgar Yojana Pradhan Mantri Rozgar Yojana (PMRY): PMRY is initiated by Central Government of India to provide sustainable self-employment opportunities to 10 lakh educated unemployed youth and women in India. Launched in 1993, PMRY initiated this cause by offering financial assistance in starting one’s own enterprise in trade, manufacturing, and services sectors. Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) The Ministry of Rural Development (MoRD) announced the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) Antyodaya Diwas, on 2014. DDU-GKY is a part of the National Rural Livelihood Mission (NRLM), tasked with the dual objectives of adding diversity to the incomes of rural poor families and cater to the career aspirations of rural youth. DDU-GKY is uniquely focused on rural youth between the ages of 15 and 35 years from poor families. As a part of the Skill India campaign, it plays an instrumental role in 17 CU IDOL SELF LEARNING MATERIAL (SLM)

supporting the social and economic programs of the government like the Make in India, Digital India, Smart Cities and Start-Up India, Stand-Up India campaigns. Some of the other PAPs: Nehru Rozgar yojana(NRY);Prime 2) Minister’sRozgar yojana(PMRY) ;3) National social assistance programme(NSAP) ;4) GangaKalyan yojana(GKY); 5) JanashreeBima yojana(JBY). 1.6 UNEMPLOYMENT 1.6.1 Meaning and definition: Unemploymentcan be defined as a state of workless ness for a person who is fit and willing to work at the current wage rate. It is a condition of involuntary and not voluntary idleness. Simply stated an unemployed person is the one who is an active member of the labour force and is seeking work, but is unable to find the same. In case of voluntary unemployment a person is out of job on his own accord or choice, doesn’t work on the prevalent or prescribed wages. Either he wants higher wages or doesn’t want to work at all. The involuntary unemployment on the other hand is the situation when a person is separated from remunerative work and devoid of wages although he is capable of earning his wages and is also anxious to earn them. It is the involuntary idleness that constitutes unemployment. Unemployment is a serious problem in India.According to M.L.Dantwala “All those who are not seeking work and are not available for work are considered outside the labour force and hence do not figure in employment or unemployment statistics.” From the economy point of view, unemployment means“inefficient utilization of human resources, lower production and hence lower standard of living of people. Apart from the above, it may also affect the morale of the worker, undermine the self-confidence. And due to prolonged unemployment, may lose the skills work habits and thus become unemployable.” Unemployed=labour force-number employed. The unemployment problem is a product of shortage of capital equipment and other complementary resources accompanied by high rate of growth of population. 1.6.2: Meaning and Types of Unemployment The population of any country consists of two components (i) Labour Force (ii) Non- Labour Force. Labour force means all persons who are working (i.e. being engaged in the economic activity) as well as those who are not working but areseeking or available for work at the current wage rate. It means the labour force consists of 18 CU IDOL SELF LEARNING MATERIAL (SLM)

both employed and unemployed people.The component of population which is not a part of the labour force is Non-LabourForce. It includes all those who are not working and are neither seeking noravailable for work. Involuntary unemployment can be further divided into cyclical unemployment,seasonal unemployment, structural unemployment, frictional unemployment,natural rate of unemployment, disguised unemployment and under employment 1.6.3: Cyclical Unemployment Cyclical or demand deficient unemployment occurs when the economy is in needof low workforce. When there is an economy-wide decline in aggregate demandfor goods and services, employment declines and unemployment correspondinglyincreases. Cyclical unemployment mainly occurs during recession or depression.This form of unemployment is most commonly known as cyclical unemploymentsince unemployment moves with the trade cycle. For instance, during the recentglobal slowdown in late 2008, many workers around the globe lost their jobs. 1.6.4: Seasonal Unemployment This type of unemployment occurs in a particular time of the year or season andthus is known as seasonal unemployment. Seasonal unemployment is mostcommon in industries like agriculture, tourism, hotel, catering etc. 1.6. 5: Structural Unemployment Structural unemployment arises when the qualification of a person is not sufficientto meet his job responsibilities. It arises due to long term change in the pattern ofdemand that changes the basic structure of the economy. The person is not able tolearn new technologies used in the new expanding economic sectors and they thusmay be rendered permanently unemployed. For instance, when computers wereintroduced, many workers were dislodged because of a mismatch between theexisting skills of the workers and the requirement of the job. Although jobs wereavailable, there was a demand for a new kind of skill and qualification. So, personswith old skills did not get employment in the changed economic regime, and remainunemployed. 1.6.6: Frictional Unemployment Frictional unemployment occurs when a person is out of one job and is searchingfor another for different reasons such as seeking a better job, being fired from acurrent job, or having 19 CU IDOL SELF LEARNING MATERIAL (SLM)

voluntarily quit a current job. It generally requires some timebefore a person can get the next job. During this time he is frictionally unemployed. Natural rate of unemployment The sum total of frictional and structural unemployment is referred as the naturalrate of unemployment. Disguised Unemployment The unemployment which is not visible is said to be disguised unemployment. Itoccurs when a person doesn’t contribute anything to the output even when visiblyworking. This happens amongst family labour especially in agriculture who areengaged on land but are not contributing to the given level of output. Thus theirmarginal productivity is zero. Underemployment When a person is engaged in the economic activity but that fail to provide him fullyin accordance to his qualification and efforts. Thus it is a situation in which a personis employed but not in the desired capacity whether in terms of compensation,hours, or level of skill and experience. While not technically unemployed theunderemployed often compete for available jobs. MEASUREMENT OF UNEMPLOYMENT Unemployment rate is the percent of the labour force that is without work. It iscalculated as below: Unemployment rate = (Unemployed Workers/Total labour force) × 100 Measurement of unemployment is a difficult task. In India, the most comprehensiveand reliable data on employment and unemployment are compiled by the NationalSample Survey Organization (NSSO). Based on different reference period (a year,a week, and each day of a week), NSSO provides four different measures ofemployment and unemployment. The following are some methods of measuringunemployment: (i) Usual Principal Status Unemployment (UPS): This is measured as thenumber ofpersons who remained unemployed for a major part of the year.The persons covered by the survey may be classified into those working and/or available for work in their principal activity, and those working and/oravailable for work in a subsidiary activity, that is, a sector other than theirprincipal activity. Hence, within the usual status concept, the estimates are now derived on the usual principal status as well as the usual principal andsubsidiary status basis. The usual status unemployment rate is a person rateand indicates chronic unemployment, because all those who are found usuallyunemployed in the reference year 20 CU IDOL SELF LEARNING MATERIAL (SLM)

are counted as unemployed. This measureis more appropriate to those in search of regular employment, e.g., educatedand skilled persons who may not accept casual work. This is also referred toas ‘open unemployment’. (ii) Usual Principal and Subsidiary Status Unemployment (UPSS): Hereperson is considered unemployed, if besides UPS, those available but unableto find work on a subsidiary basis during a year. (iii) Current Weekly Status Unemployment (CWS): This refers to the numberof persons who did not find even an hour of work during the survey week. (iv) Current Daily Status Unemployment (CDS): This refers to the number ofpersons who did not find work on a day, or on some days, during the surveyweek. Rates of unemployment differ based on different concepts. The UPS and UPSSmeasure reflect only long-term unemployment spells. The CWS measure capturesshorter unemployment spells but ignores unemployment for less than a week. TheCDS measure is the most inclusive, capturing both open as well as partialunemployment. CAUSES OF UNEMPLOYMENT IN INDIA Slow Economic Growth: During the planning period the trend rate of growth was considerably lower thanthe targeted rate. Therefore, jobs in adequate number were not created. Further,economic growth by itself does not solve the problem of unemployment. In therecent past there has been deceleration in the growth of employment in spite of theaccelerated economic growth. This can be explained in terms of steady decline inthe degree of response of employment to change in output in all the major sectorsof economic activity except in construction. According to T.S. Papola, over aperiod of time, the output growth in agriculture and manufacturing sector hasbecome more input and technology-intensive and less labour- intensive. Besides, thesectoral composition of growth is also an important determinant of unemployment.Excessive dependence on agriculture and slow growth of non-farm activities limitemployment generation. Increase in Labour force There are two important factors that have caused an increase in the labour forcewhich are as follows: (i) Rapid Population Growth: Rising population has led to the growth in thelabour supply and without corresponding increase in the employmentopportunities for the increasing labour force has aggravated the unemploymentproblem. 21 CU IDOL SELF LEARNING MATERIAL (SLM)

(ii) Social Factors: Since Independence, education among women has changedtheir attitude toward employment. Many of them now compete with men forjobs in the labour market. The economy has however failed to respond to thesechallenges and the net result is a continuous increase in unemploymentbacklogs. Rural-Urban Migration The unemployment in urban area is mainly the result of substantial rural migrationto urban areas. Rural areas have failed to provide subsistence living in agricultureand allied activities and so large scale migration is taking place to cities. However,economic development in cities has failed to create enough additional jobs for thenew urban entrants to the labour market. Thus only some of the migrants areabsorbed in productive activities and the rest join the reserve army of unemployedworkers. Inappropriate Technology In India, though capital is a scarce factor, labour is available in abundant quantity;yet producers are increasingly substituting capital for labour. This policy results inlarger unemployment. Despite the abundance of labour, capital intensive technologyis adopted in India mainly because of rigid labour laws. It is quite difficult to followeasy hire and fire policy and so right sizing of manpower is difficult for theenterprises. It is difficult to reduce the number of labour-Force. Further, the factorslike labour-unrest and lack of work-culture leads to the increased inefficiency oflabour and thus provide incentives to follow labour- saving technology by organizations. Defective Educational System The present educational system has theoretical bias and has limited utility forproductive purposes. It lacks the emphasis on the development of aptitude andtechnical qualifications required for various types of work among job seekers. Thishas created a mismatch between the need and availability of relevant skills andtraining, which results in unemployment, especially of youth and educated whileshortage of technical and specialized personnel continues. Lack of Infrastructure Development Lack of investment and infrastructure development limits the growth and productivecapacity of different sectors which leads to inadequate generation of employmentopportunities in the economy. Lack of employability India faces poor health and nutrition situation among masses which reduces thecapacity of person to be employable and it causes unemployment Government Measures: 1. Almost all the FYPs aim for the increase of employment opportunities 22 CU IDOL SELF LEARNING MATERIAL (SLM)

2. Launched National Rural employment programme(NREP) in 1980 3. The rural landless employment guarantee programme (RLEGP) was introduced in 1983, guaranteed employment to at least one member of every landless family at least for 100 days in a year. 4. Started training for Rural Youth Employment Programme in 1979, which provides technical skills to the rural youth to enable them for self-employment. There were 2 committees set up for tackling unemployment problem. 1. Bhagawati committee on Unemployment: This committee was set up in 1970. It collected data and gave recommendation and suggestions to mitigate unemployment. Some of the recommendations were :  National commission on Unemployment.  Labour intensive industries to be increased.  Tax concession to industries.  Reducing the working hours  Development of backward areas. 1.8 : SUMMARY  The Indian economy was in distress at the time of country’s independence. During independence, India’s literacy was only 17 percent, with a life expectancy of 32.5 years. After independence, systematic organisation of the economy was a real challenge for the government that came in succession. The need for delivering growth and development was in huge demand in front of the political leadership.   After independence successive governments promoted protectionist economic policies with extensive state intervention and economic regulation, in the form of the License Raj. The acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India.  As of today India is the world's sixth-largest economy by nominal GDP and the third- largest by purchasing power parity (PPP). India had rapid growth despite the Great Recession. It grew 6.8% in 2018, 7.2% in 2017, and 8.2% in 2016.  In India, the problems of unemployment and poverty have always been major obstacles to economic development. Regional disparity is also crucial in this context. Economic reforms, changes in the industrial policy and better utilization of available resources are expected to reduce the problem of unemployment and poverty.  India has a mixed economy. Half of India's workers rely on agriculture, the signature of a traditional economy. One-third of its workers are employed by the services industry, 23 CU IDOL SELF LEARNING MATERIAL (SLM)

which contributes two-thirds of India's output. The productivity of this segment is made possible by India's shift toward a market economy.  Despite the challenges from Recession, Corona infections, the outcome of the US presidential election etc Indian Economy is striving hard to boost the positive trend in Economy which has been strengthened by Covid Vaccine development in India itself.  The Indian Economy is mainly divided in to 3 major sectors namely Primary Sector; Secondary Sector & Tertiary Sector. This can be further classified as Agriculture Sector; Services sector ; Food Processing and Manufacturing Sector:  The Salient deterring Features of Indian Economy are Low Per Capita Income; Increasingpopulation; Existence of chronic unemployment and under-employment; Underutilized Natural resources; Lack of infrastructure facility; In equality factors etc.  Poverty is the denial of access to the basic necessities of human existence which is a social phenomenon in which a section of the society is unable to fulfil even its basic necessities of life.  Poverty alleviation is a gradual and automatic process as the economy grew after Independence. The government is following a focused approach through various flagship schemes in the areas of poverty alleviation and employment generation to achieve inclusive development.  Unemployment which is a state of workless ness for a person who is fit and willing to work at the current wage rate. It is a condition of involuntary and not voluntary idleness. An unemployed person is the one who is an active member of the labour force and is seeking work, but is unable to find the same.  Slow Economic Growth ;Increase in Labour force; Rapid Population Growth;  Rural-Urban Migration;Inappropriate Technology; Defective Educational System etc. are some of the key factors for unemployment problem in India. The Government has taken various initiatives by way of setting up various Committees to study the underlying problems for unemployment & implementing the various recommendations suggested the Committees. 1.9 KEWORDS  PAP-Poverty Alleviation Programmes 24  GDP- Gross Domestic Product.(The total value of goods produced and services provided in a country during one year).  PAP-Poverty Alleviation Programmes  BPL- Below Poverty Line  MNP- Minimum Needs Programme CU IDOL SELF LEARNING MATERIAL (SLM)

 NREP- National Rural employment programme 1.10 LEARNING ACITIVITY 1. Find out the recent poverty rate of India and compare it with previous years. _______________________________________________________________ _______________________________________________________________ 2. Find out the recent poverty rate of India and compare it with previous years. Discuss the effectiveness of various Poverty Alleviation programmes ________________________________________________________________________________________________________________________________ __________________ 3. Discuss the effectiveness of various Poverty Alleviation programmes. ________________________________________________________________________________________________________________________________ ____________________ 1.11UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Explain in detail the structure of Indian Economy. 2. What are the main features of Indian Economy? 3. Define Poverty and explain the nature & causes for poverty. 4. What is Poverty Education Program? Explain in detail. 5. Enumerate the measures taken by Government to tackle the problem of Unemployment. 6. Examine in brief the prospects of the growth in service sector of the Indian economy. Long Questions 1. What is the difference between labour force and work force? 2. Define Unemployment. 3. What is meant by Primary Sector? 4. What are the differences between Economic Growth and Economic Development? 5. Explain the role of food processing industry in our country. 25 CU IDOL SELF LEARNING MATERIAL (SLM)

B. Multiple Choice Questions 1.Animal husbandry comes under ----------- sector. a. Primary b. Secondary c. Tertiary d. Rural 2. -------- refers to the National income & per capita income which becomes anindicator for improvement. a. GDP b. Economic growth c. Economic Development. d. NDP 3.The unemployment rate for ______ are found to be higher than for _____ a. Males, Females b. Urban people, rural people c. Females, Males d. Rural people, urban people 4. You are a factory owner and have given employment to 400 workers. If 10 workers are dismissed by you without loss of production then this situation will be described as a. Structural unemployment b. Disguised unemployment c. Seasonal unemployment d. Cyclical unemployment 5. When was National Food for Work Programme launched? (1) 26 a. 2005 b. 1992 CU IDOL SELF LEARNING MATERIAL (SLM)

c. 2012 d. 2004 Answers 1-A, 2- A,3- C, 4- B,5-A 1.12 : REFERENCES References Book  Mishra, S.K. & V.K. Puri; Problems of Indian Economy, Himalaya Publishing House.  Dhingra, I.C.; Indian Economy, Sultan Chand, 2003  Aggarwal, A.N., Indian Economy, VishwaPrakashan, 2003.  Datt, Ruddar; Sundhram, Indian Economy, Sultan Chand, 2003Textbook  Indian Economy- Datt & Sundaram’s  Indian Economy- I.C Dhingra Website  https://www.economicsdiscussion.net/economics-2/studying-the-structure-changes- in-indian-economy/2153 27 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 2 DEMOGRAPHIC FEATURES OF INDIAN ECONOMY Structure 28 2.0 Learning Objectives 2.1 Introduction 2.2Population in India 2.3 Features of Indian Population 2.3.1: Large Size and Fast Growth: 2.3.2: Second Stage of Demographic Transition: 2.3.3: Rapidly Rising Density: 2.3.4: Sex Ratio Composition Unfavourable to Female: 2.3.5: Bottom heavy Age Structure: 2.3.6: Predominance of Rural Population: 2.3.7: Low Quality Population: 2.3.8: Low Work Participation Rate: 2.3.9: Symptoms of Over-population: 2.4 Size and growth of Indian Population 2.5 Problem of over population 2.5.1: Problem of Investment Requirement: 2.5.2: Problem of Capital Formation: 2.5.3: Effect on per Capita Income: 2.5.4: Effect on Food Problem: 2.5.5: Problem of Unemployment: 2.5.6: Low Standard of Living: 2.5.7: Poverty: 2.5.8: Burden of Unproductive Consumers: 2.5.9: Population and Social Problems: 2.5.10: More Pressure on Land: 2.5.11: Impact on Maternity Welfare: CU IDOL SELF LEARNING MATERIAL (SLM)

2.5.12: Pressure on Environment: 2.6 Population Policy in India 2.7 Summary 2.8Keywords 2.9 Learning Activity 2.10Unit End Questions 2.11 References 2.0 LEARNING OBJECTIVES After studying this unit, you will be able:  Describe the features of Indian Population.  Identify the problems of over population.  Criticize the population policy of India. 2.1 INTRODUCTION The study of human resources is important to plan for economic development. When right in numbers, it is an asset but when it exceeds the desired level, it becomes a liability. 2.2 POPULATION IN INDIA A demographic profile of India can be prepared Output of the data collected by the office of the Registrar General of India. Who is responsible for conducting an all-India census of population every 10 years? Census, a Latin word for a register, is the official counting and gathering of related information of the population of a country. It is with the help of census that a concise demographic profile of the country can be prepared. The country’s first censes was completed in 1872. By demographic features we mean the characteristics of population like, size, composition, diversity, growth and quality of population etc. To have basic understanding of the population problem of a specific country, one should have a complete knowledge regarding the basic features of population of that country. 29 CU IDOL SELF LEARNING MATERIAL (SLM)

2.3 FEATURES OF INDIAN POPULATION 2.3.1: Large Size and Fast Growth: The first main feature of Indian population is its large size and rapid growth. According to 2001 census, the population of India is 102.87 crore. In terms of size, it is the second largest population in the world, next only to China whose population was 127 crore in 2001. India’s population was 23.6 crore in 1901 and it increased to 102.7 crore in 2001. In addition to its size, the rate of growth of population has been alarming since 1951. At present, India’s population is growing at a rate of 1.9 percent per annum; 21 million people are added every year which is more than the population of Australia. This situation is called population explosion and this is the result of high birth rate and declining death rate. 2.3.2: Second Stage of Demographic Transition: According to the theory of demographic transition, the population growth of a country passes through three different stages as development proceeds. The first stage is characterised by high birth rate and high death rate. So in this stage the net growth of population is zero. Till 1921, India was in the 1st stage of demographic transition. The second stage is featured by high birth rate and declining death rate leading to the rapid growth of population. India entered the second stage of demographic transition after 1921. In 1921-30 India entered the 2nd stage, the birth rate was 464 per thousand and death rate was 363 per thousand. In 2000-01, birth rate was 25.8 and death rate declined to 85. This led to rapid growth of population. India is now passing through the second stage of demographic transition. While developed countries are in 3rd stage. 2.3.3: Rapidly Rising Density: Another feature of India’s population is its rapidly rising density. Density of population means to the average number of people living per square kilometre. The density of population in India was 117 per square km. in 1951 which increased to 324 in 2001. This makes India one of the most densely populated countries of the world. This adversely affects the land-man ratio. India occupies 2.4 per-cent of the total land area of the world but supports 16.7 per-cent of the total world population. Moreover, there is no causal relationship between density of population and economic development of a country. For example, Japan & England having higher density can be rich and Afghanistan & Myanmar having lower density can be poor. 30 CU IDOL SELF LEARNING MATERIAL (SLM)

However in an underdeveloped country like India with its low capital and technology, the rapidly rising density is too heavy a burden for the country to bear. 2.3.4: Sex Ratio Composition Unfavourable to Female: Sex ratio refers to the number of females per thousand males. India’s position is quite different than other countries. For example the number of female per thousand males was 1170 in Russia, 1060 in U.K., 1050 in U.S.A. whereas it is 927 in India according to 1991 census. The sex ratio in India as 972 per thousand in 1901 which declined to 953 in 1921 and to 950 in 1931. Again, in 1951, sex ratio further declined to 946. In 1981, sex ratio reduced to 934 against 930 per thousand in 1971. During 1991, sex ratio was recorded 927 per thousand. The sex ratio is 933 per thousand in 2001. State wise Kerala has more females than males. There are 1040 females per thousand males. The lowest female ratio was recorded in Sikkim being 832. Among the union territories Andaman and Nicobar Islands has the lowest sex ratio i.e. 760. Therefore, we can conclude that sex ratio composition is totally unfavourable to female. 2.3.5: Bottom heavy Age Structure: The age composition of Indian population is bottom heavy. It implies that ratio of persons in age group 0-14 is relatively high. According to 2001 census, children below 14 years were 35.6%. This figure is lower than the figures of previous year. High birth rate is mainly responsible for large number of dependent children per adult. In developed countries the population of 0-14 age group is between 20 to 25%. To reduce the percentage of this age group, it is essential to slow down the birth rate. 2.3.6: Predominance of Rural Population: Another feature of Indian population is the dominance of rural population. In 1951, rural population was 82.7% and urban population was 17.3%. In 1991 rural population was 74.3% and urban population was 257. In 2001, the rural population was 72.2% and urban population was 27.8. The ratio of rural urban population of a country is an index of the level of industrialisation of that country. So process of urbanisation slow and India continues to be land of villages. 2.3.7: Low Quality Population: The quality of population can be judged from life expectancy, the level of literacy and level of training of people. Keeping these parameters in mind, quality of population in India is low. 31 CU IDOL SELF LEARNING MATERIAL (SLM)

(a) Low Literacy Level: Literacy Level in India is low. Literacy level in 1991 was 52.2% while male-female literacy ratio was 64.1 and 39.3 percent. In 2001, the literacy rate improved to 65.4 percent out of which made literacy was 75.8 and female literacy was 52.1 percent. There are 35 crore people in our country who are still illiterate. (b) Low level of Education and Training: The level of education and training is very low in India. So quality of population is poor. The number of persons enrolled for higher education as percentage of population in age group 20-25 was a percent in 1982. It is only one fourth of the developed countries. The number of doctors and engineers per million of population are 13 and 16 respectively. It is quite less as compared to advanced countries. (c) Low Life Expectancy: By life expectancy we mean the average number of years a person is expected to live. Life expectancy in India was 33 years. It was increased to 59 in 1991 and in 2001, life expectancy increased to 63.9. Decline in death rate, decline in infant mortality rate and general improvement in medical facilities etc. have improved the life expectancy. However life expectancy is lower in India as compared to life expectancy of the developed nations. Life expectancy is 80 year in Japan and 78 years in Norway. 2.3.8: Low Work Participation Rate: Low proportion of labour force in total population is a striking feature of India’s population. In India, Labour force means that portion of population which belongs to the age group of 15-59. In other words, the ratio of working population to the total is referred to as work participation rate. This rate is very low in India in comparison to the developed countries of the world. Total working population was 43% in 1961 which declined to 37.6% in 1991. This position improved slightly to 39.2% in 2001. That means total non-working population was 623 million (60.8 percent) and working population was 402 million (39.2%). Similarly low rate of female employment and bottom-heavy age structure are mainly responsible for low work participation in India. 2.3.9: Symptoms of Over-population: The concept of over-population is essentially a quantitative concept. When the population size of the country exceeds the ideal size, we call it over-population. According to T.R. Malthus, the father of demography, when the population of a country exceeds the means of substance available, the country faces the problem of over-population. 32 CU IDOL SELF LEARNING MATERIAL (SLM)

No doubt, food production has increased substantially to 212 million tonnes but problems like poverty, hunger, malnutrition are still acute. Agriculture is overcrowded in rural areas of the country which is characterised by diminishing returns. This fact leads to the conclusion that India has symptoms of over-population. Indian low per capita income, low standard of living, widespread unemployment and under-employment etc. indicate that our population size has crossed the optimum limit. 2.4 SIZE AND GROWTH OF INDIAN POPULATION India comes second to China as regards the size of its population. It occupies 2.4% of world’s area and with 1.5% of world’s income; India is maintaining 16% of world’s population. *Starting from 40.98 Crores population in 1955, the present population stands at 138 Crores almost 3.4 times increase in population. Roughly 1.30 crores population gets added each year. *The World population has gone up by 502 Crores -a rise of 2.8 times between 1955to 2020. *The density of population which was 138 persons /Sq. Km is somewhere around 460 Persons/ Sq. Km; roughly 3.3 times increase. Size and Growth of India’s population are shown in Table. Table 2.1 Yearly % Yearly Density Country's World Year Population Change Change (P/Km²) Share of Population World Pop 2020 1,38,00,04,385 0.99% 1,35,86,631 464 17.70% 7,79,47,98,739 2019 1,36,64,17,754 1.02% 1,37,75,474 460 17.71% 7,71,34,68,100 2018 1,35,26,42,280 1.04% 1,39,65,495 455 17.73% 7,63,10,91,040 2017 1,33,86,76,785 1.07% 1,41,59,536 450 17.74% 7,54,78,58,925 2016 1,32,45,17,249 1.10% 1,43,64,846 445 17.75% 7,46,40,22,049 2015 1,31,01,52,403 1.20% 1,51,74,247 441 17.75% 7,37,97,97,139 2010 1,23,42,81,170 1.47% 1,73,34,249 415 17.74% 6,95,68,23,603 33 CU IDOL SELF LEARNING MATERIAL (SLM)

2005 1,14,76,09,927 1.67% 1,82,06,876 386 17.54% 6,54,19,07,027 2000 1,05,65,75,549 1.85% 17.20% 6,14,34,93,823 1995 96,39,22,588 1.99% 1,85,30,592 355 16.78% 5,74,42,12,979 1990 87,32,77,798 2.17% 16.39% 5,32,72,31,061 1985 78,43,60,008 2.33% 1,81,28,958 324 16.10% 4,87,09,21,740 1980 69,89,52,844 2.32% 15.68% 4,45,80,03,514 1975 62,31,02,897 2.33% 1,77,83,558 294 15.27% 4,07,94,80,606 1970 55,51,89,792 2.15% 15.00% 3,70,04,37,046 1965 49,91,23,324 2.07% 1,70,81,433 264 14.95% 3,33,95,83,597 1960 45,05,47,679 1.91% 14.85% 3,03,49,49,748 1955 40,98,80,595 1.72% 1,51,69,989 235 14.78% 2,77,30,19,936          1,35,82,621 210 1,12,13,294 187 97,15,129 168 81,33,417 152 67,11,079 138    2.5. PROBLEMS OF OVER POPULATION Projection of population of India:The tablebelow gives a projection on population till the year 2050. From the existing population of 138 Crores the population is expected to go up to 163 Crores a clear jump up by 25 crores. Year Population Yearly Densit Urban Country' World % Yearly y Pop % s Share Population (P/Km² of Chang ) e Change World Pop              2020 1,38,00,04,38 1.04% 1,39,70,39 464 35.00 17.70% 7,79,47,98,73 56 %9 34 CU IDOL SELF LEARNING MATERIAL (SLM)

2025 1,44,50,11,62 0.92% 1,30,01,44 486 37.60 17.66% 8,18,44,37,46 07 %0 2030 1,50,36,42,32 0.80% 1,17,26,14 506 40.40 17.59% 8,54,84,87,40 20 %0 2035 1,55,37,23,81 0.66% 1,00,16,29 523 43.50 17.48% 8,88,75,24,21 08 %3 2040 1,59,26,91,51 0.50% 77,93,541 536 46.70 17.31% 9,19,88,47,24 3 %0 2045 1,62,06,19,20 0.35% 55,85,537 545 50.10 17.09% 9,48,18,03,27 0 %4 2050 1,63,91,76,03 0.23% 37,11,367 551 53.50 16.84% 9,73,50,33,99 3 %0 Following are the main effects of these types of population explosion: 2.5.1: Problem of Investment Requirement: Indian population is growing at a rate of 1.8 percent per annum. In order to achieve a given rate of increase in per capita income, larger investment is needed. This adversely affects the growth rate of the economy. In India, annual growth rate of population is 1.8 percent and capital output ratio is 4:1. It means that in order to stabilize the existing economic growth rate (4 X 1.8) = 7.2 percent of national income must be invested. 2.5.2: Problem of Capital Formation: Composition of population in India hampers the increase in capital formation. High birth rate and low expectancyof life means large number ofdependents inthe total population. In India 35 percent of population is composed of persons less than 14 years of age. Most of these people depend on others for subsistence. They are unproductive consumers. The burden of dependents reduces the capacity of the people to save. So the rate of capital formation falls. 2.5.3: Effect on per Capita Income: Large size of population in India and its rapid rate of growth results into low per capita availability of capital. From 1950-51 to 1980-81. India’s national income grew at an average annual rate of 3.6 percent per annum. But per capita income had risen around one percent. It is due the fact that population growth has increased by 2.5 percent. 35 CU IDOL SELF LEARNING MATERIAL (SLM)

2.5.4:Effect on Food Problem: Rapid rate of growth of population has been the root cause of food problem. Shortage of food grains hampers economic development in two ways: (a) People do not get sufficient quantity of food due low availability of food which affects their health and productivity. Low productivity causes low per capita income and thus poverty. (b) Shortage of food-grains obliges the under-developed countries to import food grains from abroad. So a large part of foreign exchange is spent on it. So development work suffers. So rise in population causes food problem. 2.5.5: Problem of Unemployment: Large size of population results in large army of labour force. But due to shortage of capital resources it becomes difficult to provide gainful employment to the entire working population. Disguised unemployment in rural areas and open unemployment in urban areas are the normal features of an under developed country like India. 2.5.6: Low Standard of Living: Rapid growth of population accounts for low standard of living in India. Even the bare necessities of life are not available adequately. According to Dr. Chander Shekhar population in India increases by about 1.60 crore. It requires 121 lakh tonnes of food grains, 1.9 lakh metres of cloth and 2.6 lakh houses and 52 lakh additional jobs. 2.5.7: Poverty: Rising population increases poverty in India. People have to spend a large portion of their resources for bringing up of their wards. It results into less saving and low rate of capital formation. Hence improvement in production technique becomes impossible. It means low productivity of labour. 2.5.8:  Burden of Unproductive Consumers: In India, a large number of children are dependent. Old persons above the age of 60 and many more in the age group of 15-59 do not find employment. In 2001, working population was 39.2 percent while 60.8 percent are unproductive workers. This high degree of dependency is due to high rate of dependent children. This dependency adversely affects effective saving. 36 CU IDOL SELF LEARNING MATERIAL (SLM)

2.5.9:  Population and Social Problems: Population explosion gives rise to a number of social problems. It leads to migration of people from rural areas to the urban areas causing the growth of slum areas. People live in most unhygienic and insanitary conditions. Unemployment and poverty lead to frustration and anger among the educated youth. This leads to robbery, beggary, prostitution and murder etc. The terrorist activities that we find today in various parts of the country are the reflection of frustration among educated unemployed youth. Overcrowding, traffic congestions, frequent accidents and pollution in big cities are the direct result of over-population. 2.5.10: More Pressure on Land: Rising rate of population growth exerts pressure on land. On the one hand, per capita availability of land goes on diminishing and on the other, the problem of sub-division and fragmentation of holdings goes on increasing. It adversely affects the economic development of the country. 2.5.11: Impact on Maternity Welfare: In India, population explosion is the result of high birth rate. High birth rate reduces health and welfare of women. Frequent pregnancy without having a gap is hazardous to the health of the mother and the child. This leads to high death rate among women in the reproductive age due to early marriage. Hence to improve the welfare and status of women in our society, we have to reduce the birth rate. 2.5.12: Pressure on Environment: Population explosion leads to environmental degradation. Higher birth rate brings more pollution, more toxic wastes and damage to biosphere. Briefly speaking, population explosion hinders the economic development. It should be controlled effectively. 2.6 POPULATION POLICY IN INDIA The policy to control population growth was adopted by the Government as far as back as 1952. 1961 census showed a higher growth in population than anticipated. The government of India insisted much on family planning and neglected the various social and economic measures. But in India, widespread illiteracy prevails, hence family planning cannot provide a desirable result. The national population policy-2000 37 CU IDOL SELF LEARNING MATERIAL (SLM)

After 24 years of painstaking consideration, the NDA government announced the New National Policy,2000, in February 1st 2000 with a view to encourage two child norm and aim at stabilising the population by 2046. The policy has 3 set of objectives. They are 1. The immediate objective is to provide for facilities to meet the “unmet” needs for contraception,healthcare infrastructure and health personnel and an integrated service delivery for basic reproductive and child healthcare. 2. The medium-term objective is to bring the TFR, total fertility rate i.e., the average number of children per women in the reproductive age group. 3. The long term objective is to achieve a stable population by 2045, at a level consistent with the requirements of sustainable economic growth, social development and environmental protection. The policy has listed the following measures to achieve a stable population by 2046. 1. Reduce infant mortality rate below 30 per 1000 live births. 2. Reduction of maternal mortality rate to below 100 per 1,00,000 live births. 3. Universal immunization. 4. To achieve 80 percent deliveries in regular dispensaries, hospitals and medical institutions with trained staff. 5. Giving incentives to adopt two-child small family norm. 6. Increased facilities to safe abortions. 7. Access to information, containing AIDS prevention and control of communicable diseases. 8. Enforcement of child marriage restraint act and pre-natal diagnostics techniques act, strictly. 9. Rising the age of marriage for girls not earlier than 18, but preferably raising it to 20 years or more. 10. To monitor the implementation of population policy, a National commission on population to be appointed headed by the prime minister. 11. A national population stabilization fund, renamed as the “Janasankhya Sthirata Kosh” (JSK) has been set up. The fund will support projects, schemes, initiatives and innovative ideas designed to help population stabilization.  2.7 summary  The Study of Human Resources is important to plan the Economic Development. 38 CU IDOL SELF LEARNING MATERIAL (SLM)

 With the help of Census, a concise demographic profile of the country can be prepared.  The country’s first ever census was completed in 1872.  Demographic features refers to the characteristics of population like size, composition, diversity ,growth of population etc  The national Population policy was announced by NDA in 2000.  The policy’s long-term objective is to achieve a stable population by 2045. 2.8 KEYWORDS  NDA- National Democratic Alliance  JSK - Janasankhya Sthirata Kosh  TFR- Total Fatality Rate  GDP- Gross Domestic Product  NDP- National domestic product 2.9 LEARNING ACTIVITY 1. Find out about the recent census taken in our country and the ministry responsible for controlling population. ________________________________________________________________________________________________________________________________ _______________ 2.10UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What are the main features of Indian Population? 2. Explain the size & growth of Indian Population. 3. Explain the effects of population Explosion. 4. What is New National Population Policy? 5. Highlight the important demographic changes which result from economic growth. 39 CU IDOL SELF LEARNING MATERIAL (SLM)

Long Questions 1. What is meant by Demography? 2. What is meant by population explosion? 3. Name any 3 effects of over population. 4. What is meant by census? 5. Name 5 highly populated states and 5 scarcely populated states in India. B. Multiple Choice Questions 1. --------- is the official counting and gathering of related information of the population of a country. A. Census B. Budget C. Audit. D. Cost Accounting 2. The population policy was introduced in the year -------- A. 2010 B. 1990 C. 2000 D. 2009 3. Which state has the has the lowest population growth rate? 40 A. Mizoram B. Assam C. Manipur D. Nagaland CU IDOL SELF LEARNING MATERIAL (SLM)

4. After Census 2011 India become _____ most populous country in the World? A. 7th B. 2nd C. 5th D. 4th 5. Which state/UT has the highest density of population? A. Delhi B. Patna C. Bangalore D. Mumbai Answer 1- A,2- A,3- D,4- B,5- B 2.11 REFERENCES  Mishra, S.K. & V.K. Puri; Problems of Indian Economy, Himalaya Publishing House.  Dhingra, I.C.; Indian Economy, Sultan Chand, 2003  Aggarwal, A.N., Indian Economy, VishwaPrakashan, 2003.  Datt, Ruddar; Sundhram, Indian Economy, Sultan Chand, 2003 41 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT – 3 ECONOMIC PLANNING Structure 3.0 Learning Objectives 3.1 Introduction 3.2Meaning and Definition of Economic Planning 3.3Economic Planning in India 3.4 Importance of Economic Planning 3.5 Objectives of planning in India 3.6 Summary 3.7Keywords 3.8 Learning Activity 3.9Unit End Questions 3.10 References 3.0 LEARNING OBJECTIVES After studying this unit, you will be able.  Explain the importance of Planning and Economic Planning.  Describe the objectives of planning in India. 3.1 INTRODUCTION Planning in India started as early as 1938, when the National Planning committee (NPC) was set up under the inspiration of Jawaharlal Nehru. The committee produced a series of studies on different subjects concerning economic development. 3.2 MEANING AND DEFINITION OF ECONOMIC PLANNING Government of India through 5-year plans, has been setting targets, formulating policies for economic development. According to Herman Levy, “Economic Planning means securing a better balance between demand and supply by conscious and thoughtful control either of production or distribution.” 42 CU IDOL SELF LEARNING MATERIAL (SLM)

Prof.H.D. Dickinson defined as “the making of major economic decision what and how much to be produced and to whom it is to be allocated by the conscious decision of a determine authority, on the basis of a comprehensive survey of the economic system as a whole” National Planning Commission of India states, “ planning under a democratic system may be defined as the technical coordination, by disinterested experts, of consumption,production,investment,trade and income distribution, in accordance with social objectives set by bodies representative of the nation. Such planning is not only to be considered from the point of view of economics and the raising of the standard of living but must include cultural and spiritual and the human side of life”. 3.3 ECONOMIC PLANNING IN INDIA After the independence, the then Prime Minister ‘Jawaharlal Nehru’, set up a Planning commission in 1950 to assess the country’s needs of material capital and human resources and to formulate economic plans for more balanced and effective utilization. Thus the first Five-Year plan started in 1950-51, which was followed by a series of 5 year plans. Since then, this planning has become a means of achieving fast economic development and it is known as Economic Planning. Economic planning “is a process under which a central authority determines a set of social and economic targets for an economy for a stipulated time and these targets are set according to the resources available”. With scarce resources and a huge magnitude of welfare to be done, the role of planning becomes significant. In India the role of planning activities was played by the Planning Commission (until 2014), afterwards NITI Aayog, a policy Think Tank replaced Planning Commission with an aim to make planning approach more inclusive and bottom-up. The charter of NITI Aayog describes it as a body that should act as a catalyst of change in India's federal and complex socio-economic system. 3.4 IMPORTANCE OF ECONOMIC PLANNING 1) Best utilization of Natural resources- Economic planning facilitates in utilizing the available material and labour in the country to the full extent. 2) Growth in National and per capita income- maximum level of production with the available resources helps in increased income which in turn will increase savings and investment. This would bring a considerable change in the National and per capita income. 43 CU IDOL SELF LEARNING MATERIAL (SLM)

3) Improvement in Standard of living- Standard of living of people will improve as the per capita income increases. 4) Full employment- With proper planning,the production of essential goods and services will be maximised. This will pave way for more employment opportunities. 5) Industrialization and Balanced Economy- planning alone can transform an agricultural and primary producing economy into a more balanced economy with heavy, medium and light industries. 6) Identifying deficiencies in economy- It helps in identifying the deficiencies in the economy and social structure, which requires attention for economic growth. 3.5 OBJECTIVES OF PLANNING IN INDIA  Attaining higher rate of economic growth is the priority of every FYP (Five year Planning)  Removal of poverty  Maximizing usage of resources  Agricultural Development  Raising living standards  Increasing the foreign trade  Achieving full employment  Industrial development  Self-sufficiency in food and raw materials  Attaining economic equality and social justice. 3.6 SUMMARY  Economic planning “is a process under which a central authority determines a set of social and economic targets for an economy for a stipulated time and these targets are set according to the resources available”.  Planning in India started as early as 1938, when the National Planning committee (NPC) was set up under the inspiration of Jawaharlal Nehru.  Government of India through 5-year plans, has been setting targets, formulating policies for economic development.  Thus the first Five-Year plan started in 1950-51, which was followed by a series of 5 year plans.  National Planning Commission of India states, “ planning under a democratic system may be defined as the technical coordination, by disinterested experts, of 44 CU IDOL SELF LEARNING MATERIAL (SLM)

consumption,production,investment,trade and income distribution, in accordance with social objectives set by bodies representative of the nation. Such planning is not only to be considered from the point of view of economics and the raising of the standard of living but must include cultural and spiritual and the human side of life”.  Importance of Economic Planning-Best utilization of Natural resources, Growth in National and per capita income, Improvement in Standard of living, Full employment, Industrialization and Balanced Economy, Identifying deficiencies in economy. 3.7 KEYWORDS  FYP- Five Year Plan  NPC- National Planning CommitteeNITI Aayog- National Institution for Transforming India Aayog  Planning Commission- A commission which was set up for formulating India’s FYPs.  Per capita income- it is a measure of the amount of money earned per person in a nation or geographic region 3.8 LEARNING ACTIVITY 1. Economic planning is not only for a country. It is also suitable for every household. Think on this and find Out how planning is done in your home. ________________________________________________________________________________________________________________________________ _______________ 3.9UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is Planning & Economic Planning? 2. What is the importance of Economic Planning? 3. Enumerate the objectives of Planning in India. 4. Give few definitions of Economic planning. Long Questions 45 CU IDOL SELF LEARNING MATERIAL (SLM)

1. What is meant by Economic Planning? 46 2. What is the composition of planning Committee? 3. What are the different types of economic planning? B. Multiple Choice Questions 1. The planning commission was set up in the year -------. A. 1930 B. 1945 C. 1950 D. 1965 2. The first five year plan started in --------------- A. 1951-52 B. 1950-51 C. 1949-50 D. 1955 – 68 3. Which of the following is not a feature of Indian planning a. Development planning b. Indicative planning c. Democratic planning d. Centralized planning 4. Planning Commission was scrapped on a. 2015 b. 2014 c. 2017 d. 2012 CU IDOL SELF LEARNING MATERIAL (SLM)

5. NITI Aayog was introduced in the year a. 2014 b. 2016 c. 2010 d. 2015 Answers 1. C,2- A,3- D,4- B,5-D 3.10 REFERENCES References Book  Mishra, S.K. & V.K. Puri; Problems of Indian Economy, Himalaya Publishing House.  Dhingra, I.C.; Indian Economy, Sultan Chand, 2003  Aggarwal, A.N., Indian Economy, VishwaPrakashan, 2003.  Datt, Ruddar; Sundhram, Indian Economy, Sultan Chand, 2003Textbook  Indian Economy- Datt & Sundaram’s  Indian Economy- I.C Dhingra Website  https://www.economicsdiscussion.net/economics-2/studying-the-structure-changes- in-indian-economy/2153 47 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT – 4: FIVE YEAR PLANS Structure 4.0 Learning Objectives 4.1 Introduction 4.2 Planning Commission in India 4.2.1 Administration 4.3 Objectives/targets and achievements of FYPs 4.4 Failure of Five year plans 4.5 Summary 4.6 Keywords 4.7 Learning Activity 4.8 Unit End Questions 4.9 References 4.0 LEARNING OBJECTIVES After studying this unit, you will be able:  Explain the composition of Planning Commission.  Merits & Demerits of the various FYPs of India.  Contribution from the twelve Five-year plans. 4.1: INTRODUCTION After India gained independence in 1947 it basically had to rebuild its economy from scratch. The leaders of those times had to pick the type of economy India would be and also outline the economic planning as well. This is where the five year plan was born. From 1947 to 2017, the planning on Indian economy was carried through the Five-Year Plans, developed, executed, and monitored by the Planning Commission between 1951- 2014 and by the NITI Aayog from 2015-2017. With the prime minister as the ex- officio chairman, the commission has a nominated deputy chairman, who holds the rank of a cabinet minister.  Prior to the Fourth Plan, the allocation of state resources was based on schematic patterns rather than a transparent and objective mechanism, which led to the 48 CU IDOL SELF LEARNING MATERIAL (SLM)

adoption of the Gadgil formula in 1969. Revised versions of the formula have been used since then to determine the allocation of central assistance for state plans.  Every five year plan is developed with a specific goal in mind. But there is never one solitary objective of the plan. The plan is supposed to work towards the perspective plan and must cover a few important objectives. However, it is not possible or practical to give equal importance to all aspects of a plan. There are basically five generalized goals of a five year plan, wherein a particular plan one or two are given the most importance. In fact, some of the goals are actually conflicting with each other. Our first Prime Minister Jawaharlal Nehru preferred the socialist model. But in democracy like India, a pure socialist economy cannot flourish. Capitalism was also not suited since the government had to build up an economy and look after the common man and his needs. So as a solution our economy combined aspects of both socialism and capitalism. The new government led by Narendra Modi, elected in 2014, has announced the dissolution of the Planning Commission, and its replacement by a think tank called the NITI Aayog (an acronym for National Institution for Transforming India). The 1st Five-year plan was for the period 1951-52 to 1955-56 and there has been 12 Five Year Plans. The last 5 year plan came to an end by 31st march 2017. 4.2 PLANNING COMMISSION IN INDIA The Planning commission of India was set up in march 1950 by a resolution of the GOI, under the chairmanship of Jawaharlal Nehru. Since the necessity of forming a coordinating agency between the planning commission and states was required, National Development Council (NDC) was set up by GOI on 6th august, 1952. The planning commission was only an advisory body entrusted with preparation of the plan and not responsible for execution of development programmes. The execution of planning programmes has been entrusted with central and state governments. Thus, every planning decisions in India originates from the planning commission and finally being approved by the NDC. 4.2.1 Administration: The planning commission is composed of 8members 1. The Prime Minister (Chairman) 2. 4 full time members (including deputy chairman) 3. Minister of Planning 49 CU IDOL SELF LEARNING MATERIAL (SLM)

4. Minister of Finance Period 5. Minister of Defence 1951-52 to 1955-56 1956-57 to 1960-61 Plan 1961-62 to 1965-66 1st FYP 1966-67 to 1968-69 2nd FYP 1969-70 to 1973-74 3RD FYP 1974-75 to 1977-78 Annual Plan 1978-83 and 1980-85 4th FYP 1985-86 to 1989-90 5th FYP 6th FYP 1990-92 7th FYP 1992-93 to 1996-97 Annual Plan 1997-98 to 2001-02 8th FYP 2002-03 to 2006-07 9th FYP 2007-08 to 2011-12 10th FYP 2012-13 to 2016-17 11th FYP 12th FYP 4.3 OBJECTIVES/TARGETS AND ACHIEVEMENTS OF ALL FYP First Five-YearPlan: (1951-52 to 1955-56) Prior to first five-year plan, Indian economy was in a bad shape. Population increase was more as compared to economic growth.The situation of trade and industries was far from satisfaction. The rate of capital formation was at low level. The per capita income in the country was also very low. 50 CU IDOL SELF LEARNING MATERIAL (SLM)