Indian Economy -1

Indian Economy

  1. FIVE YEAR PLANS

First Plan

(1951-56)

  • It was based o Harrod-Domar Model.
  • Community Development Programme was launched in 1952.
  • Emphasised on agriculture, price stability, power and transport.
  • It was more than a success, because of good harvests in the last two years.

Second plan

(1956-61)

  • Also called mahalanobis Plan after its chief architect.
  • It objective was rapid industrialization.
  • Advocated huge imports which led to emptying of funds leading to foreign loans. It shifted basic emphasis from agriculture to industry far too soon. During this plan, price lever increased by 30%, against a decline of 13% during the First Plan.

Third Plan

(1961-66)

  • At its conception time, it was felt that Indian economy has entered a take-off stage. Therefore, its aim was to make India a ‘self-reliant’ and ‘self-generating’ economy.
  • Also, it was realized from the experience of first two plans that agriculture should be given the top priority to suffice the requirements of export and Industry.
  • Commplete failure due to  unforeseen misfortunes, viz. Chinese aggression (1962), Indo-Pak War (1965), severe drought in 10 years (1965-66).

Three Annual Plan

(1966-69)

  • Plan holiday for 3 years. The prevailing crisis in agriculture and serious food shortage necessitated the emphasis on agriculture during the Annual Plans.
  • During these plans a whole new agricultural strategy involving wide-spread distribution of High-Yielding Varieties of seeds, the extensive use of fertilizers, exploitation of irrigation potential and soil conservation were put into action to tide-over the crisis in agricultural production
  • During the Annual Plans, the economy basically absorbed the shocks given during the Third Plan, making way for a planned growth.

Fourth Plan

(1969-74)

  • Main emphasis on agriculture’s growth rate so that a chain reaction can start.
  • Fared well in the first two years with record production, last three years were a failure because of poor monsoon.
  • Had to tackle the influx of Bangladeshi refugees before and after 1971 indo-Pak War.

Fifth Plan

(1974-79)

 

 

 

 

 

 

 

  • The fifth plan prepared and launched by D.D. Dhar proposed to achieve two main objectives viz., ‘removal of poverty’ (Garibi Hatao) and ‘attainment of self-relience’, through promotion of high rate of growth, better distribution of income and a very significant growth in the domestic rate of savings.
  • The plan was terminated in 1978 (instead of 1979) when Janta Govt. came to power.

Rolling Plan

(1976-80)

  • There were 2 Sixth Plans. One by Janta Govt. (for 78-83) which was in operation for 2 years only and the other by the Congress Govt. when it returned to power in 1980.
  • The Janta Govt. Plan is also called Rolling Plan.

Sixth Plan

(1980-85)

  • Objectives: Increase in national income modernization of technology, ensuring continuous decrease in poverty and unemployment, population control through family planning, etc.

Seventh Plan

(1985-90)

  • The seventh plan emphasized policies and programmes which aimed at rapid growth in food-grains production, increased employment opportunities and productivity within the framework of basic tenants of planning.
  • It was a great success, the economy recorded 6% growth rate against the targeted 5%.

Eighth Plan

(1992-97)

  • The Eighth Plan was postponed by two years because of political upheavals at the centre and it was launched after a worsening Balance of Payment position and inflation during 1990-91.
  • The plan undertook various drastic policy measures to combat the bad economic situation and to undertake an annual average growth of 5.6%.
  • Some of the main economic performances during eighth plan period were rapid economic growth, high growth of agriculture and allied sector, improvement in trade and current account deficit.

Ninth Plan

(1997-2002)

  • It was developed in the context of four important dimensions. Quality of life, generation of productive employment, regional balance and self-reliance.

Tenth Plan

(2002-2007)

  • Its objectives included achieving the growth rate of 8%, reduction of poverty ratio to 20% by 2007 and to 10% by 2012, universal access to primary education by 2007, increase I literacy rate to 72% within the plan period and to 80% by 2012.

Eleventh Plan

(2007-2012)

  • Accelerate growth rate of GDP from 8% to 10% and then maintain at 10% in the 12th Plan in order to double per capita income by 2016-17.
  • Increase in agricultural GDP growth rat of 4% per year to ensure a broader spread of benefits.
  • Reduce dropout rates of children from elementary school from 52.2% in 2003-04 to 20% by 2011-12.
  • Increase literacy rate for persons of age 7 years or more to 85%.
  • Reduce infant mortality rate (MR) to 28 and maternal mortality ratio (MMR) to 1 per 1000 live births.
  • Raise the sex ratio for age group 0-6 to 935 by 2011-12 and to 950 by 2016-17.
  • Ensure electricity connection to all village and BPL households by 2009and round the clock power by the end of the Plan.
  • Increase forest and free cover by 5 percentage points.

 

Growth During Five Year Plans

Plan

Target

Actual

Plan

Target

Actual

First Plan

(1951-56)

2.9%

3.6%

Seventh Plan

(1985-90)

5.0%

6.0%

Second Plan (1956-61)

4.5%

4.3%

Eighth Plan

(1992-97)

5.6%

6.8%

Third Plan

(1961-66)

5.6%

2.8%

Ninth Plan

(1997-2002)

6.5%

5.4%

Fourth Plan

(1969-1974)

5.7%

3.3%

Tenth Plan

(2002-2007)

8.0%

7.2%

Fifth Plan

(1974-79)

4.4%

4.8%

Eleventh Plan

9.0%

-

Sixth Plan

(1980-85)

5.2%

6.0%

 

 

 

 

  1. THE PLANNING COMMISSION
  • The Planning Commission was set up on March 15, 1950 under the chairmanship of J.L Nehru, by a resolution of Union Cabinet.
  • It is an extra-constitutional, no-statutory body.
  • It consists of Prime Minister as the ex-office Chairman, one deputy-Chairman appointed by the PM and some full time members.
  • The tenure of its members and deputy chairman is not fixed. There is no definite definition of its members also. They are appointed by the Government on its own discretion. The number of can also change according to the wishes of the Government.
  1. Functions
  • Assessment of material, capital & human resources of the country.
  • Formulation of plans for the most effective & balanced utilization of country’s resources.
  • To determine the various stages of planning and to propose the allocation of  resources on the priority basis.
  • To act as an advisory body to the Union Government.
  • To evaluate from time to time the progress achieved in every stage of the plan and also to suggest remedial measures.
  • To advise the Centre and the state governments from time to time on special matters referred to the Commission.
  1. NATIONAL DEVELOPMENT COUNCIL
  • All the plans made by the Planning Commission have to be approved by National Development Council first. It was constituted to build co-operation between the states and the planning Commission for economic planning.
  • It is an extra-constitutional and extra-legal body.
  • It was set up on August 6, 1952, by a government proposal. The PM is the ex-officio chairman of NDC. Other members are Union Cabinet ministers, Chief Ministers & Finance Ministers of all States, Lt. Governors of Union Territories, Governors of Centrally Ruled States.
  1. AGRICULTUREA
  • Agriculture forms the backbone of Indian economy. It contributes approx. 26 percent of Gross Domestic Product. It was 55.4 per cent in 1950.51.
  • Though the share of agriculture in national income has come down, even now agriculture contributes a major share of the national income in India. Further, the share of agriculture in manufacturing and service sector are increasing.
  • India is the largest producer of milk in the world, and is likely to become the second largest dairy products producer in the coming years.
  • It is the second largest producer of fruits and vegetables.
  • It is home to the largest number of livestock in the world.
  • It is the third largest producer of food grains.
  • It has the third largest producer of food grains.
  • It has the third largest output of fish.
  • With above 9500 spices from medicinal and aromatic plants, India is truly a treasure trove of spices, accounting for 25-30 per cent of the world’s production.
  • India is the largest producer consumer and exporter of spices, with major spices produced being black pepper, cardamom (small & large), ginger, garlic, turmeric chilli etc.

 

THREE LARGEST PRODUCTS STATES OF IMPORTANT CROPS

                         Crop

States

Rice

West Bengal

Andhra Pradesh

Uttar Pradesh

Wheat

Uttar Pradesh

Punjab

Haryana

Maize

Andhra Pradesh

Karnataka

Bihar

Coarse Cereals

Maharashtra

Karnataka

Rajasthan

Pulses

Madhya Pradesh

Uttar Pradesh

Maharashtra

Groundnut

Gujarat

Madhya Pradesh

Tamil Nadu

Rapeseed and Mustard

Rajasthan

Madhya Pradesh

Haryana

Soyabean

Madhya Pradesh

Maharashtra

Rajasthan

Sunflower

Karnataka

Andhra Pradesh

Maharashtra

Sugarcane

Uttar Pradesh

Maharashtra

Tamil Nadu

Gujarat

Cotton

Gujarat

Maharashtra

Punjab

Jute and Mesta

West Bengal

Bihar

Assam

Potato

Uttar Pradesh

West Bengal

Punjab

Onion

Maharashtra

Gujarat

Karnataka

DIFFERENT REVOLUTIONS RELATED TO AGRICULTURE

Revolution

Area

Green Revolution

Cereals

Yellow Revolution

Oil seeds

White Revolution

Milk

Blue Revolution

Fish

Pink Revolution

Shrimp

Grey Revolution

Wool

Golden Revolution

Horticulture

 

  1. UNEMPLOYMENT
  • Structural Unemployment
  • This type of unemployment is associated with economic structure of the country i.e., productive capacity is inadequate to create a sufficient number of jobs. Rapid growing population is the causes of this.
  • This type of unemployment is of long run. The unemployment in India is basically related to this category of unemployment.
  • Open Unemployment
  • Those labours are under employed who obtain work but their efficiency and capability are not utilized at their optimum and as a result they contribute to the production up to a limited level.
  • A country having this type of unemployment fails to exploit the efficiencies of its labours.
  • Open Unemployment
  • When the labours live without any work and either don’t find any work, they come under the category of open unemployment. Educated unemployed and unskilled labour unemployment are included in open unemployment.
  • The migration from rural to urban areas in search of work is much prevalent in India which is an example of open unemployment.
  • Disguised Unemployment
  • If a person does not contribute anything to the production process or in other words, if he can be removed from the work without affecting the productivity adversely, he will be treated as disguisedly unemployed. The marginal productivity of such unemployed person is zero.
  • Agriculture sector of underdeveloped/developing economies possesses this type of unemployment at a large scale.
  • Frictional Unemployment
  • The unemployment generated due to change in market conditions (change in demand and supply conditions) is called frictional unemployment.
  • Agriculture is the main occupation in India. The supply conditions depend upon weather and similarly demand conditions depend upon the availability of resources. Any charge arising either of any or both creates a diversion from the equilibrium which results in frictional unemployment.
  • Frictional Unemployment
  • The unemployment generated due to change in market conditions (change in demand and supply conditions) is called frictional unemployment.
  • Agriculture is the main occupation in India. The supply conditions depend upon weather and similarly demand conditions depend upon the availability of resources. Any change arising either of any or both creates a diversion from the equilibrium which results in frictional unemployment.
  • Seasonal Unemployment
  • It appears due to a change in demand based on seasonal variations. Labourers do not get work round the year. They get employed in the peak season of agricultural activities and become unemployed when these activities are over.
  • Indian agriculture ensures employment for only 7-8 months and labourers remain unemployed in the remaining period. This temporary type of employment gives birth to seasonal unemployment.
  1. POVERTY
  • Presently, 21.8% Indians are living Below Poverty Line (BPL). The survey to measure this is conducted by National Sample Survey (NSS) Organization. NSS determines poverty line using the mixed recall period method in which consumer spending for five items such as clothing, footwear, durable goods, education and institutional medical expenses and collected from a  365 day period.
  • Several economists and organizations have given different estimates of poverty. Most of them estimated the number of persons below the poverty line on the basis of an average calorie intake of 2,250 per capita per day.
  • According to the report of Task Force on Minimum Needs and Effective Consumption Demand – an expert group of Planning Commission, defined poverty one on a nutritional norm of per capita daily intake of 2,400 calories in rural areas and 2,100 calories for urban areas. A person who fails to obtain this minimum level of calories is treated as being below the poverty line.
  • Orissa is the poorest state with 39.9% people living below poverty line. It is followed by Jharkhand, Bihar and MP. Poverty is lowest in Chandigarh (3.8%), Jammu and Kashmir (4.2%) and Punjab (5.2%).
  1. PUBLIC SECTOR STEEL PLANTS

Location

Assistance

  • Rourkela (Orissa)

Germany

  • Bhilai (MP)

Russian Govt.

  • Durgapur (WB)

Britain Govt.

  • Bokaro (Jharkhand)

Russian Govt.

  • Burnpur (WB)

Acquired by Private sector in 1976

  • Vishakhapatnam (AP)

Russian Govt.

  • Salem (Tamil Nadu)

 

  • Vijai Nagar (Karnataka)

 

  • Bhadrawati (Karnataka)

 

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

 

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

 

  1. NAVRATNAS
  • In 1997, the government identified nine leading, well performing and high profit making public enterprises as Navratnas (Nine precious Jewels). Later, in the same year, two more were added to the list.
  • They have been given special powers including freedom to form new joint ventures, make new investments and authorized to raise money.
  1.  List of Navratnas:
  • 1

Bharat Electronics Limited (BEL)

  • 2

Bharat Heavy Electricals Limited (BHEL)

  • 3

Bharat Petroleum Corporation Limited (BPCL)

  • 4

Coal India Limited (CIL)

  • 5

Electronics Corporation of India (ECI)

  • 6

Gas Authority of India Limited (GAIL)

  • 7

Hindustan Aeronautics Limited (HAL)

  • 8

Hindustan Petroleum Corporation Limited (HPCL)

  • 9

Indian Oil Corporation Limited (IOCL)

  • 10

Mahanagar Telephone Nigam Limited (MTNL)

  • 11

National Aluminium Company Limited (NALCO)

  • 12

National Mineral Development Corporation (NMDC)

  • 13

National Thermal Power Corporation Limited (NTPC)

  • 14

Oil & Natural Gas Corporation Limited (ONGC)

  • 15

Power Finance Corporation Limited (PFC)

  • 16

Power Grid Corporation of India Limited (PGC)

  • 17

Rural Electrification Corporation Limited (REC)

  • 18

Shipping Corporation of India Limited (SCI)

  • 19

Steel Authority of India Limited (SAIL)

  • Two of these, namely IPCL and VSNL, have since been privatized.