Economic and Social Development · 2019-09-14 · 2.2 Sansad Adarsh Gram Yojana (SAGY) 117 2.3 (National Children’s Fund)National Rural Drinking Water Programme 117 2.4 Swatch Bharat

Indian EconomyEconomic and Social Development

Topic-wise Strategy

1. Structure of Indian Economy 1

1. Classification ofWorld Economies 11.1 United Nations Development Programme’s

(UNDP) Country Classification System 11.2 World Bank’s Country Classification Systems 11.3 IMF’s Country Classification System 1

2. EconomicGrowth andDevelopment 22.1 Economic Growth 22.2 Economic Development 2

3. Types of Economic Systems 24. India-ADeveloping Economy 3

4.1 Quantitative & Structural Facets of Indian Econnomy 3

4.2 Sectors of Indian Economy 35. Indicators ofDevelopment 4

5.1 Major Indicators 45.2 Gender Development Index 45.3 Gender Inequality Index 45.4 UNDP Human Development Report 2018 45.5 Green Index 75.6 Gross National Income (GNI) 75.7 Gross National Happiness (GNH) 75.8 Green Economy 8

2. National Income of India 10

1. Meaning ofNational Income 102. Methods ofCalculatingNational

Income 102.1 New Method to Calculate GDP 102.2 Change in Methodology of

Calculating GDP 112.3 Major Change in Base Year Revision 11

3. National IncomeAggregates 123.1 Types of Aggregates 123.2 India’s History of Calculating India’s

National Income 143.3 National Income Committee 143.4 Sources of Data 14

4. Trends in Indian Economy 154.1 GVA Growth of Major Sectors 164.2 Components of GDP 174.3 Overall Performance 17

3. Economic Planning in India 191. Meaning of Economic Planning 192. Initiation of Planning in India 20

2.1 Timeline to Economic Planning in India 203. Niti Aayog 23

3.1 NITI Aayog vs Planning Commission 243.2 NITI Aayog’s Role in SDG 253.3 NITI Aayog’s Three Year Action Plan 25

4. Inflation 27

1. Basic Concepts 272. Types of Inflation 27

2.1 Based on Rate of Price Rise 272.2 Based on Government Control 272.3 Based on Degree of Volatility 282.4 Based on Causes 28

3. Measures of Inflation 293.1 Wholesale Price Index 293.4 Producer Price Index 313.5 Housing Price Index 313.6 Service Price Index 313.7 GDP Deflator 313.8 Food Inflation 313.9 Core Inflation 32

Economic and Social Development 1-260

Contents

4. Impact of Inflation 325. Measures to control Inflation 33

5.1 Monetary Measures 335.2 Fiscal Measures 335.3 Other Measures 33

6. Phillips Curve 337. Stagflation 348. Inflation Targeting in India 34

8.1 RBI’S Inflation Targeting Regime 348.2 Monetary Policy Committee 35

5. Money and Banking 37

1. Definition ofMoney 371.1 The New Monetary Aggregates 37

2. Money Supply in India 382.1 Monetary Aggregates In India 382.2 Measures of Money Supply in India 38

3. Monetary Policy 393.1 Objectives 393.2 Quantitative Measures of Credit Control 393.3 Qualitative Measures of Credit Control 403.4 Deployments of Money Supply 413.5 Urjit Patel Committee 2014 41

4. Banking in India 415. Reserve Bank of India (RBI) 42

5.1 Functions of the RBI 426. Types of Banks in India 42

6.1 Commercial Banks 426.2 State Bank of India (SBI) 436.3 Nationalized Banks 43

7. Core Banking Solutions 437.1 Foreign Banks 447.2 Private Sector Banks in India 447.3 Regional Rural Banks 447.4 Other Scheduled Commercial Banks 447.5 Cooperative Bank 447.6 Small and Payment Banks 457.7 India Post Payments Bank 457.8 Priority Sector Lending 46

8. Non-Banking Financial Companies(NBFCs) 46

9. All India Financial Institutions 47

10.Unified Payment Interface (UPI) 4811.Banking Terms 4912.Recapitalization Efforts by the

Government 5113. International FinanceCorporation

Masalabonds 5214.LatestGovernance Reforms In Banks52

14.1 Financial Sector Legislative Reforms Commission (FSLRC)’s Recommendations 52

14.2 The Nayak Committee Report 5214.3 Basel Committee on Banking Supervision 5314.4 Important Points 5314.5 New Initiations for Financial inclusion 53

15.Marginal Cost of funds-based Lending Rate (MCLR) 54

16.The InsolvencyandBankruptcyCode(Amendment)Ordinance, 2018 54

17. Indradhanush- Banking Reforms 5518.Bitcoin 5719.BHIMApplication: Salient Features 5720. Insurance in India 57

20.1 Life Insurance Corporation of India (LIC) 5720.2 General Insurance Corporation (GIC)

of India 5720.3 Agriculture Insurance Company of India

Limited (AICIL) 5720.4 Insurance Regulatory and Development

Authority (IRDA) India 5820.5 Functions of IRDA 5820.6 Present Status 5820.7 Unemployment Insurance 5920.8 Agriculture Insurance 59

Self–Evaluation Test 60

6. Indian Financial System 61

1. Indian FinancialMarkets 611.1 Meaning of Financial Market 611.2 Financial Markets Consists of

Two Segments 621.3 Indian Money Market 63

1.4 Indian Capital Market 641.5 Stock Exchange 65

2. IndianCapitalMarket 662.1 Components of Capital the Market 662.2 Stock Exchange of India 662.3 Speculative Transactions 672.4 The National Stock Exchange (NSE) 672.5 Corporate Bonds 672.6 Measures to strengthen corporate

bond market 672.7 India International Exchange 682.8 Bombay Stock Exchange (BSE) 682.9 Inter-connected Stock Exchange of

India Limited (ISE) 692.10 OTC Exchange of India (OTCEI) 692.11 Securities and Exchange Board

of India (SEBI) 692.12 Stock Market Indices 70

3. India’s Credit RatingAgencies 70 Self–Evaluation Test 71

7. Fiscal Policy 72

1. Fiscal Policy 721.1 Main Objectives 72

1.2 Types of Fiscal Policy 73

2. Meaning of Budget 742.1 Components of Budget 74

2.2 Revenue Budget 74

2.3 Capital Budget 74

2.4 Zero Base Budgeting (ZBB) 75

2.5 Overall Expenditure (1 + 2) 75

2.6 Accounting Classification 75

2.7 Demands for Grants 75

2.8 Appropriation Bill 76

2.9 Finance Bill 76

2.10 Macro-economic Framework Statement 76

2.11 Fiscal Policy Strategy Statement 76

2.12 Medium-term Fiscal Policy Statement 76

2.13 Important Reforms in the Annual Financial Statement of India 76

3. The FinanceCommission 773.1 Functions of Finance Commission 77

3.2 Major Recommendations of 14th Finance Commission 78

4. 15th FinanceCommission 784.1 Composition 78

4.2 Likely Beneficiaries 78

5. Expenditure ReformsCommission 796. Deficit Financing 79

6.1 Meaning of Deficit Financing 79

6.2 Objectives of Deficit Financing 79

6.3 Balanced, Surplus and Deficit Budget 79

6.4 Different Concepts of Deficit 79

7. Fiscal Responsibility and BudgetManagementAct, 2003 807.1 Amendments to the FRBM Act 80

7.2 Current Fiscal Situation 80

7.3 Union Budget 2018-19 81

8. Trends in the Fiscal Sector 818.1 Receipts 81

8.2 State and General Government 81

9. Fiscal Consolidation Plan 8210. Indian Tax Structure 82

10.1 Direct Taxes 82

10.2 GST 84

12. Financial StabilityandDevelopmentCouncil (FSDC) 86

13.GeneralAnti-Avoidance Rules (GAAR) 8613.1 Difference Between Shome Committee

Recommendations and Modified GAAR 86

14.GoldMonetization Scheme 8714.1 Sovereign Gold Bond (SGB) 87

15.Base Erosion and Profit Shifting 87


8. Foreign Trade 89

1. India’s Trade Policy 891.1 Main Features of India’s Trade Policy 891.2 Convertibility of Rupee 89

2. India’s Foreign Trade Regulations 892.1 Exim Policy (1997 -2002) 892.2 Exim Policy (2002 - 2007) 902.3 Exim Policy (2004-09) 902.4 Exim Policy (2009-14) 902.5 Foreign Trade Policy 2015 90

3. India’s Foreign Trade Trends 903.1 Global Economic Scenario (under India’s

Foreign Trade Trends) 903.2 India’s External Sector : Exports and Imports 913.3 Trade Deficit 913.4 Components of Current A/C 913.5 Components of Capital A/C 91

4. Balance of Payments 924.1 Invisibles 924.2 Foreign Exchange Reserves 924.3 External Debt 93

5. Trade Policy 93 6. Reasons for higher External

Commercial Borrowings (ECB) 937. TPPand its Implications for India 93

7.1 Positives 937.2 Negatives 937.3 Concerns 937.4 Some of the major concerns are as follows 94

8. Special Economic Zones 948.1 Export Processing Zones (EPZs) 958.2 Objectives of Setting up of EPZs 958.3 Agri Export Zones 96

9. ForeignDirect Investment 969.1 Instruments for Receiving Foreign

Direct Investment 9610.TradeAgreements/Pacts 97

10.1 Important Regional Trade Agreements 9710.2 By the Level of Integration 9710.3 Free Trade Agreements and Bilateral

Treaties of India 9810.4 Few Trade Agreements 99


9. Poverty in India 102

1. Meaning of Poverty 1022. CommitteesAssociatedwith

Measurement of Poverty 1032.1 Causes of Poverty in India 1032.2 Rangarajan Committee 105

3. Disagregation ofNational Poverty Line into State Specific Poverty Lines 106

4. PovertyAlleviation Programmes in India 106

5. Universal Basic Income 1095.1 Introduction 1095.2 Basic limitations to UBI 1095.3 UBI is proposed as unconditional

without concern of people’s contribution to society 109

5.4 Why Universalize? 1095.5 Way forward on UBI 110


10. Human and Social Development 112

1. Schemes Related toHealth Sector 1121.1 National Health Policy, 2017 1121.2 Ayushman Bharat 1131.3 National Health Mission 1141.4 National AYUSH Mission 1151.5 Janani Suraksha Yojana 1151.6 Mission Indradhanush 1151.7 Janani Shishu Suraksha Karyakaram 1151.8 India Newborn Action Plan 1161.9 Pradhan Mantri Swasthya Suraksha

Yojana 1161.10 Pradhan Mantri Surakshit Matritva

Abhiyan 1161.11 Kayakalp 1161.12 Mother’s Absolute Affection 1161.13 Jan Aushudhi Yojana 1161.14 LaQshya 116

2. Rural Development Programme 1162.1 Pradhan Mantri Gram Sadak

Yojana (PMGSY) 116

2.2 Sansad Adarsh Gram Yojana (SAGY) 1172.3 National Rural Drinking Water

Programme 1172.4 Swatch Bharat Abhiyan 1172.5 Shyama Prasad Mukherjee Rurban

Mission 1172.6 Deendayal Upadhyaya Gram Jyoti Yojana 1172.7 Deendayal Upadhyaya Grameen

Kaushalya Yojana 1183. UrbanDevelopment Programmes 118

3.1 HRIDAY 1183.2 AMRUT Mission 1183.3 Smart Cities 118

4. Education Programmes 1184.1 Schemes for Education Sector 118

5. Design InnovationCentres 1206. Skill Development Initiatives 121

6.1 National Skill Development Mission 1216.2 Pradhan Mantri Kaushal Vikas Yojana

(PMKVY) 1216.3 Atal Innovation Mission 122

7. Women&ChildDevelopmentProgrammes 1227.1 Beti Bachao, Beti Padhao 1227.2 Integrated Child Protection

Scheme (ICPS) 1237.3 Scheme for Empowerment of

Adolescent Girls (RGSEAG)-SABLA 1237.4 National Mission for Empowerment

of Women (NMEW) 1237.5 Support to Training and Employment

Programme (STEP) 1237.6 National Creche Scheme for the

Children of Working Mothers (RGNCS) 1247.7 Working Women’s Hostel (WWH) 1247.8 Rashtriya Mahila Kosh (RMK) 1247.9 Women’s Empowerment and Livelihood

Programme in Mid-Gangetic Plains (WELP) 124

7.10 Swadhar Greh Scheme 1247.11 Ujjawala 1247.12 National Nutrition Mission 124

7.13 Rashtriya Bal Kosh (National Children’s Fund) 124

7.14 Integrated Child Development Scheme 1257.15 Sukanya Samridhi Yojna 1257.16 SheBox 1257.17 PM Matru Vandana Yojana 1257.18 PENCIL Portal 126

8. Welfare andDevelopment Programmes forWeaker Sections 1268.1 Scheduled Caste’s (SC’s) 1268.2 Scheduled Tribe’s (ST’s) 1268.3 National Safai Karamcharis Finance and

Development Corporation (NSKFDC) 1268.4 Self-Employment Scheme for

Rehabilitation of Manual Scavengers (SRMS) 126

8.5 Vanbandhu Kalyan Yojana 1278.6 Pradhan Mantri Adarsh Gram Yojana 1278.7 National Schedule Caste and Schedule

Tribes (SC/ST) Hub 1279. Minorities 127

9.1 Nai Manzil Scheme for Minorities 1279.2 Dr. Ambedkar Post-Matric Scholarship

for EBC Students: 1279.3 Dr. Ambedkar Scheme of Interest

Subsidy on Educational Loans for Overseas Studies: 127

9.4 Upgrading the Skills and Training in Traditional Arts/Crafts for Development (USTTAD) Scheme 128

9.5 Seekho Aur Kamao (Learn & Earn) 1289.6 Nai Roshni Scheme 1289.7 Hamari Dharohar 1289.8 Jiyo Parsi 1289.9 Prime Minister’s New 15 Point

Programme for the Welfare of Minorities 12810.Governance 130

10.1 Digital India 13010.2 Aadhaar 131

11.Schemes forDisables 13111.1 Accessible India Campaign 13111.2 Rashtriya Vayoshri Yojana 131


11. Employment 134

1. Unemployment and its Types 1341.1 Types of Unemployment in India 134

2. Labour Force 1353. Measurement of Employment/

Unemployment in India 1353.1 Skill Development Programmes 136

4. EmploymentGeneration Programmes 1374.1 Mahatma Gandhi (MGNREGA) 1374.2 National Rural Livelihoods Mission

(NRLM) - Aajeevika 1374.3 National Urban Livelihoods Mission

(NULM) 1374.4 Pradhan Mantri Rojgar Protsahan Yojana 137

5. Labour Reforms 1375.1 The Payment of Bonus (Amendment)

Act 2015 1375.2 National Career Services Portal 1375.3 Shram Suvidha Portal 1375.4 National Child Labour Project (NCLP)

Scheme 1385.5 Maternity Benefit (Amendment)

Act, 2017 1385.6 Child Labour (Prohibition & Regulation)

Amendment Rules, 2017 1385.7 Code of Wages Bill, 2017 138


12. Agriculture 140

1. Agriculture Sector In India 1401.1 Kharif Production 2017-18 1411.2 Sowing of Rabi Crops 2017-18 141

2. State-Wise Index ofCropDiversification 1412.1 Index of Crop Diversification 1412.2 Agriculture and Livestock Growth in India 142

3. Agricultural Revolutions 1423.1 Green Revolution 1423.2 Second Green Revolution 1423.3 White Revolution 142

4. Agriculture Through FiveYearPlans1435. National Agricultural Policies 144

5.1 A. Missions 1445.2 B. Schemes 147

6. Soil HealthCard 1507. Seed Programmes 151

7.1 Seed Villages 1517.2 Integrated Scheme of Oil Seeds, Pulses,

Oilpalm and Maize (ISOPOM) 1517.3 National Mission on Oilseeds and

Oil Palm 1517.4 Technology Mission on Oilseeds and Oil Palm

(TMO & OP) 1527.5 Technology Mission on Cotton 152

8. Fertilizers 1528.1 Modified New Pricing Scheme-III

for Urea Units 1529. Irrigation 152

9.1 Accelerated Irrigation Benefit Program (AIBP) 152

9.2 Pradhan Mantri Krishi Sinchayee Yojana 15310.Price Policy forAgricultural Product 15311. Agricultural Extension 153

11.1 National Mission on Agricultural Extension and Technology 153

11.2 Initiatives for Higher Education in Agriculture 153

11.3 Commodity Futures Market 15312. AgricultureCredit 153

12.1 Priority Sector Credits 15312.2 Kisan Credit Card Scheme (KCC) 15412.3 Regional Rural Banks in India 15412.4 National Bank for Agriculture and Rural

Development (NABARD) 15412.5 Local Area Banks (LABs) 154

13. Agriculture Insurance 15413.1 Pradhan Mantri Fasal Bima Yojana 15413.2 Revised Provisions under the PMFBY 15513.3 Agriculture Insurance Company of

India Limited (AICIL) 15514. AgriculturalMarketing 155

14.1 Agriculture Produce Marketing Committee (APMC) Act 155

14.2 Shanta Kumar report on FCI restructuring, Buffer stock, PDS 156

14.3 PM Annadata Aay Sanrakshan Abhiyan (PM-AASHA) 157

14.4 e-NAM: National Agriculture Market 15815.Food Processing 158

15.1 National Mission on Food Processing (NMFP) 158

15.2 Mega Food Park 15815.3 Pradhan Mantra Kisan Sampada Yojana 15815.4 Globally Important Agricultural

Heritage System (GIAHS) 15915.5 NSSO 70th Round “Situation Assessment

Survey of Agricultural Households” 160 Self–Evaluation Test 161

13. Industry 162

1. Industrial Policy of India 1622. TheCompaniesAct, 2013 164

2.1 The salient features of the new bill 1643. National Policy on Electronics

(NPE) 2012 1644. NationalManufacturing Policy

(NMP) 2011 1655. Public Sector in India 165

5.1 Maharatna Status 1655.2 Navratnas 1655.3 Miniratnas 1665.4 National Investment Fund (NIF) 1665.5 Fund Managers of NIF 167

6. MSMEs in India 1676.1 Rajiv Gandhi Udyami Mitra Yojana

(RGUMY) 1687. Government Initiatives To Promote

IndustrialGrowth 1687.1 Scheme for Integrated Textile

Parks (SITP) 1687.2 The eBiz Project 1687.3 Delhi Mumbai Industrial Corridor

(DMIC) 1687.4 Investment Regions (IR) 1687.5 Intellectual Property Rights

(IPR) Policy 169

7.6 National Industrial Corridor Development & Implementation Trust (NICDIT): 169

7.7 Modified Industrial Infrastructure Upgradation Scheme (MIIUS) : 169

7.8 Indian Leather Development Programme 169

7.9 Make In India 1697.10 Measures Taken Under

‘Ease of Doing Business’ 1707.11 India Inclusive Innovation Fund 1707.12 Scheme of Fund for Regeneration of

Traditional Industries (SFURTI) 1717.13 Technology Upgradation Fund

Scheme (TUFS) 1717.14 Amended Technology Upgradation Fund

Scheme (ATUFS) 1717.15 New Exploration Licensing

Policy (NELP) 1727.16 Pardhan Mantri MUDRA Yojana 1727.17 Start Up India Scheme 1737.18 Stand up India Scheme 1737.19 National Student Startup Policy 174

8. Industrial Financing Institutions 1748.1 National Level Institutions 1748.2 Specialised Financial Institutions (SFIs) 1748.3 Investment Institutions 1758.4 State Level Institutions 175

9. Large Scale Industries 1759.1 Iron and Steel Industry 1759.2 Jute Industry 1759.3 Cotton and Textile Industry 1769.4 Sugar Industry 1769.5 Fertiliser Industry 1769.6 Paper Industry 1769.7 Silk Industry 1769.8 Petroleum and Natural Gas 1769.9 Automotive Industry 176


14. Infrastructure 178

1. Types of Infrastructure 1781.1 Basic Infrastructure 178

2. Energy 1782.1 Energy Infrastructure in India 1782.2 Grid Connected Power 1792.3 Small Hydro Power 1792.4 Solar Power 1792.5 Power Sector 1792.6 Ultra Mega Power Project Initiatives 1802.7 Changes in Mega Power Policy 1812.8 Other Gaseous Fuels 181

3. Renewable Energy in India 1823.1 New Technologies 1823.2 Large Hydroelectric Power 1843.3 Small Hydroelectric Power Stations

(SHPS) 1843.4 Carbon Capture and Storage (CCS) 1843.5 Energy from Municipal Waste 184

4. Programmes Related to Energy Sector 1844.1 UDAY (Ujwal DISCOM Assurance Yojana) 1844.2 National LED Programme 1844.3 National Smart Grid Mission 1854.4 Bachat Lamp Yojana 1854.5 Standards and Labeling Scheme 1854.6 Deen Dayal Upadhyay Gram Jyoti Yojana 1854.7 Saubhagya Scheme 1854.8 Solar Cities 1864.9 National Biogas and Manure

Management Programme (NBMMP) 1874.10 Green Buildings 1874.11 National Biomass Cookstoves

Initiatives (NBCI) 1874.12 Akshay Urja Shops 188

5. Biomass Power andCogenerationProgramme 1885.1 Introduction 1885.2 Potential 1885.3 Technology 1885.4 Cogeneration In Sugar Mills 1895.5 Biomass Gasification 189

6. Small Hydro Power Programme 1896.1 Other Initiatives 189

7. Hydrogen Energy 190

8. Chemical Sources of Energy Programme 190

9. Chemical Sources of Energy in India 1909.1 Lithium-Ion Battery by ISRO 1909.2 National Electric Mobility Plan

Mission-2020 19010.Geo-Thermal Energy 19111.Ocean Energy 192

11.1 Introduction to Ocean Energy 19211.2 Programme Objectives 19211.3 History 19211.4 Technology 192

12.Nuclear Power 19312.1 Operational Nuclear Power Plants

in India 19313.Coal 193

13.1 Coal Power in India 19313.2 Initiatives and Achievements 194

14.Minerals 19414.1 Government’s Initiative to Improve

the Mining Sector 19415.Niti Aayog’s Suggested Steps

to theMinesMinistry 19516.PetroleumandNaturalGas 195

16.1 Major Initiatives 19616.2 Issues Relating to the Petroleum Sector 196

17.Transport Infrastructure in India 19617.1 Roads 19617.2 National Highways 197

18.Bharatmala Programme 19718.1 Highlights of Bharatmala Pariyojana 19718.2 Important Components of Bharatmala 19718.3 Northeast India Connectivity 19718.4 International Connectivity 19818.5 Development of Roads in Left

Wing Extremism Areas 19818.6 Construction of Green Field Expressway 19818.7 Special Accelerated Road Development

Programme for Development of Road Network in the North Eastern States 198

18.8 Prime Minister’s Reconstruction Plan for Jammu and Kashmir 198

18.9 Chenani-Nashri Tunnel 19918.10 Pradhan Mantri Gram Sadak

Yojana (PMGSY) 19918.11 Government of India and World Bank

signs $500 Million Additional Financing for Pradhan Mantri Gram Sadak Yojana Rural Roads Project 200

18.12 Electronic Toll Collection (ETC) 20018.13 Border Roads Organisation 20018.14 Highway Advisory System (HAS) 20118.15 Buses with IT Enabled Safety

Measures under Nirbhaya Scheme 20118.16 Central Road Fund Amendment

Bill, 2017 20319.Railways 203

19.1 IROAF 20419.2 Dedicated Freight Corridors 20419.3 Bullet Train Project in India 20419.4 Green Initiatives 20519.5 Cleanliness (Swachh Rail Mission) 20519.6 Hyperloop 20619.7 Mass Rapid Transport System (MRTS) 20619.8 Metro Rail in India 20619.9 Miscellaneous 206

20.Civil Aviation 20820.1 Airports 20820.2 National Civil Aviation Policy, 2016 20820.3 Ground Handling Policy 20920.4 UDAN Scheme 21020.5 Civil Aviation Requirements Revised

to Comply with the Tokyo Convention 21120.6 Unmanned Aerial Vehicles in India 21120.7 DigiYatra Initiative 21220.8 BCAS (Bureau of Civil Aviation Security) 212

21.Ports 21221.1 Vision document for Coastal Shipping 21321.2 Port Services 21321.3 Sagarmala Programme 21321.4 Shipping 215

22. InlandWaterwaysTransport (IWT) 21722.1 Inland Waterways Transport Sector 21722.2 Ro-Ro Ferry Project 219

23.Telecommunications 21923.1 Machine to Machine Communications

(M2M) 21923.2 Telecom Sector in India 21923.3 5G Technology 21923.4 Internet of Things 22023.5 National Digital Communications

Policy, 2018 22023.6 Major New Initiatives 221

24.Urban Infrastructure 22124.1 Urban Unit (or Town) 22124.2 Swarna Jayanti Shahari Rozgar

Yojana (SJSRY) 22124.3 New ‘Deen Dayal Upadhyaya

Antyodaya Yojana’ 22224.4 New Initiatives 22224.5 Start-up India: Wings to Fly above the Sky 22224.6 Proposed Action Plans under Start-up

Initiative: 22225.AjeevikaGrameen ExpressYojana 223 Self–Evaluation Test 224

15. International Organisation 225

1. BrettonWoods Institutions 2252. IMF 225

2.1 Original Aims 2252.2 IMF Resources 2252.3 IMF Conditionality 2262.4 India and IMF 2262.5 Quota Reforms 2262.6 Article-IV Consultations 2262.7 Financial Transactions Plan (FTP) 2262.8 Facts Related to IMF 226

3. World Bank 2273.1 Governance of World Bank 2273.2 India And World Bank 2283.3 World Economic Forum 2293.4 Reports Published by World

Economic Forum 2293.5 Regional Comprehensive Economic

Partnership 2293.6 Importance of RCEP 229

3.7 Importance of RCEP for India 2293.8 New Development Bank 2303.9 Contingent Reserve Arrangement (CRA) 2303.10 Asian Infrastructure Investment Bank 230

4. Wolrd TradeOrganisation (WTO) 2304.1 Functions 2304.2 Principles of the trading system 2314.3 Trade without discrimination 2314.4 Promoting fair competition 2314.5 Six-part broad outline 231

5. WTOMeets 235 Self–Evaluation Test 240

16. Economic Survey and Budget 241

1. Economic Survey2017-18 2411.1 Ten New Facts on the Indian Economy 2411.2 State of the Economy: An Analytical

Overview and Outlook for Policy 2411.3 A New, Exciting Bird’s-Eye View of

the Indian Economy 2432. Male Preference 245

2.1 Skewed Sex Ratio at Birth (SRB) 2452.2 Social Infrastructure, Employment

and Human Development 246

3. Trends in Social Sector Expenditure 2463.1 Education for All 2463.2 Student Classroom Ratio 2473.3 Pupil Teacher Ratio 2473.4 Gender Parity Index (GPI) 247

4. Progress in Labour Reforms 2475. Political Empowerment ofWomen 2476. Health ForAll 248

6.1 DALYs: A State level analysis 2486.2 Government Programmes for

Women and Children 2487. Swachh BharatMission (Gramin) 249

7.1 Health and Economic Impact of Sanitation 2498. TheWay Forward 2499. Budget 2018-19 249

9.1 Agriculture 2499.2 Rural Development 2509.3 Education 2509.4 Health 2509.5 Infrastructure 2509.6 Medium, Small and Micro Enterprises 2509.7 Women Development 2509.8 Income Tax 250


Practice Test 252

1. ClassifiCation of World EConomiEs Development is a concept that is difficult to define; it is inevitable that it will also be challenging to construct development taxonomy. Countries are placed into groups to better understand their social and economical outcomes. The most widely accepted criterion is labelling countries as either developed or developing countries. Different criteria for calculation are:

1.1 United Nations Development Programme’s (UNDP) Country Classification System

The UNDP human development report ranks countries on basis of measuring human development by combining indicators of a long and healthy life , access to knowledge and a decent standard of living into a composite Human Development Index (HDI) .

The HDI classifies the world into four segments of very high, high,medium, low human development .

To identify high HDI achievers and consequently developed countries, the UNDP used a number of factors.

(a) One way is to look at countries with positive income growth and good performance on measures of health and education relative to other countries at comparable levels of development.

(b) Another way was to look for countries that have been more successful in closing the ‘’human development gap’’ as measured by the reduction in their HDI shortfall.

1.2 World Bank’s Country Classification SystemsThe classification tables include all World Bank members, plus all other economies with populations of more than 30,000.

Economies are currently divided into four income groupings: low, lower-middle, upper-middle, and high. Income is measured using Gross National Income (GNI) per capita

The GNI per capita is also used as input to the Bank’s operational classification of economies, which determines their lending eligibility.

The World Bank classifies countries into four income groups. These are set each year on July 1. As of July 1, 2018, the new thresholds for classification by income are:

Threshold GNI/Capita (Current US$)

Low-income < 995

Lower middle income 996 – 3,895

Upper middle income 3,896 – 12,055

High income > 12,055

World Bank has classified India’s income level to be lower middle income.

1.3 IMF’s Country Classification SystemThe IMF uses a flexible classification system that considers-

(1) Per capita income level (2) Export diversification—so oil exporters that have high per

capita GDP would not make the advanced classification because around 70% of its exports are oil, and

(3) Degree of integration into the global financial system.

Economic Growth refers to the rise in the value of everything produced in the economy. It implies the yearly increase in the country’s GDP or GNP, in percentage terms, whereas a country’s economic development is usually indicated by an increase in citizens’ quality of life.This chapter discusses about economic growth and development, various indicators related to it, etc.Through this chapter, student will be able to understand:• ClassificationofWorldEconomies• EconomicGrowthandDevelopment• TypesofEconomicSystems• India-aDevelopingNation

• SectoralGrowthofIndianEconomy• IndicatorsofDevelopment• UNDPHumanDevelopmentReport,2018• ConceptofGreenEconomy

Chapter 1 Structure of Indian Economy

2. EConomiC GroWth and dEvElopmEnt

2.1 Economic GrowthEconomic growth means an increase in real GDP. This increase in real GDP means there is an increase in the value of national output/national expenditure.

Economic growth is caused by two main factors 1. Increase in aggregate demand . 2. Increase in aggregate supply (increase in capital, investment,

higher labour productivity).

2.2 Economic DevelopmentEconomic development ideally refers to the sustained, concerted actions of communities and policymakers that improve the standard of living and economic health of a specific locality. The definition of economic development given by Professor Michael Todaro is an increase in living conditions, improvement of the citizens self-esteem needs and free and a just society.

The most accurate method of measuring economic development is the Human Development Index which takes into account the literacy rates & life expectancy which in-turn has an outright impact on productivity and could lead to Economic Growth.

Economic development can also be referred to as the quantitative and qualitative changes in an existing economy. Economic development involves development of human capital, increasing the literacy ratio, improve important infrastructure, improvement of health and safety and others areas that aims at increasing the general welfare of the citizens.

The terms economic development and economic growth are used interchangeably but there is a very big difference between the two. Economic growth can be viewed as a sub category of economic development. Economic development is a government policy to increase the economic, social welfare and ensuring a stable political environment. Economic growth on the other hand is the general increase in the country products and services output.

Economic development will only be successful if the whole nation is willing to give their best efforts towards its achievement. A lot of theories have been forwarded by different schools of thought about how economic development should be achieved.

Difference between Economic Growth and Economic Development

Economic Growth refers to the rise in the value of everything produced in the economy. Conversely, Economic Development is defined as the increase in the economic wealth of a country or a particular area, for the welfare of its residents.

Economic growth is an essential but not the only condition for economic development.

The concept of economic development is broader than the concept of economic growth.

economic growth is a quantitative concept while economic development is a qualitative concept.

Economic development may be defined “as the process of increasing the degree of utilisation and improving the productivity of available resources of a country which leads to an increase of the economic welfare of the community by stimulating the growth of national income.” Economic growth, indeed, is not concerned with the poverty-inequality reduction, unemployment situation and, above all, better quality of living. Thus, economic development is more than economic growth. ‘’Economic growth” = increase in per capita income — a quantitative expression. “Economic Development”= increase in per capita output + welfare of the masses — a qualitative expression.

3. typEs of EConomiC systEms

Capitalist Economy• In a capitalist society the goods produced are distributed

among people not on the basis of what people need but on the basis of Purchasing Power—the ability to buy goods and services. That is, one has to have the money in the pocket to buy it. Low cost housing for the poor is much needed but will not count as demand in the market sense because the poor do not have the purchasing power to back the demand. As a result this commodity will not be produced and supplied as per market forces.

Country Classification Systems in Selected International Organizations

UNDP IMF World Bank

Name of Developed Country Developed Countries Advanced Countries High-income countriesName of Developing Country Developing Countries Emerging and developing Low and middle-income countries countriesDevelopment Threshold 75 percentile in the HDI Not explicit US$6,000 GNI per capita in distribution 1987-prices Sub-categories of developing (1) Low human development (1) Low-income developing (1) Low-income countriescountries countries countries and and (2) Medium human develop- (2) Emerging and other (2) Middle-income countries ment countries developing countries (3) High human development countries

Economic and Social Development2

Socialist Economy• In a socialist society the government decides what goods

are to be produced in accordance with the needs of society. It is assumed that the government knows what is good for the people of the country and so the desires of individual consumers are not given much importance. The government decides how goods are to be produced and how they should be distributed.

• In principle, distribution under socialism is supposed to be based on what people need and not on what they can afford to purchase. Unlike under capitalism, for example, a socialist nation provides free health care to all its citizens.

• Strictly, a socialist society has no private property since everything is owned by the state. In Cuba and China, for example, most of the economic activities are governed by the socialistic principles.

Mixed Economy• Most economies are mixed economies, i.e. the government

and the market together answer the three questions of what to produce, how to produce and how to distribute what is produced. In a mixed economy, the market will provide whatever goods and services it can produce well, and the government will provide essential goods and services which the market fails to do.

4. india-a dEvElopinG EConomy 4.1 Quantitative & Structural Facets of Indian EconnomyEconomic development in India has broadly two facets:(A) Quantitative(B) Structural.(A) Quantitative Changes

For assessing the development process in this country in quantitative terms, national income trends during the five and a half decades of economic planning should be examined. But still more necessary is to take note of the structural changes in the economy that have taken place in this period.

(B) Structural Changes 1. Changing Sectoral Distribution of Domestic Product:

The important indicator of development is declining contribution of agriculture to net national product. Generally, an economy is divided into three major sectors viz. primary, secondary and tertiary sectors.

Primary sector includes agricultural and allied activities, secondary sector includes manufacturing industries and tertiary sector includes services. With the development process, significance of primary sector declines while that of secondary and tertiary sectors increases. After independence, Indian economy has also experienced such changes.

2. Growth of Basic Capital Goods Industries: At the time of independence , the share of basic and capital goods industries in the total industrial production was roughly one-fourth.

Under the second plan, a high priority was accorded to capital goods industries, as their development was considered a pre-requisite to the overall growth of the economy. A large number of basic industries which produce

capital equipment and useful raw materials have been set up making the country’s industrial structure pretty strong.

3. Expansion in Social Overhead Capital: Social overhead capital broadly includes-transport facilities, irrigation systems, energy production, educational system,organisation ,health facilities. Their development creates favourable conditions for growth and also for better human living. The transport system in India has grown both in terms of capacity and modernisation.

The railways route length increased by more than 9 thousand kms and the operation fleet practically doubled. The Indian road network is now one of the largest in the world as a result of spectacular development of roads under various plans. India has also seen growth in Life- lixpectancy and Literacy Rate but education has not expanded at a desired rate.

4. Progress in the Banking and Financial Sector: Significant progressive changes have taken place in the banking and financial structure of India, since independence. The growth of commercial banks and cooperative credit societies has been really spectacular and as a result of it the importance of indigenous bankers and money-lenders has declined.

Since nationalisation, these banks have radically changed their credit policy. Now more funds are made available to priority sectors such as agriculture, small-scale industries, transportation, etc.

Indian economy has progressed structurally when we consider the growth of capital goods industries, expansion of the infrastructure, performance of the public sector, etc.

These factors over the years are believed to have created an element of dynamism in the country’s economy and one can now hopefully say that it would sustain development in the future.

4.2 Sectors of Indian EconomyPrimary SectorWhen the economic activity depends mainly on exploitation of natural resources then that activity comes under the primary sector. Agriculture and agriculture related activities are the primary sectors of economy.Secondary SectorWhen the main activity involves manufacturing then it is the secondary sector. All industrial production where physical goods are produced come under the secondary sector.Tertiary SectorWhen the activity involves providing intangible goods like services then this is part of the tertiary sector. Financial services, management consultancy, telephony and IT are good examples of service sector.Quaternary ActivitiesQuaternary activities are specialized tertairy activities in the ‘Knowledge Sector’ which demands a separate classification. There has been a very high growth in demand for and consumption of information based services from mutual fund managers to tax consultants, software developers and statisticians. Personnel working in office buildings, elementary schools and university classrooms, hospitals and doctors’ offices, theatres, accounting and brokerage firms all belong to this category of services. Like some of the tertiary functions, quaternary activities can also be outsourced. They are not tied to resources, affected by the environment, or necessarily localised by market.

3Structure of Indian Economy

Quinary ActivitiesQuinary activities are services that focus on the creation, re-arrangement and interpretation of new and existing ideas; data interpretation and the use and evaluation of new technologies. Often referred to as ‘gold collar’ professions, they represent another subdivision of the tertiary sector representing special and highly paid skills of senior business executives, government officials, research scientists, financial and legal consultants, etc. Their importance in the structure of advanced economies far outweighs their numbers. The highest level of decision makers or policy makers perform quinary activities.

5. indiCators of dEvElopmEnt

5.1 Major IndicatorsDevelopment is a process and the process is multidimensional. The major indicators to measure the levels of development are:

(i) Net National Product (NNP) is considered a true measure of national output and is defined as GNP minus depreciation, i.e. subtracting the amount of capital which has been consumed in the process of production. NNP is also known as the national income.

(ii) Per Capita Income: A rise in per capita income (in real terms) will always mean a rise in aggregate real output. Hence, the criterion of per capita real income is better than that of national income. But the scope of per capita national income is quite limited. Most of the limitations arise from the numerators e.g. GDP, GNP or NNP.

(iii) The Use of Purchasing Power Parity (PPP): Conversion factors corrects for these differences and may, therefore, provide a better comparison of average income. If we use PPP estimates of GNP per capita, we find that income inequalities between the developed and under developed countries are somewhat lower than those we observe on the basis of exchange rate of conversion factors, the PPP for any country is the ratio of its domestic, currency expenditures to the international price value of its output.

(iv) Physical Quality of Life Index (PQLI): Once a country’s performance in life expectancy, infant mortality and basic literacy was rated on the scale of 1 to 100, the composite index, PQLI, for the country was calculated by averaging the three ratings, giving equal weights to each. These are: (i) Life Expectancy (LE) (ii) Infant Mortality (IM) and (iii) Basic Literacy (BL). Most of the countries with low per capita GNP tend to have a low PQLI while countries with high per capita GNP tend to have a high PQLI, though the correlation between the GNP and PQLI is substantially close. The PQLI had a serious flaw. Infant mortality and life expectancy both referred to the same demographic ground. Moreover, the concept did not include many other aims and objectives of life except longevity and knowledge. So, HDI (Human Development Index) was introduced which incorporated per capita income along with longevity and knowledge.

(v) Human Development Index (HDI): The most recent index of development in use since 1990, is the Human Development Index (HDI), prepared by the UNDP. It is composite of three indicators : (i) Life Expectancy Index (LEI), (ii) Education Attainment Index (EAI); (iii) Standard of Living Index (SLI) i.e. per capita income. The first two indicators are the social indicators. The per capita income, an economic indicator, is used as a proxy measure for satisfaction

derived from a bundle of basic goods and services. The HDI, unlike other indices, which measure absolute levels, ranks countries in relation to each other. For this, current minimum value and the maximum desirable value in respect of each of the three elements of the index are taken note of. In the case of the educational attainment, the minimum and maximum values are 0 per cent and 100 per cent.

(vi) Inequality Adjusted Human development Index: The HDI represents a national average of human development achievements in the three basic dimensions making up the HDI: health, education and income. Like all averages, it conceals disparities in human development across the population within the same country. Two countries with different distributions of achievements can still have the same average HDI value.

The IHDI takes into account not only the average achievements of a country in health, education and income, but also how those achievements are distributed among its population by “discounting” each dimension’s average value according to its level of inequality.

5.2 Gender Development IndexThe GDI measures differences between male and female achievements in three basic dimensions of human development: health, education and command over economic resources. Gender disaggregated data is used in each dimension. The health dimension is captured by female and male life expectancy at birth. Education is measured using two indicators - female and male expected years of schooling for children, and female and male mean years of schooling for adults ages 25 and older. Command over economic resources is measured by female and male estimated earned income.

5.3 Gender Inequality IndexThe GII is an inequality index. It shows the loss in potential human development due to disparity between female and male achievements in three dimensions, reproductive health, empowerment and economic status. Overall, the GII reflects how women are disadvantaged in these dimensions.The GII ranges between 0 and 1. Higher GII values indicate higher inequalities and thus higher loss to human development. There is no country with perfect gender equality. All countries suffer some loss in achievements in key aspects of human development when gender inequality is taken into account.

5.4 UNDP Human Development Report 2018 India Ranks 130 on 2018 Human Development Index• India climbed one spot to 130 out of 189 countries in

the latest human development rankings released 14 September 2018 , by the United Nations Development Programme (UNDP). India’s HDI value for 2017 is 0.640, which put the country in the medium human development category.

• With an HDI value of 0.64 compared to last year’s 0.636, India is categorised as a medium human development and that its rank rose one spot compared to the 2017 HDI.

• Between 1990 and 2017, India’s HDI value increased from 0.427 to 0.640, an increase of nearly 50 percent – and an indicator of the country’s remarkable achievement in lifting millions of people out of poverty.


• At the same time, in what signals the glaring inequality in the country, the HDI value declines by more than a fourth when adjusted for inequality. The value of India’s Inequality-adjusted HDI (IHDI) falls to 0.468, a 26.8 per cent decrease, far worse than the global average decrease in the global HDI value due to inequality at 20 per cent.

• Norway, Switzerland, Australia, Ireland and Germany lead the ranking, while Niger, the Central African Republic, South Sudan, Chad and Burundi have the lowest scores in the HDI’s measurement of national achievements in health, education and income.

• Within South Asia, India’s HDI value is above the average of 0.638 for the region, with Bangladesh and Pakistan, countries with similar population size, being ranked 136 and 150 respectively.

• The overall trend globally is toward continued human development improvements, with many countries moving up through the human development categories: out of the 189 countries for which the HDI is calculated, 59

countries are today in the very high human development group and only 38 countries fall in the low HDI group. Just eight years ago in 2010, the figures were 46 and 49 countries respectively.

• Movements in the HDI are driven by changes in health, education and income. Health has improved considerably as shown by life expectancy at birth, which has increased by almost seven years globally, with Sub-Saharan Africa and South Asia showing the greatest progress, each experiencing increases of about 11 years since 1990. And, today’s school-age children can expect to be in school for 3.4 years longer than those in 1990.

• Between 1990 and 2017, India’s life expectancy at birth too increased by nearly 11 years, with even more significant gains in expected years of schooling. Today’s Indian school-age children can expect to stay in school for 4.7 years longer than in 1990. Whereas, India’s GNI per capita increased by a staggering 266.6 percent between 1990 and 2017.

Since 1990, The Steady ClimbLife expectancy at

birthExpected years of

schoolingMean years of

schoolingGNI per capita

(2011)*HDI value

1990 57.9 7.6 3.0 1733 0.4271995 60.4 8.2 3.5 2015 0.462000 62.6 8.3 4.4 2470 0.4932005 64.6 9.7 4.8 3157 0.5352010 66.6 10.8 5.4 4357 0.5812015 68.3 12.0 6.3 5691 0.6272016 68.6 12.3 6.4 6026 0.6362017 68.8 12.3 6.4 6353 0.64

About Human Development Index (HDI)

• The HDI is the composite measure of every country’s attainment in three basic dimensions: standard of living measured by the gross national income (GNI) per capita, health measured by the life expectancy at birth, and education levels calculated by mean years of education among the adult population and the expected years of schooling for children.

• The Human Development Index (HDI) was developed by Indian Nobel prize winner Amartya Sen and Pakistani economist Mahbub ul Haq, with help from Gustav Ranis of Yale University and Lord Meghnad Desai of the London School of Economics, and was further used to measure the country’s development by the United Nations Development Program (UNDP).

• The index does not take into account several factors, such as the net wealth per capita or the relative quality of goods in a country. This situation tends to lower the ranking for some of the most advanced countries, such as the G7 members and others.

• The index is based on the human development approach, developed by Ul Haq, often framed in terms of whether people are able to “be” and “do” desirable things in life

• The 2010 Human Development Report introduced an Inequality-adjusted Human Development Index (IHDI).• The HDI covers 189 countries and territories. Marshall Islands is a new addition.

The human development composite indices include:• The Human Development Index, calculated this year for 189 countries, ranks countries according to their progress in key

dimensions of human development – health, education and income;• Trends in the Human Development Index, which highlights changes in the HDI over a period ranging from 1990 to 2017,

showing which countries have improved more and which ones have suffered setbacks in human development while allowing for the analysis of long-term trends;

• The Inequality-Adjusted Human Development Index, calculated for 151 countries, captures which countries are most and least unequal in terms of the distribution of health, education and income gains among their populations;

• The Gender Development Index, which showcases gaps in human development achievements between men and women for 164 countries, and the Gender Inequality Index, which captures gender-based inequalities for 160 countries in health, empowerment, and economic status;

• The Multidimensional Poverty Index, which looks at poverty going beyond income, is included in the 2018 Statistical Update launched on 20 September 2018.


Disparities between and within Countries Continue to Stifle ProgressAverage HDI levels have risen significantly since 1990 – 22 percent globally and 51 percent in least developed countries – reflecting that on average people are living longer, are more educated and have greater income. But there remain massive differences across the world in people’s well-being.

A child born today in Norway, the country with the highest HDI, can expect to live beyond 82 years old and spend almost 18 years in school. While a child born in Niger, the country with the lowest HDI, can expect only to live to 60 and spend just five years in school. Such striking differences can be seen again and again.

A closer look at the HDI’s components sheds light on the unequal distribution of outcomes in education, life expectancy and income within countries. The Inequality-Adjusted Human Development Index (IHDI) allows one to compare levels of inequality within countries, and the greater the inequality, the more a country’s HDI falls.

While significant inequality occurs in many countries, including in some of the wealthiest ones, on average it takes a bigger toll on countries with lower human development levels. Low and medium human development countries lose respectively 31 and 25 percent of their human development level from inequality, while for very high human development countries, the average loss is 11 percent.

26.8 percent of India’s HDI value is lost on account of inequalities -- a greater loss than for most of its South Asian neighbours (the average loss for the region is 26.1 percent). This confirms that inequality remains a challenge for India as it progresses economically, though the Government of India and various state governments have, through a variety of social protection measures, attempted to ensure that the gains of economic development are shared widely and reach the farthest first.

Gender Gaps in Early Years are Closing, but Inequalities Persist in AdulthoodOne key source of inequality within countries is the gap in opportunities, achievements and empowerment between women and men. Worldwide the average HDI for women is six percent lower than for men, due to women’s lower income and educational attainment in many countries.

Although there has been laudable progress in the number of girls attending school, there remain big differences between other key aspects of men and women’s lives. Women’s empowerment remains a particular challenge.

Global labour force participation rates for women are lower than for men – 49 percent versus 75 percent. And when

women are in the labour market, their unemployment rates are 24 percent higher than their male counterparts. Women globally also do much more unpaid domestic and care work than men.

Overall, women’s share of parliamentary seats remains low although it varies across regions, from 17.5 and 18 percent in South Asia and the Arab States, respectively; to 29 percent in Latin America and Caribbean and OECD countries. Violence against women affects all societies, and in some regions childhood marriage and high adolescence birth rates undermine the opportunities for many young women and girls. In South Asia, 29 percent of women between the ages of 20 and 24 were married before their 18th birthday.

These challenges are also evident in India, where despite considerable progress at the policy and legislative levels, women remain significantly less politically, economically and socially empowered than men.• In India,women hold only 11.6 percent of parliamentary seats.• Only 39 percent of adult women have reached at least a

secondary level of education as compared to 64 percent males.

• Female participation in the labour market is 27.2 percent compared to 78.8 for men.

• Still, India performs better than its neighbours Bangladesh and Pakistan, ranking 127 out 160 countries on the Gender Inequality Index.

Looking Beyond the HDI at the Quality of DevelopmentThere is tremendous variation between countries in the quality of education, healthcare and many other key aspects of life.In Sub-Saharan Africa there are on average 39 primary school pupils per teacher, followed by South Asia with 35 pupils per teacher. But in OECD countries, East Asia and the Pacific, and Europe and Central Asia there is an average of one teacher for every 16-18 primary school pupils. And, while in OECD countries and East Asia and the Pacific there are on average 29 and 28 physicians for every 10,000 people respectively, in South Asia there are only eight, and in Sub-Saharan Africa not even two.

Key Regional Development Trends, as Shown by the HDI and other Human Development IndicesSouth Asia: South Asia experienced the fastest HDI growth among developing regions with a 45.3 percent increase since 1990. During that period, life expectancy grew by 10.8 years, as did expected years of schooling for children (by 21 percent). The loss in HDI due to inequalities is about 26 percent. South Asia has the widest gap between men and women in HDI at 16.3 percent.


Calculating the human development indices—graphical presentation

of skills. It then calculates the true estimate of a country’s wealth taking into account all such resources which do not always show up on traditional economic indicators.

5.6 Gross National Income (GNI)It is the broadest measure of national income; it measures total value-added from domestic and foreign sources claimed by residents. GNI comprises Gross Domestic Product (GDP) plus net receipts of primary income from foreign sources.

5.7 Gross National Happiness (GNH)Gross National Happiness is a term coined by His Majesty the Fourth King of Bhutan, Jigme Singye Wangchuck in the 1970s. The concept implies that sustainable development should take a holistic approach towards notions of progress and give equal importance to non-economic aspects of wellbeing.

The concept of GNH has often been explained by its four pillars: good governance, sustainable socio-economic development, cultural preservation, and environmental conservation. Lately the four pillars have been further classified into nine domains in order to create widespread understanding of GNH and to reflect the holistic range of GNH values.

Q. Consider the following statements: Human capital formation as a concept is better explained in terms of a process, which enables:1. individuals of a country to accumulate more capital.2. increasing the knowledge, skill levels and capacities of

the people of the country.3. accumulation of tangible wealth.4. accumulation of intangible wealth.

Which of the statements given above is/are correct?(a) 1 and 2 (b) 2 only(c) 2 and 4 (d) 1, 3 and 4

(UPSC 2018)

5.5 Green IndexThe World Bank’s environmentally sustainable development division has developed a new index called Green Index. This new indicator attaches a dollar value to each of the three components, viz. (i) produced assets, (ii) natural resources, and (iii) human resources. It puts a price tag on produced assets, the sum of all machinery, factories, roads, and other infrastructure. It assigns economic value to land, water, timber, minerals and all the natural resources. It looks at the available human resources, the education level, and the range

The dimensions, indicators, deprivation thresholds and weights of the MPI2

Dimension Indicator Deprived if… Relative Weight

EducationYears of Schooling No household member has completed five years of schooling 1/6Child School Attendence Any school-aged child is not attending school up to the age at which they

would complete class 8.1/6

HealthChild Mortality Any child has died in the household. 1/6Nutrition Any adult or child for whom there is nutritional information is mainourished. 1/6

Living Standard

Electricity The household has no electricity. 1/18Improved Sanitation The household’s sanitation facility is not improved (according to MDG

guidelines), or it is improved but shared with other households.1/18

Safe Drinking Water The household does not have access to safe drinking water (according to MDG – guidelines) or safe drinking water is more than a 30-minute walk from home, roundtrip.

1/18

Flooring The household has a dirt, sand or dung floor. 1/18Cooking Fuel The household cooks with dung, wood or charcoal. 1/18Assets The household does not own more than one radio, TV, telephone, bike,

motorbike or refrigerator and does not own a car or truck.1/18


5.8 Green EconomyGreen Economy promotes a triple bottom line: sustaining and advancing economic, environmental and social well-being.Prevailing economic growth model is focused on increasing GDP above all other goals. While this system has improved incomes and reduced poverty for hundreds of millions, it comes with significant and potentially irreversible social, environmental and economic costs.A “market economy” alone cannot provide public goods, like efficient electricity grids, sanitation or public transportation. And economic policy is often shaped by those who wield power, with strong vested interests, and rarely captures the voice and perspectives of those most at risk.A Green Economy attempts to remedy these problems through a variety of institutional reforms and regulatory, tax, and expenditure-based economic policies and tools.

What does a Green Economy look like?The transition to a Green Economy has a long way to go, but several countries are demonstrating leadership by adopting national “green growth” or “low carbon” economic strategies. And there are many examples of successful, large-scale programs that increase growth or productivity and do so in a sustainable manner1. The Republic of Korea has adopted a national strategy and

a five-year plan for green growth for the period 2009–2013, allocating 2 per cent of its gross domestic product to investment in several green sectors such as renewable energy, energy efficiency, clean technology and water. The government has also launched the Global Green Growth Institute which aims to

help countries (especially developing countries) develop green growth strategies.

2. In Mexico City, crippling congestion led to a major effort to promote Bus Rapid Transit (BRT), a sophisticated bus system that uses dedicated lanes on city streets. Significant public investment in the BRT has reduced commuting times and air pollution and improved access to public transit for those less able to afford private cars. This remarkable success is now being replicated in cities across Mexico and has led to investment from the federal government in urban public transit for the first time.

3. China now invests more than any other country in renewable energy. Its total installed wind capacity grew 64 percent in 2010. This growth is driven by a national policy that sees clean energy as a major market in the near future, and one in which China wants to gain a competitive edge.

4. Namibia is managing its natural resources to generate economic, social, and environmental benefits. Local communities across the country are granted the right to use and capitalize on the benefits of using wildlife and other natural resources within the boundaries of “communal conservancies.”

With an economic incentive to sustainably manage these areas, food and employment is being provided for hundreds of thousands of Namibians in rural areas. More than half of the jobs are filled by women, and wildlife populations have increased.

Businesses are increasingly leading progress toward a Green Economy. For example, the carpet company Interface FLOR is improving its competitive positioning in this normally petroleum-intensive industry by focusing on how sustainability can enhance its business model.

EnvironmentDiversity


Following steps would help create a more level playing field in policy-making: Increase public awareness and the case for change. Greater

visibility on the need for this transition can motivate voters and consumers - not just because of the costs but also the economic benefits generated by a Green Economy, such as new jobs and new markets. People will not adopt policies because they are green. They will do so when they believe it is in their interest.

Promote new indicators that complement GDP. Planning agencies and finance ministries should adopt a more diverse

and representative set of economic indicators that focus less exclusively on growth and track the pace and progress of development.

Open up government decision-making processes to the public and civil society. This would help ensure policies are accountable to the public and not to vested and well-connected interests.

Identify and take advantage of political leadership when available as this will be crucial in order to limit the undue influence of “dirty” economic holdouts.

Self–Evaluation Test1. Which of the following statements best describes the

‘Environmental Kuznets Curve’?(a) There is a direct relationship between environmental

quality and economic development.(b) There is a direct relationship between pollution level

and the population of a city.(c) The inverse relationship between pollution level and

surrounding temperature.(d) There is an inverted-U-shaped relationship between

pollutants and per capita income. 2. Since independence, India’s economic development has

been guided by the twin objectives of developing: 1. A rapidly and technologically progressive economy by

democratic means. 2. A social order based on justice, offering equal opportu-

nity to every citizen of the country. Which of the above stated objectives is/are correct?

(a) Only 1 (b) Only 2(c) Both (d) None

3. World Bank classifies economies on the basis of which of the following parameter?

(a) GDP(b) Per Capita Income(c) GNI(d) Purchasing Power Parity

4. Which of the following statements related to the concept of Economic Growth is/are correct?1. Economic Growth is essential but not the only condition

for economic development.2. Economic growth is qualitative concept.

Select the correct answer using the codes given below:(a) 1 only (b) 2 only(c) Both (d) None

5. Which of the following parameters are used for calculation of Physical Quality of Life Index?1. Life expectancy2. Infant mortality3. GDP

Select the correct answer using the codes given below:(a) 1 and 2 (b) 2 and 3(c) 1 only (d) All

ANSWERS

1. (d) 2. (c) 3. (c) 4. (a) 5. (a)


Documents

Economic and Social Development · 2019-09-14 · 2.2 Sansad Adarsh Gram Yojana (SAGY) 117 2.3 (National Children’s Fund)National Rural Drinking Water Programme 117 2.4 Swatch Bharat