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SECTION – A
1. Meaning of Business Environment.
Business environment may be defined as the set of external factor such as the
economic factors socio – cultural factors, government and legal factors, demographic factors,
geophysical factors, which are. Uncontrollable in nature and affects the business decision of a
firma company.
2. Define business environment.
An organizations external environment consists of those things outside an
organization such as customers, competitors, government units, suppliers, financial firm and
labor pools that are relevant to an organizations operation – Gerald Bell.
3. What is meant by suppliers?
Suppliers are the persons who supply the inputs like raw material and components to
the business.
4. What do you mean by labor?
In big organization were hundreds of workers are employed. The labor Force is
organized in the form of trade unions. The Trade union interest with the management for
higher wages and bonus, better working conditions etc. They press the management for the
fulfillment of their demands and even resort to go slow traits strikes, Gherao.
5. Define Economic Environment .
“Improvements in the national business environment and company upgrading are
inextricably intertwined. A national business environment with improving infrastructure and
more advance to institutions faster more sophisticated strategies by companies” – Michael
porter.
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6. What is the Techniques for Environment Analysis?
Techniques for Environmental analysis refer to the methods of gathering the relavent
information for appraising the environment.
William F. Glueck mentions the following Techniques:
Verbal and Written information
Search and Scanning
Spying
Forecasting and formal studies.
7. Define environment of Business.
“A company‟s micro environments consists of elements that directly affect the
company such as competitors, customers and suppliers”.
-Charles Hill and Gareth Jones
8. Define Macro Environment of Business.
“The Macro environments consists of the broader economic social, demographic,
political, legal and technological setting within which the Industry and the company are
placed” -Hill and Jones.
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SECTION – B
1. Describe about the various types of competitions.
i. Describe competition:
Every consumer has a limited income and he can‟t fulfill all his descries with this
income. Either he can buy a T.V or a refrigerator or a washing machine or he can invest his
money in the various investment schemes. The competition among these desires in termed as
desire competition.
ii. Generic competition:
The competition among alternatives which satisfy a particular category of desire is
called generic competition. For ex: if particular person wants to invest his money, he has got
various alternatives. He can invest his money with the unit Trust of India, with the post
office with the banks or he can purchase the shares or debentures of a company, in this case,
the competition among various investment schemes is called generic competition.
iii. Product competition:
In this type of competition, the consumer has to choose between different forms of the
product. For ex, if the consumer decides to go in for a washing machine and etc., and semi
automatic and fully automatic.
iv. Brand competition:
Finally the consumer encounters the brand competition i.e., the competition between
different brands of the same product.
For Ex: if the consumer decides to buy a fully automatic washing machine.
2. What are the limitations of environmental Analysis.
i. Unexpected and unanticipated events.
Environmental Analysis can neither foretell all future not can it eliminate uncertainty
for the organization. Business enterprises sometime confront events which are unexpected or
events which could not be anticipated during analysis. Environmental study should however
try to reduce the frequency and extent of surprises that may confront a company.
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ii. Not a sufficient guarantor:
Environmental analysis in itself is not a sufficient guarantor of organisational
effectiveness. It is only one of the inputs in the strategy development and testing.
iii. Uncritical faith:
Sometimes the businessmen put blind and uncritical faith in the data without verifying
its accuracy. But this is not a drawbacks of the analysis but of the way its practice.
iv. Too much information:
Too much information is collected through environmental scanning. When there is
overloading of information, one is likely to get confused and lost.
v. Overcarstious approach:
Success lies in adventure, It excludes those who hesitate to step forward.
Environmental analysis of tern makes an individual too cautious in this approach and he is
likely to be overtaken by events.
3. Write a short notes on
(a) Suppliers (b) customers (c) labour (d)Business associates
(e) competitors.
(a) Suppliers:
Suppliers are the important force in the task environment of a business. Suppliers are
the persons who supply the inputs like materials and components to the business.
(b) customers:
On the micro environment of business, customers have direct impact.
A company may have different categories of customers viz.
(i) Industrial Customers
(ii) Retailers Customers
(iii) Wholesalers Customers
(iv) Government Bodies Customers
(v) Foreign Customers etc………
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To succeed in capturing customers, a business must try its best to know what people
want and will buy.
The consumer acceptance impose a constant challenges because non economic factors
in the environment such as attitudes, and expectation of people influence consumer behavior.
c. Labour:
In big organization where hundreds of workers are employed, the labour force is
organised in the form of trade unions. The trade unions interact with the management for
higher wages and bonus, better working conditions etc…. They pressurise the management
for the fulfilment of their demands and even resort to go slow tractics strikes, Gherao.
d. Business Associates:
The existence of business allies offer strength to an organization. It is easier to borrow
capital from the business associated during the period of emergency. Similarly, arrangements
with business associated could be entered into for the supply of raw materials or for the role
of finished products.
e. Competitors
Competitors play a vital role in running the business enterprise. Business has to
adjust its various business activities according to the behaviour of the competitors.
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SECTION – C
1. Describe about the macro environment of business.
Define macro Environment:
“The macro environment consists of the broader economic, social, demographic
political, legal and technological setting within which the industry and the company are
place”.
The important external factors that affect the economic environment of a business:
Economic conditions:
The general economic conditions prevailing in the country viz. national income, per
capital income, economic resource, distribution of income and assets economic development
etc… are important determinants of the business strategies.
Economic System:
The economic system operating in the country also affects the business enterprise to a
very grade extent. The economic system of a country may be capitalist, socialist, communist
or mixed.
Economic policies:
(a) Budgets
(b) Industrial regulations
(c) Economic planning
(d) Import & Export regulations
(e) Business laws
(f) Industiral policy
(g) Control prices and wages
(h) Trade and transport policies
(i) The size of the national income
(j) Demand & supply of various goods etc….
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Economic growth:
The stage of economic growth of the economic has direct impact on the business
strategies. Increased economic growth rate and increased in consumption expenditure,
lowers the general preasure within and industry and offers more opportunities than threats.
Interest Rates:
The Rate of interest affects the demand for the products in the economy, particularly
when general goods are to be purchased through borrowed finance. Low interest rates
provide opportunities to the industries to expand whereas rising interest rates pose a threat to
these institution. More ever, lower rates can enable the companies to adopt ambitious
strategies with borrowed funds.
i. Currency Exchange Rates:
Current exchange rates have direct impact on the business environment. When the
rupee was devalued in 1991, it was to make Indian Products cheaper in the world market and
consequently book India‟s exports that was opportunity for Indian exporter.
ii. Political and government Environment:
Political environment refers to the influence exceed by the three political institutions:
The Legislature decides on a particular course of action. Government is the executive
and its job is to implement whatever was decided by parliament. The judiciary has to ensure
that Both the Legislature and executive function in public interest and within the boundaries
of constitution.
Legal and Political environment provides a frame works within which the business is
to function and its existence depends and the success with which it can face the various
challenges constructed out of political and legal frame work.
iii. Socio – Cultural Environment:
Socio – Cultural environment is very comprehensive because it may include the total
social factors within a society socio-cultural factors include – peoples attitude to works and
health role of family, marriage, religion and education, ethical issues, Social responsibility of
business etc.,
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iv. Natural Environment:
In natural environment we include geographical and ecological factors. Both these
factors are relavent to business.
These factors include the following
(i) Natural resources endowments
(ii) Weather & climate condition
(iii) Topographical factors
(iv) Location aspects
(v) Port facilities etc……
Almost every aspect of business depends upon natural environments for example:
Manufacturing depends on physical inputs
Mining and drilling depend on natural deposits.
Agriculture depends on nature
Trade between two regions depends geographical factors.
v. Demographic Environment:
Demographic factors include:
(i) Size, growth rate, age composition, sex composition etc.
(ii) Family size
(iii) Economic satisfaction of population
(iv) Educational level
(v) Caste, religion etc.
All these demographic factors are relevant to business. These factors affect the demand
for goods and services. Markets with growing population and income are growth markets
because a rapidly increasing population indicated a growing demand for many products.
vi. Technological environment
In order to survive in today‟s competitive world, a business has to adopt technological
changes from time to time constant innovation is essential because of every business is to
create a customer and therefore every business enterprise has two basic functions etc…
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(a) Marketing (b) innovation
Technological environment also includes research base of decisions. Research
identities the consumer needs and provides information for target setting and
programming the complete marketing effort.
vii. International Environment:
Another environmental factor which is fast emerging as the force to reckon
with is the international environment
Implications of global or international environment are as flay:
(i) Due to liberalisation, Indian companies are force to view business issues from
the global perspective
(ii) Safe and protected markets are no longer these world is becoming small in
size due to advance means of transport and communication facilities.
(iii) Learning of foreign languages is a must for every business manger.
(iv) Acquiring familiarity with foreign currencies is also a must
(v) Faring political and local uncertainties is inevitable.
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SECTION-A
1.) Define National Income.
"A National Income measures the volume of commodities and services turned out
during a given period of time counted without duplication"-National Income committee
report.
2.) What do you mean by National Income?
An estimate of national income is a measure of the total output of commodities and
services during a given period, reckoned without duplication. National income trends
particularly the changes in gross or net national product, Per capita gross or net national
product and sectorial distribution of gross or net domestic product reflect the progress of the
economy.
3.) What do you mean by Savings in INDIA?
Savings is that part of income which is not consumed rather is kept for further
generation of income or for future use. Savings is a function of income and rate of interest.
Savings are directly linked with income.
4.) Define Savings.
"The excess of current income over current expenditure and is the balancing item on
the income and outlay accounts of producing enterprises and households, government
administration and other final consumers".-CSO
5.) What are the factors affecting the Savings?
(i) Objective factors
(ii) Subjective factors
6.) Mention any two reasons for low rate of savings.
(i) Low per capita income
(ii) Price level
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7.) Mention any two determinants of Investment.
(i) Rate of return
(ii) Government policies
8.) Define Industry.
"Industrial development plays a crucial role in our development strategy particularly
with regard to the objectives of structural diversification, modernisation and self reliance".-
Planning commission
9.) What are the two problem in Industrial Development in India?
(i) Poor capital formation
(ii) Regional Imbalances
10.) What is foreign trade?
During the Pre-British period, India was famous for foreign trade. Indian merchants
used to export various types of manufactured articles particularly textiles and handicrafts
which has been famous world wide.
11.) What is mean by Balance f payment?
Balance of payment is a system record of all economic transactions is a period
between one country and rest of the world. It also shows the relationship between one
countries an its total receipts from them.
12.) Define "Balance of Payment".
"A systematic record of all economic transactions between the residents of the
reporting country and foreign countries during a given period of time".-Kindle Berger
13.) Define "Money".
"Anything which is videly accepted payment for goods or in discourage of other kinds
of business obligations is called money".-D.H.Robertson
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14.) What are the structure of Indian's financial system?
(i) Industrial finance
(ii) Agricultural finance
(iii) Development finance
(iv) Government finance
15.) Define "Money market".
Money market is the collective name given to the various forms and the institutions
that deal with the various grades of hear money".-Geoffrey Growther
16.) How many types for the Inflation?
(i) Demand-pull Inflation
(ii) Cost push Inflation
17.) What is mean by capital market?
The capital market is an organised market which comprises sources of long term
finance for the industry and Government. Indian capital market is one of the largest capital
markets in the world.
18.) What do you understand by investment?
Investment simply means that part of capital which is being used for the generation of
further income. It includes,
(i)Buying stocks and shares of existing/old companies
(ii) Buying new machines, new factory, infrastructure, floating new company etc.,
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SECTION-B
1.) Analyse the estimates of domestic Savings in India.
(a) Household
(b) Private
(c) Public
(a) Household
The savings of household sector is measured by (i) Total financial savings and (ii)
Saving in the form of physical assets. The financial saving involves possession of currency,
net deposits, investment in shares and debentures, net claims on government in the form of
central and State Government securities and small savings, net increase in life insurance and
provident funds.
(b) Private
Private sector companies non-government financial companies, private financial of
institutions and co-operative institutions. The basic data for the non-government, non-
financial corporate enterprises are obtained from the analysis of balance sheets and profit and
loss account of the companies.
(c) Public
Public sector comprises government administrative department and enterprises both
departmental and non-departmental. The net savings of the government companies and
statutory corporations are estimated from the result of the analysis of their annual accounts.
2) What are the characteristics of money market?
(i) Money market is Just like any other market, it also has buyers and sellers in the
form of borrowers and lenders of money.
(ii) For every market, it is essential that it must deal with some commodity. Money
market also deals in a commodity.
(iii) The price in the money market is in the form of rate of interest which the
borrower has to pay to the lender.
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(iv) The dealers in the money market are the borrowers and the lenders. The buyers
borrowers are the public, business enterprises and the Government. The sellers or lenders are
the Reserve bank, different types of organised and unorganised for the financial institutions.
(v) The money market deals with short term loans only. The period of credit can
between one day to one year only. The capital market deals in medium and long term loans.
(vi) The money market, unlike the other markets is not located at a particular place.
The negotiations can be carried through Telephone letters, fax machines or internet also. The
borrowers and lenders need not assemble at a particular place.
3) Discuss the role of capital market in the growth of an economy.
(i) Financing of five year plans
(ii) Industiral growth
(iii) Long term capital
(iv) Ready and continuo‟s market
(v) Proper channelisation of funds
(vi) Provision of services
(i) Financing of five year plans
In India, ever since the beginning of the second Five year plan, the government
securities gave continuously gained in importance as the government had to depend on this
measures to raise of financing public sector projects.
(ii) Industrial growth
Capital market stimulate industrial growth on economic development of the country
by mobilizing funds for investment in the corporate securities. Capital market encourages
people to invest in productive channels rather then in the unproductive sectors like real estate,
bullion etc.
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(iii) Long term capital
The existence of a well established capital market enables companies to raise
permanent and long term capital. The investors cannot commit their funds for a permanent
period but companies require funds permanently.
(iv) Ready and continous market
The capital market provides a central convenient place where buyers and sellers can
easily purchase and sell securities. The element of easy marketability makes investment in
securities more liquid as compared to other assets.
(v) Proper channelization of funds
The guiding factors for the people to channelise their funds in a company are
prevailing market price of the security and relative yield capital market ensures effective
utilisation of funds in the public interest.
(vi) Provision of services
(a) Provision of underwriting facilities
(b) Participation in equity capital
(c) Expert advice on management of investment in industrial securities.
(4) Explain the types of Inflation.
(i) Demand-pull Inflation
(ii) Cost push Inflation
(i) Demand-pull Inflation
It is a situation when the demand for goods and services exceeds the supply at current
prices. The factors responsible for demand pull inflation are high rate of growth of
population, deficit financing, accumulation of black money and mounting government
expenditure.
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(ii) Cost push Inflation
Cost push inflation is also known as wage-push inflation, profit induced inflation cost
or supply inflation or supply shocked for inflation. Factors responsible for this type of
inflation are fluctuations in the production, of increased rate of taxes, increase in goods and
services produced by public sector, rise in global prices of credit oil since 1973.
5) What are the constituents of Indian capital market?
(i) The gilt edged market
(ii) The industrial securities market
(i) The gilt edged market
The gilt edged market is backed by the RBI for marketing the government and semi-
government securities. Since the government cannot default on its payment obligations, the
securities are risk free and hence are known as gilt edged which means, of best quality.
(ii) Industrial securities market
Industrial securities market is a market were securities issued by companies i.e. share,
bonds and debentures can be bought and sold freely. It consists of new issues market and the
market for old or already issue securities.
Primary market or New issues market
The new issue market has a primary role to play in mobilizing the savings of the
industrial investors and the industrial for investors. The forms in which these claims are
incurred are equity shares, preference shares, debentures, bonds, public deposits, right shares
etc.,
All individuals and the financial institutions the capital market are part of the new
issues market.
6) Analyse the development of Indian capital market since independence.
The capital market is an organized market which comprises sources of long term
finance for the industry and government. Indian capital market is one of the largest capital
markets in the world.
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The demand for the funds comes from the following:-
(i) Private sector manufacturing industries
(ii) Agricultural sector
(iii) Government both central and state, need support from the capital market
for infrastructural and industrial development of the country.
In a capital market, the supply of funds come from the individual savers, corporate
savings, various banks, insurance companies, specialized financial agencies and also the
Government.
The following are some of the institutitons supplying funds to the capital market:
(i) Commercial banks are very important for investors, which are interested in
government securities and to a small extent debentures of companies.
(ii) Insurance companies like LIC and GIC are of growing importance, though their
major interest is still in government securities.
(iii) Provident funds of employees constitute a major volume of savings but their
investment are also mostly restricted to government securities.
(iv) Various special institutions viz, the IFCI, ICICI, IDBI, UTI etc., setup since
independence are giving long term capital to the private sector of the economy.
7) What are the various factors reasonable for the gap between the actual and desired
rate investment in India?
(i) Inadequate increase in the rate of living
(ii) Poor performance of public enterprises
(iii) Faulty economy planning
(iv) Inadequate and detective resource mobilization
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(i) Inadequate increase in the rate of living
The rate of household saving on India failed to increase at a desired rate. This is the
major constraint on the path of the investment activity in the country. The position in the
public sector is also not very encouraging.
(ii) Poor performance of public enterprises
Ever since the inception of planning in India, a huge amount has been invested in the
various public enterprises with the intention that they will generate large surpluses regularly
which will again be ploughed back for future investment.
(iii) Faulty economic planning
Economic planning our country was supposed to be consistent a per the planning
commission. However, it has been observed that various sectors of our economy could not
attain balanced development and their under development become a serious hurdle to the
development of other developed sectors.
(iv) Inadequate and detective resource mobilization
Although about 70 to 80% of the total domestic saving is realized from the household
sector, but proper steps have not been taken to mobilize this large amount of savings for
further investment.
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SECTION-C
1) What are the types of Factors Affecting the savings?
There are two types of factors which affecting the savings:
(i) Subjective Factors
(ii) Objective Factors
(I) Subjective factors
Subjective factors are linked with psychological tendencies. Social behavior and
institutions of human beings. These factors are again of two types,
(A) Individual factors
(B) Business factors
(A) Individual factors
Individual factor are those which the consumer to consume less and save more.
(i) Unforeseen emergencies
It is quite clear that future is always uncertain. Savings will be more if people are
more concerned about present and vice versa.
(ii) Enlarged future Income
People consume less and save more with a view that do not invest their savings and
earn more wealth. They may lend it with a view to earn interest and appreciation.
(iii) Economic Independence
Some people save more with a view that do not depend on others as far as financial
matters are related. As a result savings will increase.
(iv) Miserly by Nature
If people are miserly savings will be more because misers do not rather never prefer
expenditure to savings.
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(v) Status in society
Since only the wealth of a person determines the standard, therefore there is a
tendency that if people are more conscious about status they will save more.
(vi) Occupational motive
When people start new occupations they have tendencies to save more in order to
meet future occupation demand and uncertainties.
(B) Business factors
It is not only Individuals but business institutions too who wish to save more.
The factors affecting savings are:
(i) Expansion of business
Firms with a view to expand their business save more and add capital with a view to
invest.
(ii) Preference for liquidity
With a view to meet future emergencies, firms prefer to hold cash.
(iii) Successful management
A good management is that which can face and crises with the help of its own
resources. These managers always keep large reserves with them.
(II) Objective factors
(i) Wages
If wage level is high savings will be more and vice versa because as wages increases
people always have tendency to save more.
(ii) Changes in money income
With the increase in income after meeting basic needs people save out of their
increased income.
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(iii) Windfall Gains and losses
Propensity to save is also affected by windfall gains and losses. If gain are there
savings will be high and if losses take place savings will be less.
(iv) Changes in the distribution of income
If distribution of income is favorable i.e riches are getting more, savings will be high
and if less. Because marginal propensity to consume of poor people is always high the reason
is that most of their demands are not fulfilled earlier.
(v) Changes in expectations
If there are chances of break of way in this savings will be less because of shortage of
Goods and higher demand prices will become high.
(vi) Change in rate of interest
If rate of interest increases savings will also increase and vice versa.
(vii) Social security
With a view to secure life most of the people contribute a part of their income towards
provident fund or towards payment of insurance premium.
2) Discuss the various measures to raise the level of savings on the country.
(i) Conspicuous consumption should be discouraged in the country. Production of
unnecessary durable goods for which large demand exist in the country should be restricted.
(ii) People should be encouraged to save more. For this exemption limit of savings for
the income tax purposes should be raised.
(iii) Experience shows that inflation erodes both ability and willingness on the part of
households to save. Inflationary price rise has, therefore, to be kept within reasonable limits.
(2) The private corporate sector
(i) Reasonable restrictions must be to impossed on the expenditure of company
directors and high executives.
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(ii) At present the salaries and perquisites of company officials are very high.
(iii) Declaration and disbursements of exborbitant amounts of dividends by the
companies must be controlled by the state.
(3) The public sector
(i) The government should bring agricultural income tax with the increasing
commercialization of agriculture, there is no justification for exempting agriculture income
from tax.
(ii) Luxury articles of consumption should be taxed heavily. Affluent people, in any
case, will buy them.
(iii) Loopholes in the tax collection system must be plugged to check wide spread
taxation.
(iv) Expenditure on unproductive activities in government departments should be
checked.
(v) Efficiency of public undertakings must be to enable them to increase their profits.
(vi) There should be full utilization of productive capacities of individual units in the
public sector. For this suitable measures should be raised to enable shortages of raw
materials, power etc.,
(vii) A rational administered price policy should be evolved. It can help in raising
surpluses of the public sector enterprises and eliminate losses in some cases.
3) Analyse the importance of industries in Economic development of the country.
1. Fullest utilization of natural resources
2. Balanced development
3. Increase in productivity
4. Increased capital formation
5. Increase in national income
6. Better standard of living
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7. Export promotion
8. Important substitutions
9. Economic stability
10. Support to agriculture
1.) Fullest utilization of natural resources
In a country like India where the natural resources are available in abundance the
development of industries makes possible the utilization of these resources to the fullest
possible extent.
2.) Balanced development
Indian economy has been unbalanced from the very beginning because of too much
dependence on agriculture major portion of our population as well as capital are employed in
agriculture, which is dependent on uncertain factors.
3.) Increase in productivity
Nature plays a dominant role in agriculture where as human beings control the
industries. As the rate of industrialisation economies of scale and inter industrial linkages also
increase which lead to increase productivity.
4.) Increased in capital formation
Growth of industries in a country of increases in the rate and volume of capital
formation. Capital formation is very important in the economic development of a countryand
it depend upon savings and investment.
5.) Increase in national income
Industries contribute a good portion of the total national income of a country. As a
consequence of industrialization the level of national income and per capita income grow at a
very satisfactory rate.
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6.) Better standard of living
Industrial development leads to increase in per capita income, as well as employment.
People get more purchasing power to industrial products to lead a better and comfortable life.
All these goods produced by industries. Thus, industrial development helps the people in
improving their standard of living.
7.) Export promotion
Industrial development is a pre-condition of export promotion. By producing low cost
products, the industrial sector can diversify the market of their products in different countries
and thereby can promote foreign trade.
8.) Important substitutions
Industrialization of the economy helps the nation in attaining self-reliance. Production
of various important goods and successful implementation of import substitution measures
have helped the country to minimise its dependence of foreign imports.
9.) Economic stability
Industrial development imparts stability to the economy of a country. An agricultural
economy is always unstable because of excessive dependence on nature. Possibilities of
fluctuations are very remote.
10.) Support to agriculture
(i) Surplus labour from agriculture can shift to industries. Thus, the problem of
unemployment as well as hidden employment will be solved.
(ii) Important agricultural tools, equipments etc., are produced and marketed by the
industrial sector of the economy.
(iii) Agro-based industries like jute, cotton, tea, sugar etc., get their raw materials
from agriculture and thereby provide ready market for the agriculture produce.
(iv) Industries have played an important role in attaining green revaluation in
agriculture.
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4) What are the major determinants of investments?
I. Rate of interest
II. Marginal Efficiency of Capital (MEC)
III. Innovations and technological advance
IV. Government policies
V. Present capital stock
VI. Maintenance and operation costs
VII. Expected competition
VIII. Population growth
IX. Territorial expansion
X. Degree of liquidity
I.) Rate of interest
Rate of interest is a reward for parting with liquidity. Higher the liquidity preference
higher will be the rate of interest. Because at higher rate of interest people will be ready to
part with more cash.
II.) Marginal Efficiency of Capital (MEC)
MEC simply means the expected rate of profitability or the expected rate of return
over cost from the employment of an additional unit of an asset over its entire life span.
III.) Innovations and technological advance
New innovations and advancement also lead to high investment. Because new
innovation and technology upgrading results into less per unit cost as a result profits
increases.
IV.) Government policies
Government policy also affects the investment pattern of an economy e.g. if
Government uses liberal policies it will lead to more investment and also if some special
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types of incentives are being given to entrepreneur who invest new goods and commodities
and come in the market and also take risk, investment will increase.
V.) Present capital stock
If the present capital stock is large and quite enough no investor will try to invest
more to increase his capital stock. On the contrary if the capital stock presently is low, it will
give more investment opportunities.
VI.) Maintenance and operation costs
If a particular investor feels that maintenance and operation costs are high they will
not be ready to make more investments because their profits will decrease and if it is low
even low capacity of investors will come in the front because they won't have the fear of high
maintenance charges.
VII.) Expected competition
In case of monopoly there is no fear of competition. Therefore the investment will be
high and on the contrary if competition fear takes place investment will become less.
VIII.) Population growth
A population increases, demand for goods and services increase because the present
stock of goods becomes insufficient to meet the present increased demand. That is why new
and more investments take place.
IX.) Territorial expansion
With the development of new territories new investment will take place.
X.) Degree of liquidity
The most important thing required for investment is capital or money, If need for cash
is less, investment will be high and vice versa.
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SECTION-A
1.What is meant by Unemployment?
Unemployment is a serious problem which under developed countries like India are
facing today. unemployment indicates a situation where the total number of job job vacancies
are much less than total number of job seekers in the country.
2.Define Unemployment
"A man is unemployment only when he is both without a job or not employed and
also desires to be employed".- Pigou
3.What are the types of unemployment?
i. Frictional unemployment
ii. structural unemployment
iii. seasonal unemployment
iv. Unemployment due to demand deficiency
v. Voluntary and involuntary unemployment
vi. Disguised unemployment
4.What is meant by "Poverty"?
Poverty is one of the major problems which India has been suffering from since long.
There is no common definition of poverty which can be accepted all over the world.
5.What are the term of poverty?
i. Absolute poverty
ii. Relative poverty
6.What do you mean by poverty alleviation programmes?
Poverty alleviation has been accepted as one of the problem in each major objectives
of economic planning of the country since fifth plan only. Number of anti- poverty
28
programmes have been introduced over the years to generate addition employment, create
productive assets,impart technical and entrepreneurial skills skills and to raise the income,
level of the poor 'Minimum Needs Programmes' was introduced during Fifth plan.
7.What is Regional Imbalances?
There has been reduction in people below the poverty line in states having faster rate
of output growth .Agriculture productivity and output may be different in different states due
to differences in availability of agriculture infrastructure in different states.
8.What is meant by social injustice?
Social injustice means inequality of income, lack of social services and existence of
socially disadvantaged groups.
9.Define parallel Economy.
"Parallel economy poses a serious threat to stability and growth of the economy".-
D.K.Rangnekar.
"Black money is aggregate of incomes which are taxable but are not reported to tax
authorities".-National Institute of Public Finance and policy.
10.What are the political institution?
Under a democratic setup, like in our country, three vital political institutions.
i.Legislature
ii.Executive
iii.Judiciary
29
SECTION-B
1.What are the types of unemployment?
i. Frictional unemployment
Unemployment and unfilled vacancies exist simultaneously because it takes time to
match job requirements and the skills of job seekers appropriately. The unemployment that
corresponds to unfilled vacancies in the same occupations and the same places is called
fictional unemployment.
ii. Structural unemployment
More stubborn frictions result when the unemployed are mismatched with job
vacancies because they do not have rigiht skills or live in places where top opportunities do
not exist such mismatching creates structural unemployment.
iii. Seasonal unemployment
The term seasonal unemployment is self explanatory. Seasoanl unemployment
occures in such activities as construction, agriculture, canning and tourist trade in which
weather.
iv. Unemployment due to demand deficiency
It occures when there is not enough aggregate demand to provide work for the whole
labour force, low matter how it is trained developed.
v. Voluntary and involuntary unemployment
Another way of classifying unemployment is to divide it into voluntary and
involuntary unemployment. Thus voluntary unemployment is essentially frictional, while
involuntary unemployment is demand deficiency unemployment.
i. Disguised unemployment
The term disguised unemployment is used to refers to individuals who are not
economically involved to a degree which uses their full capabilites even though there are
economic activities to which they apply a part of their time.
30
2.Mention the causes of poverty in India.
Poverty in rural India and urban India has been a since independence. The reason for
poverty in India can studied under following points:-
i. Population explosion
Increasing rate of population has been one of the major causes of poverty in India.
Population in India was 102crore in 2001 as against 84.63 crore in 1991 which shows that the
rate of growth of population is very high. Though there is increasing total production but per
capital wealth is decreasing and this results in decrase in standard of living as well. Rate of
growth of population was 1.0%in 1950-51 and in 2001 it was 1.8%.
ii. Growth rate of economy
Growth rate has been very low as compared to rate of the growth of population in
India. It is an established fact that growth helps to reduce poverty as it helps in creating
gainful employment, generate revenues for states and provides incentives to the poor. Past
economic growth can play a very important role in evadication of poverty in a low-income
and densely-populated agricultural economy like India.
iii. Unemployment and under-employment
In India there has been a direct relationship between population and unemployment.
The disguised unemployment in rural areas is more serious a problem in India . This has been
discussed in details in the chapter of unemployment as well.
iv. Weak development strategy for agriculture
The growth strategy in agricultural sector aimed at large and rich farmers than at
small and poor farmers. As a result theree is tremendous underutilisation of land, labour and
capital from rational point of view.
v. Inequalities in Income distribution
There exist 'inequalities of income' in urban as well as rural sectors of the economy in
India. The main reason of such inequalities is differences in ownership of land in rural areas
and material assets in urban areas. According to monopolies enquiry commission, 1536
companies of the country are controlled by 75 families only.
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vi. Transport and communication
Though a great proportion of the rural population is migrating to urban areas but they
are not finding suitable employment opportunities in the urban sectors and thus
unemployment and in turn leads to poverty. Transport system especially road transport is not
properly developed in the country.
vii. Regional imbalances
There has been reduction in people below the poverty line in states having faster rate
of output growth. This is possible when demand for labour generated by fast growth rate of
agriculture results in rise in real wages like it has happened in Punjab and Haryana state.
3. Describe the areas of social injustice in India?
Public sector has failed in achieving its objectives of "Economic growth with social
injustice" and as a result inequalities of follwoing kinds exists in society which are mainly
responsible for social injustice in India.
i.Inequality of income and wealth
ii.Increase in unemployment
iii.Increase in absolute poverty
iv.Increase in child and women labour
v.Lack of infrastructure and social services in rural areas
vi.Preference for male child-decline in sex ratio
vii.Problem of malnutrition in women and child
viii.Regional imbalances
ix.Not much improvement in health facilities especially in rural areas
x.Unsafe drinking water and lack of sanitation facilities
xi.Illiteracy of females
xii.Socially deprived sections of society-Sc/St/Bc still deprived of basic facilities like
education health etc.,
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4.What are the estimates of Black money in India?
Several attempts have been made to quantify black money in India.
a.Kaldor estimate Kaldor
Estimated non-salary income above the exemption limit. An estimate of the actual
non-salary income assessed to tax was made for each sector in order to arrive at the total non-
salary income assessed to tax.
b.Wanchoo committee's estimates
According to Wanchoo committees the estimated income an which tax has been
evaded.
c.Rangnekar's estimate
Dr.R.K.Rangnekar consider that the estimates made by Wanchoo committee and
under-estimates.
d.Chopra's estimate
Mr.OP.Chopra prepared a series of unaccounted income over a series of years.
Since it is difficult to obtain information on non-salary income actually assessed, he
used underlying assumptions.
i.The efficiency of the ta administration remains unchanged.
ii.Unaccounted income generated in the agricultural sector has not been taken into
account.
iii.The ratio of non-salary income to total income accuring from various sectors of the
economy remains the same.
5.NIPFP study
National Institute of Public Finance and Policy conducted a study under the direction
of Dr.S.Acharya and Dr.Raja Chelliah. This study defines black money as aggregate of
income which are taxable but are not reported to tax authorities.
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6.Suraj B.Gupta's study of Black money
Gupta used entirely different view to measure black money.
5.Discuss the impact of black money on the economic and social system.
The creation of parallel economy as a consequence of the growing proliferation of
black money in every sector of the economy has very serious repurcussions. It influence the
working of the Indian economy in many ways.
i. The direct effect of black money is the loss of revenue as a consequence of tax
evasion, both from direct and indirect taxes.
ii.The availability of black incomes with businessman and capitalists and the
consequent inequalities of incomes place a large amount funds at their disposal.
iii.It encourages investment in precious Jewellery and unproductive articles. This has
an adverse effect an growth via demonstration effect.
6.What are the consequences of sickness?
A sick industrial unit in the economy in just like a sick person at home. In case of
prolonged and expensive treatment, patient, in addition, to suffering from ailments himself
causes inconvenience to others and oftens spells disaster in the family.
These consequence include:
i. Aggravation in unemployment problem though the closure of industrial unit.
ii.Wide spread labour unrest due to closure threatering, industrial environment of the
country.
iii.Wastage of huge amount of resources invested in these units.
iv.Creation of adverse disincentive among the investors and entrepreneurs due to wide
spread closure of units.
v.Creation of adverse inpact on the other related though backward and forward
linkages.
vi.Causing huge financial losses to banks and other term lending instituitons and
34
locking up huge funds into these sick units.
vii.Resulting in huge loss of revenue to central, state and local Governments.
viii.Contribution to high cost economy. This in turn, will affect the competitiveness of
the economy at home and abroad.
35
SECTION-C
1.Describe the causes of unemployment in India and write the suggestive the measures
to solve this problem.
Backwardness of agriculture
There is under- employment and unemployment in rural areas because of heavy
pressure of population on land and primitive methods of agricultural operations.
Insufficient Industrial development
In India labour is available in abundance. There has been lack of proper technology,
scarcity of industrial raw material, erratic power supply, transport bottlenecks and industrial
unrest etc.
Migration of labour
Labours tend to go back to villages after earning money by working in industrial units
located in urban areas.
Emphasis on capital incentives technique
Industrial development in the country has been based mainly on the adoption of
capital intensive technique of production which have failed to generate sufficient
employment opportunities.
Government policy towards private enterprises
The policy of the government towards the private enterprises is also not conductive to
its growth strict government control regulation is exercised upon private enterprises.
Too much increase in population
Defective educational system
This system was inherited from the Britishers imparts general and literary education
devoid of any practical content.
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Lack of National Employment policy
Except for mentioning a few schemes and projects in the various plans, no specific
policy was laid down to remove unemployment
The following policy measures are suggested:
a. Manufacturing goods required by masses
Employment can be created by changing the pattern of production in India.
Emphasis should be laid on the production of goods which use more labour and less capital
investment.
b. Giving boost to small Enterprises
Under the scheme of self- employment, tiny and small industries should be
encouraged. For this, they should be provided liberal finance technical training, raw
materials and infrastructural facilities, including marketing of products.
2.Evaluate the poverty Alleviation programmes in India
Besides best efforts on the part of planner, economist and government from time to
time, there have been following short comings of different poverty alleviation programmes.
poverty
Allocation of funds and determination of targets were made without considering the
size of the population.
The selection of schemes were also not done in a rational manner.
These measures fail to realize the crucial importance of increased flow of social
inputs through nutrition, family welfare and social security.
Millennium development goals to be achieved by 2015
Goals for development and poverty eradication set at the un general assembly in
2000.
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1.Eradicate extreme poverty and hunges
Halve the proportion of people living on less than $1 a day
Halve the proportion of people suffering from hunger.
2.Achieve universal primary education
Ensure that children every where-boys and girls alike -complete a full courses of
primary education.
3.Promote gender equality and empower women
Eliminate gender disparities in primary and secondary education preferably by 2005,
and in all levels of education by 2015.
4.Reduce child mortality
Reduce infant and under-five mortality rates by two- thirds.
5.Improve maternal health
Reduce maternal mortality ratios three-quarters.
6.Combat HIV/AIDS, Malaria and to her diseases:
Halt and begin to reveres the spread of HIV/AIDS.
Halt and begin to reveres the incidence of Malaria and other major diseases.
7.Ensure environmental sustainability
Integrate the principles of sustainable development into country policies and
programmes and reverse the loss of environmental resources.
Halve the proportion of people without sustainable safe drinking water.
Employment is the surest way to enable the vast number living below the poverty
line but steps must also be taken in following direction:
Imposition of coiling on land and redistribution of coiling- surplus land among. other
landless small and marginal farmers.
Making provision for proper security for the tenant cultivators and sharing of groups.
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3.Explain the causes of social injustice and various steps taken by the government to
reduce social injustice.
Causes of social injustice in India
The following factors can be considered to be responsible for social injustice in India.
ii. Population
Population has been one of the major root causes of most of the problems in India.
India stands second in the world for being most populated country.
iii. Unemployment
Majority of population in India is dependent upon agriculture. problem of disguised
unemployment or under employment or seasonal unemployment is prevalent in rural areas.
iv. Under developed infrastructure in rural areas
Rural areas facing a problem of inadequate development of infrastructure such as
roads, transportation, electricity, hospital, education ,banking etc.
v. Decline of sex-ratio
Sex ratio in India is declining every year. The major cause for this has been
preferences for male child even by educated people. As a result female foeticide is increasing
and sex ratio is declining.
It was only 927 girls 1000 boys as per 2001 census.
vi. Low standard of living of SC,ST and BC
Schedule caste, schedule tribe and backward class have always been socially deprived
section of society.
vii. Regional Imbalances
Since the beginning of economic planning some states like
Punjab,Haryana,Goa,Delhi,Maharashtra and Gujrat have shown more economic
development while states like Bihar,orissa,madhaya pradesh,Rajasthan and Uttra Pradesh.
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4.What are the responsibilities of business towards the government?
The business has its own expectations from the government,specifically, the
expectations of the business or the responsibilities of the government towards business are as
follows.
Political Institution
Government is responsible for preparing the laws which make the business system
function smooth, In these we include various economic and business laws
It is the responsibility of the government to provide for the implementation of the
laws. Do which
Further, it is responsibilities of the government to provide a proper judicial system for
setting the disputes between business firm, individual or government agencies
Provision of a peaceful atmosphere
Government has the responsibility of maintaining law and order situation in the
country and to provide protection to persons and their property.
Provision of a system of money and credit
The government has to provide for a system of money and credit by means of which
business transaction can be effected.
Balanced development & growth
In the responsibility of the government to made sure that there is balanced region
development full employment and a stable economy.
Provision of Information
It is the responsibility of the central, state and local government to provide
information which is useful to the business in conducting their business activities
Competition with private sector
Government agencies should compete with the private business firms for the purpose
of ensuring healthy competition, improvement in the quality and regulating the price.
Licensing and Inspections
Government agencies should inspect the private business houses to ensure quality
and to prohibit the sale of substandard goods.
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SECTION - A
1. What is meant by monetary policy?
Monetary policy refers to the steps taken by the reserve bank of India to regulate the cost
and supply of money and credit in order to achieve to socio – economic objectives of the
economy. One of the most important functions of reserve bank, is to formulate and
administer a monetary policy. It also aims at varying the cost and availability of credits
with a view to influence the level of aggregate demand for goods and services in the
economy.
2. What are the objectives of the monetary policy?
In India, during the planning period the basic objective of monetary policy has been to
meet the requirements of the planned developments of the economy. The monetary policy
as been pursued to achieve the following objectives of the economic policy of the
government of India.
To accelerate the process of economic growth.
Controlled expansion.
3. Define fiscal policy.
According to prof. D.C. Rowan, “Fiscal policy is defined as the discretionary action by
the government to change. (i) the level of government expenditure on goods and services
and transfer payments and (ii) the yield of taxation at any given level of out put”.
4. What do you mean by industrial licensing?
A license is a written permission issued by the central government of an industrial under
taking to manufacture specified articles included in the schedule. The license further
contains the details relating to the location, production capacity, the articles to be
manufactured and other relevant particulars. It is also subject to a validity period within
which the licensed capacity should be implemented.
5. Mention may four objectives of licensing.
To prevent monopoly and concentration of wealth and economic power.
To protect and promote the small scale sector.
To regulate foreign capital and technology
To ensure the use of large scale economics and proper technology.
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6. What do you mean by industrial policy?
Industrial policy is a comprehensive concept. It is a package of policy measures which
covers various issues connected with different industrial undertaking of the country.
Industrial policy covers all those procedures, principles, policies, rules and regulations
which control such industrial enterprises and shape the pattem of industrialization.
7. Define privatization of Indian economy.
“privatization is the general process of involving the private sector in the ownership or
operation of a state owned enterprise. Thus, the term refers to private purchase of all part
of a company. It covers contracting out and the privatization of management. Through
management contracts, leases or franchise arrangements”.
Barbara lee and john nellis
8. What are the objectives of privatization?
The basic objectives of privatization is to improve the performance of public sector units,
so as to reduce financial burden on tax payers. Failure of the public sector units to
generate even the required level of surpluses has put a major burden on the budgetary
resource of the states. It has also necessitated huge deficits and external debts. If light that
the privatization of some of the public sector PsVS. Privatization will enable the Psvs to
generate surpluses for future investments and thus, lessen the need for deficits or foreign
and to meet the needs of resource crunch.
9. What do you mean by devaluation?
Devaluation and depreciation both mean reduction in the value of domestic currency. In
relation to foreign currency. Like if we have to pay Rs.48 for a dollar as against Rs.30
which we paid sometimes back then it is said that rupee has gone down in value. So
devaluation may increase exports and decrease imports in the country. Devaluation is
used for improving the balance of payment situation in country.
10. What do you mean by export & import policy?
Export means selling goods to other countries of the world.
Import means buying goods from the world.
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11. How many types of foreign investment?
Foreign Investment
Foreign Direct Investment Portfolio Investment
Wholly joint acquisition investment investment
owned venture by fills in GDRs and
subsidiary FCCBs
12. Define entrepreneurship.
According to Higgins, “Entrepreneurship is meant the function of seeking investment and
production opportunity, organizing an enterprise to under take a new production process,
raising capital, hiring labour, arranging the supply of raw materials, finding site,
introducing a new technique and commodities, discovering new sources of raw materials
and selecting top managers of day – to –day operations of the enterprise”.
13. What is mean by revocation of the license?
The license once issue van be revoked (or) amended only by the central government that
to only in the following circumstances.
(i) If the person (or) authority to whom the license is issued, fails, with outs
reasonable cause to establish the undertaking (or) to take effective steps to
establish the undertaking in respect of which the license is issued, within the
time permitted.
(ii) The central government may also vary (or) amend any license issued, subject
to any rules that may made in this regard.
14. Explain IIFCL.
India Infrastructure Financing Company Limited (IIFCL) has been authorized to raise
Rs.10,000 corer through government guaranteed tax free bonds, by the end of2008-09 and
additional Rs.30.000 crore on the same basis as per requirement in the next financial year.
The capital so raised will be used by IIFCL to refinance bank lending of longer maturity
to eligible infrastructure projects.
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15. What do you mean by FDI?
Foreign Direct Investment (FDI) refers to investment in a foreign country where the
investor retains control over the investment. It typically a stake in an existing a
subsidiary, a joint venture in the foreign country. Direct investment and management of
the firm concerned normally go together.
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SECTION – B
1. Determine the objectives of monetary policy.
In India, during the planning period the basic objective of monitory policy has been to
meet the requirement of the planned development of the economy. Monitory policy
has been pursued to achieve the following objectives of the economic policy of the
government of india.
To process of economic growth:
One of the twin aims of the economic policy is to accelerate the process of economic
growth with a view to raise the national income. The reserve bank has made the
allocation of funds to the various sectors according to the priorities laid down in the
plans and requirements of day to day development.
Controlled expansion:
The second objective is to be control the prices and reduce the inflationary pressures
in the economy. The monetary policy of the reserve bank during the planning period
is appropriately termed as that of “controlled expansion” every economy faces to
conflicting interests.
a) Expansion of money supply to finance the process of economic development.
b) Control of money supply to check inflationary pressure generated in the economy
as a result of last development and non- developmental expenditure.
2. What are the high – lights of the policy?
Bank rate, reverse repo rate and repo rate kept unchanged.
High priority to price stability, well – anchored inflation expectations and orderly
conditions in financial markets while substring the growth momentum.
Swift response on a continuous basis to evolving adverse international and
domestic development through both conventional and unconventional measures.
Emphasis on credit quality and credit delivery while pursuing financial inclusion.
Scheduled banks required to maintain CRR of 8.25 percent with effect from the
fortnight beginning may 24,2008.
UGP growth projection for 2008 -09 in the range (or) 8.0 - 8.5 percent.
45
Inflation to be brought down to around 5.5 percent in 2008 -09 with a preference
for bringing it close to 5.0 percent as soon as possible. Going forward, the resolve
is to condition policy and perceptions for inflation in the range of 4.0 -4.5 of 4.0-
4.5 percent so that an inflation rate around 3.0 percent becomes a medium – term
objective.
M3 expansion to be moderated in the range of 16.5 – 17.0 percent during 2008 -
09.
Deposits projected to increase by around 20.0 percent during 2008 -09.
Adjusted non – food credit projected to increase by around 20.0 percent during
2008 -09.
Introduction of SRTIPS in government securities by the end of 2008 -09.
A Dearing and settlement arrangement for OTC rupee derivatives proposed.
Domestic crowed oil refining companies would be permitted to hedge this
commodity price risk on verses exchanges / markets on purchase of crude ill and
sale of petroleum products based on underlying contract.
Indian companies to be allowed to invest overseas in energy and natural resources
sectors.
Reserve bank can be approached for capitalization of export proceeds beyond the
prescribed period of realization.
Assets classification norms fro credit to infrastructure projects relined.
3. Explain the term objectives of fiscal policy.
Full employment
The main aim of every government is to attain full employment level “full
employment simply means that man power is ready to work at a prevailing wage rate without
any dispute”
In order to achieve full employment level, government increases public expenditure to
raise aggregate demand and tax rate is decreased. As a result private sector gets incentive to
spend more when aggregate demand increases.
46
Price stability:
Another objective of fiscal policy is price stability when price rise (i.e) inflation
exists demand and aggregate expenditure and tax rate is also raised. Extra purchasing power
of people goes in to the hands of general public and demand decreases because of excess
supply, prices automatically go down because of fear of stocks. On the other hand in the case
of deflation and depression fiscal policy is used as a tool to increase public spending and tax
rate is also decreased.
Deduction in economic inequality:
In a democratic country like India the prominent aim of fiscal policy is to remove economic
inequality. To remove economic inequality progressive at a higher scale because the property
taxes are levied at a higher scale because the border of such taxes generally falls on rich
people.
Economic development
Economic development is an important feature of underdeveloped countries. To
achieve development of a country, fiscal policy acts as a source of increased, production and
employment also increases. Appropriate fiscal policy is required for development of countries
like india.
4. Write about the objectives of lisence.
The major objective of lisence is to gove effect to the industrial policy of the government.
Any change in the industrial policy will affect the licensing system. In addition to this
major objective following are the other objective of the licensing system.
To regulate the location of industrial units, thus broadening the base of industrial
ownership.
To encourage the new to start industrial units, than balanced regional
development.
To prevent monopoly and concentration of wealth and economic power.
To protect and promote the small scale sector.
To limit the industrial capacity with in the targets set by the plans.
To regulate foreign capital and technology.
To ensure the use of large scale economic and proper technology.
47
To ensure a clean environment by controlling the industrial pollution.
To maintain a proper demand – supply balance.
To conserve foreign exchange.
To help the government in solving the employment problem by generating
employment.
To encourage exports and the substitution of imports.
5. List out the industries in respect of which licensing is compulsory.
1. Coal and lignite
2. Petroleum (refined) and its distillation products.
3. Distillation and brewing of alcoholic drinks.
4. Cigars and cigarettes of tobacco and manufactured tobacco substitutes.
5. Electronic aerospace and defiance equipment of all types.
6. Industrial explosives including detonating fuse, safety fuse, gun power, nitrocellulose
and mayhems
7. Hazardous chemicals
8. Drugs and pharmaceuticals.
The compulsory licencing provisions would not apply in respect of small scale units taking
up the manufacture of any of the above items reserved for exclusive manufacture is small
sector.
An analysis of the above list indicates that the industries which are still subject to
licensing are those where the products/ production are of hazardous nature and where the
licensing is required because of environmental, health and social reasons. Industrial
undertaking exempted from licensing are required to file an industrial entrepreneurial
memoranda (IEM) with the secretariat of industrial assistance SIA) department of industrial
policy and promotion, government of india and obtain an acknowledgement – no further
approval is requires.
6. What are the objectives of new industrial policy?
The new industrial, policy has been in operation since july 24, 1991. Some amendments
have been made in this policy since then. The new policy is a big departure from the old
policy, as it is in use with the libercistion move introduced during the eights. This policy has
48
radically liberalized the industrial policy it self. The main objectives of the industrial policy
are as follows.
The main objective of the new industrial policy is to unshackle the Indian
economy from the cobwebs of unnecessary bureaucratic controls.
To build on the gains already experienced and to correct the distortions of
weaknesses involved in the system.
To abolish restrictions on direct foreign investment.
To free the domestic entrepreneurs from the restrictions of the MRTP act.
To maintain a sustained growth in productivity and employments.
To achieve international competitiveness.
to utile fully the indigenous capabilities of entrepreneurs.
To foster research and development efforts for the development of indigenous
technologies.
To assign the right areas for the public sector undertakings.
As for the external sector while the policy continues to pursue the goal of self
reliance, it places greater emphasis on building up of our ability to pay for our
imports through our own foreign exchange earnings.
7. Describe the measures of privatization.
Privatization can cover three set of measures
1. Ownership measures:
These set of measures transfer the ownership of PSUs either fully (or) partly to private
sector. The higher the potation of transfers of ownership to the individual, co
operative (or) corporate sector the greater is the degree of privatization.
The ownership transfer may be introduced in the form of :
a) Total denationalization
b) Joint ventures
c) Liquidation
d) Management by out.
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2. Organizational measures:
A number of organizational measures can be introduced to limit state control. These
measures are holding company structure, leasing and restructuring.
3. Operational measures:
These measures are intended to improve efficiency of the organization, even when
full denationalization has not been undertaken. They inject the spirit of
commercialization in the public enterprises. These measures include grant of
autonomy to PSUs in decision making. Provision of incentives for increasing the
efficiency of workers, acquiring inputs through the system of contracting, permitting
PSUs to raise from capital markets etc. so as to bring drastic reforms to reduce
government control over the enterprise.
8. What are the export policy of india?
The export policy of india as formulated since independence has all along been guided by
export promotion measures for the promotion of exports such as.
i) The duty drawback system (i.e) reimbursement of tarrif paid on imported material
and excise duties paid on inputs to the exporters.
ii) Market development assistance (i.e) providing cash compensatory support to
exporters and providing grant in aid to export promotion coracles and other
organizations for exploring new export markets.
iii) Fiscal concessions for exports such as exempting export earnings from income tax
partially or fully.
iv) Import policy for exports providing imported inputs to export sector at
international prices.
v) Developing export processing zones (EPZ) and coo percent export – oriented units
for providing necessary open environment for export production.
9. What are the evaluation of exim policy?
Thus the new policy “substantially eliminates licencing, quantitative restrictions, and
other regulatory and discretionary control” thus the trade policy is put within the realm of
economic discussions.
The new trade policy removes the differences in the treatment of public sector and
private sector.
50
Another merit of new trade policy is that it has been made coterminous with the
eighth five year plan. Both rum from April 1,1992 to 31st march, 1997. This not only
integrates trade policy with planning but also gives a measure of certainty and stability to
the EXIM policy. This should help not only the Indian producers and manufacturers in
making their medium term investment and marketing plan but also trading partners of the
country aboroad to make their decisions with regard to trading with this country.
As this situation what is required most is an all round improvement of industrial
efficiency and productivity which would make the Indian manufacturers internationally
competitive. The change in the situation cannot be brought about overnight. They become
accustomed to work in a sheltered market. Thus it would naturally take some time to
adjust with the new environment of competitiveness.
The policy does contain a number of provisions to boost exports like the capital
goods. Import scheme where by import of goods at concessional duty rates tom
manufacture export good will be allowed to the manufacturers.
It can be finally observed that in order to improve country‟s export performance, the
price stability must be achieved and the growth rate of GDP must be raised to at least 4
percent. In view of the present scaling down of the level around 6 percent in 1993 the
country can expect a better export performance in the years to come.
10. Explain the role of foreign capital.
Foreign capital plays a very important role in the economy of developing countries as
explained below:
1. Role of foreign capital in the development:
In the early stages of industrialization of advanced countries, foreign capital played a
very important role. Now a days, the problems faced by the developing countries are
different from the problems faced by the countries in the past. But it is a tried and
tested view that foreign capital, if properly directed and utilized, can assist in the
development of developing countries.
2. To facilitate the import of investment oriented items:
Foreign capital can also accelerate the place of economic growth by facilitating the
import of items required to implement development programmes. Some examples of
such goods are, capital goods, know – how, raw materials and other inputs and even
consumer goods.
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3. To help in the capital formation:
Capital formation is a major determinant of economic growth. In the developing
countries the capital formation is inadequate because of the following vicious cared.
Hence, to give a „big push‟ to the economy and to take it to the TAKE OFF stage,
domestic resources need to be supplemented with foreign capital to achieve the
minimum investment and to break the above mentioned vicious circle.
Low income
Low investment
Low savings
4. To help in reducing the foreign exchange gap.
In the mutual stage of investment, imports are very high as comported to the exports the
required machinery, know – how, other inputs and even the consumer goods which are not
indigenously available will foreign capital should help reduce the foreign exchange gap.
Foreign capital may also help in increasing a country‟s exports and reducing the imports
if foreign investments take, place in export oriented industries which complete with the
imports.
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SECTION - C
1. Discuss the monetary policy of the reserve bank of India?
The mouetary policy of 2008-09 came in t he back drop of a slowing economy facing a
sudden and a sharp surge in inflation, the WPI based Inflation touched 7.41% in march
way above the virtuat roof RBI s comfort Zone of 5 percent.
Policy Documents says
“It is critical at their Juncture to demonstrate on a coutimuning basis a determination
to act deeisively effectively and swifty to curb any signs of adverse development in
regard to inflation expections.
The highlight s of the policy where:
(i) Bank rate Reserve Repo Rate and Repo Rate Kept unchanged.
(ii) High priority to price stability well anchored Inflation expectation and order
(iii) Swift response on a continuous basis to evolving adverse international domestic
development.
(iv) Emphasis on credit quality and credit delivery while pursing financial inclusion.
(v) Scheduled banks required to maintain CRR of 8.25 percent with effect from the
fortnight beginning may 24, 2008.
(vi) GDP growth projection for 2008-09 in the range or 8.0-8.5 percent.
(vii) Inflation to be brought down to around 5.5 percent in 2008-09 with a preference
for bringing it close to 5.0 percent as soon as possible. Going forward, t he
resolve is to condition policy and perceptions for inflation in the range of 4.0-4.5
percent so that an inflation rate of around 3.0 percent becomes a medium term
objective.
(viii) M3 expansion to be moderated in the range of 16.5 – 17.0 per cent during 2008-
09.
(ix) Deposits profected to increase by amount 17.0 per cent or Rs. 5,50,000 crore
during 2008-09.
(x) Adjusted non-food credit projected t o increase by amount 20.0 per cent during
2008-09.
(xi) Active demand management of liguidity through appropriate use of the CRR
stipulations and open market operations (OMO)including the MSS and the LAF
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(xii) Introduction of STRIPS in government securities by the end of 2008-09.
(xiii) A cleaning and settlement arrangement for OTC rupee derivative proposed.
(xiv) Domestic crude oil refining companies would be permitted to ledge their
commodity price risk on overseas exchanges/markets on domestic purchase of
crude oil and sale of petroleum products based on underlying contract.
(xv) Indian companies to be allowed to invest overseas in energy and natural resources
sectors.
(xvi) Reserve Bank can be approached for capitalization of export proceeds beyond the
prescribed period of realization.
(xvii) Loans granted to RRBs for on-lending to agriculture and allied activities to be
classified as indirect finance to agriculture.
(xviii) The Reserve bank to disseminate details of various charges levied by banks.
Consolidated supervision of financial conglomerated proposed.
Working group to be set up for a supervisory frame work for SPVs/ trusts
Dispense with the extant eligibility norms for opening on-site ATMs for well
managed and financially sound UCBs.
Regulations in respect of capital adequacy, liquidity and disclosure norms for
systemically important NBFCs be reviewed.
2. Discuss different objectives with which fiscal policy is framed in india what are
major advantages of fiscal in India?
1. Full Employment:
The main aim of every government is t o attain full employment level. “Full
employment simply means that man power is ready to work at a prevailing wage rate
without any dispute”.
In order to achieve full employment level, government increased public
expenditure to raise aggregate demand and the rate is decreased. As a result private
sector gets incentive to spend more when aggregate demand increases. Total
productions increases and as a result employment will also increase.
2. Price Stability:
On the other hand in the case of deflation and depression fiscal policy is used
as a tool to increase public spending and for rate is also decreased.
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3. Reduction in economic Inequality:
In a democratic country like India the prominent aim of fiscal policy is to
remove economic inequality. To remove economic inequality progressive direct
focus like income tax, property taxes are lived at a higher scale because the
burden of such taxes generally falls on rich people .
The income generated from these taxes is used for the welfare of the poor
masses and to raise their standard of living.
4. Economic development:
Economic Development is an important feature of underdeveloped countries.
To achieve development of a country, fiscal policy acts as a source of capital
formation because as capital formation is increased, production and
employment also increases. Appropriate fiscal policy is required for
development of countries like India.
5. Advantages:
The first two crises resulted in serious inflationary pressure in the first half of 2008-
09. The focus of the monetary as well as fiscal policy shifted from fuelling growth to
containing inflation, which had reached 12.9 per cent in August, 2008.
Series of fiscal measures both on the revenue and expenditure side were undertaken
with the objectives of easing supply side constraints. These measures were
supplemented by monetary initiative through policy rate changes by the reserve Bank
of India, and contributed to the softening of domestic prices.
The global financial crisis in the second half of the financial year which heralded
recessionary trends the world over, also impacted the Indian economy causing the
focus of fiscal policy to be shifted to providing growth stimulus.
The country is facing difficult economic situation, the cause of which is not
emanating from with in its boundaries. However, left unattended, the impact of this
crisis is going to affect us in medium to long term. The government had two policy
option before it. In view of falling buoyancy in tax receipts, the government could
have taken a decision to cut expenditure and there by live within the estimated deficit
for the year.
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Ensuring revival of the higher growth of the economy will restore revenue buoyancy
in medium term and afford the required fiscal space to revert to the path of fiscal
consolidation.
Units t o be disinvestment need to be identified
The Government should retain majority equity holdings of undertakings in areas like
defence and atomic energy. In other areas, disinvestment can be up to any level.
Disinvestment should best ages and the sales are to be staggered so as to fetch the best
possible price from the bidders.
The interests of the workers need to be protected. Employees of the priratised units
should be allowed to buy shares.
Disinvestment must be transparent.
An autonomous body should be set up to monitor the process of disinvestment.
Strengthen PSUs where appropriate in order to facilitate disinvestment.
Allocation of a certain percentage of shares to the small investors and instalment
purchase of shares to be introduced.
3. Discuss the exim policy of India 1991 in details:
In July, August, 1991 the narasimha Rao Government announced certain major
reforms in exim policy 1990 after making some necessary reforms in it. All these
reforms strengthened the export incentives, eliminated a considerable volume of
import licensing and optimal import compression. The main features of this policy
were as follows.
1. Introduction to major change in the import licensing system through the
replacement of administered licensing of imports through import entitlement. The
system of supplementary licenses was discontinued and unlisted OGL category
abolished. All these imports, hence forth, met through exim scrips.
2. The new policy strengthened for the import of capital system of advance license
provided to exporters with duty free access to inputs.
3. The procedure followed for the import of capital goods was simplified.
4. The policy aimed at progressive reduction in the extent of canalization.
5. The policy permitted Export houses, Trading house and state trading Houses to
import a wide range of items.
6. Export processing zones (EP2) and 100 percent export oriented units (EOUs) were
granted several concessions.
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7. The scheme of cash compensatory support (CCS) was abolished.
8. The list of restricted items was reviewed and accordingly 98 items were shifted
from the restricted list to limited permissible list and 3% items were also shifted
from limited permissible list to OGS List.
4. Discuss the need for foreign capital.
1. To sustain a high level of investment
2. To fill the Technological Gap.
3. To undertake the initial risk
4. To exploit the natural resources.
5. To develop basic economic Infrastructure
6. To improve the balance of payment position.
To sustain a high level of investment:
For the industrialization of under developed countries, it is necessary to raise the level
of their investment substantially. This requires in turn a high level of savings. Because of
general poverty, the savings are often very low. Hence there is a gab between investment and
savings. This gap can be filled up through foreign capital.
To fill the technological gap:
The underdeveloped countries have very low level of technology as compared to the
advanced countries. This raises the necessity for importing technology from the developed
countries. In the case of India technical assistance received from abroad has helped in filling
up the technological gap in the following three way.
Provision of export services.
Training of Indian personnel abroad.
Provision of educational, research and training institutions in the country.
To undertake the initial risk:
Many underdeveloped countries suffer from acute scarcity of private entrepreneurs.
This creates obstacles in the programmes of industrialization. But once the programme of
industrialization gets started with the initiative of foreign capital, domestic industrial activity
starts picking ;up, as more and more people of the host country enter the industrial field.
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To exploit the natural resources:
A number of under developed countries possess huge mineral resources which await
exploitation. These countries themselves do not process the required technical skill and
expertise to accomplish this task. As a result, they have to depend upon foreign capital to
undertake the exploitation of the resources.
To develop basic economic infrastructure:
The economic infrastructure includes the system of transport and communications
generation and distribution of electricity, development of irrigation facilities etc. the domestic
capital of the underdeveloped countries is often too inadequate to build up the economic
infrastructure of country on its own. Thus they require the assistance of foreign capital to
undertake this task.
To improve the balance of payments position:
In the initial phase of the economic development. The underdeveloped countries need
mush larger imports in the form of machinery. Capital goods, raw materials, spores and
components etc. as compared to exports. As a result, the balance of payments generally turns
adverse. This creates a gap between the earnings and expenditure of foreign exchange.
Foreign capital presents a short term solution to the problem.
This shows that the economic development of an under – developed country should
obviously receive a baste as result of foreign capital.
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SECTION –A
1. What do you mean by price stability?
One of the important objectives of planning has always been to attain economic
stability. But during last five decades of planning the country has been facing a series of
economic fluctuations because of instability in price level.
2. What do you mean by Increase in National Income?
National Income is an Indicator of development during the period 1950-51 to 2000-
2001. It has increased by around 600 percent. The annual grow rate which was merely 3.6%
during first plan has reached 6% in 2000-2001j.
3. Write shorts notes on Increase in per capital income.
In almost all the plans. One of the main objectives has been to increase per capital
income and it has also maintained on increasing trend but at a slow pair due to higher growth
rate of population per capital income increased by 149 percent during the period 1950-51
to2001-2002. Till the 4th
plan, it had declined gradually but after that it should rising trend
due to effective policies of government.
SECTION – B
1. Explain in detail about the employment generation.
Removal of unemployment has been one of the main concerns of planning. „Full
employment has been slogan of every plan in India. Huge amount of investment has been
made on creation of large employment opportunities, creation of larger industrials and started
declining. The country is gradually emerging out as a sophisticated economy in various field
such as agriculture production, electronics, sophisticated technology etc… Inspite of all this
progress India has failed to run the economy without depending on foreign assistance.
During the first phase of nineties, a huge amount of loan to the extent of 5.0 billion SDRs
taken by government on hare terms from reflect its position of self – reliance. But in recent
years the total foreign exchange reserve of the country has increased from us $ 26.4 billion at
the end of march 1997 to US $ 34.9 billion at the end of January 2002. At the end of march
2002. At the end of march 2002 total import cover by such foreign exchange reserve stood at
8 months.
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SECTION - C
1. Discuss in details the achievements of five year plans till date:
i. Increase in national Income:
National Income is an indicator of development during the period 1950-51 to 2000-
2001. It has increased by around 600 percent. The annual growth rate which was merely 3.6
percent during first plan has reached 6 percent in 2000 – 2001.
ii. Increase in per capital Income:
In almost all the plans, one of the main objectives has been to increase per capital
income and it has also maintained an increasing trend but at a slow pace due to higher growth
rate of population per capital income increased by 149 percent during the period 1950 – 51 to
2001 to 2002 till the 4th
plan, it had declined gradually but after that it showed arising trend
due to effective policies of government
iii. Increase of Agriculture:
India is basically an agricultural economy. In all the plans huge allocations and
investments were made in this sector failed to achieve target growth this sector but this sector
failed to achieve target growth rate. Ironically about 70% of population in India engaged in
agriculture but share of agriculture in national income is still very low. During the last fifty
years of planning the index of agriculture production has increased from 46.2 in 1950 – 51 to
17772.2 in 1998 – 99. It lose to181.7 in 2001-2002. The annual growth rate has also been
above 2.6% India has now made tremendous progress in agriculture mainly due to high
yielding seeds, improved technology etc establishment and expansion of small scale and
village industries.
During early period of fifty years of planning about 20 million people got
employment. The planning commission has recently that additional employment
opportunities to the extent of 43.74 million were generated during 9th
plan only. Total back
log of unemployment which was 5.3 million at the end of first plan gradually rose to 20.7
million in 1980 and then 58 million at the end of 9th
plan and is expected to be 94 million by
the end of 2002.
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iv. Growth of Social Service:
Social service like health, family planning have improved a lot life expectancy at birth
has increased from 32.1 in 1950-51 to 60.3 years in 2001-2002.
In the field of education total enrolment of students of various levels has achieved six
fold increase. The literacy rate has increased from 18.33% to 60percent in 2001-2002. Health
facilities have also shown great improvement in the form of hospitals and dispensaries.
v. Attainment of self – Reliance:
Five year plans in India aimed attain self – reliance in the economy and also to reduce
dependence on foreign aid gradually. Since fourth plan onwards. The dependence on foreign
conuntries.
vi. Industrial progress:
Industrial sector has shown quite satisfactory progress during planning period. This
sector has achieved a considerable degree of diversification and modernization. There has
been significant expansion of industrial capacity as well. The index of Industrial production
has increased from 7.9 in 1950-51 to 153.2 in 2001-2002. Indian Industries have experienced
a steady growth rate of about 8%. This growth rate is expected to be 10% by the end of 10th
plan.
vii. Development of Infrastructure:
Infrastructure like transport and communication, irrigation facilities, power generation
have progressed considerably. Total cent of railway route has increased from 53, 600kms in
1950-51 to 72,897 kms in 2001-2002. Total length of roads has increased from 4 lakh kms in
1950 -51 to nearly 40 lakhs kms in 2001 – 2002. The installed capacity of power projects in
India has increased from 2.3 Gw in 1950-51 to 43.4 GW in 1980 -8 and then 119.8 GW in
2001.2002. Power generation has increased from 6.6 TWH in 1950 – 51 to 498.4 TWH in
2001.2002.
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viii. Employment generation:
Removal of unemployment has been one of the main concerns of planning. „Full
employment‟ has been slogan of every plan in India. Huge amount of investment has been
made on creation of large employment opportunities, creation of larger industrial aid started
declining. The country is gradually emerging act as a self reliant economy in various field
such as agriculture production, electronics, sophisticated technology etc… In spite of all this
progress India has failed to run the economy without depending on foreign associate. During
the first phase of nineties, a huge amount of loan to the extent of $ 5.0 billion SDRs taken by
government on hard terms from IMF reflects its position of self-reliance. But in recent years
the total foreign exchange reserve of the country has increased from US $ 26.4 billion at the
end of march 1997 to US $ 34.9 billion at the end of January 2002. At the end of march 2002.
At the end of march 2002 total import cover by such foreign exchange reserve stood at 8
months.
ix. Diversification of export and import substitution:
Was changed diversification of Indian Industries during the last five decades of
planning, the composition of export of country also. The composition of exports of the
country has change from primary commodities to manufactured commodities, had crafts,
minerals, Jewelleries and engineering goods which are now being produced ingenously. The
growth rate of export which was only 2.2% during the First plan rose to 18.0% during Fifth
plan. This rate than declined to only 8.8% in 1998-99 and then again rose to 16.5 in 2001-
2002.
x. Structural and Institutional changes:
The country has attained considerable success in bringing structural and institutional
changes in the economy, which has played an important role in attaining economy, which has
played an important role in attaining economic development during the periods of planning. It
includes expansion of Public sector, development of source of institutional finance,
introduction of price support system and public distribution system and formation of human
capital.
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xi. Development of Science and Technology:
Significant growth of Science and technology during planning period in India has to
development of technical and managerial manpower to meet the requirement of modern
industrial structure. India has done wonders in the field of information and Technology (IT)
and has also earned good reputation in supplying efficient manpower to foreign countries for
their IT Sector.
xii. Price stability:
One of the important objectives of planning has always been to attain economic
stability. But during last five decades of planning the country has been faring a serried of
economic fluctuations because if instability in price level. Inability to control raising prices
has been considered as the biggest failure of planning of India. The country is facing the
problem of inflation. In order to restore price stability the government has taken several
initiatives during 1991-98 as a result of which inflation rate began to record. The inflation
rate rose to 10.2% in March 1994 but then stood at 5.3% on 14th
april 2002. The Price
instability has been affecting the flow of income, savings and investments thereby recording
the
xiii. Distributive Justice:
Though planning has been able to raise volume of agricultural and industrial
production of the country to a considerable proportion, the inequalities are still present. The
growth of monopoly houses in Industrial sector has wintered the gap of income and wealth
between the rich and poor. Also „poverty Eradication programmers‟ being taken up so
forcefully under planning period have failed to reach even the poorest. It has also failed to
achieve much in the direction of balanced regional development due to faulty and improper
allocation of resource.
Conclusion:
It can be observed from above that planning in India has been for short of its targets.
The country has been experiencing great deviation between ideology of the government and
actual economic realization of targets. Thus to achieve the various objectives of planning.
The need of hour is to get realistic targets.
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2. Do you think fire year plans have failed to achieve its targets. If yes, then explain
those failures.
Failures of planning in India:
1. Standards of living:
The five years plans have failed to attain an adequate rise in standard of living of
people in general. It failed to provide even basic necessities of life. The poverty elevation
programmers‟ have also failed to achieve the required lever of success in improving the
standard of living of people and also to reduce the percentage of population living below
poverty line in India.
2. Growing unemployment:
Fifty years planning has also failed to generate adequate employment opportunities
for the unemployed. As per recent estimates, the labour force of the country has increased by
35 million during 1992-97 and by 36 million during 1997-2002.
3. Unsatisfactory growth in productive sectors:
As it is evident from the figures given in achievements, both agricultural and
industrial sector have failed to attain required growth rate. The rate of growth of agricultural
output remained all along poor.
4. Raise in price Level:
Except first plan all other plans have experienced raise in price level. NO Government
action either monetary or fiscal could control inflationary trends.
5. Inadequate distribution of Income and Wealth.
The gap between rich and poor has widened during planning period of fifty years. The
objective of attaining a socialistic pattern has remained mere in books. Almost 58.1% of total
number of agricultural holdings is of marginal category which two is considered as
uneconomic.
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6. Poor level Implementation:
The level of implementation of plan projects. Particularly in respect of rural
development, agriculture and social welfare sector remained all along poor. The benefits of
plan projects are not reaching the target group of people improper time and also in adequate
quantity as a result of growing dishonesty and corruption.
7. Shortful in attaining targets:
Five Year plans has not only failed, to attain the objectives of sectorial plans but also
failed in attaining targets in overall economic growth rate. In no plan the target of growth rate
has been attained.
8. Lack of strong base of planning:
Most of Indian population is dependent on agriculture which is fundamental of our
economy and plans. And agriculture continues to be a gamble in moon soon because of poor
development of irrigation and flood control measures.
9. Paradox of savings and Investments:
Rate of poor economic growth has been in spite of having a high rate of savings and
investment. Such a situation is a results of higher capital output ration, low rate of return on
capital employed.
10. Growing deficit in BOP and foreign Exchange crisis:
There has been a trend of growing deflicit in the Balance of payment of the country
through out leading to foreign exchange arises as experienced during 1991.
3. Briefly discuss projected 11th
five year plan of India how for the targets of this plan
are feasible in Indian Scenario:
Eleventh five Year plan (2007-2010)
The planning commission presented the draft of the approach to 11th
five year plan
having an aim of economic growth rate 9% against the target of 8% during 10th
plan. The
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growth rate of 7.2% has been achieved during 10th
plan (2002-2007) which is the highest
growth rate achieved if any plan period
Highlights 4th
Plan approach:
Formulation of “National Innovation Policy” to encourage competition amongst
entrepreneurs.
To set up centre of Relevance and Excellence (CORE) in research and development
Institutions and academic institutions.
Proposal to have “national Biotechnology Regulatory Authority.
Creation of bio-tech clusters in Delhi, Gujarat, Punjab, Haryana, West Bengal and
Orissa.
Socio – Economic Targets:
(A) Income & Poverty:
I. To accelerate growth rate of GDP to 10% from 8% in order to double per capital
income by 2016-17
II. To increase agricultural GDP growth rate to 4% per year with additional provision
of Rs.80000 crores.
III. To create 70 million new job opportunities and to reduce educated unemployment
to below 5%.
IV. To reduce head count ratio of consumption poverty by 10% points.
V. Real wage rate to conkilled workers in aimed to increase by 20%.
(B) Health of Women and Children:
(i) Provision of clean drinking water and sanitation for all by 2009.
(ii) Reduction in infant mortality rate (IMR) to 28 and maternal mortality rate (MMR)
to 1per 1000 line births
(iii) Total fertility rate to reduce to 2.1
(iv) Raise sex ratio for age 0-6 to 935 by 2011-12 and to 950 by 2016-17
(v) Malnutrition level among children of age group of 03to reduced to half of its
percent level.
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(C) Education:
(i) Development of minimum standards of attaining education in elementary schools and
regular monitoring to ensure equality education.
(ii) Reduce drop out rates of children from elementary school from 52.2% in 2003-04 to
20 percent by 2011-12
(iii)To increase literacy rate to 85% for children above of 7 years and above.
(iv) Lower gender gap in literary to 10% points.
(v) Increase the % youth of relevant age-group going to higher education from 10
percent to 15 percent.
(D) Infrastructure:
i. Electricity connections and round the clock power to all village by 2012.
ii. All weather road connection to all habitation with population of 1000 and above
by2001.
iii. Telephone and broad band connectivity to all villages
iv. To speed up house construction and to provide homestead sites to all rural poor by
2012.
(E) Environment:
(i) To attain world health organization (WHO) standards of air quality in major cities by
2011-12.
(ii) To increase forest and tree cover by 5% points
(iii)To increase energy efficiency by 20% points by 2016-17
(iv)To treat urban Wales water by 2011-12 to clean river waters.
