Unit 6a Final

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Common Proficiency Test (CPT)

Subject

ECONOMICS

Topic:

Chapter 6: Select Aspects of Indian Economy

(Unit 1 to Unit 3)Terms & Conditions

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P raveen B aldua’s S mart Notes ECONOMICS CA‐CPT

Prepared by: Praveen Baldua www.pravinsir.com/www.freecsnotes.com Page 1

CHAPTER 6 ‐ UNIT 1

POPULATION

1.0.] INTRODUCTION:• Population refers to the total number of people residing in a place.

• Australia gives incentives to people to have large families. • Large and growing population is an asset or liability for the economy depends on economy to economy.

1.1] DEMOGRAPHIC TRENDS IN INDIA:POINTS EXPLANATION

1 Size of population • According to the latest census(2001) the total population was 102.70 crores.

• Thus from the last hundred years (i.e. 1901‐2001) the size of population is

Quadrupled.

• In 2008‐09 the population was 115 crores.

• India ranked second in the world after China.

• India’s share in world’s:

Area→→→→ 2.4%

Population→ → 16.7%

Income→ →→ 1.2%

• Every sixth person is an Indian.

2 Rate of growth • The year 1921(1911‐1921) is known as year of great divide.

• The growth rate of population has remain more than 2%p.a.

3 Birth rate & Death

Rate• Birth rate→ No. of birth per thousand population.

• Death rate→→ No. of death per thousand population.

• As per trend:

Birth rate is declined but not so remarkable.

Death rate is declined

4 Density of Population • Density of population refers to number of person per square kilometer.

Period Density of population in India

Before Independence 100

2001 324

• Density Higher than nation’s average in states like:

Kerala, West Bengal, Bihar & UP

• Density Lower than nation’s average in states like:

Andhra Pradesh, Himachal Pradesh, Gujarat, Madhya Pradesh, Maharashtra,

Karnataka, Orissa, Rajasthan, Sikkim etc.

States/City/Union

territories

Density of population

(Per Sq. Km.)

Remark

West Bengal 904 person Most densely

populated statesBihar 880 person

Delhi 9294 person Most densely

populated Union

territories

Chandigarh 7903 person

Arunachal Pradesh 13 person Lowest densely

populated states

• The Industrially well developed areas have higher density of population &





Vice‐Versa

5 Sex Ratio • Sex ratio refers to the number of female per 1000 males.

• Our society is male Dominated.

• But in Kerala the number of females are more as compared to males i.e. in

2001, 1058 females(per 1000 males)

6 Life expectancy at

birth.

• Life expectancy has improved in India over the years i.e.

Period Male(Age) Female(Age) Average(Age)1951 32.5 31.7 32.1

2001 62.3 65.3 63.8

• But life expectancy is bad as compare to Developed countries & Developing

Countries such as Srilanka & Thailand.

• Kerala has the highest life expectancy i.e. 74 & M.P has the Lowest life

expectancy i.e. 58

7 Literacy ratio • Literacy refers to No. of literates as a % of population.

• Literacy in Country:

Period Male Female Total

1951 ¼ (25%) 1/12

th

1/62001 76% 54% 65%

• Literacy is higher among Urban population as compare to Rural Population.

• Illiteracy hampers Family Planning programme.

• Literacy rates among different states:

States Literacy rates

Kerala 90%

Goa 82%

Maharashtra & Himachal 77%

Tamil Nadu 73%

Bihar Less than 50%

Rajasthan & UP 60%• According to estimates, it would take more than 30 years for the Indian

population to be fully literate.

• Literacy rate in:

Urban Area Male 86%

Female 73%

Rural Area Male 71%

Female 46%

1.2] CAUSES OF THE RAPID GROWTH OF POPULATION:• Population generally increases because of :

High birth rate.

Relatively lower death rate.

Immigration.

• India’s population has mainly increased because of High birth rate & relatively low death rate.

• Gains from economic growth Neutralized by rapid increase in numbers.





1.3] GROWTH OF POPULATION IN INDIA & ITS EFFECT ON ECONOMIC DEVLOPMENT.This theory says that every country passes through 3 stages:

Stage 1

Both birth rate & Death rate are very high hence population remains stable (Undeveloped country)

Stage 2

Birth rate comes down slightly but death rate comes down very heavily, hence there is population

explosion. (Developing country like India, India is passing through 2nd stage)Stage 3

Birth rate is low & Death rate is also low (Developed countries).

EFFECT ON ECONOMIC GROWTH DUE TO POPULATION EXPLOSION.1) Growth of national income get nullified & per capital income remains low i.e. NI rose by more than 12

time during 1950‐51 but per capital income rose only by 3.25 times.

2) Shortage of food supply

3) Unproductive consumes.

4) Problem of Unemployment.

5)

Low capital formation.6) Ecological degradation.

1.4] GOVERNMENT MEASURES FOR SOLVING POPULATION PROBLEMS:• A full fledge family planning department was created in 1966

• The marriage age was raised to 18 years & 21 years for Girls & Boys respectively.

• Family planning was made a mass movement by involving mass communities like Zila Parishad,

Panchayat Samiti, Co‐operative Societies & Trade unions.

• National Population policy 2000

Motto – Two child norms & stabilizing population by 2046A.D.

Mane school education free & compulsory up to age of 14.

• Tenth plan target of government Reduction in infant mortality rate to 45 per 1000 by 2007 & 28 per 1000 by 2012.

Reduction in Maternal Mortality rate to 2 per 1000 live birth 2007 & 1 per 1000live

births by 2012.






POVERTY

2.0] ABSOLUTE POVERTY & RELATIVE POVERTY: Absolute poverty

• This poverty is not related to the income or consumption expenditure distribution.• It is relevant for less developed counties (for e.g.: India)

Relative poverty

• This poverty is related to the income or consumption expenditure distribution.

• It is relevant for developed countries.

• Gini co‐efficient index is used to measure relative poverty.

2.1] POVERTY IN INDIA:• In India we use the concept of absolute poverty for measuring poverty, by fixing a minimum level of

consumption standard called poverty line.

• In India nearly ¼ (22%) population is below poverty live.• According to planning commission, a personal is below poverty line (Considered poor) if his daily

consumption of calories is less than 2400 in Rural areas & 2100 in urban areas.

• Recommendation for new poverty line by “Expert group”

As per expert group, poverty line is defined at the state level, separately for rural & urban

households.

Each poverty line is updated by a state specific price index i.e.

a) State consumer price index for agricultural labours updates Rural’s poverty line.

b) State consumer price index for industrial workers updates Urban’s poverty line.

• Planning commission estimates incidence of poverty on the basis of large sample survey conducted by

National sample survey organization (NSSO) once in a 5 years.

• METHOD OF ESTIMATING POVERTY:‐

a) Uniform recall period consumption (URP) ‐ The respondent is asked to recall all items of

consumption in last 30 days (Both food & Non food item)

b) Mixed recall period consumption (MRP) – The respondent is asked to recall items of food

consumption in last 30 days & Non food items such as cloths, footwear, Durable goods, and

Education & Institutional medical expenses in last 365 days.

2.3] GOVERNMENT PROGRAMME FOR POVERTY ALLEVIATION:PROGRAMMES EXPLANATION

1 Pradhan mantri gram sadak yojana • Launched in December 2000 to provide road

connectivity through good all weather roads of

rural Areas.2 Indira awas yojana • Financial assistance for construction of houses to

be given to the poor living in rural areas.

3 Swarna jayanti gram swarozgar yojana • Launched in April 1999.

• It is only self employment programme for the

rural poor.

• Up to March 2009 about 121 lakh swarojgaris were

assisted

4 Sampoorna grameen rojgar yojana • Launched in 2001





• For providing wage employment, Food security &

Creation of social &

5 National Rural employment guarantee scheme • National food for work programme was launched

in November 2004 in 150 most backward districts

of the country.

• National Rural employment guaranteed act was

notified in September 2005 & the scheme was

launched in Feb 2006.

• Objectives:

To generate guaranteed wage employment of

minimum 100 days in a year.

To develop infrastructure base of area.

• During 2008‐09 more than 4.47 crores household

were provided employment.

6 The Swarna jayanti sahakari rojgar yojana: • Launched in December 1997

• It aims to provide gainful employment to the

urban unemployed or underemployed poor by

encouraging self employment ventures.

• In 2008‐09 around 9.5 lakhs urban poor were

assisted to setup micro enterprise & 15 lakhs

urban poor were imported skill training.






UNEMPLOYMENT

IMTRODUCTION:• Problem of unemployment was taken seriously by Govt. after 5

thFYP.

• Every sixth person in the world is an Indian & every third poor person in the world is also an Indian.

• When Unemployment increases, Poverty also increases.• In India 9% of labour force is unemployed

3.0] MEANING AND TYPES OF UNEMPLOYMENT: • Any person who is not employed in productive activity is called unemployment.

Open Unemployment Disguised Unemployment

TYPES IMPORTANT POINTS1. Voluntary Unemployment.

[Open Unemployment]

It means people who don’t want to work.

It is a National waste of Human energy

2. Seasonal Unemployment

[Open Unemployment]

It means people do not have work (employment) changing of

season.

Such type of employment is their mainly in Agriculture Sector,

Industries producing, Seasonal products, Tourism Industry etc.

3. Disguised Unemployment. It means people are actually employed but it marginal

productivity is ZERO.

such type of unemployment is their due to Surplus Manpower

in Agricultural Sector, Family Business etc.

4. Technological unemployment.

[Open Unemployment]

It means the workless are replaced by machines.

Such unemployment occurs when Technological development

taken place i.e. Due to introduction of new machine, Other

labour saving devices etc.

5. Frictional Unemployment.

[Open Unemployment]

It is Temporary Phenomena.

such unemployment occurs due to Changing Jobs, Strike, Lock

outs, imperfect mobility of workers & Getting workers &

Vacancies together etc.

6. Casual Unemployment.

[Open Unemployment]

Such unemployment occurs due to Contractual Work.

Such unemployment is their mainly in Construction Sector,

Catering & Agriculture.

7. Structural Unemployment.

[Open Unemployment]

It means unemployment arises due to Structural changes in

economy.

8. Cyclical Unemployment.

[Open Unemployment]

It is Temporary & short term Phenomena.

Such unemployment taken place in Recessionary &

Depresionary phases in Advance / Developed country.

For e.g. Fall in demand for goods, Disinvestments etc.





Increasing expenditure in economy, Easy money policy, &

fiscal measures etc. may help reduce this unemployment.

9. Chronic Unemployment.

[Open Unemployment]

It is a Long term Phenomena.

Such Unemployment taken place in Under developed

Countries. Due to Population growth, Low capital formation,

Poverty, Under utilization of Resources etc.

3.1] NATURE OF UNEMPLOYMENT IN INDIA:• Most of unemployment in India is structural unemployment & some is cyclical unemployment.

Classification of Unemployment

Rural Unemployment Urban Unemployment

Seasonal Disguised Industrial Educated

• Over 1/3rd of the India’s work force in Disguisedly Unemployed.

3.3] EXTENT OF UNEMPLOYMENT IN INDIA:• The tenth plan aimed at creating 50 million jobs during the plan.

• The result of 61st round of the NSSO shows that above 47 million persons were provided employment

during 2000‐05

• Important Terms:

1) Labour force:

It means population who are on the job or seeking for the job.

It includes both “Employed” & “Unemployed”.

Lobour Force Participation Rate(LFPR) is calculated as: No. of labour force/per 1000person

2) Work force:

It is that part of Labour force which is actually employed.

Work force Participation Rate(WPR) is calculated as: No. of person employed/per 1000

person

3) Measurement of unemployment :

The Employment or Unemployment can be measured in the following three ways:

a) Usual Status(US):

It measures Unemployment of a person who are Chronically Unemployed

{Unemployed for a longer period of time}

b) Current Weekly Status(CWS):

It measures unemployment on weekly basis

According to this measurement , any person who is employed for a day in a single

week will be considered as a employed for entire week.

c) Current Daily Status(CDS):

It measures unemployment on daily basis

According to this measurement, any person who is employed for half a day will be

considered as a employed for entire week.

• Trend of unemployment ‐ The unemployment in India first decreased & then Increased.





• As per 61st round of NSSO survey, Even though the faster increase in employment during 1999‐00 to

2004‐05, the unemployment rate went up between 1999‐2000 to 2004‐05 due to high rate of growth in

Labour force as compare to work force (Employment)

• Total 42% of the population in the country was usually employed out of which 44% in Rural areas &

37% in Urban areas.

• The educated unemployment was higher than uneducated unemployment in both rural & Urban areas

• Employment strategies advocated in MTA include:a) Promote public investment in Rural areas.

b) Reforms in the financial sector to achieve investment target in small & medium enterprise.

c) Employment creation in construction sector for unskilled & Semi skilled labour.

• Demographic Dividend

The demographic dividend is a rise in the rate of economic growth due to rising share of working age

of people in a population.

In India 63% population is in working age group (15‐64 years) & by 2026 it will increase to 68.4%.

In India dependency ratio is sharply declined to 0.59 in 2001, Which leads to improving our Cost

competitiveness.

In China dependency ratio is increasing.

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