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Indian Economy Lecture Notes UNIT II IE

Indian Economy Lecture Notes UNIT II IE

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BBA-II SEM

INDIAN ECONOMICS

UNIT-II

Indian Economy Overview Indian economy is growing, despite the economic crisis that engulfed the world, stated Mr Anand Sharma, Union Minister for Commerce, Industry and Textiles, Government of India, th while addressing a session at the 11 Pravasi Bharatiya Divas 2013. Mr Sharma further highlighted that the national investment rate is around 33-34 per cent, and is expected to th increase to 36 per cent by the end of 12 Five Year Plan (201217). India has been adjourned the fifth best country in the world for dynamic growing businesses, as per the Grant Thornton Global Dynamism Index. The index gives a reflection of how suitable an environment the country offers for dynamic businesses. Indian tax climate was also considered to be reasonably favourable and India continued to be an attractive investment destination, according to a survey conducted by Deloitte Touche Tohmatsu Ltd (Deloitte). Moreover, India was ranked fourth on Ernst & Young's (E&Y) renewable attractiveness index, second on the solar index, and third on the wind index, as per the latest study by E&Y and UBM India Pvt Ltd. The Economic Scenario India is expected to be the second largest manufacturing country in the next five years, followed by Brazil as the third ranked country, according to Deloitte. Some of the other important economic developments in the country are as follows: • The HSBC's Services Purchasing Managers' Index (PMI) touched a 12 month high at 57.5 points in January 2013 as compared to 55.6 in December 2012 • The net direct tax collections in India rose by 13.70 per cent to record Rs 368,322 crore (US$ 67.96 billion) during AprilDecember 2012, as compared to Rs 323,956 crore (US$ 59.77 billion) during the corresponding months in 2011 • Indian companies have raised US$ 4.29 billion, through external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs) in October 2012, to fund modernisation, foreign acquisitions, import of capital goods and onward lending • The total value of private equity (PE) and mergers & acquisitions (M&A) deals in November 2012 increased five-fold to US$ 10.1 billion, as per a study by Grant Thornton India. The total value of PE deals in November 2012 rose to US$ 39 billion from US$ 0.4 billion in November 2011, indicating that PE players preferred concentrated exposure to their value investments • The cumulative amount of foreign direct investments (FDI) equity inflows into India were worth US$ 187,804 million between April 2000 to December 2012, while FDI equity inflow during April 2012 to December 2012 was recorded as US$ 16,946 million, according to the latest data published by Department of Industrial Policy and Promotion (DIPP) • Foreign institutional investors (FIIs) made a net investment of US$ 68.46 million in the equity market and US$ 14.92 million in the debt market up to February 18, 2013, according to data released by the Securities and Exchange Board of India (SEBI)

Growth Potential Story • The pharmaceutical market of India is expected to grow at a compound annual growth rate (CAGR) of 14-17 per cent over 2012-16 and is now ranked among the top five pharmaceutical emerging markets globally • The ready-to-drink tea and coffee market in India is estimated to touch Rs 2,200 crore (US$ 405.90 million) in next four years, according to estimates arrived at the World Tea and Coffee Expo 2013 • India's IT and business process outsourcing (BPO) sector exports are expected to increase by 12-14 per cent in FY14 to touch US$ 84 billion - US$ 87 billion, as per National Association of Software and Services Companies (Nasscom) • Indian manufacturing and natural resources industry plans to spend Rs 40,800 crore (US$ 7.53 billion) on IT products and services in 2013, a growth of 9.1 per cent over 2012, according to Gartner. The telecommunications category remains the biggest spending category and it is forecast to reach Rs 13,200 crore (US$ 2.43 billion) in 2013 • The semiconductor market is expected to grow from US$ 6.03 billion in 2011 to US$ 9.7 billion by 2015. In addition, the local demand and sourcing is estimated to record US$ 3.6 billion by 2015 • The electronic system design and manufacturing (ESDM) sector of India is projected to reach US$ 94.2 billion by 2015 from US$ 64.6 billion in 2011, according to a report by the India Semiconductor Association (ISA) and Frost & Sullivan • The luxury car market of India is set for growth over the medium and long term, according to Mr Philipp Von Sahr, President, BMW Group India. The market is about 30,000 cars a year and is rising steadily, Mr Sahr added • The FM radio sector in India is expected to touch the Rs 2,300 crore (US$ 424.35 million) mark within three years of the Phase III licences' roll-out, as per estimates by Confederation of Indian Industry (CII) and Ernst & Young. The sector is expected to reach Rs 1,400 crore (US$ 258.30 million) with 245 private FM stations during 2012-13 • The US$ 12 billion Indian foundry industry has lined up investments worth Rs 600 crore (US$ 110.70 million) over the next few years as it expands and adapts environment-friendly measures to garner global market share Indian infrastructure landscape would attract investments worth Rs 49,000 billion (US$ 904.05 billion) during the 12th Five Year Plan period (2012-17), with at least 50 per cent funding from the private sector, as per Government's projections. Road Ahead The Indian economy is estimated to grow at a higher rate of 6.7 per cent in 2013-14 due to revival in consumption, according to a report by CRISIL. "India's GDP growth in 2013-14 will be supported by the revival of private sector consumption growth aided by higher growth in agriculture, high government spending and lower interest rates," said Ms Roopa Kudva, Managing Director and CEO, CRISIL. "The Indian financial markets have witnessed favoritism among the investing diaspora compared to its Asian counterparts such as South Korea, Taiwan, Thailand and Indonesia," according to a report by Mecklai Financial. Exchange Rate: INR 1 = 0.01845 as on February 19, 2013

Prof. Amit Kumar amit040985@gmail.com FIT Group of Institutions

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Economic Resources of IndiaIndustry and service resources:

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India has one of the world's fastest growing automobile industries. Industry accounts for 28% of the GDP and employ [17] 14% of the total workforce. In absolute terms, India is 12th in the world in terms of nominal factory output. The Indian industrial sector underwent significant changes as a result of the economic reforms of 1991, which removed import restrictions, brought in foreign competition, led to privatisation of certain public sector industries, liberalised the FDI regime, improved infrastructure and led to an expansion in the production of fast moving consumer goods. Postliberalisation, the Indian private sector was faced with increasing domestic as well as foreign competition, including the threat of cheaper Chinese imports. It has since handled the change by squeezing costs, revamping management, and relying on cheap labour and new technology. However, this has also reduced employment generation even by smaller manufacturers who earlier relied on relatively labour-intensive processes. Textile manufacturing is the second largest source of employment after agriculture and accounts for 20% of manufacturing output, providing employment to over 20 [67] million people. As stated in late January, by the then Minister of Textiles, India, Shri Shankersinh Vaghela, the transformation of the textile industry from a degrading to rapidly developing industry, has become the biggest achievement of the central government. After freeing the industry in 2004–2005 from a number of limitations, primarily financial, the government gave the green light to the flow of massive investment – both domestic and foreign. During the period from 2004 to 2008, total investment amounted to 27 billion dollars. By 2012, still convinced of the government, this figure will reach 38 billion as expected; these investments in 2012 will create an additional sector of more than 17 million jobs. But demand for Indian textiles in world markets continues to fall. According to Union Minister for Commerce and Industries Kamal Nath, only during 2008–2009 fiscal year (which ends 31 March) textile and clothing industry will be forced to cut about 800 thousand new jobs – nearly half of the rate of two million, which will have to go all the exportoriented sectors of Indian economy to soften the impact of the global crisis. Ludhiana produces 90% of woollens in India and is known as the Manchester of India. Tirupur has gained universal recognition as the leading source of hosiery, knitted garments, casual wear and sportswear. India is 13th in services output. The services sector provides employment to 23% of the work force and is growing quickly, with a growth rate of 7.5% in 1991–2000, up from 4.5% in 1951–80. It has the largest share in the GDP, accounting for 55% in 2007, up from 15% in 1950. Information technology and business process outsourcing are among the fastest growing sectors, having a cumulative growth rate of revenue 33.6% between 1997–98 and 2002–03 and contributing to 25% of the country's total exports in 2007–08. The growth in the IT

sector is attributed to increased specialisation, and an availability of a large pool of low cost, highly skilled, educated and fluent English-speaking workers, on the supply side, matched on the demand side by increased demand from foreign consumers interested in India's service exports, or those looking to outsource their operations. The share of the Indian IT industry in the country's GDP increased from 4.8 % in 2005–06 to 7% in 2008. In 2009, seven Indian firms were listed among the top 15 technology outsourcing companies in the world. Mining forms an important segment of the Indian economy, with the country producing 79 different minerals (excluding fuel and atomic resources) in 2009–10, including iron ore, manganese, mica, bauxite, chromite, limestone, asbestos, fluorite, gypsum, ochre, phosphorite and silica sand. Organised retail supermarkets accounts for 24% of the market as of 2008. Regulations prevent most foreign investment in retailing. Moreover, over thirty regulations such as "signboard licences" and "anti-hoarding measures" may have to be complied before a store can open doors. There are taxes for moving goods from state to state, and even within states. Tourism in India is relatively undeveloped, but growing at double digits. Some hospitals woo medical tourism. Agriculture resources: Farmers work outside a rice field in Andhra Pradesh. India is the second largest producer of rice in the world after China, and Andhra Pradesh is the second largest rice producing state in India with Uttar Pradesh being the largest. India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and fishing accounted for 15.7% of the GDP in 2009–10, employed 52.1% of the total workforce, and despite a steady decline of its share in the GDP, is still the largest economic sector and a significant piece of the overall socio-economic development of India. Yields per unit area of all crops have grown since 1950, due to the special emphasis placed on agriculture in the five-year plans and steady improvements in irrigation, technology, application of modern agricultural practices and provision of agricultural credit and subsidies since the Green Revolution in India. However, international comparisons reveal the average yield in India is generally 30% to 50% of the highest average yield in [79] the world. Indian states Uttar Pradesh, Punjab, Haryana, Madhya Pradesh, Andhra Pradesh, Bihar, West Bengal and Maharashtra are key agricultural contributing states of India. India receives an average annual rainfall of 1,208 millimetres (47.6 in) and a total annual precipitation of 4000 billion cubic metres, with the total utilisable water resources, including surface and groundwater, amounting to 1123 billion cubic metres. 546,820 square kilometres (211,130 sq mi) of the land area, or about 39% of the total cultivated area, is irrigated. India's inland water resources including rivers, canals, ponds and lakes and marine resources comprising the east and west coasts of the Indian ocean and other gulfs and bays provide employment to nearly six million people in the fisheries sector. In 2008, India had the world's third largest fishing industry.

Prof. Amit Kumar amit040985@gmail.com FIT Group of Institutions

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India is the largest producer in the world of milk, jute and pulses, and also has the world's second largest cattle population with 175 million animals in 2008. It is the second largest producer of rice, wheat, sugarcane, cotton and groundnuts, as well as the second largest fruit and vegetable producer, accounting for 10.9% and 8.6% of the world fruit and vegetable production respectively. India is also the second largest producer and the largest consumer of silk in the world, producing 77,000 million tons in 2005. Banking and finance The Indian money market is classified into the organised sector, comprising private, public and foreign owned commercial banks and cooperative banks, together known as scheduled banks, and the unorganised sector, which includes individual or family owned indigenous bankers or money lenders and non-banking financial companies. The unorganised sector and microcredit are still preferred over traditional banks in rural and sub-urban areas, especially for non-productive purposes, like ceremonies and short duration loans. Prime Minister Indira Gandhi nationalised 14 banks in 1969, followed by six others in 1980, and made it mandatory for banks to provide 40% of their net credit to priority sectors like agriculture, small-scale industry, retail trade, small businesses, etc. to ensure that the banks fulfil their social and developmental goals. Since then, the number of bank branches has increased from 8,260 in 1969 to 72,170 in 2007 and the population covered by a branch decreased from 63,800 to 15,000 during the same period. The total bank deposits increased from 5,910 crore (US$1.12 billion) in 1970–71 to 3,830,922 crore (US$727.88 billion) in 2008–09. Despite an increase of rural branches, from 1,860 or 22% of the total number of branches in 1969 to 30,590 or 42% in 2007, only 32,270 out of 500,000 villages are covered by a scheduled bank. India's gross domestic saving in 2006–07 as a percentage of GDP stood at a high 32.7%. More than half of personal savings are invested in physical assets such as land, houses, cattle, and gold. The public sector banks hold over 75% of total assets of the banking industry, with the private and foreign banks [90] holding 18.2% and 6.5% respectively. Since liberalisation, the government has approved significant banking reforms. While some of these relate to nationalised banks, like encouraging mergers, reducing government interference and increasing profitability and competitiveness, other reforms have opened up the banking and insurance sectors to private and foreign players. Energy and powerAs of 2010, India imported about 70% of its crude oil requirements. Shown here is an ONGC platform at Mumbai High in the Arabian Sea, one of the few sites of domestic production. India's oil reserves meet 25% of the country's domestic oil demand. As of 2009, India's total proven oil reserves stood at

775 million metric tonnes while gas reserves stood at 1074 billion cubic metres. Oil and natural gas fields are located offshore at Mumbai High, Krishna Godavari Basin and the Cauvery Delta, and onshore mainly in the states of Assam, Gujarat and Rajasthan. India is the fourth largest consumer of oil in the world and imported $82.1 billion worth of oil in the first three quarters of 2010, which had an adverse effect on its current account deficit. The petroleum industry in India mostly consists of public sector companies such as Oil and Natural Gas Corporation (ONGC), Hindustan Petroleum Corporation Limited (HPCL) and Indian Oil Corporation Limited (IOCL). There are some major private Indian companies in the oil sector such as Reliance Industries Limited (RIL) which operates [95] the world's largest oil refining complex. As of 2010, India had an installed power generation capacity of 164,835 megawatts (MW), of which thermal power contributed 64.6%, hydroelectricity 24.7%, other sources of renewable energy 7.7%, and nuclear power 2.9%. India meets most of its domestic energy demand through its 106 billion tonnes of coal reserves. India is also rich in certain renewable sources of energy with significant future potential such as solar, wind and biofuels (jatropha, sugarcane). India's huge thorium reserves – about 25% of world's reserves – are expected to fuel the country's ambitious nuclear energy program in the long-run. India's dwindling uranium reserves stagnated the growth of nuclear energy in the country for many years. However, the Indo-US nuclear deal has paved the way for India to import uranium from other countries Population Explosion in India INTRODUCTION: For the developing countries like India, population explosion is a curse and is damaging to the development of the country and it’s society. The developing countries already facing a lack in their resources, and with the rapidly increasing population, the resources available per person are reduced further, leading to increased poverty, malnutrition, and other large populationrelated problems. The literal meaning of population is “the whole number of people or inhabitants in a country or region” (Webster’s dictionary), and the literal meaning of population explosion is “a pyramiding of numbers of a biological population” (Webster’s dictionary).As the number of people in a pyramid increases, so do the roblems related to the increased population. The main factors affecting the population change are the birth rate, death rate and migration. The birth rate is the ratio between births and individuals in a specified population and time (Miller, 253). The death rate is the ratio between the number of deaths and individuals in a specified population and time (Miller, 253). Migration is the number of people moving in (immigration) or out (emigration) of a country, place or locality. The population change is calculated by the formula: Population change = (Births + Immigration) – (Deaths + Emigration)

Prof. Amit Kumar amit040985@gmail.com FIT Group of Institutions

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The recent increase in the world population has been caused due to the following major reasons: 1. 2. 3. The increase in birth rates due to medical improvements The decrease in death rates due to better medical facilities and advancements in the field of medicine. Immigration to better developed countries due to several reasons like better job opportunities, war, and natural causes like hurricanes, earthquakes, and so forth.

the poverty and the population both increase, the development of the country and the society seems even more far-fetched. b. Religious beliefs, Traditions and Cultural Norms India’s culture runs very deep and far back in history. Due to the increased population, the educational facilities are very scarce. As a result, most people still strictly follow ancient beliefs. According to ABC News, the famous Indian author, Shobha De said, “God said ‘Go forth and produce’ and we just went ahead and did exactly that.” In addition, a lot of families prefer having a son rather than a daughter. As a result, a lot of families have more children than they actually want or can afford, resulting in increased poverty, lack of resources, and most importantly, an increased population. Another one of India’s cultural norms is for a girl to get married at an early age. In most of the rural areas and in some urban areas as well, families prefer to get their girls married at the age of 14 or 15. Although child marriage is illegal in India, the culture and the society surrounding the girls in India does not allow them to oppose such decisions taken by their family. For many, giving a girl child in marriage is done not by choice, but rather out of compulsion. The poor economic status of tribal villagers is attributed as one of the primary factors responsible for the prevalence of child marriages in India. An example of one such incident was reported in Indiainfo.com. According to an article written by Syed Zarir Hussain on th October 16 , 2000, “Forty-two-year-old Rojo Tok, a tribal peasant in Arunachal Pradesh, was all decked up in local finery to wed Mepong Taku, a girl who will turn 14 this winter.” I was brought up in a very different environment and never had to worry about getting married at the age of 14 or 15. However, my parents turned their eyes away, when my maidservant’s daughter was being married off when she was only 13 years old. I was very young, but my parents simply said, “That’s just how things are with poor people” and I did not have a say in it. Due to the young age of these girls, they have more potential of bearing children, that is, since they start bearing children at a very early age, they can have more children throughout their lifetime. This results in the increase of the global fertility rate. Since these girls get married at a very early age, they do not have the opportunity to get educated. Therefore, they remain uneducated and teach the same norms to their own children, and the tradition goes on from one generation to the other. II. DEATH RATE: Although poverty has increased and the development of the country continues to be hampered, the improvements in medical facilities have been tremendous. This improvement might be considered positive, but as far as population increase is considered, it has only been positive in terms of increasing the population further. The crude death rate in India in 1981 was approximately 12.5, and that decreased to approximately 8.7 in 1999. Also, the infant mortality rate in India decreased from 129 in 1981 to approximately 72 in 1999 (Mapsindia.com, Internet). These numbers are clear indications of the improvements in the medical field.This development is good for the economy and society of India, but

India, being a developing country, has had to face several economic and political challenges. One of the most important problems is the population explosion. According to Geography.com.sg, “India's population hit 1 billion in May 2000, increasing the urgency for the country to moderate its population growth.” Some of the reasons for this population explosion are poverty, better medical facilities, and immigration from the neighboring countries of Bangladesh and Nepal.The population density of India in 1996 was about 287 persons per square kilometer (Encyclopedia Britannica, Internet). Several solutions to decrease the rate of population increase have been tried by the government, some successful, some unsuccessful. Although the rate of increase has decreased, the rate has not reached the satisfactory level yet.The population in India continues to increase at an alarming rate. The effects of this population increase are evident in the increasing poverty, unemployment, air and water pollution, and shortage of food, health resources and educational resources. REASONS FOR INCREASE IN POPULATION: BIRTH RATE Poverty According to ABC News, India currently faces approximately “… 33 births a minute, 2,000 an hour, 48,000 a day, which calculates to nearly 12 million a year”. Unfortunately, the resources do not increase as the population increases. Instead the resources keep decreasing, leading to making survival for a human being more and more competitive even for the basic necessities of life like food, clothing and shelter. India currently faces a vicious cycle of population explosion and poverty. One of the most important reasons for this population increase in India is poverty. According to Geography.com, “More than 300 million Indians earn less than US $1 everyday and about 130 million people are jobless.” The people, who have to struggle to make two ends meet produce more children because more children mean more earning hands.Also, due to poverty, the infant mortality rate among such families is higher due to the lack of facilities like food and medical resources. Thus, they produce more children assuming that not all of them would be able to survive. The end result is a mounting increase in the population size of India. Due to the increase in population, the problems of scarce resources, jobs, and poverty increases. Thus the cycle continues leading to an ever-increasing population that we see today. This cycle in fact might be considered as a positive feedback, in that the increase in one results in the increase of the other factor. As I.

a.

Prof. Amit Kumar amit040985@gmail.com FIT Group of Institutions

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strictly in terms of population, this advancement has further enhanced the increase in population. The average life expectancy of people in India has increased from 52.9 in 1975-80 to 62.4 in 1995-00. Although our near and dear ones would live longer, due to the increase in the population, the resources available per person would be much less, leading to a decrease in the curvature of the slope of development instead of a higher gradient. In addition, abortion is not allowed by several religions that are followed in India. In fact, in Islam, one of the leading religions of India, children are considered to be gifts of God, and so the more children a woman has, the more she is respected in her family and society. As a result, although the measures to control birth are either not available or known to the public, the facilities to increase birth through medical facilities are available. III. MIGRATION: In countries like the United States (U.S.), immigration plays an important role in the population increase. However, in countries like India, immigration plays a very small role in the population change. Although people from neighboring countries like Bangladesh, Pakistan and Nepal, migrate to India; at the same time Indians migrate to other countries like the U.S., Australia, and the U.K. During the 1971 war between India and Pakistan over Bangladesh, the immigration rate increased tremendously. However, currently the migration in India is –0.08 migrants per 1000 population (AskJeeves.com, Internet), and is decreasing further. This is definitely good for India. This way, the population might eventually come close to being under control and more people may get better job opportunities and further education. For example, the students in my university from India, like myself, have better chances for job opportunities and better education outside India than we would have had in India.

EFFECTS OF POPULATION EXPLOSION: The current rate of population growth in India is 1.58% and the total fertility rate is 3.11 (AskJeeves.com, Internet).Although the total fertility rate has decreased, due to the increase in the total number of women between the ages of 15 and 44 (reproductive ages), the total number of births has increased. This has lead to the current enormous population size of approximately 1 billion. This has greatly hampered the development of the Indian economy. The amount of resources that could have been available to one person a few years ago now need to be shared between two people, which is not sufficient for either of them. The population increase has lead to air and water pollution, unemployment, poverty, lack of educational resources, and even malnourished women and children. I. Air Pollution: The technological development of India has lead not only to medical advancements, but also to an increase in the number

Prof. Amit Kumar amit040985@gmail.com FIT Group of Institutions

of factories. That has lead to air and water pollution. More energy needs to be produced to power these factories. When fossil fuels - the world's major source of energy - are burnt, gases are added to the atmosphere. Many cities in India have crossed the limits of suspended particulate matter, sulfur dioxide, and other pollutants due to vehicular and industrial emissions. According to an article by the World Bank Organization, Delhi, the capital of India is one of the world’s most polluted cities. In fact, in 1999, the average total suspended particulate (TSP) level in Delhi was 378 micrograms per cubic meter – approximately five times the World Health Organization’s (WHO) annual average standard. Furthermore, TSP levels in Delhi exceeded the WHO 24-hour standard on 97 percent of all days on which readings were taken. As the population grows, more and more forests are cleared. The two most common reasons for deforestation are to make houses for increased number of people to live in, and to use wood as a fuel in the industries. As a result, the trees that help us in reducing the air pollution through the process of photosynthesis are not able to do so any more. According to th an article published in the Times of India on March 25 , 2000, “…increasing air pollution level in the year 1999, caused 3,650 untimely deaths and about 1,545,003 persons had been reportedly suffering with air (polluted) borne diseases.” Some of the diseases caused by air pollution are “respiratory diseases, asthma, chronic obstructive pulmonary disease, cardiovascular disease and cancer of the lung” (World Health Organization, Internet). Due to the tropical climate of India, air pollution also causes smog which may result in headaches, dizziness, breathing difficulties, or even mass illness due to carbon monoxide. This slow murder goes unnoticed because people die of diseases like cancer, asthma, and heart problems after long exposures to deadly air pollutants. Besides the untimely deaths of several thousands of people every year due to air pollution, the pollutants also have a deadly impact on our national heritage – the historical monuments that have made India proud for centuries. A classic example of the air pollution effect is the Taj Mahal in India. The sulfur dioxide in the air because of the pollution caused by the neighboring industries mixes with atmospheric moisture and settles as sulfuric acid on the surface of the tomb, making the smooth white marble yellow and flaky, and forming a subtle fungus that experts have named “marble cancer” (Central Pollution Control Board, Internet). Trying to save the monument might mean closing down several industries in the neighborhood. However, this means that several thousands of people would lose their jobs, resulting in eventual poverty. This again brings us to the same problem that is the root of all the problems – population increase. One of the major issues that have lately been bothering environmentalists all over the world is global warming. Like glass in a greenhouse, gases like carbon monoxide admit the sun's light but tend to reflect back downward the heat that is radiated from the ground below, trapping heat in the earth's atmosphere. This is called the greenhouse effect. However, due to the increase in pollution, especially due to carbon dioxide and chlorofluorocarbons, the ozone layer is getting depleted. This layer plays the major role in controlling the temperature of earth, saving it from the harmful effect of the ultraviolet radiation of the sun. However, with the depletion of the ozone layer on the rise, the temperature of the earth is

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increasing. This is global warming. As we know that India is mainly an agrarian country, temperature and climate plays an important role in the economy of the country. According to an article in Earthone news, global warming affects the main crops in India in 2 major ways: O 1. Researchers have estimated that only a 2 C increase in mean air temperatures will be enough to decrease the rice yield by 0.75 ton/hectare in high-yield areas like Punjab, Haryana and Uttar Pradesh. 2. It is also estimated that a drastic increase in greenhouse gases like carbon dioxide may cause wheat production to fall as much as 68%. 3. Additionally, the changing climatic conditions have the potential to significantly increase tropical disturbances like cyclones and storms in coastal regions. The effect on crops greatly hampers the economy of the country, especially for those farmers who solely depend on agriculture for their survival. For them, the loss of one crop would lead to a plunge into absolute poverty, and thus, the vicious cycle of poverty and population explosion continues. The effects of air pollution on the climatic conditions reveals that air pollution not only affects our environment, but it also greatly endangers the lives of everybody. This means that if the number of people increases the carrying capacity, the mere survival of human beings poses a threat to the lives of all human beings. II. Water Pollution: Air pollution is not the only environmental damage being done by the increasing population. Nowadays water pollution is also one of the increasing problems due to the population explosion. Water is considered the essence of life. There is no life without water. One might think that 70% of the earth is covered with water, so, why worry about the water problem? In fact, 3 sides of the Indian subcontinent is surrounded by water. And there are several rivers, lakes, and other sources of water within the country as well. However the fact is that less than 3 percent of that water we see can be used for human consumption and industrial uses. Nearly 10 percent of the world’s population faces chronic freshwater shortage (Geography.com.sg, Internet). This figure may rise if the population growth is uncontrolled. As in the case of air pollution, the increasing population calls for increasing numbers of factories. These factories lead to various kinds of pollution, including water pollution. Also, India being an agrarian country, the water pollution also comes from pesticides used for agriculture. Some of the major types of pollutants are: 1. Petroleum products required for automobiles, cooking, and other such human activities. 2. Pesticides and herbicides used for agriculture by the Indian farmers. 3. Heavy metals from industries, automobiles’ exhausts and mines. 4. Hazardous wastes. III.

5. Excessive organic matter like fertilizers and other organic matter used by farmers. 6. Sediments caused by soil erosion produced by strip mines, agriculture and roads. 7. Thermal pollution caused by deforestation. One of the classic examples of water pollution in India is the river Ganga. This river is considered sacred and incorruptible. People bathe in it for spiritual renewal and drink water from it. But people do not realize that along with washing off their sins in the river, they are also washing off their body wastes, leading to polluting the holy water of the river. Also, cremated and partially cremated bodies are dumped into the river. Although, dumping these bodies is a religious act in India among the Hindus, but at what cost? Thus, with the increasing population, the number of people dying is also increasing, and so is the pollution in the river Ganga. In addition, the nearby factories and human colonies dump sewage directly into the river. Recent studies show that there are more than 25,000 small-scale industries in just one of the states sharing the river and dispose off their waste in the river (Times of India, Internet). Also, according to the same article in the Times of India, just in Uttar Pradesh, one of the states sharing the river “sewage containing excrete of about 3 million people from 34 sewage pipes is being released into the Gomti in the eight-km stretch from Gaughat to Hanuman Setu in Lucknow.” Currently the river is so polluted that some experts believe such water should not even be exposed in nature without being treated. As we can observe, the increased population size is leading to increased pollution, which in turn is leading to a more hostile environment for human beings themselves. Unemployment and Illiteracy: Suppose we forget about the environment, and only worry about ourselves. Nonetheless, with the increasing population, even that is not possible because with the increasing number of people, we have to share our resources with even more people. Resources of all types are limited, even employment, especially in India. India, being a developing country, has a limited number of jobs available. Due to the increasing number of people, the competition for the most menial jobs is also tremendous. According to EconomyWatch.com, in 1972-73, unemployment rates in rural areas were 1.2 for males and 0.5 for females, and in urban areas, it was 4.8 for males and 6.0 for females. This unemployment rate rose to 2.3 for males and 1.5 for females in rural areas and 4.9 for males and 8.2 for females in urban areas in 1998-99. With the increasing population, unemployment rates are bound to rise even further. Several highly educated people with Bachelors and Master’s degrees in India sit at home, because they cannot find jobs. This, I believe, is the major reason for Indians like myself to migrate to developed countries like the U.S. Such unemployment and underemployment leads to corruption and exploitation of people by the richer classes of the society. This lack of resources further leads to lack of educational resources. Due to the unavailability of resources, parents cannot afford to educate their children to higher levels. Some parents simply cannot afford to

Prof. Amit Kumar amit040985@gmail.com FIT Group of Institutions

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teach their children further, and in some families, children need to work along with their parents in order to bring food to the table. According to the World Bank Group, “about 32 million primary school-age children, mostly girls or those from the poorest households and disadvantaged groups, are not in school; more than half of rural students drop out before completing the primary cycle, and only one-third of females make it to the secondary level.” In addition, “nearly half the population over 15 years old and about 60 percent of all women over 15 years old is illiterate.” Also, basic education has become a commodity that acts on the basis of supply and demand. Basic education has become too expensive in India for a commoner to afford for his/her children. Lack of education further leads to even more unemployment. Due to these reasons, a major part of the population is either illiterate or has the most minimum education leading them to accept minimal work in which they cannot even support themselves. Unemployment, or underemployment, further leads to poverty. This again starts the vicious cycle of poverty and population explosion discussed above. Poverty leads to an increase in the population, because poverty leads people to produce more children to increase the earning members of the family. This increases the population size of India, which further increases the unemployment rate and lack of educational facilities leading to poverty that started this whole cycle. IV.Food Resources Resources are always limited. And in a developing and highly populous country like India, resources are even scarcer. Population explosion results in the shortage of even the most basic resources like food. According to an article by World Bank Group, “…more than half of all children under the age of four are malnourished, 30 percent of newborns are significantly underweight, and 60 percent of women are anemic.” Resources are limited everywhere. Thus, unless we can develop a technology that would enable us to live on just one grain of wheat, the population increase remains a serious problem in India. India spends approximately $10 billion each year on malnutrition (World Bank Group), and even then the government of India cannot provide the everyday nutritional requirements to everybody in India. If you walk on the street of Calcutta or Delhi, you would notice several children fighting with each other for a small piece of bread that they found in a dumpster. While this might be shocking to most people, this is a daily routine and the only way to survive for many people in India. Survival of the fittest finds its true meaning on the streets of the urban cities of India. Just writing this, brings tears in my eyes remembering the scenes I have seen all my life on the streets of India. Something like food that most of us consider as a basic necessity, is a privilege for most of the children of India who are homeless because their parents cannot give them the basic necessities of life. I was raised in a well-to-do family, so I never had to think about food. As long as I was living in India, it was normal for me to see poor people fighting for food. But recently when I went back to India, and noticed the difference between the streets in the U.S. and India, one major difference struck me. That difference was not the pollution on the streets, but the kids who were only

begging for food and nothing else, and the ones who were fighting next to the garbage cans for food. If the population continues to increase at the rate it is currently increasing, then the future of India is what we see today on the street of the country. Is this what we want for our children? AVAILABLE MEASURES TO CONTROL POPULATION The government of India has been organizing several programs for limiting the population increase and has been spending millions of dollars on controlling the birth rate. Some of the programs have been successful, and the rate of increase has also reduced, but has still to reach the sustainable rate. The major factors affecting the population increase of India are the rapidly increasing birth rate and decreasing death rates. We can follow strict birth control measures like China to decrease the birth rate, but we cannot go and decrease our technological advancements to decrease the death rate. Thus, our main emphasis falls on decreasing the birth rate. Several government-funded agencies like the Family Planning Association of India spend hundreds of thousands of dollars on promoting family planning. These organizations aim to promote family planning as a basic human right and the norm of a two-child family on a voluntary basis, to achieve a balance between the population size and resources, to prepare young people for responsible attitudes in human sexuality, and to provide education and services to all. The family planning methods provided by the family planning program are vasectomy, tubectomy, IUD, conventional contraceptives(that is condoms, diaphragms, jelly/cream tubes, foam tables) and oral pills. In addition, induced abortion is available, free of charge, in institutions recognized by the government for this purpose. However, the success of the family planning program in India depends on several factors like literacy, religion and the region where the couple live. PROBLEMS WITH IMPLEMENTING MEASURES TO CONTROL POPUALTION: The success of family planning greatly depends on women and their status. Thus, it is imperative for the women to be educated so that they can decide on the number of children they want and be aware of the available birth control measures. Also, in a country like India, it is important for the women to have equal rights in the decision about the number of children to be produced. Women also need to get educated about the impacts of having so many children on their own bodies and the impacts on their children. In addition, not only the young ones, but also the older women need to be educated so that they can teach the right family planning to their own daughters. However, in India, almost no importance is given to the education of women because of the financial conditions in some families and the religious and social norms in some. In such a case, educating women about family planning becomes an even more difficult task. India, being a diverse country, has people from all religions and of different family backgrounds. As mentioned earlier, in Islam, children are considered to be a gift of God, and thus Muslims do not believe in birth control measures. Also, among the Catholics, abortion is considered a sin. Thus, the people from such sects of the society do not follow family planning. In India, most of the population live in the rural areas.

Prof. Amit Kumar amit040985@gmail.com FIT Group of Institutions

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However, family planning is not widely advertised in rural areas. Also, in rural areas, social and religious norms are more strictly followed. As a result, all the above-mentioned problems are even more intense in rural areas with the addition of the lack of family planning facilities in those areas. In fact, from my own experience, family planning is considered a sin in most of the tribal and rural communities.

(i) Child marriage is prohibited. The marriage age for male and female has been increased lo 21 years and 18 years respectively. (ii) Educated couples are generally interested for small family. So education is being given to the females to reduce birth-rate. If females are educated, they will prefer small family and late marriage. Due to more incentive for the female education, it is expected to control the growth rate of population. (iii) The measures which are now being taken in different five year plans will help to control birth-rate because, due to economic development standard of living of the people rises. So to maintain a high standard of living, people should be interested to adopt small family norm. Problem of Unemployment in IndiaUnemployment India as a nation is faced with massive problem of unemployment. Unemployment can be defined as a state of worklessness for a man fit and willing to work. It is a condition of involuntary and not voluntary idleness. Some features of unemployment have been identified as follows: 1. The incidence of unemployment is much higher in urban areas than in rural areas. 2. Unemployment rates for women are higher than those for men. 3. The incidence of unemployment among the educated is much higher than the overall unemployment. 4. There is greater unemployment in agricultural sector than in industrial and other major sectors. Economists and social thinkers have classified unemployment into various types. Generally unemployment can be classified in two types: (1) Voluntary unemployment In this type of unemployment a person is out of job of his own desire doesn't work on the prevalent or prescribed wages. Either he wants higher wages or doesn't want to work at all. It is in fact social problem leading to social disorganization. Social problems and forces such as a revolution, a social upheaval, a class struggle, a financial or economic crisis a war between nations, mental illness, political corruption mounting unemployment and crime etc. threaten the smooth working of society. Social values are often regarded as the sustaining forces of society. They contribute to the strength and stability of social order. But due to rapid social change new values come up and some of the old values decline. At the same time, people are not is a position to reject the old completely and accept the new altogether. Here, conflict between the old and the new is the inevitable result which leads to the social disorganization in imposed situation. In economic terminology this situation is voluntary unemployment. (2) In voluntary unemployment

Population Policy of India Population policy refers to the Government policy to control the population. Government has realized the problem of rising population on economic development of a country. Improvement in standard of living of the people needs a significant decline in the growth of population. Improvement in health facilities leads to decline in death-rate. It implies that decline in birth-rate is necessary to control the growth rate of population. Family planning measures have been adopted by the Government for the effective control of birth-rate. Government does not make any coercive method to implement the family planning programme. Family planning is democratic in nature. It means married people are persuaded to limit the size of their family. It persuades couple to limit the size of the family and also gives incentive for the family planning. Different steps which are taken by the Government in the family planning programme are given below: Family Planning Programme: Government gives different advertisements on radio, television, newspapers and films to educate the couple about the benefits of small family and teaches people those children by choice and not by chance. This type of advertisement gives incentive for the people to control their family. People are now being educated about the problems of large family and different methods to control birth. (i) Birth control facilities are now being provided in different health centre and hospitals. (ii) Financial incentives are. Now being given to the couple for vasectomy operation, (iii) Green card is now being provided to the couple who have operated two-child-norm. This card helps people to get facilities in employment and promotion. Other Measures: Except these above stated programmes other steps are now being adopted to reduce birth-rate.

Prof. Amit Kumar amit040985@gmail.com FIT Group of Institutions

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In this type of situation the person who is unemployed has no say in the matter. It means that a person is separated from remunerative work and devoid of wages although he is capable of earning his wages and is also anxious to earn them. Forms and types of unemployment according to Hock are. Cyclical unemployment - This is the result of the trade cycle which is a part of the capitalist system. In such a system, there is greater unemployment and when there is depression a large number of people are rendered unemployed. Since such an economic crisis is the result of trade cycle, the unemployment is a part of it. b. Sudden unemployment - When at the place where workers have been employed there is some change, a large number of persons are unemployed. It all happens in the industries, trades and business where people are employed for a job and suddenly when the job has ended they are asked to go. c. Unemployment caused by failure of Industries - In many cases, a business a factory or an industry has to close down. There may be various factors responsible for it there may be dispute amongst the partners, the business may give huge loss or the business may not turn out to be useful and so on. d. Unemployment caused by deterioration in Industry and business - In various industries, trades or business, sometimes, there is deterioration. This deterioration may be due to various factors. In efficiency of the employers, keen competitions less profit etc. are some of the factors responsible for deterioration in the industry and the business. e. Seasonal unemployment - Certain industries and traders engage workers for a particular season. When the season has ended the workers are rendered unemployed. Sugar industry is an example of this type of seasonal unemployment. The problem of unemployment has becoming a colossal. Various problems have caused this problem. There are individual factors like age, vocational unfitness and physical disabilities which restrict the people. External factors include technological and economic factors. There is enormous increase in the population. Every year India adds to her population afresh. More than this every year about 5 million people become eligible for securing jobs. Business field is subject to ups and downs of trade cycle and globalization. Economic depression or sick industries are often close down compelling their employees to become unemployed. Technological advancement contributes to economic development .But unplanned and uncontrolled growth of technology is causing havoc on job opportunities. The computerization and automation has led to technological unemployment. Strikes and lockouts have become inseparable aspect of the industrial world today. Due to these industries often face economic loses and production comes down. Since workers do not get any salary or wages during the strike period they suffer from economic hardships. They become permanently or temporarily unemployed. Today young people are not ready to take jobs which are considered to be socially degrading or lowly. Our educational system has its own a.

irreparable defects and its contribution to the unemployment is an open truth. Our education does not prepare the minds of young generation to become self-employed on the contrary it makes them dependent on government vacancies which are hard to come. Our State right from the beginning of Five year plans has introduced several employment generating schemes and programmes over the years but in the absence of proper implementation and monitoring have failed to achieve the required targets. Recently UPA Government has come up with Rural Employment Guarantee program which aims to provide minimum days of employment to people living in the villages. This is a laudable programme if implemented sincerely because it will provide employment to people during natural calamities like drought, floods etc. The remedial measures for reducing unemployment may lay greater emphasis on creation of opportunities for self -employment, augmentation of productivity and income levels of the working poor, shift in emphasis from creation of relief type of employment to the building up of durable productive assets in the rural areas and instead of attempting to revert somewhat to protectionist policies the pace of privatization may be accelerated.

Prof. Amit Kumar amit040985@gmail.com FIT Group of Institutions

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Indian Economy is Twelfth largest in the world and fourth largest by purchasing power parity. In the 21st century, India is an emerging economic power having vast human and natural resources. Economic Growth: Economic growth has been defined as "an increase in real terms of the output of goods and services that is sustained over a long period of time, measured in terms of value added". Economic growth is a dynamic concept and refers to continuous increase in output. Factors in Economic Growth: The four factors contributing to growth are 1. human resources (labour supply, education, discipline, motivation) 2. national resources (land, minerals, fuels, environmental quality) 3. capital formation (machines, factories, roads) 4. technology (science, engineering, management, entrepreneurship) Growth and Development While the term economic growth referees to increases over time in a country's real output of goods and services i.e. product per capita, the term economic development, in contrast, is more comprehensive. It implies progressive changes in the socio-economic structure. Economic growth and development frequently used interchangeably in economic literatures actually are not identical technically. Difference Between Economic Growth and Economic Development

Economic Growth 1. It indicates quantitative improvement in the economic progress of a country 2. It shows growth in natural income and per capita income over time 3. A country may grow but it may not develop

Economic Development 1. It indicates qualitative improvement in the economic progress of a country 2. It shows not only a sustained increase in national and per capita income but also qualitative changes which leads to higher standard of living. 3. Economic development includes the notion of economic growth.

Economic Growth = Size of output (A Quantitative aspect) Economic Development = Size of output + Welfare (A Qualitative aspect)
Gross National Happiness (GNH) : The concept of gross national happiness has been introduced by king of Bhutan, Jigme Singya Wang Chuck, a tiny kingdom on the northern borders of India. The GNH aims to ensure that prosperity is shared across protecting the environment and maintaining a responsive the word happiness, more like what the signers of the Declaration of Independence had in mind when they included the "pursuit of happiness" as an inalienable right equal to liberty and life itself. The index is designed to challenge the well-established indices of countries development. HDI and GDP which are seen as not taking sustainability into account. India is the 90th happiest country in the world, behind Bhutan(13), China(31), Sri Lanka(13) and Bangladesh(41). It is ahead of Pakistan(112) and Russia(172). Seven of the top 10 happiest countries are from western democracies, while countries in Asia, known for their strong cultural values, family ties and collective identities surprisingly scored low-China(31), Japan(95) and Thailand(32).

Prof. Amit Kumar amit040985@gmail.com FIT Group of Institutions

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GNH Ranking

Millennium Development Goals to be Achieved by 2015

      

Achieve universal primary education Reduce child mortality Improve maternal health Combat HIV/AIDS, Malaria and other diseases Ensure environmental sustainability Develop a global patnership for development

Ranking Country 1 2 3 Vanuatu Colombia Costa Rica Dominica Panama Cuba Honduras Guatemala El Salvador

HPI 68.21 67.24 66.00 64.55 63.54 61.86 61.75 61.69 61.66

Eliminate gender disparities in primary and secondary 4 education, preferably by 2005, and in all levels of education by 5 2015 Halve the proportion of the people suffering from Hunger 6 7 8 9 10 90

St. Vincent of the Grenading 61.37 India 42.46

Prof. Amit Kumar amit040985@gmail.com FIT Group of Institutions

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