Economics unit 2

A decentralized-planned economy or decentrally-planned economy (occasionally horizontally-planned

economy) is a type of economic system based on decentralized economic planning, in which decision-making
is distributed amongst various economic agents or localized within production units. Decentralized planning is
held in contrast to centralized planning where economic information is aggregated and used to formulate a plan
for production, investment and resource allocation by a central authority.
Decentralised planning can take shape both in the context of a mixed economy as well as in a postcapitalist economic system.

In 1957, the Balawant Rai Meheta Committee recommended for the introduction of three-tierPanchayati
Raj System in India. Following the recommendations of this committee report the then government of
India and the State Governments too took different measures to strengthen the Panchayati-raj system existing
at that time. It was with this purpose the Balwant Rai Meheta Committee was appointed by the Central
Government of India in 1957.
The committee recommended for the three-tire Panchayati Raj system in India. These three-tires are
o

the Gram-Panchayats at the village level or at the bottom,

the Panchayat Samiti at the block level or in the middle and

the Zilla Parishad at the district level.

In December 1977, the Janata Government appointed a committee on Panchayati Raj institutions under the
chairmanship of Ashoka Mehta. The committee submitted its report in August 1978 and made 132
recommendations to revive and strengthen the declining Panchayati Raj system in the country. As a result of
this report, the Indian states ofKarnataka, Andhra Pradesh, and West Bengal passed new legislation. However,
the flow of politics at the state level did not allow the institutions to develop their own political dynamics.

Recommendations[edit]
The main recommendations of the committee were:
1. The 3-tier system of Panchayati Raj should be replaced by the 2-tier system: Zilla Parishad at the
district level, and below it,the Mandal Panchayat consisting of a group of villages covering a
population of 15000 to 20000.
2. A district should be the first point for decentralisation under popular supervision below the state level.
3. Zila Parishad should be the executive body and made responsible for planning at the district level.
4. There should be an official participation of political parties at all levels of Panchayat elections.

5. The Panchayat Raj institutions should have compulsory powers of taxation to mobilise their own
financial resources.
6. There should be a regular social audit by a district level agency and by a committee of legislators to
check whether the funds allotted for the vulnerable social and economic groups are actually spent on
them.
7. The state government should not supersede the Panchayat Raj institutions. In case of an imperative
supersession, election should be held within 6 months from the date of supersession.
8. The Nyaya Panchayats should be kept as separate bodies from that of development Panchayats. They
should be presided over by a qualified judge.
9. The Chief Electoral Officer of the state in consultaton with the Chief Election Commissioner should
organise and conduct the Panchayati Raj elections.
10. Development functions should be transferred to the Zila Parishad and all development staff should
work under its control and supervision.
11. The voluntary agencies should play an important role in mobilising the support of the people for
Panchayati Raj.
12. A minister for Panchayati Raj should be appointed in the state council of ministers to look after the
affairs of the Panchayati Raj institutions.
13. Seats for SCs and Sts should be reserved on the basis of their population
13.1 INTRODUCTION
The revitalization of Panchayati Raj manifested through the 73rd Constitutional Amendment owes its origin to the
dynamic leadership of Rajiv Gandhi. In his address to the 5th Workshop on Responsive Administration held at
Coimbatore in June, 1988, he said that If our district administration is not sufficiently responsive, the basic reason is
that it is not only sufficiently representative. With the decay of Panchayati Raj Institutions, the administration has got
isolated from the people thus dulling its sensitivity to the needs of the people. With events moving at a faster pace,
Panchayati Raj emerged as a major institutional channel of such administration.
Features of 73rd and 74th Amendment 219

The Constitution 73rd Amendment Act, 1992 came into effect from 24th April 1993. No one disputes that it is a historic
legislation. The basic question arises as to what was the basic sprit behind this legislation? Was it limited to the
passing of conformity acts and endowing panchayats with some administrative and financial powers or to make them
genuine institutions for participatory self-government? The emphasis has been so far on the former, which has made

panchayats mere implementing agencies of central and state schemes, passed on to them, with funds. The basic
objective of the democratic decentralization through reactivation of the Panchayati Raj system was to realize
Gandhijis concept of Swarajya(Ibid.). In this Unit we will be discussing the various features of the 73rd and the 74th
amendments.

UNIT 3

Means of transport are undeveloped. Industry is depressed. The commercial

banks help in overcoming these obstacles and promoting economic
development. The role of a commercial bank in a developing country is
discussed as under.
1. Mobilising Saving for Capital Formation:
The commercial banks help in mobilising savings through network ofbranch
banking. People in developing countries have low incomes but the banks
induce them to save by introducing variety of deposit schemes to suit the
needs of individual depositors. They also mobilise idle savings of the few rich.
By mobilising savings, the banks channelise them into productive
investments. Thus they help in the capital formation of a developing country.
2. Financing Industry:
The commercial banks finance the industrial sector in a number of ways. They
provide short-term, medium-term and long-term loans to industry. In India
they provide short-term loans. Income of the Latin American countries like
Guatemala, they advance medium-term loans for one to three years. But in
Korea, the commercial banks also advance long-term loans to industry.
In India, the commercial banks undertake short-term and medium-term
financing of small scale industries, and also provide hire- purchase finance.
Besides, they underwrite the shares and debentures of large scale industries.

Thus they not only provide finance for industry but also help in developing
the capital market which is undeveloped in such countries.
3. Financing Trade:
The commercial banks help in financing both internal and externaltrade. The
banks provide loans to retailers and wholesalers to stock goods in which they
deal. They also help in the movement of goods from one place to another by
providing all types of facilities such as discounting and accepting bills of
exchange, providing overdraft facilities, issuing drafts, etc. Moreover, they
finance both exports and imports of developing countries by providing foreign
exchange facilities to importers and exporters of goods.
4. Financing Agriculture:
The commercial banks help the large agricultural sector in developing
countries in a number of ways. They provide loans to traders in agricultural
commodities. They open a network of branches in rural areas to provide
agricultural credit. They provide finance directly to agriculturists for the
marketing of their produce, for the modernisation and mechanisation of their
farms, for providing irrigation facilities, for developing land, etc.
They also provide financial assistance for animal husbandry, dairy farming,
sheep breeding, poultry farming, pisciculture and horticulture. The small and
marginal farmers and landless agricultural workers, artisans and petty
shopkeepers in rural areas are provided financial assistance through the
regional rural banks in India. These regional rural banks operate under a
commercial bank. Thus the commercial banks meet the credit requirements of
all types of rural people.

5. Financing Consumer Activities:

People in underdeveloped countries being poor and having low incomes do
not possess sufficient financial resources to buy durable consumer goods. The
commercial banks advance loans to consumers for the purchase of such items
as houses, scooters, fans, refrigerators, etc. In this way, they also help
in raising the standard of living of the people in developing countries by
providing loans for consumptive activities.
6. Financing Employment Generating Activities:
The commercial banks finance employment generating activities in
developing countries. They provide loans for the education of young persons
studying in engineering, medical and other vocational institutes of higher
learning. They advance loans to young
entrepreneurs
, medical and engineering graduates, and other technically trained persons in
establishing their own business . Such loan facilities are being provided by a
number of commercial banks in India. Thus the banks not only help inhuman capital
formation but also in increasing entrepreneurial activities in developing countries.

7. Help in Monetary Policy:

The commercial banks help the economic development of a country by
faithfully following the monetary policy of the central bank. In fact, the central
bank depends upon the commercial banks for the success of its policy of
monetary management in keeping with requirements of a developing
economy.
Objectives[edit]
People enlist the help of a financial planner because of the complexity of performing the following:

Providing financial security and ensuring that all goals of personal finance are met

Finding direction and meaning in one's financial decisions;

Understanding how each financial decision affects other areas of finance; and

Adapting to life changes to feel more financially secure.

The best results of working with a comprehensive financial planner, from an individual client or family's
perspective are:

To create the greatest probability that all financial goals (anything requiring both money and planning
to achieve) are accomplished by the target date, and

To have a frequently-updated sensible plan that is proactive enough to accommodate any major
unexpected financial event that could negatively affect the plan, and

To make intelligent financial choices along the way (whether to "buy or lease" whether to "refinance or
pay-off" etc.).

UNIT 4
1.
Industrialization plays an important role in the economic prosperity and growth of a
nation.In any economy there are mainly two fields namely agriculture and industry in which
it can specialize .
2.
In olden days it was a misconception that one must be chosen between agriculture and
industry.research reveals that both the sectors of the economy must go in cohesion to
make a nation prosper agriculture provides raw material to the industry where as industry
provides powerful machinery for fruitful and encouraging results in agriculture sector.
3.
industrialized nations have high gross domestic products. their per capita income is
comparably higher than agriculture based countries. deficit in account took place in
Pakistan from its initial days and one of the reason for it was importing of expensive
machinery to start the economic cycle and industrializing Pakistan.
4.
electronic products have stable and high prices due to its innovation in the world market
,where as prices of agricultural products are fragile to climatic conditions that is why they
are sold at the throw away prices in the world market.
5.

the whole outlook of a nation modernize because of industrialization. people acquire jobs in
urban center with decent pay scale and availability of consumer goods is cheap and easy
due to local production.
6.
it is evident in the current scenario that industrialized nations are the richest in the world
like america,japan and now china. china transformed from an agricultural economy to the
industrialized nation.now they have surpassed the economy of japan and considered the
second best economy of the world after america. India is trying to speed up the process of
industrializing their economy.
7.
nations which are confined to agriculture only,lack behind in the economies of the
world,their antiquated methods are no match to the corporate sector style of agriculture in
industrialized nations.