Pradham Mantri Ujjwala Yojana

Sub: Economics II

CHANAKYA NATIONAL LAW UNIVERSITY

SUBMITTED TO: SUBMITTED BY:

Dr. Shivani Mohan NAME: VICKY KUMAR

(Faculty of Economics) ROLL NO: 1574

COURSE: B.A.LLB

SESSION: 2016-2021

SEMESTER: FOURT

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 DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the B.A. LL.B (Hons.) Project Report entitles
“Pradhan Mantri Ujjwala Yojana” submitted at Chanakya National Law University, Patna is
an authentic record of my work carried out under the supervision of DR SHIVANI MOHAN. I have
not submitted this work elsewhere for any other degree or diploma. I am fully responsible for the
contents of my Project Report.

(Signature of the Candidate)

VICKY KUMAR
Chanakya National Law University, Patna

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 ACKNOWLEDGEMENT

A project is a joint endeavour which is to be accomplished with utmost compassion, diligence

and with support of all. Gratitude is a noble response of one’s soul to kindness or help
generously rendered by another and its acknowledgement is the duty and joyance. I am
overwhelmed in all humbleness and gratefulness to acknowledge from the bottom of my heart to
all those who have helped me to put these ideas, well above the level of simplicity and into
something concrete effectively and moreover on time.
This project would not have been completed without combined effort of my revered teacher Dr.
Shivani Mohan whose support and guidance was the driving force to successfully complete this
project. I express my heartfelt gratitude to him .Thanks are also due to my parents, family,
siblings, my dear friends and all those who helped me in this project in any way. Last but not the
least; I would like to express my sincere gratitude to our Economics teacher for providing us
with such a golden opportunity to showcase our talents. Also this project was instrumental in
making us know more that what is pradhan mantri yojana is all about. It was truly an endeavour
which enabled me to embark on a journey which redefined my intelligentsia induced my mind to
discover the intricacies involved in justice delivery mechanism.

Moreover, thanks to all those who helped me in any way be it words, presence encouragement or
blessings..

VICKY KUMAR

4TH

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 TABLE OF CONTENT

SERIAL NO. NAME OF CHAPTER PAGE NO.

1. INTRODUCTION 5
2. REVIEW OF LITERATURE 8
3. RESEARCH METHODOLOGY 8
4. CHAPTERISATION: 9-21
1. INTRODUCTION
2. SOCIAL ISSUES AND ITS SOLUTION OF
YOJANA
3. BENEFITS OF YOJANA
4. CHALLENGES OF YOJANA
5. CRITICISM,SUGGESTIONS AND
CONCLUSION
BIBLIOGRAPHY 22

INTRODUCTION

The three sectors constituting an economy are the Agricultural or Primary sector, the Industry or
Secondary sector and the Services or Tertiary sector. The primary sector is directly concerned
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with natural resources of the country. Agricultural, forestry, fishing and mining constitute the
primary sector. The primary sector utilizes the natural resources and produces raw materials and
basic goods which may be used by the industries or by the end-users. Hence, it can be said that
the primary sector serves as a basic sector assisting the growth of the secondary and tertiary
sectors. The Secondary sector consists of the industrial sector, engaged in construction activities
and manufacturing of finished goods and tangible products. The secondary sector performs the
vital role of catering to the needs of potential consumers of the nation. The Tertiary sector is
intangible in nature, concentrating on the services sector. This sector consists of provision of
services such as education, medical, hotel and finance needed by the consumers.

Early civilization started with excessive reliance on the primary sector. However, with extreme
spurt in food production, people started to turn to industries. This led to the industrial revolution
during the 19th century. Rapid industrialization saw the development of the support system in
the form of the services sector. Thus, the economy evolved from the primary sector to the tertiary
sector gradually in phases. The level of development achieved by any nation is indicated by the
position of these three sectors. Any nation in which majority of its GDP is contributed by the
Agricultural sector is an ―Under-developed nation‖, while a country whose GDP is largely
accounted for by the Industrial sector may be termed as a ―Developing nation‖. In case a
nation‘s GDP is largely contributed by the Tertiary sector, the nation may be categorized as a
―Developed Nation‖.

INDIAN ECONOMY

The Indian economy has witnessed rapid development since independence through its well
executed five year plans and formulation of effective Government policies, both fiscal and
monetary. India is currently the eleventh largest economy in the world (IMF 2011). India‘s total
GDP is about $1.676 trillion and GDP growth rate was 5.5%. India is currently growing at a
rapid pace next only to China. India is one of the very few countries which has accomplished a
positive growth rate despite the global recession. Agriculture is the important sector of India as
the country is still an agro-based economy. Agriculture feeds almost 52% of the country‘s
population. Almost 17.2% of India‘s GDP is contributed by Agriculture, while the Secondary
sector contributes almost 26.4% of GDP and provides employment to about 14% of the
population. The tertiary sector contributes almost 57.2% of the nation‘s GDP, employing about

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34% of the population. The Tertiary sector consists of transport, distribution of goods,
wholesaling, retailing, after sales service, maintenances etc. The Tertiary sector has witnessed a
rapid development in the past two decades. This has significantly contributed to the boosting of
the Indian economy.

THE THREE SECTORS OF INDIAN ECONOMY

Agriculture and Allied sector (the primary sector)

Agriculture is the most important sector of India, providing employment to majority of our
population. The primary sector witnessed a reasonable rate of growth during the eleventh five
year plan when compared to the tenth plan. This has been attributed to the fact that government
spending in this sector has almost doubled, though private spending has not witnessed such a
sharp growth. The food processing sector is growing at a whopping 13% and it shall be the
engine for the growth of this sector. The Agri-Biotech sector has tremendous scope for growth in
India with the growing of transgenic rice and genetically engineered vegetables offering
tremendous growth opportunities. A RBI bank report quotes that this sector has witnessed an
enormous growth of 30% during the preceding half decade. The manufacturing sector of India
has also witnessed a reasonable growth during the recent past. The lengthy past record of
manufacturing coupled with higher education system has positively contributed to the enormous
growth of this sector, giving India an international recognition in this field. Availability of
desired skilled manpower, necessary products and processes, and capital engineering has
immensely contributed to India becoming a manufacturing hub in the global level. Many multi-
national companies are attracted to venture into India to exploit these favorable conditions,
enabling India to become a force to reckon with in the manufacturing sector. The International
Yearbook of Industrial Statistics 2009 has highlighted the following remarkable achievements of

India in the manufacturing sector:

a. Our country occupies twelth position in Manufacturing Value Added (MVA).

b. India is ranked fourth in Textiles, next only to China, the US and Italy.

c. India occupies position five in electrical machinery and apparatus.

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d. India occupies the sixth rank in basic metals industry.

e. India occupies the seventh position in chemicals and chemical products.

f. Our country occupies the tenth rank in leather, leather products, refined petroleum products
and nuclear fuel.

g. India occupies the twelfth position in the manufacturing of machinery and equipment and
motor vehicles.

Services

The services sector is the engine for India‘s growth during the past decade. The sector has
contributed more than half of the country‘s GDP. This trend has persisted over the past decade,
and is expected to continue in the future also. The components of the Services sector namely,
hotels, insurance, Trade, transport and communication, real estate, financing and business
services are all growing strength to strength year after year. Lead indicators also show favorable
trends for high growth of the services sector. The spurt in arrival of foreign tourists into our
country, Railway Freight Traffic, quantum of cargo handled by major ports and the number of
mobile and telephone connections are all indicators of the robust growth of services sector in the
country and excellent future prospects.

KPMG Survey 2009 has revealed that 31.3% of Indian companies engaged in the services sector
shall witness a spurt in their activities level, 37% are anticipating fresh orders while 16% are
anticipating a decline, 43% planning for enhancement of capital expenditure in the form of
increased spending in fixed assets, and an anticipated spurt in revenues of these firms by 31.1%.
These statistics indicate the healthy state of the Indian services sector.

Manufacturing

Manufacturing is the process consisting of activities concerned with the conversion of basic raw
materials in to finished or semi-finished products by utilizing the available resources. In short, it
is the process of conferring form utility to the raw inputs. For instance, when a raw leather is
turned in to shoes, form utility is provided to the raw leather converted it in to shoes, which
constitutes the actual manufacturing process. This manufacturing process undergoes various

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stages before yielding the final product for consumption or industrial use. The three stages
involved in the process of manufacturing are input-process-output. Firms engaged in the
production of food, chemicals, textiles, machine tools and equipment, etc. are said to constitute
the manufacturing sector. Manufacturing units constitute the secondary sector of an economy.
This secondary sector plays a vital role in the growth and prosperity of any economy.

AIMS AND OBJECTIVES

1. To know about primary sector of Indian economy.

2. To know about secondary sector of Indian economy.

3. To know about territory sector of Indian economy.

4. To understand the economic gap in these sectors.

5. To understand the difficulties in these sectors.

HYPOTHESIS

1. Service sector is the biggest sector in India on earning basis.

2. Primary sector is biggest sector in Indian economy in terms of employment.

3. There is too much inter sector inequality in Indian economy.

4. This inter sector inequality results into many difficulties in the economy.

RESEARCH MEATHODOLOGY

The researcher has used only doctrinal method of research for the accomplishment of this project
and relied upon the websites and library of CNLU.

STYLE OF WRITING

The researcher has used both descriptive and analytical styles of writing.

SCOPE AND LIMITTATIONS OF THE STUDY

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Though the researcher has tried her level best not to leave any stone unturned in doing this
project work to highlight various aspects relating to the topic, but the topic is so dynamic field of
Economics and Law, the researcher will sight with some of unavoidable limitations. The
limitations encountered by the researcher were the paucity of time.

PRIMARY SECTOR IN INDIA

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Agriculture is the Primary sector of Economy. It makes direct use of natural resources. It is
contrasted with secondary sector( producing manufactured& other processed goods) & the
Tertiary sector (producing services). This sector is usually most important in less developed
countries & typically less important in industrial countries. Until the industrial revolution, Vast
majority of human population labored in agriculture. Pre Industrial agriculture was typically
subsistent in which farmers raised most of their crop for their own consumption instead of cash
crop for trade. A remarkable shift in agriculture practices has occurred over the past century in
response of new technology & the development of world market. This also led to technological
improvements in agricultural techniques. Now, Agriculture with its allied sector is
unquestionably the largest livelihood provider in India, more so in the vast rural area.It also
contributes a significant figure to GDP. Most of the industries also depend on agriculture sector
for their raw materials. The planned approach to development has helped the country to reach a
stage where the country is self sufficient in food grains and has a comfortable buffer stock. These
achievements have been possible mainly through the favourable policy framework. The policy of
Indian Agriculture was to achieve food security by providing incentive for growth alongwith
equitable access to food. As a result terrible famineshave become events of the past and the
agricultural production does not show large variation even in the event of adverse climatic
condition.

As of 2011, India had a large and diverse agricultural sector, accounting, on average, for about
16 % of GDP and 10 % of export earnings. India's arable land area of 159.7 million hectares
(394.6 million acres) is the second largest in the world, after the United States. Its gross irrigated
crop area of 82.6 million hectares (215.6 million acres) is the largest in the world. India has
grown to become among the top three global producers of a broad range of crops, including
wheat, rice, pulses, cotton, peanuts, fruits, and vegetables. Worldwide, as of 2011, India had the
largest herds of buffalo and cattle, is the largest producer of milk, and has one of the largest and
fastest growing poultry industries.

The first and for most importance of the study is increasing of per capita income. When per
capital income of the people increases the standard of living of the people also increase then
automatically the economic growth of the nation also increase. The acceleration of economy of

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the country is depends upon the development of agricultural sector in India. The majority 60%
of the population in India, mainly depends upon agricultural sector.

HOW AGRICULTURAL SECTOR IMPACTING ON INDIAN ECONOMY?

Much percentage of raw material to industries are coming from agricultural sector only. It is not
only becoming a livelihood to people, but also it is becoming a major source to industries as a
raw material sources to the companies. Earlier major portion of the GDP is generating from
agricultural sector only, but at present it is declined to around 18%. One thing that we need to
remember that India is feed up with natural resources.

Living Purpose: As we know that most of the rural Indians are depending up on agricultural
sector. Agricultural sector has become major income source to the people in India. Nearly 60%
of the population still depending up on agricultural sector India.

National Income: National income which represents standard of living of the people. When
National income increases the per capita income of the people would gradually increase. The
GDP of the nation which is essential for the country.

Raw Material to Industries: As we know that agricultural sector is becoming major source to
generate raw material to industrial sector. Most of the industries are depending up on agricultural
sector for raw material sources.

Exports and Imports: Most of the agricultural products are exporting from India, by that we can
import other goods from other countries. In such a manner we can have exports and imports with
other countries. Revenue to Nation: It is becoming a best income source to nation. When
agricultural sector developed can go for exports and imports, by that revenue to the nation will
increase.

Agriculture makes the highest contribution to India's GDP. Agriculture contributes almost about
13.7 percent to the country's GDP. It has been seen in the last few years that the input of the
agriculture sector has been declining, but it is still the biggest contributor. Agriculture occupies a
prominent position in Indian policymaking not only because of its contribution to GDP but also
because of the large proportion of the population that is dependent on the sector for its
livelihood. However it is clear that India’s agricultural sector has made huge strides in

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developing its potential. The green revolution massively increased the production of vital food
grains and introduced technological innovations into agriculture. This progress is manifested in
India’s net trade position. Where once India had to depend on imports to feed its people, since
1990 it is a net exporter of agrifood products. Its agriculture is large and diverse and its sheer
size means that even slight changes in its trade have significant effects on world agricultural
markets. Training the farmers and educating them appropriately to change their mindset and
reorienting them to take up new activities or adopt foreign technology is of utmost importance.
In this context, it is necessary to involve non-governmental organizations in training and
mobilizing the rural poor to face the challenge of liberalization. Also, with domestic economic
reforms, more care needs to be exercised to draw up state-specific liberalization measures to
maximize their benefits. Lastly, in the implementation of these reforms for successful
globalization, one crucial element, not entirely within control is the need for good governance
and stability in the political and economic environment.

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SECONDARY SECTOR IN INDIAN ECONOMY

The secondary sector plays a significant role in shaping the Indian economy. It is the second
largest contributor to the nation‘s GDP next to the Services sector. It contributes to almost 26.5%
of India‘s GDP. Manufacturing units constitute the major part of the secondary sector. They
provide employment opportunities to innumerable youth in the country. Manufacturing units
play a vital role in improving the health of the economy, as they have a direct impact on the
country‘s inflation and employment pattern. They play a significant role in reducing the
inequalities of distribution of wealth and income in the country, enhancement of the country‘s
National Income and Per capita income, and thereby eradicating poverty among the people.
Studies reveal that a 1% increase in GDP shall result in a 0.8% reduction in poverty, whereas, in
India 1% increase in GDP has yielded only a negligible 0.3% reduction in poverty. The reason
for this dismal situation is that Indian economy has grown largely due to the services sector
rather than the manufacturing sector. Had India‘s GDP grown due to the right share of the
manufacturing sector, poverty rates will drastically decline.

DEFINITION OF MANUFACTURING INDUSTRY

“The branch of manufacture and trade based on the fabrication, processing or preparation of
products from raw materials and commodities. This includes all foods, chemicals, textiles,
machines, and equipment. This includes all refined metals and minerals derived from extracted
ores. This includes all lumber, wood, and pulp products” {Source: Standard Industrial
Classification (SIC) established in the UnitedStates in 1937}.

CLASSIFICATION OF MANUFACTURING INDUSTRIES

1. Classification Based on Possibility of dismantling the finished goods: Based on the possibility
of dismantling of the finished goods yielded by the manufacturing units, the manufacturing
process may be broadly classified into two types of Process Manufacturing and Discrete
manufacturing (product).
a. Process manufacturing: Under Process manufacturing, the production takes place in huge bulk
and the goods produced cannot be dismantled into the original component. Thermal or chemical
reactions such as heating, applying pressure, processing time etc, are used in the Process
manufacturing process to convert the inputs and raw materials into finished or semi finished

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goods. Some illustrationsof process manufacturing industries are chemicals, food and beverage,
cement,paint, etc.
b. Discrete Manufacturing: Also known as Product manufacturing, under discrete manufacturing,
each product is paid unique care and attention by the craftsman at the time of production. The
goods are manufactured in discrete units under this Manufacturing process by the workers
engaged in fitting or assembling activities to produce finished or semi-finished products. Under
this production process, theproducts produced can be disassembled to their original form if
desired. Importantly, the individual products are easily identifiable. Some illustrations of
products manufactured using the Discrete Manufacturing process are bicycles, washing
machines, cars etc.
2. Classification based on investment: The Micro, Small and Medium Enterprises (MSME)
Development Act, 2006 classifies manufacturing enterprises into Micro, Small, Medium and
Large scale based on the quantum of investment in plant and machinery. The classification of
undertakings based on investment is explained as under:
a. Micro Enterprise: A manufacturing enterprise shall be categorized as a micro enterprise if its
investment in plant and machinery is not more than Rs. 25,00,000 (this ceiling is Rs. 10,00,000
in case the unit is engaged in providing service).
b. Small Enterprise: A manufacturing enterprise shall be categorized as Small Industry if the
amount of investment in plant and machinery ranges from Rs. 25,00,000 to 5,00,00,000 (this
range is Rs. 10,00,000-2,00,00,000 in case the enterprise is engaged in providing service).
c. Medium Enterprise: A manufacturing enterprise shall be labeled as medium enterprise if the
quantum of investment in plant and machinery ranges from Rs. 5,00,00,000 to 10,00,00,000 (this
range is Rs.2,00,00,000 to 5,00,00,000 in case the enterprise is engaged in providing service).
d. Large Enterprise: A manufacturing enterprise shall be categorized as ―Large Enterprise‖ if
the quantum of investment in plant and machinery exceeds Rs. 10,00,00,000 (in case of service
firms, it is Rs. 5,00,00,000).

INITIATIVES FOR ENCOURAGING THE MANUFACTURING SECTOR

Manufacturing is the engine for industrialization of a country, which alone shall lead to
development and prosperity of the nation. Abundant availability of human and natural resources
in India needs to be rationally utilized for the prosperity of the country, and it is the

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manufacturing sector which will facilitate such utilization. The four factors of production are to
be properly utilized to bring about a balanced industrial growth. The pace of industrialization
shall be largely influenced by a variety of factors such as sound infrastructure, power, timely and
adequate availability of finance and inputs, and proactive entrepreneurs. Service sector has a
direct bearing on the Indian economy as it is the largest contributor to the country‘s GDP.
However, the secondary sector forms the base for the growth of both the primary and tertiary
sectors. Any issue in the secondary sector will have its impact on both the primary and tertiary
sectors, and hence on the economy at large. Hence, secondary sector is of immense importance
for the overall development of any economy and the prosperity of the nation. Recognising the
importance of the manufacturing sector, the Government of India announced the New National
Manufacturing Policy.

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TERTIARY SECTOR IN INDIAN ECONOMY

The tertiary sector includes service industry and it holds the highest importance among all
sectors. The tertiary sector of economy involves the provision of services to business as well as
final consumers. Services may involve the transport, distribution and sale of goods from
producer to consumers as may happen in wholesaling and retailing, or may involve the provision
of a service, such as in pest control or entertainment. The tertiary sectors account for 51% of the
GDP.

Service sector also recognized as tertiary or residual sector is indispensable for economic
development in any economy including India. It has developed as the main and fastest-growing
sector in the global economy in the last three decades. The rising part of the services sector in the
gross domestic product (GDP) of India indicates the importance of the sector to the economy
(GOI 2012). The services sector accounted for about 30 per cent of total GDP of India in 1950s;
its share in GDP increased to 38 per cent in the 1980s, then to 43 per cent in the 1990s and
finally to about 56.5 per cent in 2012‐13 (GOI 2013). Thus, the services sector currently
accounts for more than half of India‟s GDP. While the share of the services in GDP increased
from 34 per cent in 1970s to 54 per cent in 2010‐11, the corresponding share of services sector
employment in total employment changed from 15 per cent in 1972‐73 to only about 26.67 per
cent per cent in 2009‐10. As a consequence, a large proportion of workers remain in rural
agriculture. Among others, this has led to a situation of a large gap in productivity between
agricultural workers and workers in the services sector (Papola and Sahu 2012). Service sector
employment is associated with informal sector not only due to the relatively large proportion on
unprotected jobs, but also due to the fact that a large proportion domestic workers are accounted
for as services sector workers (Jonakin 2006). Unlike the output of agriculture, mining or
manufacturing which are material and tangible, the output of the services sector such as teaching,
cleaning, selling, curing and entertaining have no physical form and therefore are immaterial or
intangible (Noon 2003). The present study makes an analysis of service sector in Indian
economy. The paper also makes an analysis of Indian services sector through examining its

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growth and contributions in the economy. Development and structure of services sector GDP in
India Within the services sector, however, there is a wide variation in the growth performance of
different sub‐sectors. Between 1950‐51 and 1965‐66, the services that grew at a rate faster than
the average growth rate for the entire services sector are: Public administration (6.37 per cent),
Banking (6.8 per cent), Insurance (6.8 per cent), Road transport (6.06 per cent) and Trade (5.2
per cent). Other sub‐sectors that were relatively smaller in size and had smaller base values and
experienced higher growth rates during this period were: Education (8 per cent), Water transport
(6.15 per cent), Air transport (9.64 per cent) Health (5 per cent) and Communications (7 per
cent). The services sub‐sectors that experienced lower than average growth in the period from
1950‐51 to 1965‐66 belonged to the category of Personal services (2.33 per cent) and to
Dwellings and business services (2.45 per cent). Within personal services the low growth
services were Domestic services (1.8 per cent), Laundry, dyeing & dry cleaning (4.18 per cent),
Barber & beauty shops (1.32 per cent) and Tailoring (1.87 per cent). Within business services the
low growth services were Dwellings (2.34) real estate (3.72) and legal services (0.25). Sectoral
growth rate Road transport continued to increase in share accounting for 5.8 per cent in 1965‐66
and 7.4 per cent in 1979‐80. Similarly, the share of air transport increased from 0.2 per cent to
0.6 per cent (an almost trebling of its share) and storage from 0.2 per cent to 0.4 per cent. The
Banking and insurance sector also increased its share with Banks‟ share in services increasing
from 1.7 per cent to 2.5 per cent and that of non‐life insurance increasing from 0.9 per cent to 1.3
per cent. The growth of the public sector led services continued in this period. While the share
of education services remained unchanged that of medical services increased from 2.1 per cent to
2.6 per cent, that of public sector communications increased from 0.7 per cent to 0.9 per cent and
finally public administration from 12.4 per cent to 14.7 per cent. In the period from 1950 to
1966, Trade, Dwellings, Public administration, Education services, Road transport, Railways and
Banks together contributed to about 80 per cent of the overall services sector growth. The
average annual growth rate of the services sector from 1980‐81 to 1995‐96 was about 6.5 per
cent. The services sector growth further increased to 7.7 per cent in the period from 1996 ‐97 to
2004‐05 and finally to 10.3 per cent in the most recent period from 2004‐ 05 to 2009‐10.

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COMPARISON BETWEEN PRIMARY AND TERTIARY SECTOR

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