ECONOMICS (MINOR)

Submitted by: - Submitted to: -

Name – AVIK AGGARWAL Dr. RACHNA SHARMA

Roll Number - 19071 RGNUL, PUNJAB
Group - 11

Rajiv Gandhi National University of Law

2019
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Acknowledgement
On completion of this project, it is my privilege to express my
heartfelt gratitude and indebtedness towards my teachers for their
valuable suggestion and constructive criticism. Their precious
guidance and unrelenting support kept me on the right path
throughout the whole project so I am very much thankful to my
teacher in charge and project coordinators for giving me this
relevant and knowledgeable topic.

I wish to express my sincere gratitude to my teacher Dr. Rachna

Sharma for her guidance and encouragement in carrying out this
project work.

 
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RAJIV GANDHI NATIONAL UNIVERSITY

OF LAW, PUNJAB

SUPERVISOR’S CERTIFICATE

Dr. Rachna Sharma

Patiala (Punjab)

Date:
18-oct.-2019

Rajiv Gandhi National University of Law, Punjab

This is to certify that the Dissertation titled: Aftermath of Jallianwala Bagh Massacre
submitted to Rajiv Gandhi National University of Law, Patiala in partial fulfilment of
the requirement of the B.A.LLB (Hons.) course is an original and bona fide research
work carried out by Mr. AVIK AGGARWAL under my supervision and guidance. No
part of this project has been submitted to any University for the award of any Degree
or Diploma, whatsoever.

Dr. Rachna Sharma

 
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Contents
​1. Introduction……………………………………………………………..5
2. Background of Evets ………………………………………...…… .…6
2.1 Def ence of Indian Act 1915………………………………….….…6
2.2 The Rowlatt Act………………………………………………..…..7
2.3 Before The Massacre…………………………………………….…8
3. Aftermath of Massacre……………………………………….……..…10
3.1 Hunter Commission………………………………………...……..11
3.2 Demonstration at Gujranwala……………………………………..16
3.3 Assassination of Michael O'Dwyer………………..………………17
3.4 Monument and legacy……………………………………………..19
3.5 Regret…………………………………………………….………..19
3.6 Controversies………………………………………..………….…20
3.7 Demands for apology………………………….…………………..21
3.8 Popular memory………………………………………..………….23
4. Bibliography…………………………………………………………….25

 
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1. INTRODUCTION
Agriculture, which is the predominant occupation of rural India, is still restricted to
just 15% of GDP in terms of overall contribution. But it directly and indirectly
employs more than 70% of the all-India workforce. That share would be a lot higher
in rural areas. In other words, the rural household economy and demand generation
is largely farm dependent. Another aspect is the rural consumption pattern.

The importance of rural and semi-urban consumption was highlighted when the CFO
of Parle hinted that the company may have to cut nearly 8,000 jobs due to weak
demand. Now, Parle sells biscuits at the market entry point and has a strong
presence in the rural and semi-urban areas. This was a clear indication that rural
demand was faltering to the extent that even a biscuit packet at Rs 5 was not finding
willing buyers. That brings us to a much bigger question; why is rural demand so
critical for India. The rural households have a large marginal propensity to spend
and therefore any increase in income can have a multiplier effect on consumption
and jobs creation. That perhaps explains why most FMCG and consumer companies
are chasing rural consumers aggressively. In fact, according to Nielsen estimates, the
rural FMCG goods consumption alone is expected to increase 3-fold from the current
$35 billion to $100 billion in 2025. That is how big rural consumption story is and
that is why rural demand matters a lot to the economy in general and consumption
driven companies in particular.

Indian Economy Snapshot​ -

India is the seventh largest economy in terms of Gross Domestic Product (GDP)
in current US$ and has emerged as the fastest growing major economy (Figure 2).
The average growth rate of India was not only higher than China’s during 2014-15 to
2017-18 but much higher than that of other top major economies (measured in terms
of GDP at current US$ terms) as well. With Purchasing Power Parity (PPP)
adjustments, India’s GDP at current international dollar, ranks third in the world.

 
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Importance of rural demand matters for Indian economy

In an interesting study conducted by CSFB, it was found that the willingness of the
Indian consumer to postpone purchases of consumer durables had touched a high of
1 year. Effectively, consumers were willing to put off purchase of durables like white
goods, two wheelers, entry level cars, etc. by up to one year as they were not
confident of the economic conditions. The liquidity crunch in the aftermath of the
NBFC crisis has also created problems for rural demand as NBFCs and MFIs were
virtually acting as the last mile delivery agents for banks. That has hit fund flows into
rural areas in a big way.

There are 3 principal reasons why this rural slowdown impacts consumption in
general.
1. Rural India accounts for 37% of overall FMCG spend and, according to
Nielsen, this is likely to get closer to 50% in the next 5 years. That is a very large
chunk of the consumption market and that explains why consumption stories
are under strain.

 
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2. Rural sector consumption ​demand for FMCG products has traditionally

grown at 3-5% more than the urban demand growth and that differential has
been the key to creating alpha for the FMCG companies
3. Finally, the high ​marginally propensity to consume among the rural
population makes it an important and lucrative consumption market.

2. Household Demand
Households are the main sector for the consumption of an economy. Household
spending is the most important part of aggregate demand. It can be broken down
into a number of categories, covering major spending items such as transport, food,
fuel, holidays, and clothing. The households are the final consumers of goods and
services produced by the firms. They create demand in the market and according to
their tastes and preferences. The firms produced and supplied goods in the market,
as per their demand. Therefore, households determine the production line of a
country.
Consumer spending is what households buy to fulfill everyday needs. This private
consumption includes both goods and services. Every one of us is a consumer. The
things we buy every day create the demand that keeps companies profitable and
hiring new workers.
Almost two-thirds of consumer spending is on services, like real estate and health
care. Other services include financial services, such as banking, investments, and
insurance. Cable and internet services also count, and even services from non-profits.
The remaining one-third of our personal consumption expenditure is on goods.
These include so-called durable goods, such as washing machines, automobiles, and
furniture. More frequently, we buy non-durable goods, such as gasoline, groceries,
and clothing.

The pattern of spending changes over time as a result of changes in:

 
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● Household income – some goods are normal goods while others are
inferior, so increases in income encourage households to shift spending from
goods with a low income elasticity of demand, like food, to those with high
income elasticity of demand, like holidays.
● Tastes and fashions – over time spending on certain items that are ‘in
fashion’ increase relative to those that go out of fashion.
● Taxes and subsidies – as indirect taxes and subsidies rise and fall,
households will be encouraged or discouraged from spending.
● Relative prices ​– as the prices of certain goods and services rise in relation
to others, household spending will adjust.

The data from NSSO Household Consumption survey also shows the increase in
share of non-food expenditure in total consumption over time. First interesting point
to note is that the share of food in total consumption is more than 10 percentage
points lower in urban areas (in 1999-00, 2004-05 and 2011-12 as well) as compared
to rural areas. Secondly, share of food in total consumption has gone down by around
6.5 percentage points in rural areas and 5.5 percentage points in urban areas from
1999-00 to 2011-12. Within food, cereals have accounted for almost the entire
decline. The share of cereals has reduced to half between 1999-00 to 2011-12 in both
urban and rural areas. Overall, the share of non-food expenditure has increased with
the expenditure share increasing for education, medical, conveyance and durable
goods.

 
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This shows that the shift towards discretionary spending has been increasing while
with the spending on necessities has been gradually decreasing.

The level of spending is determined by a number of factors, including:

The current level of national income​ :

Some extra spending is induced by changes in the current level of national income.
As income rise, consumers tend to increase their spending on higher income elastic
goods and services, such as luxuries, holidays and leisure goods. When income falls
households may postpone spending on these luxuries until incomes rises again.

The level of savings :

Spending and saving are mutually exclusive, which means that if income is fixed, any
change in households savings will inversely affect spending. Many of the
determinants of consumption have an inverse effect on saving.

Expectations

 
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If households are confident, and have positive expectations about the future, current
spending can rise. This can lead to economic growth, and re-enforce the positive
expectations.

Unemployment

Unemployment has two potential effects on household spending. Firstly, the

unemployed spend less because of their lower personal income, and secondly,
unemployment causes negative expectations, even for those employed, and this can
act as a curb on spending and a stimulus to saving.

Rates of income tax

Changes in tax rates can clearly affect disposable, post-tax income, and hence affect
household spending.

Interest rates

By altering the level of savings – a rise in interest rates will stimulate more savings,
and less spending.

By altering the cost of funding existing debts, such as mortgages and bank loans. For
example, a rise in interest rates will divert household funds towards the higher loan
payments and away from general spending.

By altering the cost of new credit, and thus encouraging or discouraging household
borrowing. For example, a rise in interest rates will deter new borrowers, who may
postpone borrowing until rate fall back.

By altering expectations and confidence. For example, rising interest rates will
subdue confidence and create a ‘wait and see’ attitude by households, who may
postpone certain spending until expectations improve.

 
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3. Rural Household Demand in

India

India is predominantly a rural country with two third population and 70% workforce
residing in rural areas. Rural economy constitutes 46 per cent of national income.
Despite the rise of urbanisation more than half of India‟s population is projected to
be rural by 2050.
Thus growth and development of rural economy and population are a key to overall
growth and inclusive development of the country.

This report is based on the ​Situation Assessment Survey (SAS) of Agricultural

Households ​conducted in the 70th round of NSS during January 2013 to December 2013.
The survey, conducted in the rural areas of the country with its two visits, was spread over
4529 villages covering 35200 households. Some of the key estimates related to the income,
expenditure, productive assets and indebtedness of the agricultural households with respect
to the agricultural year July 2012 – June 2013 as obtained from this Survey are presented
here-
● The average monthly income per agricultural households during the agricultural
year July 2012- June 2013 was estimated as ₹6426

● Net receipt from farm business (cultivation and farming of animals) accounted for
about 60 percent of the average monthly income per agricultural household during
the agricultural year July 2012- June 2013. Nearly 32 percent of the income was
contributed by wage/ salary employment.
● The average monthly consumption expenditure per agricultural household during
the agricultural year July 2012- June 2013 was ₹6223.
● Average monthly expenditure on productive assets used for farm and non-farm
business per agricultural household during the agricultural year July 2012- June
2013 was ₹1087.

 
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● Out of the average monthly expenditure on productive assets, nearly 33 percent was
spent on agricultural machinery and implements, 18 percent was on livestock and
poultry and another 42 percent was on ‘other assets in farm businesses’.
● Expenditure on productive assets used in non-farm business accounted for about 7
percent of the total monthly expenditure.

4. Data Analysis of Rural

Household Demand In India.

The report is based on information collected during 2011-12 from 101651

households in 7469 villages and 5268 urban blocks spread over the entire
country.

● Pulse and Pulse Products consumption trends - Fig 1 shows the

composition of pulse consumption in quantity terms. In value terms, monthly
per capita consumption was Rs.41.58 in rural India and Rs.53.66 in urban
India

 
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● Edible Oil consumption trend ​- Monthly per capita edible oil

consumption was estimated as 674 gm in rural India and 853 gm in urban
India. The breakup of edible oil consumed per capita at all-India level by type
of oil is shown in below for rural and urban sectors.

 
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● Milk, egg, fish and meat consumption trends : Milk and milk products
commanded a share of 8% of
consumer expenditure in rural India
and 7% in urban India.

The group “egg, fish and meat”, on

the other hand, had a share of 4.8% in
rural and 3.7% in urban consumer
expenditure

● Energy (excluding vehicle fuels) consumption trends​:

● Nearly 71% households in urban

areas and over 21% in rural areas
reported consumption of LPG for
household use during the last 30 days
Electricity made up about 50% of fuel
expenditure in the average urban
household and 22% in the average rural
household. Electricity was consumed by
96% households in urban areas and 74%
in rural areas.

 
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● Clothing and bedding consumption trends​ - The clothing expenditure

of a household during a 365-day period is usually spread over a large number
of items and a number of months; the value of a purchase is frequently small
and difficult to recall. In an effort to minimise recall lapses, as many as 25
clothing items were provided in the schedule of enquiry. The estimated value
of consumption was a very small component of MPCE for most of these items.
Monthly per capita consumption expenditure on all clothing was estimated as
only about Rs.81 in rural India and Rs.133 in urban India.

Findings - cloth for shirts and trousers had greater importance in the clothing
budget of the rural Indian compared to the urban. The shares of readymade
garments such as shirts, trousers, kurtas, pyjamas, etc. were all greater for
urban India than for rural India. Saris accounted for 16% of the clothing
budget in both sectors.

● Education expenditure trends: ​Per capita educational expenditure was,

however, as much as 3.6 times higher in the urban sector than in the rural.
Educational expenditure per person per month (including the entire

 
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population in the denominator and not only students) was about Rs.50 (3.5%
of MPCE) in rural India and Rs.181.50 (about 7% of MPCE) in urban India.

The largest component of educational expenses was tuition and other fees,
which had a share of 56% in the rural sector and about 67% in the urban
sector. Private tuition had a hare of around 12-13% of educational expenditure
in both sectors.

● Medical Care expenditure trends : ​Expenditure on medical care has two

components: institutional (incurred as in-patient of a medical institution) and
non-institutional. Data were collected with a reference period of 365 days for
the institutional component and 30 days for the other.

non-institutional medical expenditure during the last 30 days was reported by

about 79% of rural and 75% of urban households. Medicine accounted for
nearly 80% of non-institutional medical expenses in rural India and 75% in

 
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urban India. Institutional medical expenditure during the last 365 days was
reported by about 14-15% of households in each sector. Here, too, medicine
was the largest component but, as might be expected, its share was smaller –
44% in the rural sector and 34% in the urban.

5. Key Findings​ :
Apart from the highlighted data results in the analysis, following were the key
findings as per NSS Report No.558: Household Consumption of Various Goods and
Services in India, 2011-12 :
● In rural India, telephone expenditure per person increased to about Rs.25 per
month in 2011-12, which was about 4.6 times its value in 2004-05. While 32%
of rural households reported telephone expenditure in 2004-05, the
proportion of households in 2011-12 reporting expenditure on mobile phones
alone was 77%.
● Rural per capita expenditure on petrol rose in 2011-12 to about Rs.23, about
4.2 times its level in 2004-05. Petrol expenditure per capita in urban India
increased about 2.7 imes during the same period, from Rs.31 to about Rs.85
per month.
● Expenditure per person on cable TV subscription in rural India rose in
2011-12 to 5.9 times its value in 2004-05, and the proportion of households
incurring such expenditure increased by 270%, from 88 per 1000 households
to 326.
● Rural per capita expenditure on taxis and auto rickshaws was in 2011-12 about
3.7 times its value in 2004-05.
● Urban expenditure per person on house rent (taking the entire population in
the calculation and not rent-paying households only) rose from about Rs.55
per month in 2004-05 to Rs.159 in 2011-12 – a nearly threefold increase over
7 years.

 
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● While the proportion of urban households incurring expenditure on mobile

phone charges and cable TV subscription rose by 45% (at least) and 60%
respectively between 2004-05 and 2011-12, per capita expenditure on these
services grew at a slower rate than overall MPCE in urban India during this
period, indicating a fall in their budget shares.

Bibliography

Following are the list of sources -

1. NSS Report No. 558: Household Consumption of Various Goods and Services
in India, 2011-12
2. State of the Economy in 2018-19: 01 A Macro View
3. GDP at Factor Cost at 2004-05 Prices, Share to Total GDP and % Rate of
Growth in GDP (31-10-2014)
4. https://www.ibef.org
5. https://www.livemint.com
6. Wikipedia
7. Journals/Newspapers etc.

 
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