INFLATION

 Inflation means increase in average prices of goods and services in a long period of
time.
 It is macro concept, where in the effect of inflation is seen over a large basket of
goods.
 Ultimate effect of inflation is that the value of money is reduced i.e., the purchasing
power of money is reduced
 1. Demand-Pull Inflation Caused due to increase in aggregate demand in the
economy.
 2. Cost-Push Inflation Caused due to reduction in aggregate supply in the economy.
 Note: Cost pull inflation is considered bad among the two types of inflation
 Remedies
 1. Monetary Policy (Contractionary policy)
 2. Fiscal Policy measure
 Also called Budgetary policy
 It deals with the Revenue and Expenditure policy of government.
 3. Supply Management measures Import commodities which are in short supply
 4. Decrease exports
 5. Govt may put a check on hoarding and speculation
 6. Distribution through PDS
 Based on value of inflation
 1. Creeping inflation - If rate of inflation is low (upto 3%)
 2. Walking/Trotting inflation – Rate of inflation is moderate (3-7%)
 3. Running/Galloping inflation – Rate of inflation is high (>10)
 4. Runaway/Hyper Inflation - Rate of inflation is extreme
 Measurement of Inflation Inflation is measured with the help of Index numbers.
Index numbers are numbers that measure change in any variable.
 There are two types of Index numbers
 Wholesale Price Index (WPI)
 Consumer Price Index (CPI)
 Based in 676 commodities
 Estimated by Min of Industry and Commerce
 Measured on a monthly basis, but with a lag of 14 days.
 Base year is 2004-05
 WPI was revised in 2010.
 It was revised on the recommendation of Prof. Abhijit Sen committee.
 Earlier the base year for WPI was 1993-94.
 In India, general rate of inflation is measured by WPI.

INTERNATIONAL TRADE

 The balance of Payments (BOP) and Balance of Trade (BoT)

Balance of Payments

 The balance of payments (BOP) record the transactions in goods, services, and
assets between residents of a country with the rest of the world for a specified time
period typically a year.
 There are two main accounts in the BoP - the current account and the capital
account.
 Current Account: The current account records exports and imports in goods, trade
in services and transfer payments.
 Capital Account: The capital account records all international purchases and sales
of assets such as money, stocks, bonds, etc.
 It includes foreign investments and loans.

What would happen if a country spends more than it receives from abroad?
 What would happen if an individual spends more than his income? He must
finance the same by some other means, right? It may be by borrowing or by selling
assets.
 The same way, if a country has a deficit in its current account (spending more
abroad than it receives from sales to the rest of the world), it must finance it by
borrowing abroad or selling assets. Thus, any current account deficit is of necessity
financed by a net capital inflow
 The balance of trade is also referred to as the trade balance or the international
trade balance.
 A country that imports more goods and services than it exports in terms of value
has a trade deficit.
 The formula for calculating the BOT can be simplified as the total value of imports
minus the total value of exports

BoT vs BoP

 The balance of Trade (BoT) or Trade Balance is a part of the Balance of Payments
(BOP). BoT just includes the balance between export and import of goods.
 BoP not only adds the service-trade but also many other components in the current
account (Eg: Transfer payments) and capital account (FDI, loans etc).

Rural welfare oriented programmes

Aam Aadmi Bima Yojna:

 It was launched on october 2, 2007.

 II. It's a social security scheme for rural households.
 III. Under this scheme one member of the family is covered.
 IV. The premium of Rs. 200 per person per annum is shared by the state and
central government.
 V. The insured person need not to pay any premium if his/her age is between the
18 years to 59 years.

National Rural Health Mission:

 I. The National Rural Health Mission (NRHM), now under National Health
Mission is initiated on 12 April 2005.
 II. Main aim of this plan is to provide accessible, affordable and accountable
quality health services even to the poorest households in the remotest rural regions.
 III. Accredited social health activists (ASHA) scheme is also operational under this
scheme.

Village Grain Bank Scheme:

 I. This scheme was implemented by the department of food and public distribution.
 II. Main objective of this scheme is to provide safeguard against the starvation
during the period of natural calamity or during lean season when the marginalized
food insecure households do not have sufficient resources to purchase rations.
 III. Under this scheme needy people will be able to borrow food grains from the
village grain bank and return it when they have abundant food.

Antyodaya Anna Yojna (AAY):

 I. The scheme was launched by the Prime Minister Atal Bihari Vajpayee on the 25
December 2000.
 II. The scheme provides food grains to around 2 cr. Below Poverty Line (BPL)
families at a very subsidized rate.
 III. Total 35 kgs of food grains is provided to a family. Rice is provided at the rate
of Rs. 3/kg and wheat at 2 Rs.2/kg.

Training to Rural Youth for Self Employment (TRYSEM)

 I. This centrally sponsored programme was started on august 15, 1979.

 II. The main target of this scheme was to provide technical and business expertise
to rural BPL people who are in the age group of 18-35.
 III. This programme has been merged with Swarn Jayanti Gram Swarojgar Yojana
on April, 1999.

Pradhan Mantri Gram Sadak Yojana:

 I. Initially it was 100% centrally funded scheme, launched on the December 25,
2000.
 II. After the recommendation of 14th finance commission report now expenditure
will be shared by the centre and state at ratio of 60:40.
 III. The main aim of this scheme is to provide all weather road connectivity to the
rural areas whose population is more than 500 persons and in terms of hilly areas it
is 250 persons.

National Rural Livelihood Mission:

 I. This scheme was restructured from the Swarn Jayanti Gram Swarojgar Yojna in
2011.
 II. National Rural Livelihoods Mission (Aajeevika) is aimed to empower the
women's self-help group model across the country.
 III. Under this scheme govt. provides loan up to 3 lakh rupee at the rate of 7%
which could be lowered to 4% on the timely repayment.

Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS):

 I. National Rural Employment Guarantee Act 2005, was launched on the 2nd
Feb.2006. Now the new name of this scheme is "Mahatma Gandhi National Rural
Employment Guarantee Act" (or, MGNREGA).
 II. This scheme is an Indian labour law and social security measure that aims to
provide ‘right to work to the people falling Below Poverty Line.
 III. It guarantees 100 days employment in a year to the village people.
 IV. Fifty percent workers should be women.
 V. Its 90% funding is borne by the central government and 10% by the state
government.

Heritage Development and Augmentation Yojana (HRIDAY):

 I. This scheme was launched on the 21 January 2015 under the care of The Union
Ministry of Urban Development.
 II. Its aim is to preserve and rejuvenate the rich cultural heritage of the country.
 III. In the initial phase of HRIDAY, 12 heritage cities have been identified which
will be rejuvenated and developed. Union Government will provide 500 crore
rupees to these 12 cities.

Sansad Adarsh Gram Yojna:

 I. This programme was launched by the Prime Minister Narendra Modi on the birth
anniversary of Lok Nayak Jai Prakash Narayan on 11 October 2014.
 II. Ministry of Rural Development will be the supervising authority for this
programme.
 III. Under this programme each Member of Parliament will take the responsibility
for developing physical and institutional infrastructure in three villages by 2019.

Swachh Bharat Mission:

 I. The Prime Minister launched Swachh Bharat Mission on the birth anniversary of
Mahatma Gandhi on 2nd October, 2014.
 II. The concept of Swachh Bharat Abhiyan is to pave access for every person to
sanitation facilities including toilets, solid and liquid waste disposal systems,
village cleanliness and safe and adequate drinking water supply.
 III. The programme is to be implemented by Ministry of Drinking Water and
Sanitation.
 IV. An action plan has been drawn up for Swachh Bharat to become a reality by
2019, the 150th birth anniversary of Mahatma Gandhi.
 V. The Mission aims to triple the growth percentage of toilet from present 3% to
10% by 2019

Roshni: Skill Development Scheme for Tribals:

 I. The Ministry of Rural Development on 7 June 2013 launched a new skill

development scheme designed to offer employment to tribal youth in 24 Naxal
-affected districts.
 II. The scheme, which is named Roshni is supposed to provide training and
employment to an anticipated 50000 youth in the 10-35 years age group, for a
period of three years.
 III. As per the Ministry 50 per cent of the beneficiaries of the scheme will be
women only.
 IV. The scheme is designed in light of the Himayat project model, which was
launched in Jammu and Kashmir has been implemented in Sukma, Chhattisgarh,
and West Singhbhum, Jharkhand, on a pilot basis over the last 18 months.

Deen Dayal Upadhyay Grameen Kaushal Yojana:

 I. This is a placement linked skill development scheme for rural poor youth.
 II. It was launched by on 25 September 2014 by Union Ministers Nitin Gadkari and
Venkaiah Naidu on the occasion of 98th birth anniversary of Pandit Deendayal
Upadhyaya.
 III. It aims to target youth, under the age group of 15–35 years.

RURAL ECONOMY - India Lives in Villages' – Mahatma Gandhi

Population and Associated Issues

The two main common causes leading to over population in India are:
 The birth rate is still higher than the death rate. We have been successful in
declining the death rates but the same cannot be said for birth rates.
 The fertility rate due to the population policies and other measures has been falling
but even then it is much higher compared to other countries.
 Early Marriage and Universal Marriage System
 Poverty and Illiteracy
 Age old cultural norm
 Illegal migration

Effects of Over Population:

 Unemployment
 Manpower utilisation
 Pressure on infrastructure
 Resource utilisation
 Decreased production and increased costs
 Inequitable income distribution

Steps to Control Population in India

 Social Measure
 Raising the Status of Women
 Spread education
 Adoption
 Social Security
 Economic Measures
 Urbanisation
 birth control measures
 Five-Year Plans by the Government of India for population control
 First Five Year Plan: India is the first country in the world to begin a population
control programme in 1952. It emphasized the use of natural devices for family
planning.
 Third Five Year Plan: In 1965, the sterilization technique for both men and women
was adopted under this plan. The technique of copper-T was also adopted. An
independent department called the Family Planning Department was set up.
 Fourth Five-Year Plan: All kinds of birth control methods (conventional and
modern) were encouraged
 Fifth Five Year Plan: Under this plan the National Population Policy was
announced on 16 April, 1976. In this policy, the minimum age for marriage
determined by the Sharda Act, 1929 was increased. It increased the age for boys
from 18 to 21 years and for girls from 14 to 18 years.
 Ninth Five-Year Plan: In 1993, the government has established an expert group
under the chairmanship of M.S. Swaminathan for formulating national population
policy.
 The Central Government formulated the 'new national population policy' in
February 2000

POVERTY

 Rural Poverty
 On the basis of recommended nutritional intake, persons consuming less than 2,400
calories per day in rural areas and 2100 calories in urban areas are treated as they
are under rural poverty

EMPLOYMENT

 Types of Employment: Organised and Unorganised Sectors

 The organised sector is one that is incorporated with the appropriate authority or
government and follows appropriate rules and regulations
 The unorganised sector of the economy characterised by the household
manufacturing activity and small-scale industry

TYPES OF UNEMPLOYMENT

 Open Unemployment - Open unemployment is a condition in which people have

no work to do.
 Structural Unemployment - It occurs due to structural changes in the economy.
 Frictional Unemployment - It occurs when a worker is shifting from one job to the
other. During the mobility period, he may unemployed for some time.
 Cyclical Unemployment - It occurs because of cyclical fluctuations in the
economy. Phases of boom, recession, depression and recovery are typical
characteristics
 Under-employment - It is a situation under which employed people are
contributing to production less than they are capable of.
 Disguised Unemployment - A disguisedly unemployed person is the one who
seems to be employed but actually he is not. His contribution to the total output is
zero or negligible
 Seasonal Unemployment -It occurs only during seasonal months of the year.