ECONOMIC PROBLEMS

12/11/2017 BBA-112 1
 ECONOMIC PROBLEMS IN
INDIA

• POVERTY
• INEQUALITY
• UNEMPLOYMENT
• CONCENTRATION OF ECONOMIC POWER
• BALANCED REGIONAL DEVELOPMENT.
• PARALLEL ECONOMY
• LOW CAPITAL FORMATION
• INDUSTRIAL SICKNESS

12/11/2017 BBA-112 2
 POVERTY

12/11/2017 BBA-112 3
12/11/2017 BBA-112 4
 POVERTY
• Poverty is widespread in India, with the nation
estimated to have a third of the world's poor. According
to a 2005 World Bank estimate, 41.6% of the total
Indian population falls below the international poverty
line of US$ 1.25 a day (PPP, in nominal terms 21.6 a
day in urban areas and 14.3 in rural areas).
• According to 2010 data from the United Nation
Development Programme, an estimated 37.2% of
Indians live below the country's national poverty line.
A recent report by the Oxford Poverty and Human
Development Initiative (OPHI) states that 8 Indian
states have more poor than 26 poorest African nations
combined which totals to more than 410 million poor in
the poorest African countries.

12/11/2017 BBA-112 5
 Impact of poverty
• Since the 1950s, the Indian government and non-
governmental organizations have initiated several
programs to alleviate poverty, including subsidizing
food and other necessities, increased access to loans,
improving agricultural techniques and price supports,
and promoting education and family planning.
• Presence of a massive parallel economy in the form of
black (hidden) money stashed in overseas tax havens
and underutilisation of foreign aid have also
contributed to the slow pace of poverty alleviation in
India.

12/11/2017 BBA-112 6
 Causes of poverty
1. Rapidly Rising Population
2. Low Productivity in Agriculture
3. Under Utilized Resources
4. Low Rate of Economic Development
5. Price Rise
6. Unemployment
7. Shortage of Capital and Able Entrepreneurship
8. Social Factors
9. Political Factors

12/11/2017 BBA-112 7
 BALANCED REGIONAL
DEVELOPMENT

12/11/2017 BBA-112 8
• Balanced regional development implies uniform distribution of planned
investment among different regions of the country.
• The investments should be so planned that regional growth rates should be
equal. Some regions are more developed than others.
• To develop underdeveloped areas, the rate of growth should be more at
those places so that disparities are removed.
• So balanced regional development means the economic development of all
regions raising per capital income and standard of living of the people by
exploring natural and human resources.

12/11/2017 BBA-112 9
 Why support balanced regional
development?
• The development of every area in a country is desirable. The development
of areas leads to the prosperity of the people and proper use of material
resources.
• In India, wide regional disparities existed at the time of independence. The
foreign rules did not think of spreading the benefits of economic
development to everyone.
• The Government of India, after independence, has been laying emphasis on
the balanced regional development of the country.
• Various industrial policy statements and five year plans emphasized the
development of all regions in a planned way.
• No country can afford to allow disparities in development to persist. So
steps should be taken to develop all the areas in a uniform way.

12/11/2017 BBA-112 10
GOALS OF THE POLICY FOR STIMULATION OF BALANCED
REGIONAL DEVELOPMENT ARE:
• Balanced and sustainable development of the whole territory
• Lowered disparities between and within the planning regions and improved
quality of life of all citizens;
• Increased competitiveness of the planning regions through the
strengthening of their innovation capacity, optimal utilization and
valorization of natural resources, human resources and economic specifics
of the different regions;

12/11/2017 BBA-112 11
• Preservation and development of the specific identity of the
individual planning regions, as well as their affirmation and
development;
• Revitalization of villages and development of the areas with specific
development needs; and Support of the inter-municipal and cross-
border cooperation of the units of local self-government for the
purpose of stimulating balanced regional development.

12/11/2017 BBA-112 12
• The salient features of the policy/ programme which are guiding regional
development include:
(1) An interregional allocation policy tilted in favour of backward States
(2) An incentive policy designed to attract investments in industrially
backward regions and areas
(3) A sub-plan approach for some special problem areas to ensure that
investments from the state and Central sectors flow to such areas in a
coordinated manner to undertake programme and schemes specially
designed to their interests and needs
(4) A social justice approach towards provision of minimum needs so that the
disadvantaged areas may achieve parity in items of social consumption.

12/11/2017 BBA-112 13