ASSIGNMENT ON INDIAN ECONOMY

Submitted by : Archish Kothari

Section : A

Submitted To : Mr. Sandeep Badoni

Explain the following terms:

a) what is balance of payments?

Ans- The balance of payments (BOP) is an accounting of a country's international
transactions for a particular time period. Any transaction that causes money to flow
into a country is a credit to its BOP account, and any transaction that causes money to
flow out is debit.

b) What is central planning ?

And- Central planning denotes the total body of gout actions to determine and
coordinate directions of national economic development. The term planning after stirs
emotions. For some people, especially for many communist economist, central
planning is good by definition. Center planning denotes the total body of qout. actions
to determine & coordinate directions of national economic development.

c) What is 5 year plans?

Ans- Five year plans, methods of planning economic growth over limited periods,
through the use of quotas, used first in the Soviet Union & Later in other socialist
States. From 1947' to 2017, the Indian economy was premised on the concept of
planning This was carried through the 5 year plans, developed, executed, and
monitored by the planning Commission and the Niti Ayog.

d) What is sylviculture?
Ans- sylviculture is the practice of controlling the growth, composition / structure,
and quality of forests to meet values & needs, specifically timber production. In
specific, sylviculture is the practice of controlling the establishment and management
of forest stands.

e) What is operation flood?

Ans- Operation flood, launched on 13th Jan, 1970 was the world's largest dairy
development program and landmarks project of India's National Daisy Development
Board (NDDB). It transform -ed India from 2 milk deficient nation into the world's
largest milk producer surpassing the USA in 1998 with about 22.22% of global output
in 2013.

F) What is IME?
Ans- The International Monetary Fund (IMF) is an international financial institution,
headquarter in Washington, D.C., consisting of 190 countries. IHF promotes global
economic growth & financial stability, encourages international trade, and reduce
poverty the world. It now plays a central role in the management of Balance of
payments difficulties & international financial crisis Through the fund and other
activities, the IHF works to improve a the economies of its member countries.

G)What is GDP?
Ans- An GDP stands for Gross Domestic Product and represent the total monetary
value of all find goods and services produced. and sold) within a country during a
period of time typically I wear. GDP is the most commonly used measure of
economic activity

h) What is development economics?

Ans- Decampment economics is a branch of economics that focuses on imps
improving fiscal, economic, and social condition in developing countries
Development economics consider factors such as health,education, working
conditions, domestic and international policies and market conditions with a focus on
improving conditions in the world's poorest countries. They also examines both macro
economics & micro -economics.

I) What is NITI Aayoge?

Ans. NITI Aayog as the apex public policy think tank of the Government of India,
and the nodal agency tasked with catalyst zing economic development, and fostering
cooperative federalism through the insolvent of state empowerment of India in the
economic policy ma king process using a bottom up approach.

J) What are the 2 types of inequality?

Ans- social scientist studies 2 types of inequality.
a) Inequality between persons (as in income inequality), and
b) b) Inequality between subgroups (as win racial inequality)

K) What is UNIDO?
Ans- The United Nations Industrial Development Organization is 2 2 specialized
agency of the United Nations that assists counties in economic & industrial
Decampment.

L) What is license quota raj?

Ans- The license quota raj Permit raj was the system of license, 2 regulations, and
accompanying red tapes, that hindered the set up and running of business in beluvien
1947-1990.

m) What is UNDP?
Ans- The United Nations Development Programme is a United Nations Organization
tasked with helping countries eliminate poverty & achieve sustainable economic
growth and human development headquarter in New York City, it is the largest UN
development aid agency , with offices in 170 countries. The UNDP emphasizes
developing local capacity towards long term self-sufficiency and prosperity.

n) What is growth?
Ans- Growth is the increase in production of economic goods and services, compared
from one period of time to another It can be measured in nominal or real (adjusted or
inflation) terms.

0) What is oil stoch?

Ans- The 1973 oil crisis is the sudden dramatic increase in the price of oil, a period of
economic difficulty caused by such an increase; specifically either of two price rises
imposed by the petroleum Exporting countries (OPEC) in 1973-1974 and 1978-1979.

p) What is development ?
Ans- Development is a process that creates growth, progress, position change or the
addition of physical, economic, environmental, social & demographic components. It
is an increase in size or pace of the economy such that more products & services are
produced.
q) What is structural adjustment program?
Ans- It is a set of economic reforms that a country must adhere to in order to secure a
loan from the IMF or the World Bank. Structural adjustments are often a set of
economic policies indulged in reducing government spending opening to free trade,
etc.

R) what is stabilization program?

Ans- Broadly defined, a stabilization program is a package of policies designed to
eliminate disequilibrium between aggregate demand and supply in the economy,
which typically manifest itself in balance of payments deficits and casting prices.

S) What is inflation?
Ans- Inflation is the state of an pruned of time. Inflation is the state of increase in
prices over a given period of time. Inflation is typically a broad measure, such the
overall increase in prices on the increase in the cast of living in a country.

T) What is IBRD or World Bank?

Ans- The International Bank for Reconstruction and Development is an Internationale
financial institution, established in 19448 headquartered in Washington DC, US, that
is the leading among World Bank Group. world Banks is an international
organizational -on dedicated to providing Yunanang waduice & research to
developing nations to aid their economic advancement.

u) What are the main 3 articles causing negative balance of trade in India?
Ans- The three main articles causing balance of trade are
1) Gold
2) Petrol
3) cooking Oil

V) What is green revolution?

Ans- Green Revolution was the period in which there was a great increase in
production of food grains (especially wheat & rice that resulted in large part from the
introduction into a developing countries of chemical Fertilizers and How seeds,
beginning in the mid 20 century.

w) What is BPL ?
Ans- Below Poverty Line (BPL) is a benchmark used by the government of India to
indicate economic disadvantage and to identify individuals & households in need of
Government assistance and and. It is determined using various parameters which vary
from state to state and within states.

x) Explain WTO.
Ans- World Trade Organization is the only global international organization dealing
with the sales of trade between nations. It was formed in 1995. Its purpose is to reduce
tariffs & other barriers to trade. It's headquarter is in Switzerland. It has 164 member
nations.

y) What is blue revolution?

Ans- the blue revolution refers to the significant growth with and intensification of
global aquaculture producer-domestication and farming of fish, shellfish, and aquatic
plants from the middle of the 20th Century to present, particularly in under developed
countries.

z) What is demographic dividend?

Ans- As defined by the UN population Fund is the economic growth potential that can
result from shifts in a population's age structure, mainly when the share of the
working age population is larger than the non-working

aa) What is INR?

Ans- The Indian Rupee (INR) is the currency of India. INR is the International
Organization for standardize currency codes for the Indian rupees, for which the
currency symbol is (R).

ab) What is apiculture?

Ans- Beekeeping (apiculture) as the maintenance of bel colonies 2 commonly in man
made hives, by humans.

ac) What is dependent ratio?

Ans- The dependency ratio is a measure of the member of dependents aged zero to
Fourteen and over the age of65", prepared with the total population aged 15 to 64,
compared with the total population aged 15 tools.

ad) What is common currency?

Ans- It is a system of where a group of countries use a common - currency.

ae) who publishes economic survey?

Ans- The ministry of finance, government of India publishes economic survey every
year

af) A currency note is an asset or liability to the government?

Ans- Liability

ag) Increasing money supply disproportionately leads to inflation? - Yes/No only.

Ans- Yes

ah) What is hyper inflation?

Ans- Hyperinflation is a term used when inflation rates exceeds 50%. It quickly
erodes the real value of the local currency as the prices of all good increases

ai) What is deflation?

Ans- Deflation us a decrease in the general price level of goods & services. Deflation
occurs when the inflation rate fall below - 0%.

aj) What is NAIRU?

Ans- non-accelerating Inflation rate of unemployment (NAIRO) is a theoretical loud
of unemployment below which indexation world be expected to use.

ak) What us Gini Ratio?

Ans- It is a measure of statistical dispersion intended to represent the income
inequality or the wealth inequality within a nation or a social group. The Gini
coefficient was developed by the statistic an & sociologist lorrado Gins. The
coefficient ranges from o to I, where o represents perfect equality and 1 represents
perfect inequality.

al) What are the stages of population growth in a country.

Ans- i) In stage 1, the two creates are balanced.
ii) In stage 2, they demerge, as the death notch falls relative to the Birth rate.

am) What is per capita income?

Ans- Per Capita income or total income is measure of the accrual of money earned per
person in a nation or geographic region.

02) Long Answer Questions :

a) What is ADI? How is it measured?

Ans- The Human Development Index is based off of the factors in a country's
development determines how much a country is developed. The three factors of
Economic, social & Demographic. The HD I is calculated as the Geometric means of
life expectancy. Education & GNI (Gross National Income) per capita.

< 4=Peer country *Current HDI of India is .65

4 to 6= Developing
6 to 8 = Highly developing •
8 to above = developed

B) Explain different methods used to measure poverty in India?

Ans- There are two common methods to calculate the poverty of India.
1) Income Method - as per the guidelines of the income of a person is below the
set den which is 40 500 to u 9000 in rural areas and 51500 to 60000 in urban areas.
The person is considered poor
2) Consumption Method - the good has also set a limit for caloric intake of person
is unable to consume the expected levels due to financial constraint the person is
considered to be poor.

C) What are the two types of economic inequality? How the measures to impact
economic inequality by Indian gout. have affected the economy?
Ans- The two types of economic inequality
i) Income inequality looks at how big the difference in what people get paid are in the
economy.
ii) Wealth inequality - measures how a small group of people in the world own most
of the worlds stuff. This stuff can be everything from houses & cars to financial assets
and share in business.

Three way to reduce economic inequality.

i) Investing in workers as important worker is necessary & urgent today to reduce
inequality d increase nation's GDP.
 ii) Investing in agriculture:- as per the world Bank agriculture can help reduce
poverty for 80% of the worlds poor who live in rural areas & work in farming. So,
we ham to must more & more cine agricultural activities.
iii) Reforming work place law-Reforms in workers laws can reduce inequality in
Minimum wages & universal basic income u two of the popular ways to reform
workplace laws.

D) What a country needs forex reserve?

Ans- i)To keep the value of their currencies at a fixed crate.
iii) Countries with floating exchange rate system use forex rescuer to keep the nature
of their currency lower than the US Dollar
iv) To maintain liquidity in case of an economic crisis.
v) To ensure that a country meets with foreign Obligation & liabilities

E) What in the ease of doing business? How it help the economy?

Ans- The ease of doing business (EODB) index is a ranking system established by the
world Bank Group. In the EDB index, & higher ranking, indicates better, usually
simpler, regulations for business & stronger protections of property rights.
The growth of business in any economy provides support to Gout. addressing Lover
coming economic challenge faced by the society like job creation & financial
resources generation and in improving the standard of living of the citizen.

F) what is the difference between Balance of payment & Balance of trade?

Basis Balance of Trade Balance of Payments

Definition Bot is a financial statement Bop is financial statement
that captures the Nation's that gives trees of all the
import export of economy transactions by
commodities with the rest the nation with the rest of
of the world the world
What does it deal with it deals with the net profit it deals with the proper
or loss that country with accounting of the
trees from the import and transaction conducted by
export of goods the Nations
Fundamental difference Bot is the difference that is Bop is the difference
obtained from the export between the inflow and
and import of goods outflow of foreign
exchange
Type of transaction Related to goods Related to Transfer,goods
& services
Are capital transaction no yes
included
Net effect Either positive or 0 Always 0

G) What is the contribution of public sector en Indian economy.

Ans- Here are the following contribution of public sector in Indian economy
i) Generation of Income - Public sector in India has been playing a definite positive
role in generating income in the economy
 ii) Capital formation - Public sector has been playing an important role in the GDC
formation of the country,
iii) Employment - Public sector is playing an important role generating
employment in the country.
iv) Infrastructure : - without the development of infrastructure facilities, economic
development is impossible. Public sector or infrastructure sector like power,
transportation, sic & heavy Industrious, communication, education,crucial training
etc readers to the overall development of economy
v) Strong industrial base - The industrial base of the economy us considerably
strengthened with the developmental of public sector industries in various field
lite-vion & steel, coal, heavy engineering, health electrical machinery, petroleum ,
Chemicals, fertilizes.
vi) Export Promotion and Import substitution. - Public sector enterprises have been
contributing a lot for a the promotion of India's exports & in achieving import
substitution.

H) Differentiate between growth and development

basis Economic Growth Economic Development

Concept Narrow concept Border concept
Nature Concept of economic Concept of economic
growth is quantitative indevelopment bot
nature quantitative and
Is is a concept of rate of
qualitative.
increase in national
Its concerned with people
income welfare along with peer
capita income.
Distribution of income Growth ignores Development concerns
distribution of income distribution of income
Independent of structural May occur independent Invariable associated with
institution and economy Independent of structural
institution and economy.

I) What is the contribution of SHE sector in Indian economy?

Ans- The Indian SME Medium Enterprises sector about 2 a.s. towards the GDP
through national & international trade SHE encourage both urban & rural growth.
Broadly, the AME help the Indian economy in the following way-
1) Generate employment
2) Reduce poverty rate
3) Reduce urban-rural income gap.
4) Migration
5) Encourage regional development
6) Boost exports
7) Bring down pollution levels
8) Increase production
9) Increase peoples purchasing power.
10) Improve quality of life in general.
J) Outline the process by which growth leads to development Discus the limitations.
Ans- long form growth can lead to economic development which lead to benefit such
as increase employment rater & national income. These benefits in economic
development lead to an increase in the standard of online for the citizen in the
country.
Limitations -
Inflation - Economic growth will cause aggregate demand to increase faster than the
increase in aggregate supply, en there will be an excess demand but a shortage in.
supply in the economy, producers will lead to measure the price and this situation is
known as inflation
environmental problems in Economic growth will cause lot of environment problems.
During economic growth factories will operate for a longer time to release the
production output. So this will lead to increase in the emission of carbon which then
causes the air pollution.

k) What are the main bottlenecks in economic Growth in India ?

Ans- The main bottleneck in economic growth in India are:
1) Population Growth- Judia grants after China in total population Population grout
leading to problem Head includes food deficits, sanitation deterioration & pollution
2) Deteriorating infrastructure - India has struggled to improve its deteriorating
infrastructure in business, education & health care.
3) Corruption - Raring business in a corrupt country is difficult because there is little
respect for the rule of law, there are competing good. bureaucracies, and there are
often under & unfair regulatory & Taxation system.

L) Compare Indian economy before & after the liberation started in 1991
Ans- The Indian economy after before 1991 is characterized as Before the process of
reform began in l991, the govt. attempted to close the Indian Economy to the outside
old. The Indian currency, the rupee, was incontestably high tariffs & import licensing
prevented foreign goods reaching the market. Alter liberalization started in 1991.
users gave us miracle mouth in the Indian economy, with the abomination of ore &
industrialize licensing. It has opened up the Indian economy to foreign interest.

M) What is trade off between inflation and unemployment ding to classical economic?
Explain with examples.
Ans- If policy maker expand aggregate demand, they can dower unemployment, but
only at the cost of higher inflation. If they contract aggregate demand, they can comer
activation, but at the cost of temporarily higher unemployment. Forex- during an oil
price shoch, it is possible one cost-push & rise in unemployment due to lover growth.

u) Give arguments in favor of & against privatization of Public sector units.

Ans- Arguments en favor of privatization of PSEs
i) Dismal performance of PS Es, and its efficiency can be removed of these
expenses are purchases,
ii) Accountability of the Private sector passes efficiency
iii) development of social economic infrastructure by the count.
iv) 2 Pu Manere against Anti Competitive Behaviour
v) Absence of governmental interfere.

Arguments en favor of privatization

1) privatization is inefficient due to multiple resources like lack of accountability,
political interface in day to day functioning, wrong plucking policy, cost escalation
etc.
2) Infrastructure may not coming in abundance.
3) Peripheral social responsibility
4) Ranger of employment

0) Differentiate between FDI, FPI and FII. With examples

Ans- FDIO - Foreign direct investment (FDI) as an investment a made by company or
individual in one country in business Internets in another countable in the form of
either establishing a business operations or acquiring business assets in the other
country For examples in the UK thrust either in TATA sore by setting up a a
subsidiary of a in based company in India.
FPI - Foreign port to Investment (FPI) is the entry of funds into a country where
foreigner deposit money in a country's bank or make purchase in the country's stock.
and bond markets, sometimes for speculation. For eg - Institutional Investor (FII)an
investor or institution fund registered in a country outside of the one in what is
investing. The reasons used most commonly in India and duress to outside companies
investing in the financial markets of India.
For ex: - pension funds, mutual funds, investment & trust.

P) What is the SSI reservation & How is it affected Indian economy?

Ans- Reservation of product you exclusive manufacture in the small scale Industries
(SI) sector as a policy instrument for its promotion over its origin to the Industries
(Development & Regulation Ad, 19951.
specific roles that SSI reservation play in the Indian economy.
i) increases production :-continuously almost 10y.of India's gross Industrial value
consequently its production on output is missing.
ii) increases export - SSI have been able to export then in large numbers as well
Almost half of India's total export these days cone from SDTS.
iii) improve employment rate, – DA I employs people than all industries after
agriculture. Furthermore DAI, employ people in urban as well as rural areas
iv) open new opportunities. - offers several advantage opportunities for investment
v) Advance welfare - play a large scale role in educating welfare measures in the
Indian economy as well.

Q) What is the occupational structure of Indian economy? Explain with examples.

Ans- The occupational structure of any country is defined by the segment economic
segment of country is population that is engaged in. economic ventures and narrows
professions
wadly, occupational sbucure of Indian economy is divided into 3 Categories

primary sector - primary occupation includes agriculture contraction A animal

husbandry.
Secondary Sector - The secondary set of occupation. include the people who work in
an manufacturing & servicing industry.
Tertiary sector - encompasses the part of the population working in communication,
transports administration, & other remaining..
r) Why high growth of certain states has not resulted in development?
Ans-Economic growth may be essential to enable higher incomes sou people to be
able to buy more food, increase in operative GDP. However, economic growth down
necessarily improve anyone's living standards. Economic growth sometimes could by
pass the poorest sections of society because they don't have the ability to take the part.
That's why high growth of certain shares has not resulted in development.

S) In light of contributions to GDP, Taxation and employment; explain the regional

disparities in India.
Ans- The most important indicator of regional, imbalance & disparity among the
different states of India is the difference on per capita income figures. i.e , difference
in GDP across various regions.
Next indicator is taxation policy under various sectors or various regions, on the basis
of which regional disparity occurs in India.
Employment pattern of workers is also an important indicator of regional disparities.
States attain higher degree of industrialization are maintainability higher proportion of
industrial workers to total population

T) "India is a rich country which has poor people" explain this statement.
Ans- India is a rich country which has poor people. This statement is somewhat true,
this is partly so because the resources of India have not been properly utilized and
partly because per capita share of resources is small. An assessment of India's
physical & Human resource will make it evident to us.