• Growth and Development – Measurement of growth: National Income and per capita

income – Poverty Alleviation and Employment Generation in India – Sustainable

Development and Environmental issues.
• Indian Economy – Economic History of India - Changes in Industrial and Labour Policy,
Monetary and Fiscal Policy since reforms of 1991 – Priorities and recommendations of
Economic Survey and Union Budget – Indian Money and Financial Markets: Linkages with
the economy – Role of Indian banks and Reserve Bank in the development process - Public
Finance - Political Economy - Industrial Developments in India- Indian Agriculture -
Services sector in India.
• Globalization – Opening up of the Indian Economy – Balance of Payments, Export-
Import Policy – International Economic Institutions – IMF and World Bank – WTO –
Regional Economic Co-operation; International Economic Issues
• Social Structure in India – Multiculturalism – Demographic Trends – Urbanisation and
Migration – Gender Issues – Social Justice: Positive Discrimination in favour of the under
privileged – Social Movements – Indian Political System – Human Development – Social
Sectors in India, Health and Education.
 AffairsMind
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 India’s Economy before Independence

1700 1947
22.6% 3.8%
• As per Cambridge historian Angus Maddison,
India’s share of world income shrank from
22.6% in 1700 to 3.8% in 1952.
• Less than 1/6th of India’s population was
literate and majority of India was under
poverty.
Angus Maddison
 India’s Economy after Independence
All India Congress Committee
Economic Programme Committee
Planning Commission
1950
Economic Programme Committee (EPC) –
formed by All India Congress
Committee (AICC) with Nehru as its chairman.
The aim of this committee was to make a plan
which could balance private and public
partnership and urban and rural economies.
The EPC recommended in 1948 to form
a permanent Planning Commission in India.
In March 1950 in pursuance of declared
objectives of the Government, the Planning
Commission was set up.
 India’s Economy after Independence
1st Five Year Plan (1951-1956)
• 1st Five year plan started from 1951 to 1956 with focus on agriculture
sector including irrigation and power projects. It was based on the Harrod-Domar
model. Which says economic growth can be carried out if we do two things -
higher savings and investment.

2nd Five Year Plan (1956-1961)

• Second Five Year Plan duration was from 1956 to 1961 with a focus on heavy
industries and capital goods. It was based on the P.C. Mahalanobis Model.
• The Mahalanobis model of growth was based on the predominance of the basic
goods (Capital goods or investment goods that are used to make further goods).
• It was based on the premise that it would attract all round investment and result in a
higher rate of growth of output. Second Industrial Policy, 1955 was created which
divided industries into three schedules - with Industries that are of basic and strategic
importance and shall be owned by Government, some partially owned by state and
Consumer goods industries left to private sector this includes agriculture.
 Capital or Investment goods Consumer goods

Manufacture
Import

Job Growth
 India’s Economy after Independence
2nd Five Year Plan (1956-1961)

Industries that are of basic Some industries should Consumer goods industries
and strategic importance be partially owned by left to private sector which
and shall be owned by Government includes agriculture
Government
 India’s Economy after Independence

Public Enterprise Private Enterprise

No Foreign Investment Foreign Investment
Capital Goods Agriculture
Green Revolution
White Revolution
India’s Economy after Independence

1965 - 1975

Emergency from 1976 to 1977

India’s Economy after Independence

Demonetization 1.0
India’s Economy after Independence

IT Revolution
 Making of 1991 Crisis
Many reasons contributed for 1991 Crisis of India
• Rise in Fiscal Deficit – Due to increase in non- development
expenditure fiscal deficit of the Government had been
increasing. This was accompanied by rise in public debt
and resultant interest.
• Fall in Foreign Exchange Reserves – India’s foreign Forex Reserve
exchange reserve fell to lowest in 1990-91 and it
was insufficient to pay for an import bill for 2 weeks.
• Iraq-Kuwait War 1990-91 – which led to rise in petrol
prices. The flow of remittances from Gulf countries
stopped.
• Rise in Prices – Inflation surged from 7% to 16.7%. 2 weeks import
attributed to rapid increase in money supply
 Help for 1991 Crisis
• To avert and mitigate the crisis, India approached the International Bank for
Reconstruction and Development (IBRD) (World Bank) and the International
Monetary Fund (IMF) and received $7 billion as loan to manage the crisis.
• But conditions to avail the loan from IMF and World Bank were Liberalisation,
Privatisation and Globalisation.

Liberalisation
• The term “liberalization” in this context implies economic
liberalization. This policy connotes that greater freedom
is to be given to the entrepreneur of any industry, trade
or business and that governmental control on the same
be reduced to the minimum.
• It simply means removing restrictions on the private
sector
 Privatization
• Privatization at that time was used as a process under which the state assets were
transferred to the private sector.
• Another variant of privatization is disinvestment. The only point of difference
between privatisation and disinvestment is that in privatisation the government
divests its shareholding in the company to the tune of more than 50 per cent
wherein the management control is transferred to the private sector whereas in the
case of disinvestment the portion of shareholding that the government divests is
less than 50 per cent so that the ownership and control over the company remains
in the hands of the government.

Globalization
• Globalization is termed as ‘an increase in economic integration among nations’. For
the WTO, the official meaning of globalization is movement of the economies of
the world towards “unrestricted cross border movements of goods and services,
capital and the labour force”.
Disinvestment of PSUs

Privatisation of Banks Liberalisation

Banking Reforms

End of License Raj Privatization

Downsizing of the government

SEBI NSE BSE created Globalization

Free rupee convertibility
 NITI Aayog
• The 65 year-old Planning Commission was relevant in
a command economy structure, but not any longer.
India is a diversified country and its states are in
various phases of economic development along with
their own strengths and weaknesses.
• In this context, a ‘one size fits all’ approach to
economic planning is obsolete. It cannot make India
competitive in today’s global economy.
• Planning Commission was replaced by a new
institution – NITI AAYYOG on January 1, 2015 with
emphasis on ‘Bottom –Up’ approach to envisage the
vision of Maximum Governance, Minimum
Government, echoing the spirit of ‘Cooperative
Federalism’.
• Chairperson is Prime Minister
 NITI Aayog

State Government Village level

• To foster cooperative federalism • To develop mechanisms to

through structured support
initiatives and mechanisms with
the States on a continuous basis,
recognizing that strong States make
a strong nation.
formulate credible plans at the
village level and aggregate these
progressively at higher levels of
government.
 Earlier System

Rs. 10000 Rs. 11000

Manufacture Sale

1000 1100
Rs.11000 Rs.12100

Excise = 10% VAT = 10%

 Goods and Services Tax

Rs. 10000 Rs. 11000

Manufacture Sale

1000
1000
Rs.11000 Rs.12000

CGST = 10% SGST = 10%

 IGST
Manufacture Sale

CGST
SGST
CGST = 10% SGST = 10%

IGST

CGST = 10% SGST = 10%

Interstate Trade IGST = CGST + SGST

 Goods and Services Tax
• The Goods and Services Tax (GST) is a value-added tax levied on most goods and
services sold for domestic consumption.
• The GST is paid by consumers, but it is remitted to the government by the
businesses selling the goods and services.
• Goods and Services Tax was 122nd Amendment bill which got an approval in 2016
and was renumbered in the statute by Rajya Sabha as The Constitution
(101st Amendment) Act, 2016.
• It is a dual GST with the Centre and the States simultaneously levying tax on a
common base.
• GST to be levied by the Centre is called Central GST (CGST) and that to be levied by
the States is called State GST (SGST).
• Central GST will cover Excise duty, Service tax etc,
• State GST will cover VAT, luxury tax etc.
• IGST - Integrated GST is to cover inter-state trade. IGST per se is not a tax but a
system to coordinate state and union taxes.
 GST Council

• Under Article 279A, GST Council to be formed by the

President to administer & govern GST. It's Chairman is
Union Finance Minister of India with ministers
nominated by the state governments as its members.
• The council is devised in such a way that the centre will
have 1/3rd voting power and the states have 2/3rd. The
decisions are taken by 3/4th majority.
• CGST, SGST & IGST are levied at rates to be mutually
agreed upon by the Centre and the States.
• The rates are notified on the recommendation of the
GST Council. Initially GST was levied at four rates viz. 5%,
12%, 16% and 28%.
• The schedule or list of items that would fall under these
multiple slabs are worked out by the GST council.
 Advantages of GST
• Creation of common national market by amalgamating a large number of Central
and State taxes into a single tax.
• GST mitigated ill effects of cascading or double taxation in a major way and paved
the way for a common national market.
• From the consumers’ point of view, the biggest advantage would be in terms of
reduction in the overall tax burden on goods.
• Introduction of GST is making Indian products more competitive in the domestic
and international markets owing to the full neutralization of input taxes across
the value chain of production.
 Era before IBC

NPA Repay

• The era before IBC had various scattered laws relating to insolvency and
bankruptcy which caused inadequate and ineffective results with undue delays.
• For example,
• Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act SARFAESI –for security enforcement.
• The Recovery of Debts Due to Banks and Financial Institutions Act, 1993
(RDDBFI) for debt recovery by banks and financial institutions.
• Companies Act for liquidation and winding up of the company.
 Insolvency and Bankruptcy Code, 2016

• The Central government introduced the Insolvency and Bankruptcy Code(IBC) in 2016
to resolve claims involving insolvent companies.
• This was intended to tackle the bad loan problems that were affecting the banking
system.
• IBC proposes a paradigm shift from the existing 'Debtor in possession' to a 'Creditor in
control' regime.
 Insolvency and Bankruptcy Board of India (IBBI)

• The Insolvency and Bankruptcy Board of India (IBBI) – apex body for promoting
transparency & governance in the administration of the IBC. It has 10 members
from Ministry of Finance, Law, and RBI.
• Debt Recovery Tribunal (DRT) has jurisdiction over individuals and partnership
firms other than Limited Liability Partnerships.
• National Company Law Tribunal (NCLT), also called The adjudicating authority
(AA), has jurisdiction over companies, other limited liability entities.

• Insolvency Professional Agency (IPA) -Insolvency Professionals are the persons

enrolled with IPA (Insolvency professional agency (IPA) and regulated by Board and
IPA will conduct resolution process; it will act as Liquidator/ bankruptcy trustee.
• They are appointed by creditors and override the powers of the board of directors.
 Insolvency and Bankruptcy Board of India (IBBI)
• Information Utilities (IUs) - Information Utilities (IUs) is a centralized repository of
financial and credit information of borrowers, which would accept, store,
authenticate and provide access to financial data provided by creditors.
• Time bound manner - The code aims to resolve insolvencies in a strict time-bound
manner - the evaluation and viability determination must be completed within 180
days which is extendable by 270 days for the Company. For startups and
small companies the resolution time period is 90 days which can be extended by 45
days.
• New Provisions - Special Provisions for MSME as now, the promoters of MSMEs are
allowed to bid for their companies as long as they are not willful defaulters and
don’t attract any other related disqualification. This has corrected the anomaly in the
section 29A of the existing act which had barred promoters of defaulting assets from
bidding for their assets.
• Homebuyers will be recognized as Financial Creditors, giving them due to
representation in the Committee of Creditors (CoC). Thus, now home buyers will be
an integral part of the decision making process.
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