PPS Academy Prasad Sir

Indian Economy

Chapter -1

1. Basics of Indian Economy

The following sub-Topica are covered in this chapter.Those are...,

 1. Introduction of the Indian economy.

 2. Types of Economies .

 3. Sectors of the Indian Economy.

 4. The present state of the Indian economy.

 5. Famous Personalities in economics.

Note: - 1 or 2 Bits come in the Group -1 Prelims and Group-2 and other
competitive examinations from the above topics in this chapter.

1. Introduction to the Economy

Economy : - In simple words economy means producing the goods &

services is called economy (Economy = goods and services)

2. Types of Economies

1. The capitalist economy.

2. Socialist economy.

3. Mixed economy.

1. Capitalist Economy :- If the goods and services are produced by the

private sector, it is called a capitalist economy.

For example : - USA, Canada, Australia, New Zealand, Norway, etc.

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2. Socialist Economy : - If the goods and services are produced by the

public sector, it is called a socialist economy.

For example : - Russia, China, Cuba etc.

3. Mixed Economy : - If both the public sector and the private sectors
jointly produced the goods and services together, it is called a mixed
economy. (2019 AP Group -2 & Police Constable, Grama Sachivalayam Bit)

Example : - India, Singapore, Japan, Spain, France etc.

3. The main sectors of the Indian economy

 C.S.O divides the Indian economy into 3 main sectors.

1. Primary sector

2. Secondary sector

3.Tertiary sector

 C.S.O - Central Statistics Office (Central Statistics Office)

 C.S.O. Calculates the "National Income"/ the whole Income of the

Country (2019 Group -2 Bit)

 It Calculates National Income in a mixed manner From 1954.

 C.S.O Calculates the National Income from 1954.

 CSO Calculates the National Income at current

price and at Base year Prices.

a) At Current Year Price - C.Y.P

b) At Base Year Price - B.Y.P (Base Year -2011-12) (2019 Gr--2 Bit)

 The C.S.O statistics are called National Accounts and Statistics

(NAS) at present.

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1. Primary Sector : -

 1) Agriculture & Live stock.

 2) Forest & Logging.

 3. Fisheries / Aquaculture.

 4. Mines, quarries.

 Note: - The first 3 sub-sectors together are called "Agriculture".

 This means that mines and quarries are not part of the agricultural
sector.

 Note: - If those have been added the mines and quarries to the first
three sub-sectors of the Secornadry, then these above subsectors
are called Industrial Sector.

2. Secondary Sector :-

 1. Construction sector: -

a) Urban construction sector.

b) Rural Construction Sector.

 2. Manufacturing sector :

a) Registered - Manufacturing Sector

b) Un-Registered Manufacturing Sector.

 3. Electricity, gas, and water supply. (2019 AP Group-1 Bit)

 Note -1:- If those have been added the mines and quarries to the
first three sub-sectors of the Secornadry, then these above 4 sub
sectors are called Industrial Sector.

 2. Industrial sector = secondary sector + mining & Queries.

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 3. Mining & Queries are part of the primary sector and not part of
the agricultural sector.

 4. Mining & Queries., which are in the industrial sector and not in the
secondary sector.

3. Tertiary Sector : -

 1. Hotel, Trade, and Restaurants.

 2. Transport, information, Inventory. (2023 Group-1 Prelims)

 3. Banking, Insurance, Personal Services Public Services.

 4. I.T, real estate, and other business entities, Foreign sector,

defense etc.

 Note 1:- . The primary and secondary sectors together are called
the manufacturing sector.

 Note 2:- The tertiary sector is called the service sector.

4. Terminology of Economics and Famous Personalities in Economics

 Any systematic study is called science.

 The sciences that study the various aspects which are mentioned in
society are called the social sciences.

 For example : - Geography, History, Political Science and Economics.

 The Economics is the queen of Social Sciences is economics - by

Paul Samuel Son.

 In ancient times economics was known as the "political economy".

 But in English it is called "Economics".

 The English term 'Economics' is derived from the Greek word

'Oikonomia'.

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 Its meaning is 'household management'.

 Economics was the first to read in ancient Greece. Aristotle, the

Greek Philosopher termed Economics as a science of 'household
management'

 Aristotle referred to economics as the management of house hold.

 Meaning of Economics : - "Economics" is "science", which studies

economies and develops "possible" models for their functioning. It
is also the study of "human behavior".

 1776 - Adam Smith (England - economist)

 Economics has been developed as a separate field of study.

 His famous book , by Adamsmith / Book ..,

 "An Inquiry into the Nature and Causes of the Wealth of Nations", as
we commonly call it "The Wealth of Nations" / "The Wealth of
Nations".

 Through this economics was formed as a science of study.

 That is why Adam Smith has been called the father of economics.

 Nobel Prize In Economics - since 1969.

 Ragnar Fish (Norwegian economist) was the first economist in the

world to won the Nobel Prize in Economics. (With John Timbergene)

 Topic: - "For Dividing Economics into Two Economics".

1. Microeconomics.

2. Macroeconomics.

 These are called the Branches of Economics.

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1. Microeconomics :-

 Micro means = "micro" or "small".

 The Father of Micro economics "Alfred Marshall.

 Micro economics: - It examines the fundamentals of the economy,

including personal agents.

 For example: - Households, Firms, Buyer, Seller, Market and their

Interaction ect ..,

 'It studies commodity prices, market performance, consumer

behavior, and organizations.

 And Other Names for Microeconomics..,

So this is called the Price theory , the theory of individual units.

 Note: - Savings are always better.

2. Macro Economics : -

 Macro means :- macro (or) large.

 The father of macro economics is "J.M. Keynes".

 It studies the whole economy and it's features.

 Macroeconomics is also known as the Theory of Income and

Employment, or income analysis.

For example: -

 1. National Income

 2. Unemployment

 3. Poverty

 4. Inflation

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 5. Balance of payments etc.

 1936 "John Maynard Keynes", the economist who popularized

macro economics.

 Thus, in times of recession, savings can lead to bad results.

 The book "General Theory of Employment, Interest and Money" is a

book by English economist John Maynard Keynes published in
February 1936.

 Note:- The first Indian Economist Dadabhai Naoroji wrote a book.

 The book 'Poverty and Unbritish rule in India' was written by

Dadabhai Naoroji and it was published in 1901 A. D.

 Dadabhai Naoroji highlighted the draining of wealth from India by

the British and its effect in the mentioned book.

The Nobel Economics prize Winners in 2023

 Nobel Economics Award Winner :- Claudia Goldin Her

 Her Country:- American

 Achievement for:- for having advanced our understanding of

women's labour market outcomes.

 Note:- Nobel Economics Prize 3'rd Female Economit.

 Any country in the world faces three types of problems, depending

on prices of goods. They are.,

 1. Inflation - The constant rise in prices of goods.

 2. Deflation - The constant decline in prices of goods.

 3. Recession: - fall down of the prices of goods.

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5. Present Status of Indian Economy

CABINET SURVEY 2022-23 Highlights

 India's Nominal GDP at Current Prices (2022-23) :- 273 Lakh Crores.

 India's Real GDP at Constant Prices or Base Year Prices (2011-12) :-

157 Lakh Cr

 India's Nominal GDP Growth Rate (at Current Year Price, (2022-23) :-
15.4%.

 India's Real GDP Growth Rate ( at Constant Prices, (2011-12) :- 7.3%

 The Gross Value Added (GVA) of different sectors in percent as per

2022-23 cabinet Survey 2022-23

GDP by sector :- 1) Agriculture: 18.1%

2) Industry: 28.5%

3) Services: 53.4 % (FY 2022-23)

 Indian GDP Growth Rates at Base Year Price for the last 5 years.

 2019-20 - 3.7%,

 2020-21- ( -) 6.6%

 2021-22 - 8.7%

 2022-23 - 7.0%

 2023-24 - from 6.0 to 6.8% or 7.3%

 Note:- In 2024-25 Vote on Account budget, it was revised at 7.3

Percent.

 Note:- Projections indicate that India is poised to surpass Japan and

Germany, positioning itself as the world's third-largest economy by
2027, according to a note published by analysts at the investment

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banking firm Jefferies 2024 estimates.

 IMF - According to the International Monetary Fund, the Indian

economy is the 5'th largest economy in the world by nominal GDP.

 Based on Purchasing Power Equity (On PPP- Purchasing Power

Parity) ....India is the 3'rd largest economy.

 In terms of per capita income (On Per Capita Income basis), India
ranks 142'nd in terms of nominal GDP and 125'th in GDP (PPP).

 India is the fastest growing major economy in the world.

 The highest revenue earning sector in the Indian economy is the

service sector (this share is 53.40% as per the 2022-23 Economic
Survey of India).

 The agricultural sector is largest in the Indian economy in providing

employebility. (this share is 42.60% per cent according to the 2021-
22 Economic Survey of India).

 According to the 2022-23 Indian Economic Survey, the share of

various sectors in the country's GDP is as follows.

1) Agriculture Sector - 18.1%

2) Industrial Sector - 28.5%

3) Service sector - 53.40%

 India's GDP growth rate for the last 5 financial years is as follows..,
(Financial Year) (GDP Growth)

 2019-20 - 3.7%,

 2020-21- ( -) 6.6%

 2021-22 - 8.7%

 2022-23 - 7.0%

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 2023-24 - from 6.0 to 6.8% ( later it was revised to 7.3% in 2024-

25 Vote on Account budget)

 Sector wise growth rates (GVA at constant prices)

1. Agriculture Sector :- 2022-23- 3.5%

2. Industrial Sector:- 2022-23- 4.1%

3. Service Sector :- 2022-23-9.1%.

 Nearly forty years later, India's GDP growth rate has registered a
negative growth rate during Covid Pandemic.

 Note:- Due to the corona Pandamic, the GDP growth rate for the
financial year (2020-21) recorded negatively minus " - 7.3%".

 India is a developing Market economy.

 India is the fastest growing major economy in the world.

 India currently has the 5th largest economy in the world.

 India ranks 3rd in the world in terms of purchasing power parity

(PPP).

 The Indian economy is currently projected to reach $3.5 trillion by

the end of fiscal year 2022 23, according to the survey.

 5 trillion dollars (Rs. 410 lakh crore) in the country's economy by

2025-26 or 2026-27.

 By 2030, India's economy can reach 7 trillion dollars (Rs. 574 lakh
crores).

 Accordingly, the Economic Survey has concluded that this decade

will be India's in terms of economic growth.

 Foreign Exchange Reserves:- 2022-23: 562.85 (US Billion Dollars).

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 Inflation :- 2022-23 F.Y WPI - 11.5% and CPI - 6.8%

 Fiscal Deficit:- 6.4% ( In GDP). and Current Account Deficit - 4.4% (In
GDP)

 Per Capita Income : 2021-22 (at Current year Price Rs,1,70, 620)
and at Base year Price Rs, 96,522.

 High Percapita Income States:- 1. Goa, 2. Sikkim.

 Low Per Capita Income States:- 1. Bihar 2. Uttarpradesh.

 Food Grains 🌾:- 2021-22, 315.7 (M.T)

 Milk Production):- 2021-22 - 221.06 Tons.

 India is the world's largest Milk Producer.

 Remittance:- It means the funds send to India from abroad by

Indians.

1) India - 100 US billion dollars

2) Mexico 60 US billion dollars

3) China 51 US billion dollars

 The Ease of Doing Business (EoDB) index is a ranking system

established by the World Bank Group.

 India jumps 79 positions from 142nd (2014) to 63rd (2019) in 'World

Bank's Ease of Doing Business Ranking 2020'.

 UN Sustainable Development Goals: India Ranked 112 Among 166

Countries for Performance in 2023. With a score of 63.45% in 2023,

 India's ranking on the United Nations Human Development Index

(HDI) climbed one spot in 2022 to 134 out of 193 countries, with a
slight increase in its HDI value to 0.644.

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Prepared by

Prasad Sir

Faculty of Economy

M.com.,B.ed.,M.A (Eco)

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