• 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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 Political Economy
Politics Economy
• Political economy is a branch of social science that studies the relationship that
forms between a nation's population and its government when public policy is
enacted.
• It is, therefore, the result of the interaction between politics and the economy and
is the basis of the social science discipline.

Capitalism
• Capitalism theory advocates profit as a motive for advancement.
• Put simply, the idea behind capitalism is that private individuals and other
actors are driven by their own interests—they control production and
distribution, set prices, and create supply and demand.
 Socialism
• Socialism promotes the idea that the production and distribution of goods and wealth
are maintained and regulated by government, rather than a particular group of
people.
• The rationale behind this is that whatever is produced by government is done so
because of those who participate, regardless of status, wealth, or position.
• Socialism aims to bridge the gap between rich and poor. Here government control the
economy.

Communism
• Communism was a theory developed by Karl Marx. He believed in shared resources,
including property, and that production and distribution should be overseen by the
people together and not the government.
• He talked about stateless, classless and moneyless society. So his idea was everybody
will contribute to the economy and take what they need in return.
 India’s Economy before Independence
• 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 1/6 th of India’s population was
literate and majority of India was under poverty.

What exactly happened?

• The impact of British Policies and the Industrial Revolution led to the decay of Indian
handicraft industry.
• Post-Industrial revolution in Britain, machine-made goods started flooding into the
Indian markets.
• The decline of traditional handicraft was not followed by the rise of modern
Industrialization in India due to the British policy of encouraging the imports of
British made goods and exports of raw materials from India.
 After Independence (1950-65)
• There were majority of consumer goods industries vis-à-vis producer goods/capital
goods industries resulting in lopsided industrial development.
• The Industrial sector was extremely underdeveloped with very weak infrastructure.
The lack of government support to the industrial sector was considered as an
important cause of underdevelopment.
• The national leadership reached on a consensus that economic sovereignty and
economic independence lay in the rapid industrialisation including the development
of Industrial Infrastructure.
• The Second Five-Year plan accorded highest priority to Industrialisation.
• The plan was based on famous Mahalanobis Model. Mahalanobis model set out the
task of establishing basic and capital goods industries on a large scale to create a
strong base for the industrial development.
 Phase of Industrialization Deceleration (1965-80)
• The first three five-year plans mostly focused on the development of the Capital Good
sector. As a result, the consumer goods sector was left neglected.
• The consumer goods sector also known as wage good sector is considered to be the
backbone of the rural economy and its complete neglect had resulted in fall in the
growth rate of industrial production as well as of the overall economy.
• Other reasons for industrialization deceleration includes low growth in agriculture
sector contributed to low industrial growth due to shortages of raw materials, wars
happened in 1965 and 1971 and wrong industrial policies with complex system of
licensing.

Phase of Industrialization Recovery (1980-91)

• After 1980s, Industrialization started to recover due to liberalization of Industrial and
Trade policies by the government, reduction in barriers for expansion, maintenance of
high budgetary deficits to promote growth, liberal interest rates for industries to
burrow., improvement in agriculture mainly green revolution increased the supply of
raw materials to industries and growth of service sector.
 Post Reform of 1991

End of Licence Raj

Disinvestment
Foreign Investors

Exit from many

businesses Lower Taxes
 Post Reform of 1991
• Post 1991 reforms include
• abolishment of the Industrial Licensing,
• Reduction in the sector exclusively reserved for the Public sector,
• Disinvestment of the selected Public-sector undertakings,
• Foreign investors were allowed to invest in the Indian firms and
• Reduction in the Income and Corporate taxes to promote Business.

Post 2011 till now

• The period starting from 2011-12 saw a severe slowdown in the industrial growth
and production.
• Major reasons were weak Demand for exports from the Developed Western
Countries due to Global Financial Crisis, the slowdown in the Domestic Demand.,
high Interest in India maintained by the RBI, due to persistently high Inflation, failure
of past projects of the private sector and rising NPAs of the Public-Sector banks has
led to weak credit and lending offered by them.
 Indian Agriculture
• The history of Agriculture in India dates back to Indus Valley Civilization .
• The economic contribution of agriculture to India’s GDP is steadily declining with
the country’s broad-based economic growth, yet, it is an important sector of Indian
economy as it contributes about 17% to the total GDP and provides employment to
around 58% of the population.

Green Revolution
• The Green Revolution was an endeavour initiated by Norman Borlaug in the
1960s. He is known as the 'Father of Green Revolution' in world.
• In India, the Green Revolution was mainly led by M.S. Swaminathan.
• The Green Revolution, spreading over the period from 1967-68 to 1977-78,
changed India’s status from a food-deficient country to one of the world's
leading agricultural nations.
 Minimum Support Price (MSP)
• The Minimum Support Price or MSP was introduced by the government of India in
the year 1966-67.
• The MSP is the rate at which the government purchases crops from farmers, and
is based on a calculation of at least one-and-a-half times the cost of production
incurred by the farmers.
• MSP is a “minimum price” for any crop that the government considers as
remunerative for farmers and hence deserving of “support”.

Nationalization of Banks
• The government through the Banking Companies (Acquisition and Transfer of
Undertakings) Ordinance, 1969, and nationalized the 14 largest commercial banks
on 19 July 1969.
• One of the aim of this move was the availability of credit to rural areas.
 Priority Sector Lending(PSL)
• The RBI mandates banks to lend a certain portion of their funds to specified priority
sectors, like agriculture, Micro, Small and Medium Enterprises (MSMEs), export credit,
education, housing, social infrastructure, renewable energy among others.
• All scheduled commercial banks and foreign banks (with a sizable presence in India) are
mandated to set aside 40% of their Adjusted Net Bank Credit (ANDC) for lending to
these sectors.
• Regional rural banks, co-operative banks and small finance banks have to allocate 75%
of ANDC to PSL.
NABARD
• NABARD is a development bank focusing primarily on the rural sector of the country. It is
the apex banking institution to provide finance for Agriculture and rural development.
• It is responsible for the development of the small industries, cottage industries, and any
other such village or rural projects.
• It is a statutory body established in 1982 under Parliamentary act-National Bank for
Agriculture and Rural Development Act, 1981.
 Agricultural Produce Market Committees
(APMC)

Auction Low price at market

• Agricultural Produce Market Committees (APMC), 2003 is the marketing board

established by the state governments in order to eliminate the exploitation incidences
of the farmers by the intermediaries, where they are forced to sell their produce at
extremely low prices.
• All the food produce must be brought to the market and sales are made through
auction.
 Evergreen Revolution
Second Green Revolution

The first Green Revolution in the 1960s characterized by the use of high-yielding
varieties and more intensive farming techniques transformed the agricultural
landscape in the country. Green revolution rampantly used fertilizers and other
chemicals, which made food and water, toxic to some extent. It supported
indiscriminate use of water as rice was main target of revolution. India’s 80% of fresh
water is consumed by agriculture, more particularly by rice farming. New agriculture
policy of India aims at sustainable agriculture, which is popularly called ‘second green
revolution’ or ‘Evergreen Revolution’. This includes organic farming, Horticulture
mission, bamboo mission, integrated pest management, etc.
 Evergreen Revolution / Second Green Revolution

• The first Green Revolution in the 1960s characterized by the use of high-yielding varieties
and more intensive farming techniques transformed the agricultural landscape in the
country.
• Green revolution rampantly used fertilizers and other chemicals, which made food and
water, toxic to some extent.
• It supported indiscriminate use of water as rice was main target of revolution. India’s 80%
of fresh water is consumed by agriculture, more particularly by rice farming. New
agriculture policy of India aims at sustainable agriculture, which is popularly called
‘second green revolution’ or ‘Evergreen Revolution’.
• This includes organic farming, Horticulture mission, bamboo mission, integrated pest
management, etc.
 Services Sector
• In 1950 to 1970, service sector contribution was only 4%, but now services accounts
for around 55 per cent of total size of the economy, about 38 per cent of total exports
and two-thirds of total FDI inflows into India.
• The real reason for the growth of service sector is due to increase in urbanization,
privatization and more demand for intermediate and final consumer services. This
scenario is direct result of globalization.
• The services sector is not only the dominant sector in India’s GDP, but has also
attracted significant foreign investment, has contributed significantly to export and
has provided large-scale employment.
• The services sector is a key driver of India’s economic growth. India’s services
sector covers a wide variety of activities such as trade, hotel and restaurants,
transport, storage and communication, financing, insurance, real estate, business
services, community, social and personal services, and services associated with
construction.
 Tourism Services
• With the liberalization of the visa regime with the e-Visa scheme, foreign tourist
arrivals to India on e-visas have increased.
• Schemes like Swadesh Darshan, National Mission on Pilgrimage Rejuvenation and
Spiritual Heritage Augmentation Drive (PRASHAD), tourist circuits are undertaking the
development or maintenance of heritage sites.
• Better flight connectivity to tourist destinations through the timely implementation of
the Regional Connectivity Scheme – UDAN Scheme is helping the tourism grow.

IT – BPM SERVICES
• Policy initiatives like Start-up India, National Software Product Policy and removal of
issues related to Angel Tax have given a boost to the sector.
• Pradhan Mantri Digital Saksharta Abhiyan (PMGDISHA), Digital India Mission, Public
Procurement (Preference to Make in India) Order 2017 which requires govt
departments to buy India-made desktops and computer parts- All of them directly and
indirectly increased the demand of computer hardware and software.
 Purchasing Managers Index (PMI)
Manufacturing and Services Sector

0 50 100
Contraction No Change Expansion

• It is an indicator of business activity, both in the manufacturing and services sectors.

• The headline PMI is a number from 0 to 100.
• PMI above 50 à represents an expansion when compared to the previous month.
• PMI under 50 à represents a contraction.
• A reading at 50 à indicates no change. PMI is compiled by IHS Markit.
 Logistics Performance Index

Every 2 Years
6 Indicators

• LPI is developed by the World Bank Group. It is released every two years (Biennial
Report). The logistics performance (LPI) is the weighted average of the country’s
scores on the six key dimensions:
1.Efficiency of the clearance process
2.Time taken for shipment to reach destination
3.Ability to track and trace consignments
4.Quality of trade and transport related infrastructure
5.Ease of arranging competitively priced shipment
6.Competence and quality of logistics services
 Champions Services Sectors (CSS)
Champion service sectors include
IT & ITES
Tourism and Hospitality Services
Communication Services
Medical Value Travel
Construction, and Related Engineering Services
Transport, and Logistics Services
Environment -al Services
Accounting and Finance Services
Financial Services,
Audio Visual Services
Education Services
Legal Services
 Champions Services Sectors (CSS)

DIPP Dept. of Commerce

Manufacturing Services

Rs.5000 Cr

• CSS was identified to give attention to 12 identified Champion Services Sectors

for realizing their potential. A fund of Rs. 5000 crores are proposed.
Department of Industrial Policy and Promotion (DIPP) is the nodal department
for the Champion Sectors in manufacturing and
Department of Commerce would coordinate the proposed initiative for the
Champion Sectors in Services.
 Start up India Scheme
• A startup is defined as an entity that is:
• 1. Headquartered in India,
• 2. Was opened less than 10 years ago,
• 3. Has an annual turnover less than RS. 100 cr
• The aim of this scheme is to promote and support startups by providing banking
finances. Small Industries Development Bank of India (SIDBI), acts as the principal
financial institution for this scheme.

Start up India Fund / Funds of Funds

• It was launched in the year 2016 with the corpus of Rs.10,000 crore.
• SIDBI manages the fund.
• The government launched this fund to help startups get funding in early stages.
The fund does not directly invest in startups, instead, it allocates money to
venture capitalists (VC) funds, which are required to invest at least twice the
amount of contributions received from the government.
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