UNIT- 2

PROBLEMS OF INDIAN ECONOMY

I. Answer the following :-

1. Distinguish between less developed and developed economics ?

S.No. Less developed economics Developed economics
1 The Per Capita, GNP decides this economy. The Per Capita, GNP decides this economy.
2 The world bank, in its world development report of 1997, has classified 49 countries are less developed countries. The world bank in its world development report of 1997 has classified 26 countries are developed countries.
3. The percapita income of these economic is 765 dollars or even less. The Percapita income of these economics is more than 9386 dollars.
4. Some of these economies are of India, Pakistan, mexico, Bangladesh, Brazil, Namibia, Somalia, Ethiopia etc. Some of these economies are U.S.A , Great Britan , France, Germany, Australia, Japan,

5. These economies mainly depend on agriculture and its allied activities. These economies mainly depend on industries.
6. These economics are not industrially
And Technologically well developed These economies are industrially and technologically well developed.

2. Define Poverty line ? Explain the concepts of absolute and relative poverty ?

Poverty:-
Poverty can be defined as a phenomenon in which certain sections of the society are not capable of meeting basic needs for their subsistence.

Poverty line:-

1. The amount of consumer expenditure required to purchase the minimum physical quantities is known as Poverty line.

2. The population whose level of income or consumption expenditure is below this quantum is considered to be below poverty line (BPL).

There are two types of poverty . They are:-
1. Absolute poverty.
2. Relative poverty.

1. Absolute poverty:-

Absolute poverty refers to the situation where the minimum required quantities of cereals, pulses and milk etc are not met in money terms.

2. Relative Poverty:-

Relative Poverty is measured by taking the income levels of the top 5 to 10 percent of the population and compared with the bottom 5 to 10 percent of the population which gives the relative levels of poverty.

3. Differentiate involuntary and voluntary unemployment? What is the relevance of disguised unemployment of India?

Unemployment:-
Unemployment is defied as the stock of all those individuals who are not gainfully employed in any productive work.
(or)
Who are unable to find work at the prevailing real wage rate.

Generally, two types of unemployment are distinguished:-

1. Involuntary unemployment and
2. Voluntary unemployment.

1. Involuntary unemployment:-

Involuntary unemployment refers to a situation where the individuals are prepared to undertake jobs at the prevailing wage rate but do not find jobs.

2. Voluntary Unemployment:-

Voluntary unemployment arises because individuals prefer not to work for reasons of affluence (richness), or leisure or if their expected wage rate is much higher than the existing market wage rate.

3. Disguised unemployment:-

1. Disguised unemployment refers to the stock of gainfully employed individuals, who do not work to their full capacity.

2. This is a peculiar situation most commonly prevalent on India family owned agricultural units.

3. The marginal productivity of the disguised unemployed is zero,
4. In rural India, disguised unemployment as well as open unemployment are rampant.

4 .Explain various programmes launched by the government for promotion of employment?

Measures to promote Employment:-

The Government of India has been reviewing the conditions of employment from time to time and has set up various committees to suggest measures to solve the problem of unemployment and underemployment.

1. A number of employment generation programmes introduced by government.
They are:-
a. Rural Works Programme (RWP)
b. Marginal Farmers and Agricultural Labourers Scheme (MFAL)
c. Small Farmers Development Agencies(SFDA) and
d. Self employment programmes.

2. As in the case of poverty eradication programme majority of the employment generation programmes also were targeted at the rural population.

3. New programmes meant for urban unemployed, particularly the educated unemployed, are to be designed to reduce the incidence of educated unemployment.

5. What are the factors causing regional imbalances? Explain the indicators of regional disparities?

Factors:-

1. There could be some natural factors like variation in resource endowments or some historical reasons like British colonial exploitation of India or a combination of both.

2. In India, for example, the growth of the port cities of Bombay (Mumbai), Madras(Chennai) and Calcutta(Kolkata) can be traced back to trade and s commerce policies of the British rules. These three cities acted as nuclei for the development of the three states, namely, Maharashtra, Tamilnadu and West Bengal.

3. Because of the selective and discriminatory approach of the British there has been a lopsided growth of the regional which has resulted in wide disparities in regional growth.

Indicators:-

A variety of Indicators either separately or in a combination to estimate the extent of disparities in regional economic development.

The main indicators are:-
1. Percapita income of the region,
2. Rate of industrial growth.
3. Rate of agricultural growth.
4. Rate of generation and utilization of infrastructural facilities and
5. Social indicators of development.

6. Explain different concepts of inflation. Is structural inflation a useful concept in the context of India?

Inflation:-

Inflation is state in which there is a sustained rise in general level of prices accompanied by a fall in the value of money when inflation exists in the economy the volume of money exceeds the value of goods and services.

Generally, two types of inflationary situations are distinguished:-
a. Demand – pull inflation.
b. Cost – push inflation.

a. Demand – pull inflation:-

A demand – pull inflation occurs when the aggregate demand rises continuously due to increases in investment expenditure, public and private or both, which may result in sustained rise in general price level.

b. Cost – push inflation:-

1. A cost push inflation, on the other hand, occurs when a sustained rise in the general price level is caused due to an autonomous increase in costs.

2. This may be either owing to the decision by employees to demand higher real wages, or by employees to raise their profit margins.

3. It may also rise in from rising prices of imports.

Structural Inflation:-

1. The more relevant concept of inflation to the Indian context, as also to the developing countries, is what is known as “structural inflation”.

2. A structural Inflation occurs, when the structural factors, namely, the interaction of the primary sector with the secondary sector and a variety of exchange relations causes a sustained rise in general price level which results in inflationary spiral.

3. It is mostly noticed in Latin America.

4. Any type of inflation including structural inflation does not do good to India as India is a developing country. Any inflation leads to the increase in poverty in the middle and lower class people.

7. Explain briefly the social and infrastructural needs of our country?

1. Economists like ‘Amartya Sen’, have suggested that per capita income as an indicator of development is inadequate and should be replace by a better one such as ‘Human Development Index’.

2. A human development index is a composite index based on life expectancy, general health level, literacy rate and education, sanitation facilities, besides, of course, per capita income.

a. Education:-

1. As regards the elementary education system India stands second in the world with 15 million children enrolled in 1994-95 in the age group of 6-14 year.

2. This is not at all encouraging when compared with the other Asian Countries.

3. China, Indonesia, Malaysia and Korea which started more or less with similar status in 1951, they have achieved near complete literacy by 1996.

b. Health:-

1. Health is an important sector. However, the plan outplay for health is not in consonance with the general requirements of the needy population.

2. The “Health for All” strategy is changed to “Health for Under Privileged”.

3. The number of Primary Health Centres has increased from 725 in 1951to 21853 in 1996. Similarly, Community Health Centres also increased ten fold to 2424 in 1996 compared to 217 in 1981.

4. However, we could not augment the life expectancy to the satisfactory levels.
c. Transport:-

1. Transport sector is crucial to any economy because it helps widen the market for goods and services by connecting remote parts of a nation.

2. Transport facilitates mobility of men and materials needs for production.

d. Power:-

1. Electric power is an essential energy component required in agricultural, industry transport and house hold sectors.

2. In modern world, it is the basis for almost all types of activity. Hence, much of industrialization and development depends upon, generation of electric power.

e. Housing:-

1. Housing is essential for human living.

2. The government has a crucial role to play in this sector.

3. Since, housing is primarily a state subject, centre oversees broad policy formulation, implementation of social housing scheme, particularly for the weaker sections of the society.

4. Indira Awas Yojana (IAY) and the Urban Basic Services (UBS) for the poor are under operation at present, towards fulfilling the housing needs in general.

f. Irrigation:-

1. Irrigation contributes to rapid agricultural progress of an economy.

2. In order to bridge the gap between the major, medium and minor projects over time the Command Area Development (CAD) programme was introduced.

II Answer the following questions.

1. Name some of the poverty eradication programmes.

To tackle the problem of poverty several anti poverty programmes are launched from time to time. Some of them are:-

1. National Rural Employment Programme (NREP).
2. Rural Labour Employment Generation Programme(RLEGP)
3. Integrated Rural Development Programme (IRDP)
4. Swarna Jayanthi Gram Samridhi Yojana (SJGSY)
5. Jawahar Gram Samridhi Yojana (JGSY)
6. Jawahar Rozgar Yojana (JRY), etc.

2. What is Human Development Index?

1. Economists like Amartya Sen, have suggested that per capita income as an indicator of development is inadequate and should be replaced by a better one such as Human Development Index.

2. A Human Development Index is a composite index based on life expectancy, general health level, literacy rate and education, sanitation facilities, besides, of course, per capita income.

3. What is Poverty?

Poverty can be defined as a phenomenon in which certain sections of the society are not capable of meeting basic needs for their subsistence.

4. What is a Inflation?

Inflation is a state in which there is a sustained rise in general level of prices accompanied by a fall in the value of money.

5. Define poverty line?

1. Poverty is a situation in which certain sections of the society are not in a position to meet their basic needs of food, shelter and clothing.
2. The amount of consumer expenditure required to purchase the minimum quantity is known as poverty line.

6. What are the problems of Indian Economy?

The Indian economy is affecting with many problems.

1. The two main problems are a. Poverty b. Unemployment.

2. There are other problems like

(a) regional disparities,
(b) inflation,
(c) social sector and
(d) infrastructural needs,
(e) population explosion.

7. Mention the measures to be adopted to reduce regional imbalances?

1. Backward areas are identified.
2. Sufficient funds are allocated for the development of those areas.
3. Rural industrial projects are established in backward area.
4. Industrial estates are established.
5. In 1980 National Committee for the development of Backward areas (N.C.D.B.A.) was established.
6. Welfare programmes like Girijan Welfare Development Board, literacy programmes, Communication and transport facilities have been implemented and carried out in backward area.

II Fill in the blanks:-

1. GNP per capita is used as index of relative economic development.

2. UN has classified 144 countries as underdeveloped which have less then $350 per capita GNP in 1986.

3. According to World Development Report 1997, low-income countries are those with $765 in 1995.

4. India’s per capita income is $340 in 1995 according to world bank.

5. Incidence of poverty is more in rural areas than in urban areas.

6. Involuntary unemployment is a situation when jobs are not available to prevailing wages.

7. Under disguised unemployment marginal productivity is zero or negative.

8. Regional plans for Telangana and Rayalaseema were adopted in the year 1970.

9. Structural inflation is rampant in Latin America.

10. The present ‘Health for Under Privileged’ is a modified Health for all strategy.

11. If agriculture is considered as the indicator of growth, the state that ranks first is Punjab.

12. The scheme under operation to day for fulfilling housing needs UBS, IAY.

13. In the year July 1996 the government of India has adopted basis minimum services.

14. Dollar belongs to America country.

15. In India, life expectancy at birth is 60.8 years.

16. The most employment generation programmes are for rural areas.

17. sterling pounds belongs to U.K (United Kingdom).

18. CAD Major, Medium, Minor projects are irrigation schemes.

19. In disguised unemployment workers working less than full capacity.

20. Under employment is working less than standard hours.

21. The country with highest adult literacy is Korea.

22. I.R.D.P stands for Integrated Rural Development Programme.

23. As regards the elementary education system India stands second place in the world

III Match the following:-

1. Anti – Poverty programmes [h] a. RWF, MFAL, SFDA

2. Disguised unemployment [j] b. Industrial estates.

3. Under – employment [i] c. Price rise due to rise in aggregate
demand.

4. Employment generation programmes [a] d. Mismactch of sectoral relations.

5. Regional development programmes [b] e. IAY, UBS

6. Demand – pull inflation [c] f. CAD, Major, Medium, Minor
projects.

7. Cost – Push inflation [g] g. Price rise due to in input costs.

8. Structural inflation [d] h. SJGSY, JGSY,IRDP,JRY

9. Social Housing Schemes [e] i. Working less than standard hours.

10. Irrigation schemes [f] j. working less than full capacity.

http://www.chittoorlive.in/structure-of-indian-economy/

News Reporter