Understanding Indian Economy
The economy of India is currently the world’s fourth largest in terms of real GDP (purchasing power parity) after the USA, China and Japan and the second fastest growing major economy in the world after China. India’s annual growth rate is above 8% while that of China is about 10%. India is a developing country and our economy is a mixed economy.
In a mixed economy the public sector co-exists with the private sector. Dadabhai Naoroji is known as the Father of Indian Politics and Economics. He is also called the ‘Grand Old Man of India’. In his book Poverty and Un BritNaoroji ish Rule in India he describes his theory, i.e. the economic exploitation of India by the British. His theory is popularly called the Economic Drain Theory. 'Brain drain' means talented men leaving their own country because of lack of opportunities and facilities and going to foreign countries for better conditions. Which of the following does not contribute to the development in India?
(a) Technological research (b) Population growth (c) Diversification of Industry (d) Increased saving Ans : (b) Population growth The socialist pattern aimed at by our planning comes through (a) a closed economy (b) mixed economy (c) public sector (d) open economy Ans : (b) mixed economy Which of the following is not a characteristic of Indian economy? (a) High rate of population growth (b) Extensive disguised unemployment (c) Low level of adult literacy (d) High level of exports Ans: (d) High level of exports
Basic Features of Indian Economy
(i) Low per capita income. (ii) Inequalities in income distribution. (iii) Predominance of agriculture. (More than 2/3rd of India’s working population is engaged in agriculture. But in USA only 2% of the working population is engaged in agriculture.) (iv) Rapidly growing population. (v) Chronic unemployment
(A person is considered employed if he / she works for 273 days of a year for eight hours every day.) (vi) Low rate of capital formation. (vii) Dualistic Nature of Economy (features of a modern economy, as well as traditional). (viii) Mixed Economy (ix) Follows Labour Intensive Techniques.
Five Year Plans
National Income (tZiob hcp-am-\w)
The national income is the sum total of the value of all the final goods produced and services of the residents of the country in an accounting year. For comparison purposes the national income is measured at constant prices with a base year. The base year at present is now 1993 - 94 and current prices are converted to the prices of the base year (Base year was originally 1960-61 but later periodically revised.) CSO : Central Statistical Organisation is under the Department of Statistics. Govt. of India is responsible for estimating the national income. CSO was founded by Prof. Mahalanobis. CSO is assisted by the National Sample Survey Organisation (NSSO) in estimating National Income. Dadabhai Naoroji was the first to calculate the national income of India. Gross Domestic Product (GDP) is the money value of final goods and services produced in the domestic territory of a country during the accounting year. In India Gross Domestic Product (GDP) is larger than national income because net factor income from abroad is negative, i.e. foreign payment is larger than the foreign receipt. Net National Product (NNP) at market prices = Gross National Product at Market Prices - Depreciation Depreciation is the losses arised due to wear and tear and technological obsolescence. Net National Product at factor cost NNP (fc) = NNP at market prices - Net Indirect taxes. Net National Product at factor cost is the actual National income.
Father of Indian Planning : M. Visweswarayya. M. Visveswarayya, in his book, Planned Economy of India, advocated the need of economic planning in India. The concept of planning is based on the Russian model...
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