Economic Text Book
Economic Text Book
Economic Text Book
43/16) SD - 4
Dated 25.4.2016 has given approval to prescribe this textbook in its meeting held on
20.06.2019 and it has been decided to implement it from academic year 2019-20.
ECONOMICS
STANDARD ELEVEN
2019
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Controller
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Maharashtra State Textbook
Dr. Sudhakar Ramkrishna Kute, Bureau, Prabhadevi,
Aurangabad Mumbai - 400 025
Shri Kashiram Parshuram
Bawisane, Buldhana
The Constitution of India
Preamble
2. MONEY 9 - 13 10
3. PARTITION VALUES 14 - 23 16
6. POPULATION IN INDIA 36 - 42 14
7. UNEMPLOYMENT IN INDIA 43 - 49 14
8. POVERTY IN INDIA 50 - 56 14
S.O.I. Note : The following foot notes are applicable : (1) © Government of India, Copyright : 2019. (2) The responsibility
for the correctness of internal details rests with the publisher. (3) The territorial waters of India extend into the sea to
a distance of twelve nautical miles measured from the appropriate base line. (4) The administrative headquarters of
Chandigarh, Haryana and Punjab are at Chandigarh. (5) The interstate boundaries amongst Arunachal Pradesh, Assam
and Meghalaya shown on this map are as interpreted from the “North-Eastern Areas (Reorganisation) Act. 1971,” but
have yet to be verified. (6) The external boundaries and coastlines of India agree with the Record/Master Copy certified by
Survey of India. (7) The state boundaries between Uttarakhand & Uttar Pradesh, Bihar & Jharkhand and Chattisgarh &
Madhya Pradesh have not been verified by the Governments concerned. (8) The spellings of names in this map, have been
taken from various sources.
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Front Page : Students of standard ten have now come to standard eleven. They are going to study 'Economics' as
an independent subject. The front cover is a visual presentation on the importance of Economics across all age
groups. Visual images in this, represent the hierarchy of economic needs as per the age groups.
Back Page : Various economic activities.
CHAPTER - 1 : BASIC CONCEPTS IN ECONOMICS
Introduction :
Types of Economic Systems - Capitalism,
Today’s world is marked by scientific Socialism and Mixed Economy.
inventions and discoveries. This remarkable
scientific progress enables to probe into the Kautilya's Views on Economics :
question, What is a science? Science is the Artha means 'Wealth' and
systematic body of knowledge. There are two Shastra means 'Science'.
main types of sciences. Arthashastra implies the
x Natural sciences x Social sciences science of acquiring and
x Natural science is one whose laws are managing wealth. Essentially,
universally acceptable and their validity can be Arthashastra is a treatise
tested in a laboratory under controlled conditions. Fig 1.1 on Political Economy in its
Natural sciences are also called exact sciences Kautilya broadest sense.
because of their empirical approach to the
study. e.g. Mathematics, Physics, Chemistry. Key-points based on Kautilya's views :
x Social Science is called abstract or 1) Crucial role of the state or government.
behavioural science because it is related to 2) Focus on creation of wealth as the means to
the study of some or the other aspect of human ensure welfare of the state.
behaviour. e.g. Psychology is related to ‘mental’ 3) Need for efficient administrative machinery
aspect of human behaviour. Sociology is related
for good governance.
to the study of ‘social’ aspect of man as a
4) Compilation of political ideas into
member of society. Human behaviour can neither
be empirically tested nor can be studied in the Arthashastra.
laboratory. Hence, the laws of social sciences
Do you know?
are not universal but they are only statements of
general human tendencies. Kautilya was a great statesman,
philosopher, economist and royal advisor
Meaning of Economics : during the Mourya period. He is also known
Economics is a social science. The origin by the name Chanakya or Vishnugupta.
of the term 'Economics' lies in the Greek word,
Kautilya authored the ancient Indian
'Oikonomia' which means management of the
political treatise, the 'Arthashastra'.
household.
Economics is referred to as 'Queen of
Definitions of Economics :
Social Sciences' by Paul Samuelson. Economics
1) Adam Smith's Wealth-Oriented Definition
deals with the economic aspect of human
behaviour. It deals with how human beings of Economics :
satisfy unlimited wants with limited means. Classical economist Adam
Let us understand the nature of Economics Smith, also regarded as the
with respect to some popular definitions. "Father of Economics", has
given the wealth-oriented
Refresh your memory : definition of Economics.
Have you studied the following concepts Out of his many literary
in the previous textbooks? Fig 1.2 contributions to Economics, he
Adam Smith
1
is most famous for his 1776 piece of work, "An 3) Lionel Robbins' Scarcity-Oriented
Inquiry into the Nature and Causes of Wealth of Definition of Economics :
Nations". Adam Smith defines Economics as "a This is the most popular
science of wealth". definition of Economics.
Key-points of Adam Smith's definition : Robbins, in his book
1) Laissez faire i.e. non-intervention of the entitled, "An Essay on the
government. Nature and Significance
Fig 1.4 of Economic Science"
2) Capital and wealth accumulation
Lionel Robbins published in 1932 mentions
3) Nature's law in economic affairs.
about the scarcity-oriented definition of
4) Division of labour as an aspect of growth Economics.
theory. "Economics is a science which studies
Do you know? human behaviour as a relationship between ends
and scarce means which have alternative uses".
Paul Romer and William Nordhaus have
won Nobel Memorial Prize in Economics Key-points of Robbins' definition :
for 2018. Paul Romer tends to be described 1) Wants (ends) are unlimited.
as a growth theorist whereas Mr. Nordhaus 2) Means are comparatively limited.
has remarkably contributed to the field of 3) Wants are gradable on the basis of priority.
Environmental Economics. 4) Means have alternative uses.
4
5) Wealth : Wealth refers to “anything which has 6) Personal Income : Earnings received by a
market value and can be exchanged for money.” person from all sources is called his personal
To be regarded as 'wealth', a commodity income.
must possess the following characteristics : 7) Personal Disposable Income (PDI) : It is
i) Utility that part of personal income which is left over
ii) Scarcity after payment of direct taxes such as income
iii) Transferability tax, wealth tax etc.
iv) Externality
You should know :
i) Utility : A commodity must have the capacity
to satisfy human wants, e.g. furniture, Following are the various types of income.
refrigerator etc. A) Fixed income : Income which remains
ii) Scarcity : A commodity must be scarce in stable over a period of time, e.g. rent,
supply in relation to its demand if it is to wages.
be included in the term ‘Wealth’, e.g. all B) Fluctuating income : Income which
economic goods for which price is paid. is not fixed but keeps on changing, e.g.
iii) Transferability : A commodity should be profit. It can be positive, negative or zero.
transferable from person to person as well C) Money income : It is the income received
as place to place. If the good is material or in actual currency of the country. In other
tangible then only it is possible to transfer words, it is the income in cash, e.g. ` 5,000
it from place to place, e.g. vehicle, jewellery
etc. D) Real income : It is the purchasing power
of money income, e.g. commodities
iv) Externality : A good can be transferred
purchased out of money income.
only if it is external to human body, e.g. bag,
chair etc. E) Contractual income : This income is
paid as per the terms and conditions of
Do you know? contract, e.g. rent, wages.
Physical transferability - This is actual
F) Residual income : Income which is left
transfer of goods from one person to another
over after making payments to all factors
and from one place to another, e.g. vehicle.
of production is called residual income,
Notional Transferability - It is not possible
e.g. profit
to transfer the good physically but there can
be only transfer of ownership rights, e.g. land G) Earned income : Income obtained after
participating in the productive activity,
Try this : e.g. rent, wages, interest, profit.
Prepare a list of commodities which satisfy H) Unearned income : Income received
the condition of physical transferability and from all sources without indulging in any
notional transferability. productive activity, e.g. windfall gains,
lottery prizes.
Do you know?
Inborn qualities like beauty, melodious 8) Economic activity : Economic activities
voice, efficiency etc. are not ‘wealth’ in the can be classified into four types which
strict sense of economics. They are neither include production, distribution, exchange and
external nor transferable. consumption.
5
of production which earns the reward
in the form of ‘interest’, e.g. machinery,
technology, factory building etc.
iv) Entrepreneur : Entrepreneur is the
organizer who is a real captain of the
industry. He is a special kind of labour who
gets the work done to earn the reward of
‘profit’ in the process of production.
b) Distribution : It is division of factor
rewards among different segments of the
society. Factors of production claim their
Fig. 1.8 : Economic Activities rewards of rent, wages, interest and profit
a) Production : Production is creation of utility. through the process of distribution.
There are four factors of production such as c) Exchange : It is give and take between
land, labour, capital and entrepreneur. various units in the economy. ‘Exchange’
refers to sale and purchase of goods
Always remember : and services. In economics, exchange is
The activities which are carried out just necessarily a monetary transaction.
for the sake of charity, hobby or in general,
where there is no monetary exchange are d) Consumption : It is making use of goods
considered ‘unproductive’ in the sense of and services to satisfy human wants.
Economics, though they may be adding B) Macro-Economics :
immense value to life. Macro means large or aggregate or total.
Macro-Economics is therefore the study of
Factors of production :
aggregates covering the entire economy such
i) Land : ‘Land’ in Economics is a wide as total employment, national income, national
term. It is a natural factor of production. output, total investment, total savings, total
Any natural resource that is available on, consumption, aggregate supply, aggregate
above and below the surface of the earth is demand, general price level etc.
called ‘land’ in Economics, e.g. minerals
which are found below the surface of the Kenneth Boulding's definition of Macro
earth; soil, water on the surface of the earth; Economics :
air, sunshine, wind are above the surface of "Macro Economics deals not with
the earth. Land earns ‘rent’ in productive individual quantities as such, but with the
activity. aggregates of these quantities, not with the
individual incomes but with the national income,
ii) Labour : Labour is a human factor of
not with individual prices but with the general
production. Any physical or mental effort
price level, not with individual output but with
undergone during the process of production
the national output".
to earn the reward of 'wages' is called
‘labour’, e.g. carpenter, accountant, Basic Concepts of Macro Economics :
engineer etc. 1) National Income : This reveals the total
iii) Capital : Capital is a produced means for economic performance of a nation. It is
further production. It is a man-made factor referred to as the total income of a country.
6
In the economic sense, national income is the Find out :
aggregate monetary value of all final goods and Which of the following terms is a part of
services produced in an economy during a year. micro economics or macro economics?
Definition by National Income Committee : x Global poverty
“A national estimate measures the volume x Price of a commodity
of commodities and services turned out during a x Balance of payments
given period counted without duplication”. x Profits of a firm
x National income
2) Saving : It is that part of the income which is
set aside to satisfy the future needs by foregoing
current consumption. In other words, saving is Always Remember
that part of income which is not spent currently
Economic Economic
on consumption. Growth Development
3) Investment : It refers to creation of capital 1) Economic 1) Economic
assets through mobilisation of savings, e.g. growth means development indicates
machinery, equipment etc. an increase in economic growth plus
the real national progressive changes
4) Trade Cycles : Trade cycles are fluctuations income of the in certain important
in business. They are ups and downs in the country. variables which
overall economic activities. Ups and downs determine well-being
means fluctuations caused by inflation and of the people.
depression respectively. 2) This concept 2) This concept
x Inflation is a continuous rise in general is narrow and is broader and
price level. quantitative. qualitative.
3) Economic 3) Economic
x Depression is a continuous fall in overall
growth is development is not
prices and lowering down of economic possible without possible without
activity in general. economic economic growth.
development.
Do you know ?
4) Economic 4) Economic
Unemployment created due to impact growth is a development is a
of cyclical fluctuations is called ‘Cyclical unidimensional multi-dimensional
Unemployment’. concept. concept.
5) Economic 5) Economic
5) Economic Growth : The term economic growth is development is
growth has a 'quantitative' dimension. In simple spontaneous and deliberate and
words, economic growth means an increase in reversible. irreversible.
the real national income of the country, over a 6) Economic 6) Economic
long period of time. growth is development is
6) Economic Development : This is a wider measured measured in terms
concept which has a 'qualitative' dimension. in terms of of agricultural
national income productivity, industrial
Economic development implies economic
and per capita productivity quality of
growth plus progressive changes in certain
income. human life etc.
important variables which determine well-being
of the people, e.g. education, health etc. Table : 1.1
7
EXERCISE
8
CHAPTER - 2 : MONEY
precious metals like gold, silver etc. Standard coins were used for some
days during the British period. Fig. 2.2 : Evolution
b) Token coins : Token coins are those whose face value is higher of Money
10
than their intrinsic value. These coins are smart cards, computer etc. It is backed by
made of cheaper metals like aluminum, the Central Bank. Electronic money is used
nickel etc. These coins are of lower for purchases and transactions globally.
denominations and are generally used for Digital wallets are also a form of stored
settling smaller transactions. In India, all electronic money.
coins in circulation today are token coins.
Difficulties in transportation of token coins Find out :
gave rise to paper money. List of various modes of digital
transactions.
5) Paper Money : Paper Money was a substitute
for metallic money. In course of time, issue
of currency notes was monopolized by the You should know :
Central Bank. Paper money consists of a) Legal Tender Money : It is the money
paper currency issued by Government and which is backed by law and cannot be
Central Bank of the country. refused in transaction by anybody on any
In India, one rupee note and all coins are ground. In India, all coins and currency
issued by the Government of India. Currency notes are legal tender money.
notes of higher denominations are issued by
b) Non-Legal tender Money : It is the money
the Central Bank (Reserve Bank of India).
Inconvenience in handling and risk of storing which is generally used by people in final
paper money gave rise to bank money. payments but there is no legal compulsion of
acceptance. It can be refused. Cheques, bills
6) Bank Money or Credit Money : Bank
of exchange are examples of this money. It
money refers to deposits which are in the
is also known as optional money.
form of cash saved by the people. It is
used to create credit money. This can be
withdrawable and transferable on demand, Qualities of Money :
by means of cheque, demand draft etc. The qualities of money are as follows :
Cheque, demand draft are not actual money 1) General Acceptability : Anything which is
but credit instruments through which deposits used as money must be easily accepted by
are transferable. Credit money plays an all for exchange purpose.
important role in economic development. On
the background of global economy, cashless 2) Divisibility : Money should be easily
transaction gained importance thereby divisible into smaller denominations to
giving rise to plastic money. facilitate small transactions.
7) Plastic Money : Plastic Money is easy 3) Durability : Money should also possess the
to use in transaction due to advanced characteristic of durability. Currency notes
technology. Debit cards and credit cards are and coins are being used repeatedly and
used as plastic money. Further innovation shall continue to do so for years together on
in smart transactions led to the introduction account of durability.
of electronic money. 4) Cognizability : Money must be easily
recognised. It should have certain distinct
Find out : Recent changes introduced by
marks so as to avoid confusion by the
banks for safe use of plastic money.
receiving person.
8) Electronic Money : E-money or Electronic 5) Portability : It should be easy to carry from
money is a monetary value that is stored one place to another without any difficulty,
and transferred electronically through a expense and inconvenience, e.g. currency
variety of means i.e. a mobile phone, tablet, notes are easily portable.
11
6) Homogeneity : Money of a particular building, plot, shop, agricultural land etc. can
denomination must be homogeneous or be sold at one place and can be purchased at
identical in its features. another place with the help of money.
7) Stability : Money should have a stable C) Contingent Functions :
monetary value. It serves as a measure According to Prof. Kinley, in the modern
of value to exchange goods and services. period money plays an important role almost in
These goods can be sold and purchased in all economic transactions.
future as per requirements.
1) Measurement of National Income :
Functions of Money National Income is expressed in money
A) Primary Functions : terms. Distribution of national income
1) Medium of Exchange : The most important among the four factors of production is
function of money is to serve as a medium in terms of monetary rewards. e.g. rent,
of exchange. Any commodity can be wages, interest, profits etc.
purchased or sold for money. 2) Basis of Credit : Commercial Banks
2) Measure of Value or Unit of account : Price create credit money on the basis of primary
is the value of a commodity or a service deposits. Money provides a liquid base for
expressed in terms of money. Money enables creation of credit money.
to compare the prices of commodities.
3) Imparts liquidity to wealth : Money is
Different currencies are used to express the
called the most liquid asset. Money can
value of commodity in different countries,
e.g. Rupee in India. Dollar in U.S.A., be easily converted into any asset and any
Pound in U.K., Yen in Japan etc. Income asset can be converted into money. e.g. a
and expenditures of all kinds, assets and person can purchase gold and if he wants
liabilities are stated in terms of money as a he can sell it and purchase government
unit of account. bonds, securities etc.
Q. 1. Complete the correlation : Q. 4. Identify and explain the concepts from the given
1) Primary function of money : Medium of exchange illustrations :
:: : Transfer of value 1) Vasantsheth provides coal from his shop to farmers
2) : Basis of credit : Secondary functions of in exchange for foodgrains.
money : standard of deferred payments. 2) Babanrao deposits his money in a nationalized
bank.
3) Commodity money : Shells : : : Credit
card 3) Charu used her debit card to purchase a shirt for her
younger brother.
4) Divisibility : Smaller denomination; ::
4) Malathi purchased a house through an agent. The
Easy to carry from one place to another.
agent accepted the commission amount in cash but
5) Barter system : Goods : : Modern economy did not issue a receipt to her.
13
CHAPTER - 3 : PARTITION VALUES
LET'S RECALL
x Are you familiar with the word ‘averages’?
x Can you tell the meaning of individual series, discrete data and continuous data.
x Name the positional averages that you have previously studied.
Introduction :
The procedure of dividing the data into equal Do you know?
parts is called 'partitioning'. Values dividing the Statistics Day : Prof. Prasanta Chandra
data into a required number of equal parts are Mahalanobis, an Indian Statistician was
called 'Partition Values'. instrumental in formulating India's strategy
In Class X, you have already studied for industrialization in the Second Five
about the measures of central tendency i.e. Year Plan (1956-61) which later came to be
averages such as Arithmetic Mean, Median and known as Mahalanobis Model.
Mode. Median is the value of the middlemost Mahalanobis devised a measure of
observation in the data when the observations comparison between two data sets that is
are arranged in increasing or decreasing known as the Mahalanobis distance. He
order of values. 'Median', is a special type of also devised a statistical method called
partition value because there are equal number 'fractile graphical analysis' which could be
of observations above as well as below it. Like used to compare the socio-economic
Median, Quartiles, Deciles and Percentiles are conditions of different groups of people. In
also partition values, since they divide the given
recognition of the notable contributions
set of observations into equal number of parts.
made by P. C. Mahalanobis in the field of
In general, they are referred to as 'fractiles'.
economic planning and statistical
Partition values form a part of descriptive
development, the Government of India has
statistics.
designated 29th of June every year,
In the forthcoming chapters such as
coinciding with his birth anniversary as
Population, Unemployment and Poverty,
'Statistics Day', in the category of Special
students will get acquainted with the use of
day to be celebrated at the national level.
partition values in economic data analysis.
14
Need for Partition Values : known as Q1, Q2 and Q3 respectively.Second
The data consists of extreme values on the quartile is nothing but the median. To findout
lower side and also on the higher side in quartiles, generally the data is arranged in
magnitude. Such values are known as 'outliers'. ascending order.
The average used for such data often It is explained in the following example :
misinterprets its representative value. To
overcome this misinterpretation, generally (1) Q1 (2) Q2 (3) Q (4)
3
partition values like median, quartiles, deciles
and percentiles are used. a) In general, for individual and ungrouped
data we get the formula for Q1, Q2 and Q3
Always remember : as given below :
n + 1 th Observation.
Q2 = D5 = P50 = Median Qi = size of i
4( ) i = 1, 2, 3
Where
of financial information concerning
l = Lower limit of quartile class.
economic data, income data, stock data,
sales and survey data etc. f = Frequency of the quartile class
x Income quartiles is the most objective cf = Cumulative frequency of the class preceding
method of comparing changes among the quartile class.
individual income groups caused by n = Total of frequency.
economic changes such as wage
h = Upper limit - lower limit of the quartile class.
fluctuations and inflation.
x Deciles too have wide application in
Calculation of Quartiles
finance and economics. Government uses
deciles to study the level of economic Solved Examples
inequality, measurement of poverty line, A) Individual Data :
drought conditions etc. 1) Calculate Q1 and Q3 of the first semester
x Deciles are used in investments, particularly examination marks scored by the students as
to assess the performance of a portfolio given : 40, 85, 84, 83, 82, 69, 68, 65, 64, 55, 45
investment such as a group of mutual
funds. Solution :Arrange the series in ascending order
x Percentiles are used in the measurement of i.e. 40, 45, 55, 64, 65, 68, 69, 82, 83, 84, 85
test scores, health indicators, household n = Total number of observations
income, household wealth, percentile wages. n = 11
n + 1 th Observation.
x Percentiles can be used for benchmarking
and baseline purposes.
Q1 = size of (4 )
11 + 1 th Observation
LET’S LEARN :
Q1 = size of ( 4 )
12 th Observation
Quartiles : Q1 = size of
4
( )
Meaning : 'Quartiles' are values of data which Q1 = size of 3rd Observation.
divide the whole set of observations into four
Q1 = size of 3rd Observation. is 55
equal parts. There are three Quartiles which
divide the data into 4 equal parts. They are ? Q1 = 55
15
Third Quartile Solution : Arrange the data in ascending order
n+1 th Observation and find out the cumulative frequency.
Q3 = size of 3 ( 4 ) Income (lakh `) No. of Person Cumulative
th Observation
Q3 = size of 3 ( 11 + 1
4 ) (x)
4
(f) frequency (cf)
6 6
th Observation 5 8 14
Q3 = size of 3 ( 124 ) 6 9 23
Q3 = size of (3 × 3) th Observation 9 12 35
Q3 = size of 9th Observation is 83 10 10 45
12 8 53
? Q3 = 83
15 6 59
Ans : Q1 = 55, Q3 = 83 n = 59
17, 18, 19, 20, 21, 22, 28, 31, 32, 33 th Observation
n = 10 Q1 = size of
60
4
( )
Q3 = size of 3 4 ( )
n + 1 th Observation
Q1 = size of 15th Observation
Size of 15th observation lies in cf 23, hence
Q3 = size of 3 ( )
10 + 1 th Observation
4 quartile value = ` 6 lakhs
Q3 = size of 3 × 4( )
11 th Observation ? Q1 = ` 6 lakhs
Q3 = size of 4
33 th Observation
( ) Q3 = size of 3 ( n+1
4 ) th Observation
th Observation
Q3 = 31 + 0.25 (32 – 31) Q3 = size of 3 ( 604 )
Q3 = 31 + 0.25 × 1 Q3 = size of (3 × 15)th Observation
?Q3 = 31.25 Q3 = size of 45th Observation
Ans : Q3 = 31.25 Size of 45th observation lies in cf 45, hence
quartile value = ` 10 lakhs
B) Discrete Data : By arranging the observations ? Q3 = ` 10 lakhs
in the data in ascending or descending order, we
derive : Ans : Q1 = ` 6 lakhs, Q3 = ` 10 lakhs
n + 1 th Observation
Qi = size of i
4( ) where i = 1, 2, 3
C) Continuous data : Q1 and Q3 for continuous
1) Find out Q1 and Q3 from the following data. frequency distribution are calculated by applying
the following steps.
Income (lakh `) 5 4 9 12 15 6 10
1) Arrange the data in ascending or descending
No. of Person 8 6 12 8 6 9 10 order.
16
2) Write respective frequencies of the class. Step II
n – cf
3) Find out cumulative frequency (cf)
4) Determine the quartile class.
Q1 = l + ( 4
f ) ×h
Formula :
Step - I : First find the value of quartile
n th Observation
Q1 = 30 + ( 50 – 7
4
20
× 10 )
Q1 = size of 4 ( ) Q1 = 30 + (
12.5 – 7
) × 10
20
3n th Observation
Q3 = size of 4 ( ) Q1 = 30 +
5.5
( )
× 10
20
Step - II :
in – cf
Q1 = 30 +
55
( )
Qi = l + ( 4
f )×h i = 1, 2, 3
20
Q1 = 30 + 2.75
Q1 = 32.75
Where
l = Lower limit of quartile class. ? Q1 = 32.75
f = Frequency of the quartile class Step I
cf = Cumulative frequency of the class preceding th Observation
150 th Observation
1) Find out Q1 and Q3 quartile for the following Q3 = size of
4
( )
data. Q3 = size of 37.5th Observation
Rainfall (in cms) 20-30 30-40 40-50 50-60 37.5 lies in cf 44 hence third quartile class is
No. of years 7 20 17 6 40 - 50
? l = 40 f = 17 cf = 27 n = 50 h = 10
Rainfall No. of Cumulative
(in cms) years (f) frequency (cf) Step II
20-30
30-40
40-50
7
20
17
7
27
44
Q3 = l + (
3n – cf
4
f
×h )
50-60 6
n = 50
50
Q3 = 40 + (
3 × 50 – 27
4
17
× 10 )
Step I
n
Q1 = size of 4 ( )
th Observation Q3 = 40 + (
17 )
37.5 – 27
× 10
50
Q1 = size of 4 ( )
th Observation
10.5
( )
Q3 = 40 + 17 × 10
17
Deciles : Calculation of D8
Meaning : 'Deciles' are values of data which
divide the whole set of observations into D8 = size of 8 10 ( )
n + 1 th Observation
Calculation of Deciles
Solved Examples
D8 = size of 8 10 ( )
11 th Observation
D4 = size of 4 10(
n+1
)th Observation D8 = 18 + 0.8
?D8 = 18.8
D4 = size of 4 ( 9+1
10 )th Observation
Ans : D8 = 18.8
th Observation
10
D4 = size of 4 10( ) B) Discrete data :
1) Find out D2 and D4 for the following data.
D4 = size of (4 × 1)th Observation
Marks 10 20 30 40 50 60
D4 = size of 4th Observation
No. of Students 5 6 4 5 10 9
? D4 = 10
18
Solution : Marks No. of students (f) cf Marks No. of students (f) cf
10 5 5 0-10 10 10
20 6 11 10-20 10 20
30 4 15 20-30 40 60
40 5 20 30-40 20 80
50 10 30 40-50 20 100
60 9 39 n = 100
n = 39 Calculation of D5
D2 = size of 2 (
n+1
10 )th Observation
Step I
D5 = size of ( 5n10 )
th Observation
(
D2 = size of 2 10 )
39 + 1 th Observation
D5 = size of (
5 × 100 th Observation
)
40 th Observation 10
D2 = size of 2 10( ) D5 = size of 10
500 th Observation
( )
D2 = size of (2 × 4)th Observation
D5 = size of 50th Observation
D2 = size of (8)th Observation
Size of 50th Observation lies in cf 60
Size of 8th Observation lies in cf 11
Hence Decile class = 20-30
Hence D2 = 20 marks
? l = 20 f = 40 cf = 20 n = 100 h = 10
? D2 = 20
Step II
Calculation of D4
(
n + 1 th Observation
D4 = size of 4 10 ) (
D5 = l + 10
5n – cf
f
×h )
( )
39 + 1 th Observation
D4 = size of 4 10 D5 = 20 + (5 × 100 – 20
10
40
× 10 )
40 th Observation
( )
D4 = size of 4 10
D4 = size of (4 × 4) th Observation
D5 = 20 + 10 (
500 – 20
40
× 10 )
D4 = size of 16th Observation D5 = 20 + ( )
50 – 20
40 × 10
Size of 16th Observation lies in cf 20
Hence D4 = 40 marks ( )
30
D5 = 20 + 40 × 10
? D4 = 40 300
D5 = 20 + 40
Ans : D2 = 20, D4 = 40
D5 = 20 + 7.5
C) Continuous Data : D5 = 27.5 marks
Apply the steps as mentioned in Qualities of
continuous data. ? D5 = 27.5
1) Find out D5 and D7 for the following data of
Calculation of D7
marks of 100 students in a class test.
Step I
Marks 0-10 10-20 20-30 30-40 40-50
No. of
Students
10 10 40 20 20 D7 = size of ( ) 7n
10
th Observation
19
D7 = size of ( )
7 ×100 th Observation
10
Where
P = Percentile
D7 = size of 10 ( )
700 th Observation l = Lower limit of percentile class
f = Frequency of percentile class
D7 = size of 70th Observation
cf = Cumulative frequency of class preceding
D7 = size of 70th Observation lies in cf 80 percentile class
Hence Decile class = 30-40 h = Upper limit of the class - lower limit of the
? l = 30 f = 20 cf = 60 n = 100 h = 10 percentile class.
Step II
Calculation of Percentiles
(
D7 = l + 10
7n – cf
f
×h ) Solved Examples
A) Individual Data :
D7 = 30 + (
7 × 100 – 60
10
20
× 10 ) 1) Find P40 for the following data.
10, 15, 8, 16, 19, 11, 12, 14, 9
D7 = 30 + 10 (
700 – 60
20
× 10 ) Solution : Arrange the data in ascending order
i.e. 8, 9, 10, 11, 12, 14, 15, 16, 19
n=9
D7 = 30 + ( )
70 – 60
20 × 10 ( )
n + 1 th Observation
P40 = size of 40 100
10
( )
D7 = 30 + 20 × 10 P40 = size of 40 ( ) 9 +1
100
th Observation
D7 = 30 + 20 ( )
100
( )
10
P40 = size of 40 × 100
th Observation
D7 = 30 + 5
D7 = 35 marks
? D7 = 35
P40 = size of ( )
40 ×10
100
th Observation
kn – cf
Pk = l + (
100
f
×h ) k = 1, 2,... 99
P85 = size of 85 ( )
10 + 1
100
th Observation
20
P60 = size of 8.2th Observation lies in cf 9
11
P85 = size of 85 100 ( ) th Observation
Hence P20 = 59
th Observation
P85 = size of (85 × 0.11)
? P20 = 59
th Observation
P85 = size of (9.35)
Calculation of P60
P85 =size of 9th observation + 0.35 (10th observation – 9th observation)
P85 = 79 + 0.35 (82 – 79) ( )
n+1
P60 = size of 60 100
th Observation
P85 = 79 + 0.35 × 3
P85 = 79 + 1.05 P60 = size of 60 ( )40 + 1
100
th Observation
th Observation
?P85 = 80.05 41
( )
P60 = size of 60 100
Ans : P85 = 80.05 th Observation
B) Discrete Data :
P60 = size of ( 60100
× 41
)
th Observation
= size of ( )
1) Find out P20 and P60 for the following data : 2460
P60
100
Height (in inches) 58 59 60 61 62 63 64
P60 = size of (24.6) th Observation
No. of persons 4 5 6 10 12 2 1
P60 = size of 24.6th Observation lies in cf 25
Solution : Arrange the data in ascending order. HenceP60 = 61
Height (in inches) No. of persons (f) cf ? P60 = 61
58 4 4 Ans : P20 = 59, P60 = 61
59 5 9
60 6 15 C) Continuous data :
Apply the steps as mentioned in Quartiles of
61 10 25
continuous data.
62 12 37
1) Find P65 from the following data
63 2 39
Marks 0-5 5-10 10-15 15-20 20-25
64 1 40
No. of 3 7 20 12 8
n = 40
Students
n+1
P20 = size of 20 100 ( ) th Observation
Solution :
Marks No. of students (f) cf
( )
40 + 1 th Observation
P20 = size of 20 100 0-5 3 3
41 th Observation
P20 = size of 20 100 ( ) 5-10 7 10
10-15 20 30
th Observation
P20 = size of
100
(
20 ×41
) 15-20 12 42
th Observation 20-25 8 50
820
P20 = size of 100 ( ) n = 50
P60 = size of 8.2th Observation
21
Step I
P65 = size of ( 65n
100 )
th Observation
P65 = 15 + ( 3250 – 30
100
12
) ×5
P65
65 × 50
= size of ( 100 )
th Observation
P65 = 15 + ( 32.5 – 30
12 ×5 )
th Observation
3250
= size of ( 100 ) ( 2.5
12 ) × 5
P65 P65 = 15 +
P65 = size of 32.5th Observation
P65 = size of 32.5 th Observation
lies in cf 42 P65 = 15 + ( 2.5 × 5
12 )
Hence percentile class = 15-20
l =15 f = 12 cf = 30 n = 50 h=5
P65 = 15 + ( 12.5
12 )
Step II P65 = 15 + 1.04
P65 = l + ( 65n – cf
100
f ) ×h
? P65 = 16.04
P65 = 15 + ( 65 × 50 – 30
100
12
) ×5
EXERCISE
Q. 1. Choose the correct option : Q. 2. Identify the correct pairs from the given options :
1) Statments that do not apply to Quartiles. Group A Group B
( n10+ 1 )
th Observation
a) First arrange the values in ascending or descending 1) Quartiles a) Dj = size of j
order.
kn – cf
b) Observation can be divided into 4 parts.
c) They are represented as Q1, Q2 and Q3.
d) Q2 is also known as median.
2) Deciles b) Pk = l + ( 100
f
) ×h
in – cf
Options : 1) a
3) a, b and c
2) b and c
4) None of these 3) Percentiles c) Qi = l + ( 4
f
) ×h
2) D7 from the given data. Options : 1) 1-b, 2-c, 3-a 2) 1- c, 2-a, 3-b
Data – 4, 5, 6, 7, 8, 9, 10, 11, 12 3) 1- c, 2-b, 3-a 4) 1- a, 2-b, 3-c
Options : 1) 7 2) 9 3) 10 4) 12
Q. 3. Give economic terms :
3) Statements related to partition values that are 1) Procedure for dividing the data into equal parts.
correct.
2) Value that divides the series into ten equal parts.
a) Exact divisions of percentiles into 100 parts gives
99 points 3) Value that divides the whole set of observations in
b) Deciles have total 9 parts to four equal parts.
c) Quartiles are shown by Q1, Q2 and Q3
Q. 4. Solve the following :
d) Symbolically, Percentiles and Deciles are shown
by P and D 1) Calculate Q1, D4 and P26 for the following data.
Options : 1) a and c 2) a and b
18, 24, 45, 29, 4, 7, 28, 49, 16, 26, 25, 12, 10, 9, 8
3) a, b and c 4) a, c and d
22
2) Calculate of Q3, D5, and P35 for the given data. 6) Calculate P15 for the following data.
Investment
Income (in lakhs `) 1 2 3 4 5 6 0-10 10-20 20-30 30-40 40-50 50-60
(` in lakhs)
No. of family 2 5 20 25 15 12 No. of firms 5 10 25 30 20 10
3) Find out P50 for the following data. Q. 5. State with reasons whether you agree or
disagree with the following statements :
Wages (in `) (x) Number of workers
1) Partition values have application only in theory but
0-20 4
not in practice.
20-40 6
2) Average can misinterpret the representative value.
40-60 10
3) Median is also known as second quartile.
60-80 25
Q. 6. Answer the following questions on the basis of the
80-100 15
given table :
23
CHAPTER - 4 : THE ECONOMY OF MAHARASHTRA
Introduction :
The state of Maharashtra came into existance on 1st May 1960. The state economy has achieved
a distinguished status as a result of the collective efforts of its people.
M A D H Y A P R A D E S H
Nandurb C
ar Gondia
Bhand
G U JARAT Nagpur H
Amravati
H
ar a
Dhule
Dadra Jalgaon A
And Akola Wardha
Nagar
Haveli Buldhana T
Yavatmal Chandrapur T
Daman Nashik Washim
(Daman and Diu) I
Palghar Aurangabad
Jalna Hin Gadchiroli S
gol
i G
Thane Ahmadnagar A
Mumbai Suburban Parbhani R
District Beed T E LAN GANA
Nanded
Mumbai City H
District
Pune
Rai
Latur
AR
gad
Osmanabad MAHARASHTRA
AB
K
N
N
A
Ra
tna
Sangli T
SE
gir
A
i
Kolhapur
A
N
R
Si
nd A
hu
du K
rg 0 60 120
Kilometres
GOA
Think about it :
What will happen if the farmers sell their
farm produce without the middlemen?
26
7) Internet subscriber base was 5.45 crore in
Try this :
Maharashtra as on 30th September 2017,
Classify the services mentioned in which is the highest among all the states.
the previous paragraph into services for
b) Social infrastructure : Social infrastructure
business and services for final consumers.
is also one of the important components of the
Core Areas of Service Sector : economy because it improves the quality of
human life as well as stimulates the economic
x Infrastructure :
development. It not only improves the quality
Infrastructure is the basic requirement for but also gives the power to produce knowledge.
economic development. A sound infrastructural Social infrastructure includes literacy
foundation is the key to overall socio-economic programme, education, public health, housing,
development of the state. This acts as a magnet drinking water and sanitation.
for attracting additional investment into the state Measures undertaken to develop Social
and thus provides a competitive edge to it over Infratructure :
other states. Adequate infrastructural facilities
are an absolute necessity for rapid achievement i) Education :
of sustainable economic growth. Education is considered as one of the
Classification of Infrastructure basic human needs. It forms the backbone of
socio-economic development of any country.
Education is significant aspect of human resource
Economic Infrastructure Social Infrastructure
development (HRD). In the present scenario, India
Energy Transport Communication Health Education
is getting the advantage of highest demographic
dividend due to maximum percentage of young
a) Economic Infrastructure : It facilitates population in the country. Education, therefore
production and distribution of goods and services becomes 'a priority' at the national as well as state
for economic development. level. The state of Maharashtra has implemented
various educational schemes to achieve the goal
Measures for development of economic
of education. There are four levels of education in
infrastructure :
our country.
1) Increasing installed capacity of electricity 1) Primary 2) Secondary
generation. 3) Higher Secondary 4) Higher education
2) Rural electricification, network improvement a) Primary education : The state of
and programmes for energy conservation. Maharashtra has implemented the Right to
3) Modified direct benefit transfer scheme to Education (RTE) of children in the age group
LPG consumers in the state. 6-14 years to provide free and compulsory
education under the Sarva Shiksha Abhiyan
4) Road development plan (2001-2021) is
(SSA). The expenditure of the State government
being implemented in the state with a target
on primary education was `19,486 crores during
to develop 3.37 lakh kms of road.
2016-17.
5) Metro Railway has started at Mumbai and Primary (Std. I to VIII) Educational
Nagpur. Institutions and Enrolment
6) Maharashtra Port Development Policy Year Number Total No. of Pupil-
was constituted for integrated development of Enrolment Teachers Teacher
of ports. State government is promoting Schools (in lakhs) (in lakhs) Ratio
Sagarmala programme launched by the 2016-17 1,04,971 159.86 5.30 30.1
central government for port led development. Source : Economic Survey of Maharashtra 2017-18
27
b) Secondary and Higher Secondary d) Others :
Education : Rashtriya Madhyamik Shiksha 1) Inclusive education : This is for
Abhiyan (RMSA) was launched in 2009 differently abled children with special needs.
with the objective to improve the access as 2) Girls' Education : Various schemes
well as the quality of secondary education. to promote girls' education such as free
During 2016-17, the State government’s education till the higher secondary level,
expenditure on secondary and higher free of cost S.T. bus service for school
secondory education was `16,089 crores. going girls in rural areas, bicycles to needy
Secondary and Higher Secondary (Std. girls living within 5 kms from schools have
IX to XII) Educational Institutions and their been introduced by the Government of
Enrolment Maharashtra.
Year Number Total No. of Pupil- 3) Adult Literacy : To increase adult
of Enrolment Teachers Teacher literacy in the state, innovative schemes
Schools (in lakhs) (in lakhs) Ratio like ‘Each one Teach one’, ‘Sakshar Bharat
2016-17 25,737 66.15 2.13 31.1 Abhiyan’ are implemented with community
Source : Economic Survey of Maharashtra 2017-18
participation.
4) Tribal Education : Government of
c) Higher education : Apart from Maharashtra has introduced residential
universalization of primary education, the Ashram Schools in the tribal areas of
Government of Maharashtra is taking efforts the state. Tribal students are provided
to expand opportunities in higher education accommodation, food, uniforms, educational
also. Higher education helps in creating materials and other concessions free of cost.
technical and skilled human resources which There are 556 aided Ashram Schools in the
is an important input necessary for overall state. Government hostel facility is provided
economic development. There are 22 state at division, district and taluka levels to
universities, out of which 4 universities are for encourage tribal students to pursue higher
agriculture, one university for health science studies.
courses, one university for veterinary science,
one for technology and 15 other universities Find out :
for general courses. In addition to these, there Symbols of the following :
are 21 autonomous universities, one central
x Sarva Shiksha Abhiyan (SSA)
university, 4 private universities and 5
institutes of national importance in the state. x Rashtriya Madhyamik Shiksha Abhiyan
To meet the challenges of liberalization, (RMSA)
privatization and globalization, the state x Adult Literacy Mission (ALM)
enacted the new Maharashtra Public
Universities Act, 2016. Key focus of this ii) Health Services :
Act is to promote academic autonomy and
There were 1814 primary health centres
excellence, skill based education through
and 360 community health centres in the state as
democratic process in higher education.
on 31st March 2017. Government of Maharashtra
Maharashtra is also the first state in the also emphasizes on programmes to strengthen
country to receive RUSA grant of ` 20 crore health system in rural and urban areas through
under Research and Innovation and Quality National Rural Health Mission (NRHM) and
Improvement for setting up innovation National Urban Health Mission (NUHM).
and technology transfer hubs. Rashtriya These programmes include health determinants
Uchchatar Shiksha Abhiyaan (RUSA) is a like sanitation and hygiene, nutrition and safe
centrally sponsored scheme launched by the drinking water. The Government of Maharashtra
Government of India in 2013.
28
has created a three tier health infrastructure to tourism and event management are also a part
provide comprehensive health services. of this sector.
Primary tier includes Primary Health Centres
and Community Health Centres. The Secondary xEntertainment Industry :
tier includes sub district hospitals and district India produces the largest number of
hospitals. films in the world. Maharshtra has played a
The tertiary tier includes well equipped remarkable role in this. Entertainment sector of
medical colleges and super speciality hospitals Maharshtra generates employment opportunities
located in major cities. to large number of people. Kolhapur has been
a worth mentioning city for regional films.
xTourism : Mumbai, popularly known as 'Bollywood' has
a great impact on the global film industry.
Maharashtra attracts many tourists from
different states and abroad too. To promote D) Co-operative Movement in Maharshtra :
the state as a leading tourist destination, the Co-operative movement is the greatest
government has formulated Maharashtra contribution given by the state of Maharashtra
Tourism Policy, 2016. y
to the country.
Objectives of tourism policy include :
h To make Maharashtra a leading tourist
destination by 2025.
h To attract investments to the tune of
` 30,000 crore.
h To create one million additional jobs in the
industry.
Maharashtra Tourism Development
Corporation (MTDC) is the nodal agency
for implementation of this policy in the state.
MTDC organises different events such as Ellora
festival, Elephanta festival etc.
MTDC has also launched the scheme of Fig. 4.4 : Co-operative Movement
‘Mahabhraman’ to bring different experimental Co-operative Movement is an effective
projects such as agro tourism, village tourism, instrument in the economic development of rural
food tourism, safaris, tribal lifestyles etc. under areas and improving socio-economic conditions
one roof. of the under- privileged in Maharshtra. The basic
nature of co-operative societies is to encourage
xHospitality : the values of self help, democracy, equality
and solidarity.
Hospitality is a much broader industry
Co-operative movement in Maharashtra
than other industries. It has grown manifold in
was confined mainly to the field of agricultural
Maharashtra due to flourishing tourism. One
credit but subsequently extended to other
of the most defining aspects of this industry is
sectors such as :
that it focusses on customers' satisfaction. Hotel
h agro processing
industry is one of the sectors of the hospitality
industry. Many forms of transportation that h agro marketing
cater to the tourists are also part of this business, h sugar co-operatives
e.g. Airlines, Mumbai-Goa cruiseship, fancier h fisheries co-operative societies
trains (Deccan Odyssey), restaurants, general h co-operative dairy societies
29
h textiles As on 31st March 2017, there were about
h housing societies 1.95 lakh co-operative societies in the state with
h consumer stores about 5.25 lakh members.
EXERCISE
1) Agricultural Indebtedness, dry farming, lack of 4) Explain the measures taken to develop social
capital, engineering infrastructure in Maharashtra.
2) Tourism, Banking, Automobile Production, Q. 6. Read the following passage and answer the
Insurance questions given below :
3) Pune, Hyderabad, Nasik, Nagpur Government of India has launched an ambitious
4) MTDC, MAITRI, SEZ, MIDC programme of 'Bharatnet' for rural India by keeping in
5) Primary education, Hospitality, Higher education, mind today's modern era. More than one lakh rural
Skill based education. (Grampanchayat) areas have been connected under
Bharatnet high speed broadbrand scheme. Maharashtra
Q. 3. Identify and explain the concepts from the given has become the best performing state. East Uttar Pradesh,
illustrations : Chattisgarh, Rajasthan and Jharkhand have also been
1) To facilitate research in robotic technology, Japan placed among the best performing states in the first phase
has invested ` 1000 crores in India of Bharatnet broad band connection scheme.
2) Prajakta and her family visited the beaches during 1) Why did the Government of India launch the
her eight-day Diwali vacation. Bharatnet project?
3) Pravin from Latur works as a technician in the 2) How many Grampanchayats have received the
films division at Mumbai city. Internet service?
4) Rani Gond from Chandrapur works as a hostess 3) Which states have been placed as the best
with the Mumbai-Goa cruise ship. performing states in the first phase of Bharatnet?
4) 'Internet has brought the world closer' - Express
Q. 4. Distinguish between :
your views on it.
1) Economic Infrastructure and Social infrastructure
30
CHAPTER - 5 : RURAL DEVELOPMENT IN INDIA
31
gap between the rural and urban literacy
rates. Rural development helps to bridge this
gap by making provisions for educational
facilities at all levels.
3) Empowerment of women : Rural
development helps to reduce gender
disparity, meet the diverse needs of
rural women as well as encourage their
participation in community development
programmes.
Fig. 5.1 : Transformation of Agriculture
4) Enforcement of law and order : Rural
development helps to safeguard the rights of Agricultural Credit in India :
Agricultural credit is an important pre-
the socially disadvantaged groups through
requisite for agricultural growth. Agricultural
proper enforcement of law and order. policies have been reviewed from time to time
5) Land reforms : Rural development ensures to provide adequate and timely finance to this
effective implementation of land reforms sector. Rural credit system assumes importance
such as ceiling on land holdings, regulation because for most of the Indian rural families,
savings are inadequate to finance farming and
of rent, protection of tenancy rights etc.
other economic activities.
This leads to reduction in rural inequality.
6) Infrastructure development : Rural Classification of
Agricultural Credit
development leads to further progress
in basic facilities such as generation of On the basis of On the basis of
electricity, road connectivity, irrigation etc. Tenure Purpose
7) Availability of credit : Rural Short term Productive
development also facilitates the
growth of financial institutions such Medium term Unproductive
as primary agricultural co-operative
credit societies, regional rural banks, co- Long term
operative banks. This is vital for providing
subsidised credit facilities to the farmers. Types of Agricultural Credit :
8) Eradication of poverty : Rural Agricultural credit can be classified on the
development leads to an increase in rural basis of :
incomes and standard of living. This helps 1) Tenure : It is credit requirement based on
in the eradication of poverty. the time-period of loans. It is of three types:
a) Short-Term Credit : It refers to loans
not exceeding two years. It is required
for meeting the short-term requirements
of the cultivators, e.g. loans required for
the purchase of fertilizers, High Yielding
Variety (HYV) seeds, for meeting expenses
on religious or social ceremonies etc.
32
b) Medium-Term Credit : These loans 2) Institutional Sources : The general
are for a period upto 5 years. These policy on agricultural credit has been one
are the financial requirements to make of progressive institutionalization aimed
improvements on land, buying cattle or at providing timely and adequate credit
agricultural equipments, digging up of to farmers for increasing agricultural
canals etc. production and productivity. Providing better
c) Long-Term Credit : These loans are access to institutional credit for the small and
for a period of more than 5 years and are marginal farmers and other weaker sections
generally required to buy tractor, making to enable them to adopt modern technology
permanent improvements on land etc. and improved agricultural practices has
been a major part of the policy.
2) Purpose : The agricultural credit on the Following are some of the institutional
basis of purpose for which the credit is used sources of agricultural credit in India.
can be of two types:
i) National Bank for Agriculture and Rural
a) Productive : Productive loans are the loans Development (NABARD) : It is the apex
that are related to agricultural production banking institution to provide finance
and economically justified, e.g. purchase of for agriculture and rural development.
tractor, land, seeds etc. National Bank for Agriculture and Rural
b) Unproductive : Unproductive credit Development (NABARD) was established
is used for personal consumption and on July 12, 1982 with a paid up capital
unrelated to productive activity, e.g. loans of ` 100 crores by 50:50 contribution of
for expenditure on marriages, religious Government of India and Reserve bank of
ceremonies etc. India. NABARD is an apex institution in
rural credit structure for providing credit
Source of Agricultural Credit in India :
for promotion of agriculture, small scale
1) Non-Institutional Sources industries, cottage and village industries,
2) Institutional Sources handicrafts etc.
1) Non-Institutional Sources : The non- The paid up capital stood at ` 10,580
institutional finance forms an important crores as on 31st March 2018. Consequent
source of rural credit in India, constituting to the revision in the composition of share
around 40 percent of total credit in India. capital between Government of India and
The interest charged by the non-institutional RBI, NABARD today is fully owned by
lenders is usually very high. The land or Government of India.
other assets are kept as collateral security. ii) Rural Co-operative Credit Institutions :
The important sources of non-institutional The rural credit co-operatives may be further
credit are as follows : divided into short-term credit co-operatives
i) Money-Lenders : Money-lending has been and long-term credit co-operatives.
a widely prevalent profession in the rural A) Short-term credit co-operatives : It
areas. The money-lenders charge huge rate provides short-term rural credit and are
of interest and mortgage the property of the based on a three-tier structure as follows
cultivators. x Primary Agricultural Credit Societies
ii) Other Private Sources : (PACS)
a) Traders, landlords, Commission agents, x District Central Co-operative Banks
etc. (DCCB)
b) Credit from relatives, friends, etc. x State Co-Operative Banks (SCB)
33
B) Long-term credit Co-operatives : These cater to the needs of the rural poor. RRBs are
co-operatives meet long-term credit set-up as rural-oriented commercial banks
requirements of the farmers and are with the low cost profile of co-operatives
organized at two levels: but with the professional discipline and
x Primary Co-operative Agriculture modern outlook of commercial banks.
and Rural Development Banks : These v) Micro Finance Institutions (MFIs) :
banks operate at the village level as an Banks offer concessional interest rates for
independent unit. the rural credit. However, small farmers are
x State Co-operative Agriculture and unable to access them because of borrower-
Rural Development Banks : These banks unfriendly products and procedures,
operate at state level through their branches inflexibility and delay, and high transaction
in different villages. costs, both legitimate and illegal. Thus,
Non-Government Organisations (NGOs)
iii) Commercial Banks : Commercial Banks
are providing alternative means to enhance
(CBs) provide rural credit by establishing
access to credit by the poor since mid-70’s.
their branches in the rural areas.
iv) Regional Rural Banks (RRBs) : Regional Find out :
Rural Banks (RRBs) are the specialised Information about the latest achievements
banks established under RRB Act, 1976, to of NABARD.
EXERCISE
34
Q. 3. Assertion and Reasoning questions : Q. 4. Identify and explain the concepts from the given
1) Assertion (A) : Indian economy is pre-dominantly illustrations :
rural economy 1) Kusumtai knowingly set up her business enterprise
Reasoning (R) : As per 2011 census, the country’s in the rural area so that people living there could be
rural population is almost 83.25 crore (68.8% of gainfully employed.
total population) 2) Raoji purchased a new tractor for his farm by
Options : 1) (A) is True but (R) is False taking a loan.
2) (A) is False but (R) is True 3) Subsidized credit is provided by banks to small
farmers for purchase of high yielding variety
3) Both (A) and (R) are True and (R) is the correct
(HYV) seeds.
explanation of A.
4) Damaji borrows loan from a credit society
4) Both (A) and (R) are True but (R) is not the
established in the village this season rather than
correct explanation of (A) taking it from a moneylender.
2) Assertion (A) : Literacy is a powerful instrument 5) Ramraoji takes a loan from the bank for a period
of socio-economic change. of ten years subject to terms and conditions for the
Reasoning (R) : Empowerment of women helps to purpose of irrigated farming.
reduce gender disparity. Q. 5. Read the following passage carefully and answer
Options : 1) (A) is True, but (R) is False the questions given below :
2) (A) is False, but (R) is True Rural development is one of the thrust areas of
3) Both (A) and (R) are True and (R) is the correct administration. As Mahatma Gandhi rightly said, “India
explanation of (A) lives in villages and the development of the nation cannot
be achieved without the development of the villages”. The
4) Both (A) and (R) are True but (R) is not the
need of the hour is the convergence of all development
correct explanation of (A)
interventions, at the grassroot level which can be possible
3) Assertion (A) : Agricultural credit is mostly for through effective governance at the village level. The
unproductive purposes. movement towards decentralization of the National and
State governments through the Panchayati Raj system
Reasoning (R) : Agricultural credit is an important
needs to be strengthened through lessons learned from the
pre-requisite for agricultural growth.
successful stories of ‘Model villages’ around India.
Options : 1) (A) is true, but (R) is false Though India is progressing in the right direction in
2) (A) is False, but (R) is True reducing education inequalities and increasing literacy
3) Both (A) and (R) are True but (R) is the correct levels, there is still a lot that needs to be done. An
explanation of (A) understanding of social issues is important for effective
planning and policy development. Self-governance
4) Both (A) and (R) are True but (R) is not the correct
ensures that Indian citizens, even the previously
explanation of (A)
marginalized, can participate in decision-making.
4) Assertion (A) : Non-institutional finance forms an 1) Explain in short Mahatma Gandhi’s views on rural
important part of rural credit. development.
Reasoning (R) : Small farmers are unable to 2) Highlight the role of the government in achieving
access bank credit because of borrower unfriendly rural development.
products. 3) What measures have been suggested to achieve
Options : 1) (A) is True, but (R) is False rural development.
2) (A) is False, but (R) is True 4) Express your idea of a ‘Model Village’.
3) Both (A) and (R) are True and (R) is the correct
explanation of A
4) Both (A) and (R) are True, but (R) is not the
correct explanation of A
35
CHAPTER - 6 : POPULATION IN INDIA
36
1) Marginal Decline in population (1911- Malthus states that correction of the
1921) : There was a marginal decline in imbalance can be done by introducing
population from 25.2 crores in 1911 to 25.1 'preventive checks' such as late marriage,
crores in 1921. Thus, there was negative moral restraint etc. He also mentions about
growth rate due to spread of epidemics such 'positive or natural checks' such as natural
as influenza, cholera, plague, malaria etc. calamities. Natural checks operate and wash
2) Year of Great Divide : The decadal out the excess population and thus balance is
growth of population was negative during maintained. However, preventive checks are
the period 1911 to 1921. After 1921, there more dependable out of the two.
was a continuous increase in population.
Concepts related to population growth :
Hence, then Census Commissioner of India
had designated the year 1921 as the 'Year 1) Birth rate : Birth rate means the number
of Great Divide'. of births occurring per thousand of the
living population during a year. It is also
3) Positive growth rate (1931-1941) : India known as fertility rate .
recorded an annual growth rate around 1 to
1.3% during this period. 2) Death rate : The number of deaths per
thousand of the living population during
4) Increase in population (1951 onwards) : a year is called death rate. It is also called
Between 1951 to 1971 population increased mortality rate.
from 36.1 crores to 54.8 crores. This
3) Survival rate : The difference between
shows that after Independence, there was
the birth rate and death rate is known as
tremendous rise in population.
the survival rate. This shows the actual
5) Population Explosion (1971-2001) : During rate of population growth.
this period, India experienced 'population
Survival rate = Birth rate – Death rate.
explosion' because during these three
decades, annual population growth rate
2) Theory of Demographic Transition : The
was more than 2%.
theory of demographic transition was given
6) Slow down in population growth rate by A. J. Coale and E. M. Hoover, in the book,
(2001-2011) : There is an indication of "Population growth and Economic Development
slow down in growth rate of population in low-income countries" (1958).
from 1.9% in 2001 to 1.4% in 2011. This According to this theory, every country
shows that the average annual growth rate passes through three stages of demographic
is declining. transition. This theory explains the transition
Theories of Population Growth : from high to low birth rates and death rates.
1) Malthusian theory of population growth : Stages of Demographic Transition :
Thomas Robert Malthus propounded this The theory shows a three stage relationship
theory in his book, "An Essay on the Principle between economic development and population
of Population" in 1798 and modified some growth. According to this theory, as a country
of its conclusions in the next edition in 1803. advances economically, its population passes
According to Malthus, population increases through three stages as follows :
in geometric progression (2, 4, 8, 16, 32, 64 A) First stage (Low growth of population) :
etc.) and food supply increases in Arithmetic It is pre-industrialised and primitive stage.
progression (1, 2, 3, 4, 5, 6, 7, 8, 9 etc.), This creates The birth rate and death rate both are
imbalance between population and food supply. very high. All underdeveloped countries
37
have passed through this stage. Social and Birth rate and Death rate in India
60
economic conditions such as mass illiteracy,
50
superstitions, mass poverty, orthodoxy, lack
39
5) Use of nutritious food : Education has B) Social Measures : Population explosion
created awareness about health and is a socio-economic problem. It is related
nutrition. Percentage of children and women to illiteracy, superstition, orthodoxy, low
dying due to malnutrition and ill health was status of women. The following are the
quite high.These deaths are now brought social measures :
under control by providing nutritious diet. x Spread of education
x Improving the status of women
e.g. Mid-day meal programme in schools.
x Raising the minimum age of marriage
6) Disaster management : The National
C) Population Policy of India : Population
Disaster Management Authority (NDMA)
policy was implemented through the
was constituted in 2005. This helps to
following programmes.
mitigate all types of disasters thereby
reducing the loss of lives.
7) Other factors : Education, social reforms,
rapid urbanization, improvement in standard
of living, publicity campaigns are also
responsible for creating awareness among
the people.
40
1) Free and compulsory school education upto – economic, social, cultural or political.
the age of 14 years. 4) Human resource development occurs through
2) Reduce infant mortality rate to below provision of educational facilities. Increase
30/1000 live births. in literacy rate, especially among women,
3) Reduce Maternal Mortality Rate (MMR) to tends to reduce birth rate and infant mortality
below 100 per 1,00,000 live births. rate. This contributes to population control.
4) Universal immunization of children against 5) Human resource development contributes to
all vaccine preventable diseases. improvement in life expectancy and literacy
5) Delayed marriage for girls, not earlier than rate. This further improves the quality of life.
18 and preferably after 20 years of age. 6) Human resource development helps to
6) Prevention and control of communicable bring about research and development. It
diseases. motivates research in various educational
institutions.
7) Achieve a stable population by 2045.
7) Human development leads to increase
Population as a Human Resource in human productivity, i.e. investment in
Introduction : nutrition, health and education which results
Population constitutes a nation’s valuable in higher productivity.
resource. Nature’s bounty becomes significant 8) Concept of human development is universal
only when people find it useful. It is people with by nature. It applies to less developed as
their demands and abilities that turn them into well as highly developed countries. In short,
resources. Hence, human resource is the ultimate human development embraces the entire
resource. Healthy, educated and motivated people society.
develop resources as per their requirements.
Do you know?
Human resources like other resources are not
equally distributed all over the world. They differ Population Education : It is essentially
in their educational levels, age and sex. Their related to human resource development. It
numbers and characterisitcs also keep changing. aims not only at creating awareness about
The United Nations Development the population but also with developing
Programme (UNDP) has introduced the concept values and attitudes which take care of
of 'Human Development' in 1990. quality and quantity of population. According
to UNESCO ‘‘Population Education is an
Human Development embraces enlargement
educational programme which provides for
of all human choices – economic, social, cultural
a study of population situation of the family,
or political. It is the enrichment of human lives
the community, nation and world with the
which is the real wealth of the society.
purpose of developing in the students rational
Role of human resources in economic and responsible attitude and behaviour
development : towards the situation’’.
1) Human development is an end while
economic growth is a means to achieve You should know :
this end. So, human conditions should be
Demographic Dividend : One of India’s
improved.
competitive advantages is its demographic
2) Human development can contribute to dividend. Demographic dividend occurs
reduction in civil disturbances in a society when the proportion of working people to
and increased political stability. the total population is high. This indicates a
3) Human development is concerned with high potential of human resources which can
widening not merely income choices but contribute to economic growth.
covering all aspects of human development
41
EXERCISE
Q. 1. Choose the correct option : Q. 3. Identify and explain the concepts from the given
1) Stages of the theory of demographic transition. illustrations :
a) High birth rate and high death rate 1) There were 40 births per 1000 in country 'A' during
b) High birth rate and low death rate a year.
c) Low birth rate and low death rate 2) In Mumbai city, public transport service is largely
affected due to the growing population.
d) Economic development
Options : 1) a and b 2) a and c 3) In country 'B', there are 15 deaths taking place per
3) a, b and c 4) a, b, c and d 1000 during a year.
4) For a certain period of time China had adopted the
2) Incorrect reasons for population explosion in
policy of 'One child per family'.
India.
a) Illiteracy b) Universalization of Q. 4. Answer the following :
Marriage 1) Explain the causes of high birth rate.
c) Joint family system d) Upliftment in lifestyle 2) Explain the causes of low death rate.
Options : 1) a and b 2) c and d 3) Explain the role of Human Resource in Economic
3) a, b and c 4) d development.
3) Remedies undertaken to check population Q. 5. State with reasons whether you agree or
explosion.
disagree with the following statements :
a) To provide employment
1) India is experiencing population explosion.
b) To improve women’s quality of life
2) Death rate is falling rapidly in India.
c) National Population Policy
3) Optimum population contributes economic
d) Disaster management development of a country.
Options : 1) d 2) a and c 4) Human resources play an important role in
3) c and d 4) a, b and c economic development.
4) Choose the correct option. 5) Birth rate is declining due to changes in the
Group A Group B standard of living.
1) Year of Great a) Stable population till 2045 Q. 6. Solve the following :
Divide
1) Find out Q3 from the given data.
2) A. J. Coale and b) 1921
(Use the population figures as numerical data)
E. M. Hoover
2) Draw a population growth curve from the given data.
3) Social Reforms c) Demographic Transition
Year Population
4) National Population d) Spread of education (in Crores)
Policy, 2000 1951 36.1
Options : 1) 1-d, 2-c, 3-a, 4-b 2) 1-b, 2-c, 3-d, 4-a 1961 43.9
3) 1-b, 2-a, 3-c, 4-d 4) 1-c, 2-d, 3-a, 4-b 1971 54.8
Q. 2. Give economic terms : 1981 68.3
1) Increase in population is faster than economic 1991 84.6
growth and development. 2001 102.7
2) Difference between birth rate and death rate. 2011 121.02
3) Balance between natural resources and population (Source - Census reports)
growth.
4) Programme introduced to reduce the birth rate in 1952.
42
CHAPTER - 7 : UNEMPLOYMENT IN INDIA
Unemployment Employment
Five workers = Ten quintals of jowar Sixteen workers = Ten quintals of jowar
Fig. 7.2 : Disguised Unemployment
44
B) Urban Unemployment : lack of proper training, e.g. computerisation,
Urban unemployment refers to introduction of robotic technology etc.
unemployment found in the urban areas i.e. ii) Frictional Unemployment : Frictional
towns and cities of the country. Following are the unemployment is caused due to breakdown
types of urban unemployment. of machinery, power failure, shortage of raw
1) Educated Unemployment : When people materials, strikes by workers etc. Frictional
are educated and willing to work but do not unemployment is temporary by nature.
get jobs is known as educated unemployment.
This type of unemployment is found among iii) Cyclical Unemployment : Cyclical
matriculates, undergraduates, graduates unemployment is the result of cyclical
and post graduates. Casual approach fluctuations in the level of business activity.
to education, imbalance between job The economy passes through phases of
opportunites and number of educated youth, prosperity and depression. During the
preference for white collar jobs, lack of period of depression, effective demand
employable skills, lack of awareness about falls which leads to a fall in the prices
available educational opportunities are the and profits earned by the producers. As a
main reasons for unemployment among result, there is a corresponding decline in
educated youth in India. investment and production of commodities.
A fall in production leads to a fall in
2) Industrial Unemployment : It refers to employment. As a result, workers are thrown
unemployment in the industrial sector. out of jobs during the period of depression.
The unemployed workers may be skilled
or unskilled. This is generally a form iv) Structural Unemployment : This type of
of open unemployment. Slow industrial unemployment arises due to drastic changes
growth, rapid growth of population, lack in the economic structure of a country. These
of training facilities, low adaptability to changes may affect either the supply of or
modern technology, inconvenient location of demand for a factor of production. Structural
industries, low mobility of labour etc. are the changes in the economy are caused by
main reasons for industrial unemployment. changes in government policies, shortage of
capital, shifting of industry from one region
Following are the types of Industrial to another etc. Structural unemployment
unemployment : is a long term phenomenon. Structural
i) Technological Unemployment : unemployment takes place because of a
Technological unemployment arises mismatch between the skills of workers
because of changes in technology. Modern and the jobs that are actually available,
technology is capital-intensive and requires e.g. i) horse carts had been replaced by auto
less labourers. When new techniques are rickshaws. ii) introduction of computerised
introduced in the industrial sector, existing typing has caused unemployment among
workers are displaced from their jobs due to manual typists.
Extent of Unemployment in India : Employment and Unemployment (in million)
Year Labour Force Employed Unemployed Unemployment rate in (%)
1993 - 94 381.94 374.45 7.49 2.0
1999 - 2000 406.85 397.88 8.97 2.2
2004 - 05 468.73 457.56 11.17 2.4
2009 - 10 472.32 462.49 9.84 2.1
2011 - 12 483.75 472.91 10.84 2.2
Table : 7.1 Source : Economic and Political Weekly (June 7, 2014)
45
Do you know? State-wise unemployment rates in India (2015-16)
Ranks State Unemployment Ranks State Unemployment
(Per 1000) (Per 1000)
1 Tripura 197 16 Manipur 57
2 Sikkim 181 17 Odisha 50
3 Kerala 125 18 West Bengal 49
4 Himachal Pradesh 106 19 Meghalaya 48
5 Assam 96 20 Haryana 47
6 Arunachal Pradesh 89 21 Madhya Pradesh 43
7 Nagaland 85 22 Tamilnadu 42
8 Jharkhand 77 23 Andhra Pradesh 39
9 Uttar Pradesh 74 24 Mizoram 30
10 Jammu and Kashmir 72 25 Telangana 28
11 Rajasthan 71 26 Maharashtra 21
12 Uttarakhand 70 27 Chhattisgarh 19
13 Goa 61 28 Karnataka 15
14 Punjab 60 29 Gujarat 09
15 Bihar 60
Source : Report on Fifth Annual Employment-Unemployment Survey (2015-16), GoI.
46
entrepreneurial spirit to organize economic
activities where they can be self-employed. You should know :
Graduates prefer to remain unemployed General Measures to reduce
till they get a job which is upto their Unemployment :
expectations in terms of salary and nature
1) Development of agricultural sector
of work.
2) Provision for alternative occupation
6) Seasonal nature of agriculture :
Agriculture in India is seasonal by nature. 3) Development of infrastructure
It depends on monsoon. Lack of irrigation 4) Reforms in the educational system
facilities, poor soil fertility, outdated
5) Development of Tourism
production techniques, non-availability of
certified seeds and fertilizers are the factors 6) Use of labour-intensive techniques
that reduce the capacity of agriculture for 7) Development of Information technology
other gainful employment throughout the and communication
year. The labourers are employed only for
a few months in a year. For the rest of the 8) Provision for vocational training and skill
year, the labour force remains jobless. development facilities
7) Slow rate of economic development : 9) Rural industrialization
The overall economic development of 10) Motivation for self employment
India is very slow. Inadequate irrigation
facilities, fertilizers, unsatisfactory Specific Measures undertaken by the
growth of infrastructure are all due to Government to generate employment
inadequate industrial expansion. As a
opportunities :
result, employment opportunities have
not increased enough in the rural sector to 1) Employment Guarantee Scheme (EGS) :
absorb the growing labour force. Employment Guarantee Scheme was
8) Migration of rural population : There has first introduced by the Government of
been a continuous migration of people from Maharashtra on 28th March 1972. This
rural to urban areas in search of jobs. This scheme was intended to provide productive
has increased the problem of unemployment employment to the rural population
in urban areas. and thereby solve the problem of rural
unemployment and poverty. Under this
You should know :
scheme, government assures to provide
Effects of Unemployment
minimum employment opportunities. Due
to its success in Maharashtra, EGS was
Economic effects Social effects implemented in other states as well.
1) Waste of human 1) Social tension
2) Swarnjayanti Gram Swarozgar Yojana
resources and unrest
(SGSY) : This scheme was launched in
2) Difficult to implement 2) Loss of human
April, 1999 after restructuring the Integrated
welfare schemes dignity
Rural Development Programme (IRDP) and
3) Poverty and income 3) Helplessness
allied schemes. It is the only self-employment
inequality
scheme for the rural poor in India.
4) Growth of informal sector
3) Swarna Jayanti Shahari Rozgar Yojana
5) High dependency ratio
(SJSRY) : This scheme was launched
47
in December, 1997. It provides gainful 8) Deen Dayal Upadhyaya Grameen
employment to the urban unemployed Kaushalya Yojana 2014 : It is the most
and underemployed. It included self- important placement linked skill training
employment, women self-employment programme under the Ministry of Rural
programme, skill training for employment Development announced on September
promotion and urban wage employment 23, 2014. The mission of this scheme is to
programme. For this scheme, Central reduce poverty as well as provide gainful
Government shares 75% of the cost and and sustainable employment through
State Government shares 25% of the cost. regular wages. The focus of this programme
4) Pradhan Mantri Rozgar Yojana (PMRY) : is on the rural youth from poor families, in
This scheme is being implemented since the age group of 15-35 years.
1993 to create and provide sustainable self- 9) National Policy for Skill Development
employment opportunities to more than one and Entrepreneurship - 2015 : The first
million educated unemployed youth. National policy on skill development was
5) Training Rural Youth for Self-employment notified in 2009 to promote private sector
(TRYSEM) : It was initiated in 1979 with participation via innovative funding models.
the objective of tackling unemployment The objective of this scheme is to
problem among the rural youth. It aimed at co-ordinate and strengthen factors
training about 2 lakh rural youth every year essential for growth of entrepreneurship
to enable them to become self-employed. across the country. This would include :
TRYSEM was merged into Swarnajayanti i) Promote entrepreneurship culture
Gram Swarozgar Yojana in April 1999.
ii) Encourage entrepreneurship as a viable
6) Jawahar Rozgar Yojana (JRY) : On 1st career option through advocacy
April 1989, the Government announced a
iii) Promote entrepreneurship among women
new wage employment scheme, the Jawahar
Rozgar Yojana for intensive employment 10) Start up India Initiative : It was introduced
creation in 120 backward districts. It was in January 2016 with an aspiration to impart
restricted to rural area. With effect from more "strength and inspiration to the talented
April 1999, it was renamed as Jawahar young generation of India to do something
Gram Samrudhi Yojana (JGSY). new for India and humanity."
7) Mahatma Gandhi National Rural 11) Pradhan Mantri Kaushal Vikas Yojana-
Employment Guarantee Scheme (2016-20) : The objective of this scheme
(MGNREGS) : Since 2nd October 2009, is to encourage skill development among
National Rural Employment Guarantee youth by providing monetary rewards for
Scheme has been renamed as Mahatma successful completion of approved training
Gandhi National Rural Employment programmes. The government has allocated
Guarantee Scheme. This scheme provides a budget of ` 12,000 crores till 2020 for
at least 100 days of guaranteed wage implementation of the scheme.
employment in a financial year to at least
one member of every rural household whose
adult member volunteers to do unskilled
manual work.
48
EXERCISE
Q. 1. Find the odd word out : Q. 4. Observe the following chart and answer the
1) Urban unemployment - following questions.
Educated unemployment, Industrial
Unemployment
unemployment, Disguised unemployment, Rural unemployment Urban unemployment
Technological unemployment
Seasonal Educated
2) States with high rates of unemployment - unemployment unemployment
Goa, Punjab, Maharashtra, Tripura Disguised Industrial
unemployment unemployment
3) Employment Guarantee Scheme 1972,
Jawahar Rozgar Yojana 1989, Technological Cyclical
unemployment unemployment
Swarnajayanti Gram Swarozgar Yojana 1999 Frictional Structural
Development of Tourism unemployment unemployment
Q. 2. Identify and explain the concepts from the given 1) Production does not increase if additional worker
illustrations : is employed and production does not decrease if
worker is reduced from the work. Mention the type
1) Hussain Shaikh employed seven workers less than of unemployment.
the usual number of workers on his farm, in spite of 2) A worker is thrown out of job because of
this, output remained the same. computerisation. Name this type of unemployment?
3) Sharad was forced to return back to India from
2) Use of new technology in the printing industry has
USA due to depression in IT sector.
led to unempolyment among several workers.
4) In spite of being a graduate, Vasant is sitting idle
3) Satish has completed his post graduation and is at home.
desperately expecting a job. Q. 5. Find out Q1 and Q3 using unemployment rates as
4) In certain agricultural areas of Maharashtra only numerical data :
kharif crops are grown, therefore employment is Year Unemployment Rate %
available till the month of October. 2009 3.75
2010 3.54
Q. 3. Complete the correlation :
2011 3.53
1) Seasonal unemployment : Tourist guides; 2012 3.62
: Graduates 2013 3.46
2) : Disguised unemployment; Urban 2014 3.41
unemployment : Industrial unemployment 2015 3.49
2016 3.51
3) Frictional unemployment : Shortage of raw
2017 3.52
materials ; : Fluctuations in business
activity Q. 6. Answer the following in detail :
1) Explain the types of Industrial unemployment in
4) MGNREGS : guaranteed wage employment;
India.
TRYSEM :
2) Explain the causes of unemployment in India.
5) : Waste of resources. Social effect : loss 3) Explain the measures taken by the government to
of human dignity reduce unemployment.
49
CHAPTER - 8 : POVERTY IN INDIA
Multi-dimensional Poverty :
Concept of poverty in the conventional sense
was limited only to basic needs of life. However,
in modern times, the scope of the concept of
poverty has been enlarged. Of late, the concept
of multi-dimensional poverty has emerged.
Multi-dimensional poverty refers to
deprivation in terms of both material and non
material dimensions. Material dimensions relate
to deprivation in terms of food, clothing, shelter,
health, education, road connectivity, electricity,
access to safe drinking water and sanitation
facilities etc. The non material dimensions are
Fig. 8.1 : Poverty
associated with social discrimination.
Introduction :
Poverty is one of the major challenges faced You should know :
by Indian economy. It is a socio- economic According to Prof. Amartya Sen,
phenomenon. Poverty is perceived as ‘social “Poverty is not just a lack of money, it is not
exclusion’ of a certain section of people in the having the capability to realize one’s full
society. Deprivation of basic needs and denial of potential as a human being”. Capabilities
opportunities has led to social exclusion. refer to economic, social and political
Fig. 8.1 gives an idea about the concept
freedom. Lack of substantive freedom such as
of poverty.
freedom to satisfy hunger, lack of nutrition,
Poverty in India has a long history. healthcare and educational facilities, denial
Economic drain of resources, decline of of political and civil liberties lead to poverty.
handicraft and cottage industries, oppressive
economic policies, recurrence of famines etc.
were responsible for mass poverty among the Do you know?
people during the British period. Noted Indian Economist
and recipient of Bharat
Elimination of poverty has been the
Ratna, Prof. Amartya
top agenda of the Indian Government since
Independence. Policy measures such as Sen was awarded the
economic planning, economic reforms and anti- Nobel Memorial Prize in
poverty programmes such as 'garibi hatao' have Economic Science(1998)
helped in greater reduction of poverty . Prof. Amartya Sen for his contribution to
welfare economics and social choice theory
Meaning of Poverty : as well as for his interest in the problems
In the conventional sense, poverty refers to a of the society’s poorest members. In his
situation in which a major section of the people book, ‘Poverty and Famines: An Essay on
in the society are unable to fulfil even the basic Entitlement and Deprivation (1981)’, Prof. Sen
needs of life such as food, clothing and shelter revealed that declining wage, unemployment,
due to lack of sufficient income.
50
rising food prices and poor food distribution Find out :
systems led to starvation among certain groups Prepare a list of 5 Countries in the World
in the society. His views encouraged policy having Absolute Poverty with reference to
makers to pay attention not only to alleviating the latest World Bank Report.
immediate suffering but also finding ways
to replace the lost income of the poor. For b) Relative Poverty : It is difficult to define
economic growth to be achieved, he argued the concept of relative poverty.
that social reforms such as improvements It is judged on the basis of comparison
of relative standards of living of different
in education and public health must precede
sections of the people. Relative poverty
economic reforms.
is measured with respect to differences in
the levels of income, wealth, consumption,
Can you tell : economic inactivity (unemployment, old
Express your opinion on the following : age) etc. Such poverty is found in all the
x There is a thick line of rural-urban countries of the world. It is an universal
economic divide in India . phenomenon. Relative poverty cannot be
x There is an equitable distribution of income completely eradicated. However, it can be
and wealth in the country. reduced to some extent through appropriate
x All the citizens have equal access to policy measures.
education, health, energy and drinking
water. Poverty Line :
x There is no hunger, starvation or Poverty line is an imaginary line that
malnutrition in the country. divides the poor and non-poor. It is determined
x There is lack of sanitation facilities in the in terms of per capita household expenditure.
country. Various Committees and Study Groups have
x Poverty ratio is uniform across all the states. defined poverty line in different ways.
As per the Task Force on Eliminating
Concepts of Poverty : Poverty constituted by the NITI Aayog,
Poverty is multifaceted. The major concepts Poverty line is defined as "the threshold
of poverty in India include absolute poverty and expenditure or the amount necessary to
relative poverty. purchase a basket of goods and services that
a) Absolute Poverty : Absolute poverty is are considered necessary to satisfy basic human
measured in terms of minimum calorie needs at socially acceptable levels".
intake. Earlier, Planning Commission Poverty line helps to fulfil the following
determined per capita daily calorie objectives :
requirement of 2400 calories for a person 1) To determine the population living above
living in the rural area and 2100 calories poverty line (APL) and below poverty line
for a person living in the urban area. (BPL).
On an average, the per capita daily calorie 2) To identify the poor on the basis of the
requirement amounts to 2250 calories. household consumption expenditure.
Absence of minimum income to satisfy the
3) To track poverty in a region over a period
desired level of calorie intake of food leads
of time and compare it across regions.
to absolute poverty. It is mostly found in the
developing countries like India. Absolute 4) To provide an estimate of the required
poverty can be eradicated through effective expenditure on poverty alleviation
poverty alleviation measures. programmes.
51
Poverty line differs from country to and informal sector as well as it creates law and
country. According to World Bank, "Poverty order problems in the society.
line was defined at $1.90 per capita per day
at 2011 prices on purchasing power parity Find out :
basis (PPP)". On this basis, 21.2% of India’s Information about the informal sector and
population lived below poverty line. list a few activities related to it as per your
observation.
Can you tell :
Place the following individuals as per Do you know?
their income in the pyramid as given below: Following are some of the food and non-
1) Contract labourer food items required to be on the poverty line.
2) Salesman in a shop
3) CEO of a Multinational Company
4) Executive in a Company Food Items Non Food Items
Cereals, pulses, milk Fuel and light,
and milk products, salt medical,
High and sugar, edible oil, entertainment, durable
Income egg, fish and meat, goods, rent, clothing,
vegetables, fruits, bedding, footwear,
Upper Middle spices, beverages, education, toilet
Income processed food articles, conveyance
Middle
Income
Try this :
Low 1) Given the number of members in your
Income family prepare a list of food items and
non-food items purchased monthly.
Income Pyramid
2) Calculate the total monthly consumption
Types of Poverty : expenditure of your family’s consumption
1) Rural poverty : Deprivation of basic needs basket as per the current prevailing prices.
among certain section of the people living in the 3) What is the per capita monthly expenditure?
villages is termed as rural poverty.
It is found among small and marginal farmers, Extent of Poverty in India :
agricultural labourers, contractual workers and Extent of poverty is measured by the
landless labourers. Low agricultural productivity, poverty ratio. It is the ratio of the number of poor
drought, poor rural infrastructure, illiteracy, to the total population. Studies were conducted
lack of alternative jobs, rural indebtedness have by individual economists as well as research
aggravated the problem of rural poverty. institutions to ascertain the extent of poverty in
India. Since 1962, the Planning Commission had
2) Urban Poverty : Absence of basic needs
appointed several working groups, task force
among certain section of the population living
and expert committees for estimation of poverty.
in towns and cities is termed as urban poverty.
Urban poverty is largely attributed to the Estimates of Poverty :
spillover effects of migration among the rural Earlier, poverty lines were based on calorie
poor, lack of affordable housing, illiteracy, slow intake. It did not include the non food components
industrial growth, lack of infrastructure etc. such as education, health etc. Government of
Urban poverty has led to the growth of slums India had appointed various Committees to
52
review poverty line from time to time. In 2012, Causes of poverty : Following are the major
an Expert Group, under the Chairmanship of Dr. causes of poverty in India :
C. Rangrajan, was constituted. This Committee 1) Population explosion : Unequal distribution
submitted its report in 2014. As per the report of resources among the rapidly growing
approved by this Committee, a new poverty line population has led to deprivation of basic
has been decided for rural and urban areas. facilities causing widespread poverty.
Table 8.1 provides estimates of poverty by 2) Slow Economic Growth : Due to slow
the Rangarajan Committee. agricultural and industrial growth, the
Poverty Estimates (2011-12) growth rate of national income and per
capita income has been slow over the
Poverty Line (in Rs.) years. This has resulted in poverty and low
Poverty Ratio (%)
(Consumption Expenditure)
standard of living among the people.
Rural Urban Rural Urban Total
3) Unemployment and Underemployment :
Rs. 972/- Rs. 1407/- 30.9% 26.4% 29.5% Poverty in the rural and urban areas has
Per month Per month also increased due to unemployment and
(Rs. 32/- (Rs. 47/- underemployment.
per day per per day per
4) Economic inequalities : Wide inequalities
person) person )
have been observed in the distribution of
Table 8.1 income, assets, consumption expenditure,
Source : Government of India, Planning Commission credit facilities, agricultural landholdings
Report, (June, 2014) etc. This has also led to a high incidence of
State-wise Poverty Ratios (2011-12) poverty.
5) Inaccessibility to infrastructural
State Ratio Poverty State Ratio Poverty
Ratio Ratio facilities : Due to lack of purchasing power
(2011-12) (2011-12) infrastructural facilities such as energy,
in in
Percent Percent transport, communication, health and
Andhra 9.20 Kerala 7.1 education are inaccessible to the poor. This
Pradesh perpetuates poverty.
Assam 31.9 Madhya 31.7 6) Inflation : Inflation refers to a continuous
Pradesh rise in the price level of essential
Bihar 33.7 Maharashtra 17.4 commodities especially the food items.
Chhatisgarh 39.9 Odisha 32.6 Growing demand for food and its
Gujarat 16.6 Punjab 8.3 insufficient supply causes the prices to
Haryana 11.2 Rajasthan 14.7 rise tremendously. This results in low
Himachal 8.1 Tamil Nadu 11.3 purchasing power making the poor still
Pradesh poorer. Food crisis has led to malnutrition,
Jammu and 10.4 Uttar Pradesh 29.4 hunger and starvation among the people.
Kashmir 7) Regional imbalance : Regional imbalance
Jharkhand 36.9 Uttarakhand 11.3 is also one of the causes of poverty. States
Karnataka 20.9 West Bengal 19.9 such as Orissa, Bihar, Madhya Pradesh,
Table 8.2 Source : Economic Survey 2017-18 Chhatisgarh, Jharkhand, Sikkim, Arunachal
Pradesh, Assam etc. lag behind in terms of
Find out : economic development and therefore have
From the above data on poverty ratios, find a high poverty ratio.
out Q3 and P10 and name the states as per the
8) Vicious Circle of Poverty : This concept
derived partition values.
is given by Prof. Ragnar Nurkse. The
53
operation of vicious circle of poverty has x Poor people become vulnerable to diseases,
trapped Indians into miseries which in misery and economic hardships.
turn leads to low national income, low per
x Poverty also leads to environmental
capita income, low capital formation, low-
deterioration.
savings, low production, less employment.
Fig 8.2 explains the vicious circle of poverty.
Low You should know :
National Income
Low Low
production Savings
Q. 1. Assertion and reasoning questions : 3) Both (A) and (R) are True and (R) is the correct
1) Assertion (A) : Poverty level declines with a rise in explanation of (A)
agricultural output. 4) Both (A) and (R) are True, but (R) is not the
Reasoning (R) : Agricultural incomes have declined correct explanation of (A)
due to wide fluctuations in climatic conditions. Q. 2. Find the odd word out :
Options : 1) (A) is True, but (R) is False.
1) Colours of Ration card - White, Green, Saffron,
2) (A) is False, but (R) is True. Yellow
3) Both (A) and (R) are True and (R) is the correct 2) High Poverty ratio - Chhatisgarh, Jharkhand, Bihar,
explanation of (A). Kerala
4) Both (A) and (R) are True, but (R) is not the 3) Calories - 2400, 1800, 2100, 2250
correct explanation of (A).
2) Assertion (A) : Urban poverty is attributed mainly to Q. 3. Give economic terms :
spillover effects of migration among the rural poor. 1) Denial of opportunities to certain section of the
Reasoning (R) : Poor rural infrastructure, lack of people in the society.
alternative jobs results in forced migration. 2) Concept of poverty that covers material and non-
Options : 1) (A) is True, but (R) is False. material dimensions.
2) (A) is False, but (R) is True. 3) Poverty judged on the basis of relative standards of
3) Both (A) and (R) are True and (R) is the correct living of the people.
explanation of (A). 4) Poverty that can be completely eradicated.
4) Both (A) and (R) are True, but (R) is not the 5) Threshold expenditure needed to satisfy basic
correct explanation of (A). human needs at socially acceptable levels.
3) Assertion (A) : Relative poverty is found in all the Q. 4. Identify and explain the concepts from the given
countries of the world. illustrations :
Reasoning (R) : Differences in the levels of income 1) Baban's daughter had to be hospitalized due to
is the only criteria for judging relative poverty. weakness caused by undernourishment or lack of
Options : 1) (A) is True, but (R) is False. minimum calorie requirement in the intake of food.
2) (A) is False, but (R) is True. 2) Dhanajirao is a wealthy landlord, but his annual
3) Both (A) and (R) are True and (R) is the correct income is relatively less in comparison to
explanation of (A). entrepreneur Raobahadur.
4) Both (A) and (R) are True, but (R) is not the 3) Urmi's family live in a situation whereby they are
correct explanation of (A). not able to fulfil even the basic needs of life such as
food, clothing and shelter.
4) Assertion (A) : Poverty is not just lack of money
but also lack of capabilities. 4) Sanjay's family receives food grains on the basis
of yellow ration card through public distribution
Reasoning (R) : Lack of freedom to satisfy hunger, system.
lack of health care facilities, denial of political
freedom leads to poverty. 5) In certain parts of the State, starvation-related
Options : 1) (A) is True, but (R) is False. deaths have been observed whereas in certain areas
gross wastage of food has been reported.
2) (A) is False, but (R) is True.
3) Both (A) and (R) are True and (R) is the correct Q. 5. State with reasons whether you agree or disagree
explanation of (A). with the following statements :
4) Both (A) and (R) are True, but (R) is not the 1) Population control is the only measure to eradicate
correct explanation of (A). poverty.
5) Assertion (A) : Food security, credit facilities 2) Relative poverty is universal by nature.
guarantee social protection to the poor. 3) Regional imbalance is the only cause of poverty.
Reasoning (R) : Leakages in the administrative Q. 6. Answer in detail :
system perpetuates poverty.
1) Assess various measures undertaken to eradicate
Options : 1) (A) is True, but (R) is False
poverty.
2) (A) is False, but (R) is True
56
CHAPTER - 9 : ECONOMIC POLICY OF INDIA SINCE 1991
58
2) Freedom for expansion of industries : In in ownership of public enterprise. In simple
this new liberalised era, the industries are words, Privatisation refers to a process that
free to diversify their production capacity reduces the involvement of the public sector
and reduce the cost of production. Earlier, and increases that of private sector in economic
Government used to fix the maximum activities.
limit of production capacity. No industry
could produce beyond that limit. Now
the industries are free to decide their own
production limit on the basis of market
requirements.
3) Abolition of Monopolies and Restrictive
Trade Practices : According to MRTP
Act of 1969, all those companies having
assets worth Rs. 100 crores and more were
classified as MRTP firms, and were subject
to several restrictions. Now these firms have Fig. 9.2 : Privatisation
the freedom to take investment decisions. Measures taken for Privatisation :
4) Reforms in FERA : To bring about
1) Disinvestment : It is the act of selling
flexibility in the laws relating to foreign
shares of sick public sector units to the
exchange. Foreign Exchange Regulation
private sector. e.g. Disinvestment of Maruti,
Act (FERA) was replaced by Foreign
ITDC hotels, IPCL, VSNL etc.
Exchange Management Act (FEMA). This
would encourage international trade. 2) Dereservation policy : The Industrial
Policy of 1956 reserved 17 industries for
5) Investments in infrastructure :
the public sector. NEP reduced this number
Infrastructure was opened to domestic as
to eight, gradually to three and then two. At
well as foreign investors. They could invest
present only railway transport and atomic
in rail, roads and power projects.
energy are reserved for the public sector.
6) Encouragement to foreign technology :
Liberalisation has allowed the use of foreign 3) Establishment of BIFR (Board of
technology in high priority industries. This Industrial and Financial Reconstruction) :
helps to reduce the cost and make the NEP has set up Board of Industrial and
industries competitive. Financial Reconsrtuction to take decision
regarding sick public sector units. By the
7) SEBI (Securities and Exchange Board of end of 1996, 188 cases of sick public sector
India) : SEBI was established on 12th April units were referred to BIFR.
1992. This step was introduced to protect
the interest of investors in securities, 4) Creation of National Renewal Board
promote development and regulate the (NRB) : When the loss making public sector
securities market. units are closed, the workers have to face
the problem of unemployment and poverty.
B) Privatisation : To solve this problem, goverment has
Meaning : Privatisation means transfer of created National Renewal Board (NRB).
ownership from public to private sector. In the NRB takes the responsibility of providing
broader sense, it means introduction of private compensation to the retrenched workers as
management and control with or without change well as those seeking voluntary retirement.
59
5) Navratna Status : During 1997-98, nine
public sector units were selected and given Find out :
the status of 'Navratnas' on the basis of their Names of companies coming under
performance. These Navratnas were given Maharatna and Miniratna status.
full financial and managerial autonomy. C) Globalisation :
These Navratnas are as follows :
1) IOC : Indian Oil Corporation.
2) ONGC : Oil and Natural Gas Corporation.
3) HPCL : Hindustan Peroleum Corporation
Ltd.
4) BPCL : Bharat Petroleum Corporation Ltd.
5) IPCL : Indian Petrochemicals Corporation
Ltd.
6) VSNL : Videsh Sanchar Nigam Limited
7) BHEL : Bharat Heavy Electricals Ltd.
8) SAIL : Steel Authority of India Ltd.
9) NTPC : National Thermal Power Corporation Fig. 9.3 : Globalisation
At present, public sector units (PSUs) have Meaning :
been further categorised into Miniratnas and Globalisation has been the ultimate aim of
Maharatnas. the new economic policy. To be more specific,
x Miniratna Companies : The concept liberalisation and privatisation finally lead to
of 'Miniratna' was introduced by the globalisation of the economy.
Government of India in 2002. Miniratnas Globalisation means the creation of global
are furthur divided in two cotegories. economy. A Global economy is a borderless
economy having a free flow of goods and
Miniratna Category - I : A public sector
services, capital, labour and technology
company should have made profit in the last
across the national borders. In other words
three years continuously, the pre-tax profit
‘Globalisation’ means integrating the economy
should have been ` 30 crores or more in at
of a country with the world economy. It removes
least one of the three years.
all barriers in free trade and investments.
Miniratna Category - II : A public sector
company can be called as miniratna Measures taken for Globalisation :
category II, if it has continuously made 1) Removal of quantitative restrictions :
profit for last three years as well as it has a All the quantitative restrictions have been
positive net worth. removed on imports and exports. Further
x Maharatna Companies : The Maharatna tariff rates have been brought down
category for Central Public Sector considerably. The import duty on industrial
Enterprises (CPSEs) was introduced in goods have been reduced.
2009 with the objective to empower mega 2) Encouragement to Foreign Capital :
CPSEs to expand their operations and Government has opened the economy to
emerge as global giants or become Indian foreign investments. As a result, foreign
multinational companies (MNCs). capital is attracted towards various sectors.
60
Indian economy has become a part of 3) Improvement in educational standards :
global economy. Globalisation has motivated Indian students
3) Convertibility of Rupee : Exchange rate to go abroad and seek higher education as
of rupee has been made flexible. Rupee is an effect of flexibility in getting educational
made fully convertible to all current account loans, scholarships and other required
transactions. facilities.
61
crops. But poor farmers are left unnoticed. 5) Neglects welfare aspect : Privatisation
They cannot face the competition. Hence, of services like health, communication,
they are forced to sell their land or take education has led to exhorbitant charges
extreme steps. They are facing the problem and fees for maximisation of profit. Hence,
of indebtedness and poverty. welfare aspect has taken a backseat.
4) Unhealthy competition : The Indian 6) Unemployment : Many Indian industries
entrepreneurs cannot face competition are compelled to close down as they cannot
with multi-national companies (MNCs). face the competition with multinational
As a result, they are forced to declare their companies. Hence, large number of
units as a sick unit or close it down or to workers are thrown out of jobs leading to
sell it out. unemployment, poverty and inequality.
EXERCISE
Q. 1. Complete the following statements by choosing Reasoning (R) Import quotas and tariffs led to an
the correct alternative : increase in the imports.
1) After Independence, India had adopted .................... a) (A) is TRUE but (R) is FALSE
a) Socialism b) Capitalism
b) (A) is FALSE but (R) is TRUE
c) Mixed Economy d) Communism
c) (A) and (R) both are TRUE and (R) is
2) The new economic policy approved foreign the correct explanation of (A)
technology in .................... . d) (A) and (R) both are TRUE but (R) is
a) Cottage industries not the correct explanation of (A)
b) Small scale industries
3) Assertion (A) Post liberalization, the sale of
c) Micro enterprises
domestic goods has increased.
d) High priority industries
Reasoning (R) The demand for imported goods
3) At present, the number of industries reserved for had increased due to liberal policy.
public sector has been reduced to .................... . a) (A) is TRUE but (R) is FALSE
a) 3 b) 5 c) 7 d) 2
b) (A) is FALSE but (R) is TRUE
Q.2. Assertion and Reasoning questions : c) (A) and (R) both are TRUE and (R) is the
1) Assertion (A) Delicensing of industries was an correct explanation of (A)
important step taken under liberalization. d) (A) and (R) both are TRUE but (R) is
Reasoning (R) Unwanted controls and restrictions not the correct explanation of (A)
led to economic stagnation prior to 1991. 4) Assertion (A) Due to Globalisation, a country
a) (A) is TRUE but (R) is FALSE cannot achieve self- sufficiency in food production.
b) (A) is FALSE but (R) is TRUE Reasoning (R) Globalisation has created a
c) (A) and (R) both are TRUE and (R) is the correct revolution in IT sector.
explanation of (A) a) (A) is TRUE but (R) is FALSE
d) (A) and (R) both are TRUE but (R) is not the b) (A) is FALSE but (R) is TRUE
correct explanation of (A) c) (A) and (R) both are TRUE and (R) is the
correct explanation of (A)
2) Assertion (A) In 1990-91, India faced an acute
shortage of foreign exchange reserves. d) (A) and (R) both are TRUE but (R) is not the
correct explanation of (A)
62
Q. 3. Find the odd word out : Q. 7. Read the following passage carefully and answer
1) New Economic Policy - the questions.
Liberalization, Privatization, Demonetization, Indian ice-cream industry is one of the fastest growing
Globalisation segments of the dairy and food processing sector. India
2) Industries requiring compulsory licensing - has a low per capita consumption of ice-cream of 400 ml
defence equipment, agro-based industries, whereas in USA it is 22,000 ml and in China it is 3000 ml.
cigarettes, industrial explosives The per capita consumption of ice-cream is low in
3) Navratna status companies - India because it is a country filled with traditional sweets
SPCL, IOC, ONGC, HPCL of more than 100 varieties. In developed countries, people
have either pastries or ice-creams for dessert. In the era of
4) Liberalization dealt with the following -
Globalisation, the mindset of the people is fast changing.
MRTP, FERA, SEBI, NTPC
This is because multi-national companies have set up a
Q. 4. Identify and explain the concepts from the given number of ice-cream parlours, with a lot more varieties
illustrations : and flavours that attract the younger lot. Besides this,
1) Vehicles manufactured by various automobile there are better delivery systems.
companies are now available in India. The ice-cream sector has great potential for growth in
2) Government equity in some public sector enterprises the country due to improvement in the cold chain
is sold to the private sector. infrastructure, increasing disposable income and changing
3) Foreign investments are encouraged on a large lifestyle of the people. However, it is taxed higher with 18
scale in the industrial sector of India. percent GST while other dairy products in the same basket
such as butter and cheese are taxed at 12 percent.
Q. 5. State with reasons whether you agree or disagree
The ice-cream industry has generated revenue of more
with the following statements :
than $1.5 billion in 2016-17. With an employment of
1) Liberalisation has permitted the use of foreign
15 lakh people directly or indirectly, it is also considered
technology.
one of the largest employers of the dairy and food
2) Government has given private enterprises free
processing industry.
access to public sector.
1) Identify the reason for low per capita consumption
3) Government has monopoly in insurance sector.
of ice-cream in India.
4) The creation of National Renewal Board was done
2) Explain the impact of Globalisation on the Indian
to remove poverty.
ice-cream industry.
5) Indian Oil Corporation is one of the public sector
units among 'Navratnas'. 3) Find out the factors that could lead to the growth of
ice-cream industry in India.
Q. 6. Answer in detail :
4) Express your views about the implications of
1) Explain the features of economic policy of 1991. higher GST on ice-cream industry in India.
2) Explain the measures undertaken for Globalisation.
63
CHAPTER - 10 : ECONOMIC PLANNING IN INDIA
Find out : Calculate D6 and D9 from the x Manufacturing or Industrial growth rate at
above table using 'achievements' as the 10% to be achieved.
numerical data. x Every State must have a higher average
growth rate in the 12th plan than what was
12th Five Year Plan (2012-2017)
achieved in the 11th plan.
Twelfth five year plan which covered the
2) Poverty and Employment :
period 2012-2017, focussed on the objective
of "Sustainable Growth". The plan aimed x To reduce head-count ratio of poverty
at encouraging the development of India's by 10%.
agriculture, education, health and social welfare x To create 50 million new work opportunities
through government spending. It also aimed at in the non-farm sector.
creating employment through developing India's 3) Education :
manufacturing sector.
x Mean years of schooling to increase to seven
Following were the targets of 12th five years by the end of the twelfth plan.
year plan : x Access to higher education with reference
1) Economic Growth : to skill development.
x Real GDP growth rate at 8% to be achieved. x Eliminate gender and social gap in school
enrolment by the end of this plan.
x Agriculture growth rate at 4.0% to be gained.
65
4) Health : growth and development. Resolution of NITI
x Reduce total fertility rate to 2.1% Aayog was sanctioned on 1st January 2015, but
x Reduce undernutrition among children in its actual execution started after the completion
the age group of 0 to 3 years to half of the of 12th five year plan.
NFHS-3 levels. Think-Tank Functions :
As a premier policy 'Think-tank' of the
Find out :
Government of India, NITI Aayog aims to
Information of various levels of NFHS evolve a shared vision of national development
(National Family Health Survey). with the active involvement of states. It fosters
co-operative federalism through structural
5) Infrastructure :
support and policy guidance to the states on a
x Investment in infrastructure to be increased continuous basis.
to 9% of GDP.
x Connect all villages with all weather roads. Do you know?
x Increase in rural television and telephone Think-tank : Think-tank is a group of
density to 70% experts who are gathered together by an
organisation, especially by a Government in
6) Environment and sustainability :
order to consider various problems, try and
x Increase green cover by 1 million hectare
work out ways to solve them.
every year during the 12th plan period.
7) Service Delivery : Following are the Pillars of NITI Aayog
x Provide access to banking services to 90% 1) Vision Document of India
Indian households by the end of the plan. 2) Appraisal Document of 12th five year Plan.
x Major subsidies and welfare related 3) Transforming India :Lecture series
beneficiaries to be shifted to a direct cash
organised by NITI Aayog.
transfer by using the Aadhar platform
4) Doubling of Farmers' Income
linked with bank accounts.
5) Outcome Budget and Output-Outcome
NITI Aayog (National Institution for Framework.
Transforming India) 6) Global Entrepreneurship Summit 2017
Introduction : 7) Launching of Programme to transform
st
Twelfth Five Year Plan ended on 31 March, identified aspirational districts.
2017, which was extended by 6 months (4th Oct,
Structure of NITI Aayog :
2017) for enabling ministries to complete their
appraisals. NITI Aayog, introduced in 2015 The Resolution dated 1st January 2015 and
aimed at expanding the role of the states, making its subsequent amendment dated 16 th February
the state's role more positive in collaboration 2015, provides for the structure of NITI Aayog
with the Centre. Formation of NITI Aayog was as follows :
an innovative and remarkable step to reinforce 1) Governing Council : Comprising of the
the principles of federalism and decentralisation Chief Ministers of all States and Governors
of power It also aims to accelerate economic of Union Territories.
66
2) Regional Councils : These would be formed 2) States' Best Friend at the Centre : Supports
to address specific issues and contingencies states in addressing their own challenges,
impacting more than one state or region. building on strengths and comparative
advantages. This will be through various
3) Special Invitees : These would include
means such as co-ordinating with
experts, specialists and practitioners with
Ministries, championing their ideas at the
relevant knowledge who will be nominated
centre, providing consultancy support and
by the Prime Minister.
building capacity.
4) Organisational Framework :
3) Decentralized Planning : Restructuring
x Chairperson : Prime Minister of India
the planning process into bottom-up model,
x Vice Chairperson : To be appointed by from village-level i.e. local government to
the Prime Minister. national level or central government.
Full time members - 5
4) Knowledge and Innovation Hub : Be an
Part time members - 2
accumulator as well as booster of research
x Ex-Officio Members : Maximum of and best practices on good governance,
4 members of the Union Council of through a State-of-the-art Resource centre
Ministers to be nominated by the Prime which identifies, analyses, shares and
Minister. facilitates replication of the same.
x Chief Executive Officer (CEO) : To be 5) Monitoring and Evaluation : Monitor the
appointed by the Prime Minister for a implementation of policies and programmes
fixed tenure, in the rank of Secretary to the and evaluate their impact through rigorous
Government of India. tracking of performance metrics and
x Secretariat- As deemed necessary. comprehensive programme evaluations.
This will identfy weaknesses and bottlenecks
Find out :
for necessary course correction, enable date-
Present structure of NITI Aayog and list driven policy making, encouraging greater
out the names of members in the respective efficiency and effectiveness.
columns.
6) Co-operative and Competitive
NITI Aayog Federalism : Be the primary platform for
Chairperson Vice -Chairperson Members operationalizing co-operative federalism,
enabling states to have active participation
in the formulation of national policy and
achieving time-bound implementation of
quantitative and qualitative targets through
Functions of NITI Aayog :
the combined authority of the Prime
1) Shared National Agenda : Evolves a shared
Minister and Chief Ministers of the states.
vision of national development priorities
and strategies with the active involvement 7) Others Functions :
of states. This will provide a framework of x Inter consultancy
'National Agenda' for the Prime Minister x Conflict Resolution
and Chief Ministers to implement. x Technological upgradation
67
Comparison between Planning Commission and NITI Aayog
Planning Commission NITI Aayog
1) Planning Commission was established on 1) NITI Aayog was established on 1st January
15th March 1950. 2015.
2) Planning Commission enjoyed the powers 2) NITI Aayog is an advisory body or a
to allocate funds to Ministry and State think tank which performs the function of
governments. allocation of funds.
3) Role of states was restricted to the National 3) State governments are expected to play a
Development Council (NDC) and annual more significant role.
interaction during Plan meetings.
4) Secretaries or member secretaries were 4) Secretary known as CEO, to be appointed
appointed through the usual process. by the Prime Minister.
5) Planning Commission had no provision for 5) NITI Aayog has a number of part time
part-time members. members, depending on the need from time
to time.
6) Planning Commission had a Chairperson, a 6) NITI Aayog comprises of Chairperson,
Member Secretary and full time members. Vice-Chairperson, Full time members, Part-
time members, Ex-officio members and
CEO of Secretary Rank.
7) Planning Commission framed policies for 7) NITI Aayog is only a think tank and does not
States and tied allocation of funds with have the powers to frame policies.
approval of the project.
EXERCISE
Q. 1. Choose the correct option : c) By the second five year plan, focus increased
1) Statements that are true about the Planning on faster, inclusive growth.
Commission : d) Development of both agriculture and industry
a) Planning Commission was established in 1950. were the main objectives of the third five
b) The Prime Minister is the Ex-Officio Chairman year plan.
of Planning Commission. Options : 1) a 2) a, b and d
c) Economic planning is a time bound programme. 3) c 4) b and d
d) Economic planning is based on predetermined 3) Identify the correct of pairs from the given
objectives. options :
Options : 1) a and b 2) a, b, c and d 'A' 'B'
3) a and c 4) None of these 1) Economic a) Selection by
Planning Prime Minister
2) Statements that are incorrect regarding India's
five year plans : 2) Twelfth Five b) Think Tank group
Year Plan of Indian Government
a) The main objective of first five year plan was
development of agriculture. 3) NITI Aayog c) Fast and sustainable growth
b) Social welfare and poverty eradication were the 4) NITI Aayog d) Time bound programme
prime objectives of the seventh five year plan. Vice-Chairperson
68
Options : 1) 1-c, 2-a, 3-d, 4-b 2) 1-d, 2-b, 3-a, 4-c 4) Explain the functions of NITI Ayog.
3) 1-d, 2-c, 3-b, 4-a 4) 1-b, 2-d, 3-c, 4-a 5) Distinguish between Planning Commission and
NITI Aayog.
4) Choose the correct statement :
Statement 1 - NITI Aayog takes note of dynamic Q. 5. State with reasons whether you agree or disagree
change in the Indian economy. with the following statements :
Statement 2 - Considering the economic, social 1) State governments have more significant
and technological differences in underdeveloped
role to play under NITI Aayog.
districts, the body plans to implement various
programmes and bring about economic changes. 2) Functions of Planning Commission has been
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GLOSSARY OF ECONOMIC TERMS
70
free interplay of demand and supply that were exclusively reserved for the
forces. government sector.
x Co-operative federalism : It is a x Digital wallets : A digital wallet or
concept in which national, state and an electronic wallet is a software-
local governments share responsibility based system for making e-commerce
in the governance of the people. They transactions. By using a digital wallet,
work collectively towards solving online purchases can be done easily
problems of the nation and for its through computers, tablets or smart
betterment. phones. Bank accounts of individual
x Credit instruments : Credit users are linked with their digital wallet.
Instruments may be an order for x Direct benefit transfer scheme : It
payment of money to a specified is a kind of social protection measure
person or it may be a promise to pay aimed to transfer government subsidies
the loan. Credit instruments generally directly in to the bank account of
in use are cheques, bills of exchanges, the beneficiaries with the purpose of
bank overdraft etc. removing leakages in the delivery
x Current account transactions : The system and enhancing financial
current account in balance of payments inclusion.
of a country includes transactions in x Disinvestment : Disinvestment
goods, services, investment income is an act of selling or diluting the
and current transfers. government’s stake (share) in public
x Deferred payments : A loan sector undertakings to the private
arrangement in which the borrower sector in which it has a majority
is allowed to make payments at some holding with the aim of giving more
specified time in the future. freedom to the management, mobilizing
resources and inducting private
x Demonetization : It refers to corporate oriented business practices in
withdrawal of a coin, note or precious their administration.
metal from use as legal tender.
x Diversification of cropping : It refers
x Dereservation : It is one of the to production of a variety of crops in a
important policies that were followed given area so as to expand production
under the policy of privatization as related activities on various crops
a part of new economic reforms. and also to lessen risk. In India, crop
Dereservation implies opening up of diversification is viewed as a shift from
those industries for the private sector traditionally grown less remunerative
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crops to more remunerative crops. earlier FERA to promote the orderly
development and maintenance of
x Empirical approach : It is an
foreign exchange market in India.
evidence-based approach that relies on
real world data to study and interpret x Flexibility of interest rate : Flexibility
information. of interest rate is a self- adjusting
mechanism that keeps the money
x Empowerment of women : It is a
market or the market for loanable
process by which women gain power
funds in equilibrium all the time and
and control over their own lives and
thus prevents the real GDP (Gross
acquire the ability to make strategic
Domestic Product) from falling below
choices.
its natural level.
x Enrolment ratio : It is the number of
x Financial Inclusion : Financial
students enrolled in school at several
inclusion may be defined as the process
different grade levels.
of ensuring access to financial services
x Environmental Economics : It is a sub- and timely and adequate credit where
discipline of economics that applies needed by vulnerable groups such
the values and tools of mainstream as weaker sections and low income
macroeconomics and microeconomics groups at an affordable cost.
to allocate environmental resources
more efficiently. x Fintech : Fintech or financial
technology describes a business that
x EXIM Policy : It is a set of guidelines aims at providing financial services by
and instructions established by the making use of software and modern
Directorate General of Foreign Trade technology.
(DGFT) in matters related to import
and export of goods in India. x Food tourism : It refers to visit
to primary and secondary food
x FERA : Foreign Exchange Regulation producers, food festivals, restaurants
Act (FERA) of 1973 is an act to regulate
and specific locations for food tasting
certain payments dealing in foreign
and experiencing the attributes of
exchange, securities, the import and
specialist food production regions.
export of currency and acquisition of
immovable property by foreigners. x Foreign collaboration : It is an
important driver of growth in the
x FEMA : Foreign Exchange
country. Foreign collaboration is an
Management Act (1999) was
agreement or contract between two
introduced as a replacement for the
or more companies from different
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countries for mutual benefit. x Hospitality : It is related to the business
of entertaining clients, conference
x Foreign Direct Investment :
delegates, tourists or other official
Investment from one country into
visitors.
another (normally by companies
rather than governments) that involves x Inclusive education : Inclusive
establishing operations or acquiring education is a new approach towards
tangible assets, including stakes in other educating the children with disability
businesses. FDI is not just a transfer and learning difficulties with that of
of ownership as it usually involves normal ones under the same roof.
the transfer of factors complementary x Inclusive growth : Inclusive growth
to capital, including management, is economic growth that is distributed
technology and organizational skills. fairly across society and creates
x Global Entrepreneurship : It is a trait opportunities for all.
or characteristic in which professionals x Infant mortality rate : Infant
as global entrepreneurs use their
mortality rate is the number of deaths
global understanding and connections
under one year of age occurring per
to identify transnational and cross-
1,000 live births among the population
cultural opportunities and turn them in
to new value- creating initiative. in a given geographical area during a
given year.
x Global poverty : Global poverty
refers to a situation of extreme poverty x Informal Sector : It is a diversified
(hunger, starvation and homelessness) set of economic activities, enterprises,
among certain sections of the people jobs and workers that are not regulated
across countries in the world. The or protected by the State.
World Bank is the main source of
x Institutional Sources : It is a multi-
global information and it sets the
agency approach to provide credit
International poverty line which has
to the agricultural sector comprising
been updated to $1.90 per person per
day since October 2015. of co-operative banks, commercial
banks, regional rural banks (RRBs),
x Gross State Domestic Product micro-finance institutions etc.
(GSDP) : It refers to the aggregate
monetary value of all goods and services x Intrinsic value : It is the inherent
produced within the geographical worth of a company, investment
boundaries of a particular State in the or asset based on its fundamental
country during a given period of time characteristics and earning power.
accounted without duplication.
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x Liquid asset : An asset is said to be company shares, stocks or bonds.
liquid if it is easy to sell or convert in
x National Disaster Management
to cash without any loss in its value.
: It refers to the organization and
x LPG Consumer : They are ultimate management of resources and
users of liquefied petroleum gas responsibilities at the national level
cylinders for cooking purposes. for dealing with all humanitarian
aspects of emergencies, in particular
x Mahabhraman : It is a scheme
preparedness, response and recovery in
introduced by Maharashtra Tourism
order to lessen the impact of disasters.
Development Corporation (MTDC)
for marketing and promoting agri- x National Family Health Survey : It is
tourism. a large scale multi-round health survey
conducted in a representative sample
x Marginal farmers : Marginal farmer
of household throughout India.
means a farmer cultivating (as owner
or tenant or share cropper) agricultural x Nationalization of Banks : It is a
land up to 1hectare (2.5 acres) process whereby a national government
or State takes over the ownership and
x Maternal Mortality Rate (MMR) :
control of private banks by an Act or
Maternal Mortality Rate (MMR) is the
ordinance or some other kind of orders.
ratio of the number of maternal deaths
during a given time-period per 100,000 x Open unemployment : It is a situation
live births during the same time-period. wherein a large section of the labour
force does not get a job that may
x Material welfare : It refers to the fact
yield them regular income. This
or state of having enough housing,
unemployment is clearly visible and
clothing, food and possessions etc. to
can be counted.
live comfortably.
x Outcome Budget : Outcome based
x Microfinance institutions :
budgeting is a practice of suggesting
Institutions providing financial
and listing of estimated outcomes
services such as small loans, to poor
(end products) of various Government
people or new businesses that cannot
initiatives and interventions, including
use traditional banking services,
those involving partnership with the
usually in developing countries.
State Governments, Public Sector
x Mutual funds : A mutual fund is Undertakings, autonomous bodies and
formed when capital collected from the community.
different investors is invested in
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x Output-outcome framework : refers to a trade restriction imposed on
Output-outcome framework is an the amount of an item or service that
explicit summary of the different can be imported into a country so as
levels, or chains, of results expected to protect the price of domestically
from a particular intervention- project, produced good or to reduce the trade
programme or development strategy. deficit.
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x Socio-Economic change : It is a of taxes by means of not reporting
change related to or concerned with all taxable income especially through
the interaction of social and economic fraud or concealment of income.
factors, based on income, education,
x Three-tier : It refers to a system that
occupation etc.
has three distinct levels.
x Social exclusion : It is an act of making
x Threshold expenditure : It is also
certain groups of people within the
referred to as poverty threshold. It is a
society feel isolated and unimportant.
limit fixed by economists to get a head
x Special Economic Zones (SEZ) : count of the poor people in the country.
It refers to an area with particular It is a monthly budget that a household
economic advantages such as lower needs in order not to consider itself
taxes than the rest of the country poor in general.
so as to encourage investment and
x Tier II Cities : Cities that are
development there.
comparatively smaller than
x State Per Capita Income (SPCI) : It metropolitan cities in terms of
measures the average income earned population (50,000 – 99,999 as per
per person in any particular State of 2001 census)
the country.
x Treatise : It is defined as a written work
x Sub-set : A set of numbers, objects or dealing formally and systematically
people that is part of another, larger with a subject.
set.
x Universal Immunization : It is a
x Sustainable economic growth : vaccination programme undertaken
It refers to a rate of growth which to provide recommended vaccines
can be maintained without creating against tuberculosis, polio and other
other significant economic problems, diseases for infants, children and
especially for future generations. pregnant women.
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LIST OF ABBREVIATIONS
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x IOC INDIAN OIL CORPORATION
x IT INFORMATION TECHNOLOGY
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x PMRY PRADHAN MANTRI ROZGAR YOJANA
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REFERENCES
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