SYLLABUS

07 April 2025 01:24

Unit 1: Basic Issues in Economic Development

Concept and Measures of Development and Underdevelopment; Human Development
Unit 2: Basic Features of the Indian Economy at Independence
Composition of national income and occupational structure, the agrarian scene and industrial structure
Unit 3: Policy Regimes
a. The evolution of planning and import substituting industrialization.
b. Economic Reforms since 1991.
c. Monetary and Fiscal policies with their implications on economy
Unit 4: Growth, Development and Structural Change
a. The experience of Growth, Development and Structural Change in different phases of growth and policy regimes across
sectors and regions.
b. The Institutional Framework: Patterns of assets ownership in agriculture and industry; Policies for restructuring agrarian
relations and for regulating concentration of economic power;
c. Changes in policy perspectives on the role of institutional framework after 1991.
d. Growth and Distribution; Unemployment and Poverty; Human Development; Environmental concerns.
e. Demographic Constraints: Interaction between population change and economic development.
Unit 5: Sectoral Trends and Issues
a. Agriculture Sector: Agrarian growth and performance in different phases of policy regimes i.e. pre green revolution and
the two phases of green revolution; Factors influencing productivity and growth; the role of technology and institutions;
price policy, the public distribution system and food security.
b. Industry and Services Sector: Phases of Industrialisation – the rate and pattern of industrial growth across alternative
policy regimes; Public sector – its role, performance and reforms; The small scale sector; Role of Foreign capital.
c. Financial Sector: Structure, Performance and Reforms. Foreign Trade and balance of Payments: Structural Changes
and Performance of India’s Foreign Trade and
d. Balance of Payments; Trade Policy Debate; Export policies and performance; Macro Economic Stabilisation and
Structural Adjustment; India and the WTO, Role of FDI, Capital account convertibility.
UNIT 1 BASIC ISSUES OF ECONOMIC DEVELOPMENT
06 April 2025 16:58

Development
Development refers to a process that brings improvement in the quality of life of people.
It includes both economic growth (increase in income and output) and structural changes (like better health, education,
gender equality, and poverty reduction).
Development is a multi-dimensional concept. It focuses not just on how much a country earns, but also on how that
income is distributed and how people live.
Key aspects:
• Rise in per capita income
• Better healthcare and education
• Access to clean water, housing, electricity
• Freedom, dignity, and equal opportunity
Measures of Development
Income-Based Measures
1. Gross National Income (GNI) per capita-Average income earned by citizens of a country, including income from
abroad.World Bank
GNI per capita = Gross National Income / Total Population
2. Gross Domestic Product (GDP) per capita- Average income earned from goods and services produced within the
country.GNI includes income from abroad, while GDP is domestic only.International Monetary Fund (IMF), World Bank
GDP per capita = Gross Domestic Product / Total Population
Social Measures
1. Life Expectancy at Birth-Average number of years a newborn is expected to live, assuming current health conditions
remain.World Health Organization (WHO), United Nations Development Programme (UNDP)
2. Literacy Rate-Percentage of population aged 7 years and above who can read and write with understanding.UNESCO,
National Statistical Offices
Literacy Rate = (Literate population aged 7+ / Total population aged 7+) × 100
3. Infant Mortality Rate (IMR)-Number of children who die before their 1st birthday per 1,000 live births.WHO, UNICEF
Infant Mortality Rate = (Infant deaths under 1 year / Total live births) × 1000
4. Maternal Mortality Rate (MMR)- Number of mothers who die during childbirth per 100,000 live births.WHO, World
Bank
Maternal Mortality Rate = (Maternal deaths / Total live births) × 100000
5. Gross Enrollment Ratio (GER)- % of students enrolled at a particular level compared to the eligible age
group.UNESCO Institute for Statistics (UIS)
Gross Enrollment Ratio (GER) = (Total enrolled students / Eligible age population) × 100
C. Composite Measures
6. Human Development Index (HDI)- A composite index measuring average achievement in health, education, and
income.United Nations Development Programme (UNDP)
HDI (Class 12 approach) = (Health Index + Education Index + Income Index) / 3
7. Inequality-adjusted HDI (IHDI)-Adjusts the HDI by considering inequalities in the distribution of each dimension
(health, education, income).UNDP
IHDI < HDI when inequality exists
8. Multidimensional Poverty Index (MPI)-Measures poverty based on various deprivations in education, health, and
standard of living.UNDP and Oxford Poverty & Human Development Initiative (OPHI)
MPI = H × A
H = Headcount ratio (% of poor people)
A = Intensity of poverty (% of deprivations)
9. Gender Development Index (GDI)-Compares HDI values for males and females to identify gender gaps in
development.UNDP
GDI = Female HDI / Male HDI
10. Gender Inequality Index (GII)- Reflects inequality between men and women in health, empowerment, and labour
market.UNDP
Inequality Measures
11. Gini Coefficient- Measures income inequality within a country; ranges from 0 (equality) to 1 (inequality).World Bank,
United Nations University
12. Palma Ratio-Compares the income share of the richest 10% to the poorest 40% of the population.United Nations and
various development economists
Palma Ratio = Income of top 10% / Income of bottom 40%
Poverty and Employment Measures
13. Poverty Headcount Ratio- Percentage of population living below the national or international poverty line.World Bank,
NITI Aayog (India)
Poverty Ratio = (People below poverty line / Total population) × 100
14. Unemployment Rate- Percentage of people willing to work but unable to find employment. International Labour
Organization (ILO), National Sample Survey Office (NSSO - India)
Unemployment Rate = (Unemployed people / Labour force) × 100
15. Underemployment Rate-Refers to people who are working less than they would like or in jobs below their skill
level.ILO, NSSO
Underdevelopment
Underdevelopment refers to a condition where a country or region is not able to provide a decent standard of living to most
of its population.
lack of access to basic human needs and opportunities. It often results from historical exploitation, social inequality, and
weak governance systems, which prevent large sections of the population from reaching their potential.
Measures of Underdevelopment
Indicators of underdevelopment include:
• Low per capita income
• High poverty and unemployment
• Poor health and education services
• High birth and death rates
• Dependency on agriculture
• Economic and political instability
 • Economic and political instability
Human Development
Human Development is the process of enlarging people’s choices and improving their well-being, so they can lead long,
healthy, and fulfilling lives. It goes beyond just increasing income or economic growth—it focuses on helping people reach
their full potential.
It includes:
• Good Health – Access to healthcare, nutrition, clean water, and a healthy life.
• Proper Education – The ability to gain knowledge, skills, and make informed choices.
• Productive and Creative Work – Opportunities for decent work that is both meaningful and income-generating.
This approach was promoted by Amartya Sen and Mahbub ul Haq, and it forms the basis for the Human Development Index
(HDI) created by the United Nations Development Programme (UNDP).
Key Elements of Human Development
1. Equity-Ensuring equal opportunities for all people—regardless of gender, caste, income, religion, or region.
2. Sustainability-Using natural and human resources in a way that meets present needs without compromising the
future.
3. Productivity-Using people's talents, knowledge, and skills efficiently to contribute to economic and social development.
4. Empowerment-Giving people the freedom and ability to make decisions, participate in governance, and shape their
own lives.
5. Security-Providing people with protection from chronic threats like hunger, disease, unemployment, violence, and
ensuring a safe environment to live in.
UNIT 2 BASIC FEATURES OF INDIAN ECONOMY AT INDEPENDENCE
06 April 2025 23:10

Basic Features of Indian Economy at Independence

• A poor and backward economy
• Overdependence on agriculture
• Underdeveloped industries
• Widespread poverty, illiteracy, and unemployment
• Unequal distribution of income and regional imbalance.
This laid the foundation for the need of planned economic development in India post-independence (like Five-Year Plans
starting in 1951).
Composition of National Income
1. Low National Income:
• India's total and per capita income were very low.
• Per capita income (1947) was around Rs. 230 annually.
• This was due to low productivity in all sectors.
2. Primary Sector Dominance:
• Agriculture contributed about 50-60% of GDP, showing over-dependence on farming.
• The secondary (industrial) and tertiary (service) sectors were underdeveloped.
3. Low Contribution of Industry and Services:
• Industry contributed only around 10-15%.
• Services sector was also small and not modernized.
4. Lack of Reliable Data:
• There was no proper national income accounting system until the 1950s.
• Estimations were rough and varied by economists like V.K.R.V. Rao and Dadabhai Naoroji.
5. Income Inequality:
• A small elite class had wealth, while the majority lived in poverty.
• Economic benefits were not distributed equally.
Occupational Structure
1. High Dependence on Agriculture:
• Around 70–75% of the working population was engaged in agriculture.
• It was mainly subsistence farming, not commercial.
2. Low Industrial Employment:
• Only 10-12% of people were in industry.
• Most jobs were unskilled and poorly paid.
3. Underemployment and Disguised Unemployment:
• Many people worked on farms but were not actually needed—productivity was very low.
4. Negligible Service Sector Jobs:
• Only 15-17% of people worked in services like administration, transport, or education.
5. Regional Imbalance:
• Economic opportunities were concentrated in a few cities (like Bombay, Calcutta, Madras).
• Rural areas had fewer jobs, leading to rural poverty.
The Agrarian Scene
1. Exploitative Land Tenure Systems:
• British introduced systems like Zamindari, where landlords collected rent and farmers suffered.
• Tenants had no rights and were often forced to take loans at high interest.
2. Fragmentation of Land:
• Farms were small and scattered, making modern farming difficult.
3. Low Productivity:
• Use of primitive tools, poor seeds, no fertilizers or irrigation resulted in low output.
4. Lack of Institutional Credit:
• Farmers relied on moneylenders for loans, leading to debt traps.
5. No Agricultural Reforms:
• British did not introduce reforms like land ceilings, consolidation of holdings, or support prices.
6. Frequent Famines and Food Shortages:
• Famines like the Bengal famine (1943) killed millions.
• There was no national food security system.
Industrial Structure
1. Neglected Industrial Sector:
• British focused only on export of raw materials and import of British goods.
• Indian industries were ignored and restricted.
2. Limited Modern Industries:
• Only a few industries like textiles (Bombay), jute (Bengal), iron and steel (Jamshedpur) were developed.
3. Decline of Handicrafts:
• Traditional Indian industries like weaving, metal work, pottery declined due to machine-made British imports.
4. Lack of Capital and Technology:
• There was no support for entrepreneurs.
• India lacked access to machines, electricity, and skilled labour.
5. Underdeveloped Infrastructure:
• Transport (railways, roads), electricity, communication, ports were built only to serve British trade, not Indian needs.
6. Absence of Industrial Policy:
• No plans or policies to promote Indian industries were introduced during British rule.
UNIT 3 POLICY REGIMES
06 April 2025 23:41

Policy Regimes: Concept

Policy Regime refers to the set of economic policies and strategies adopted by a government to manage the economy during
a specific period. These regimes influence trade, industry, investment, fiscal and monetary systems.
The Evolution of Planning and Import Substituting Industrialization (ISI)
1. Economic Planning in India:
• Started in 1951 with the First Five-Year Plan.
• The goal was to ensure balanced development, poverty reduction, and self-reliance.
• The Planning Commission was formed to design and implement these plans.
2. Import Substituting Industrialization (ISI):
• Adopted mainly from 1956 to 1990.
• Focus was on reducing foreign dependency by producing goods domestically.
• Promoted heavy industries and public sector undertakings (PSUs).
• High tariffs, licensing, and restrictions on imports to protect Indian industries.
Criticism:
• Created a license raj.
• Limited competition and inefficient production.
• Led to low exports and foreign exchange crisis.
Economic Reforms Since 1991
1. Background:
• India faced a balance of payments crisis in 1991.
• Foreign reserves dropped to dangerously low levels.
• IMF and World Bank intervened for a bailout.
2. New Economic Policy (NEP) 1991:
• Introduced Liberalization, Privatization, and Globalization (LPG).
3. Key Reforms:
• Liberalization: Removed licensing, reduced regulations, eased foreign investment norms.
• Privatization: Reduced government role in business, disinvestment of PSUs.
• Globalization: Opened Indian markets to foreign trade and capital.
4. Impact:
• Boosted GDP growth, exports, and foreign investments.
• Improved technology and competition.
• But also increased inequality and jobless growth.
Monetary and Fiscal Policies with their Implications on the Economy
1. Monetary Policy:
• Managed by the Reserve Bank of India (RBI).
• Regulates money supply, interest rates, and credit availability.
• Tools:Repo rate, Reverse repo rate,CRR (Cash Reserve Ratio), SLR (Statutory Liquidity Ratio), Open Market
Operations (OMOs)
Implications:
• Controls inflation and maintains price stability.
• Affects investment and consumer spending.
• Helps maintain exchange rate stability.
Fiscal Policy:
• Managed by the Government of India.
• Involves taxation, public spending, and borrowing.
Types:
• Expansionary (increase spending, cut taxes during recession)
• Contractionary (reduce spending, raise taxes during inflation)
Implications:
• Promotes economic growth, employment, and infrastructure development.
• High deficits may cause debt burden and inflation.
• Used for redistribution of income through subsidies and welfare.
UNIT 4 GROWTH,DEVELOPMENT & STRUCTURAL CHANGE
06 April 2025 23:59

Growth, Development and Structural Change

Experience of Growth, Development and Structural Change in Different Phases
1. Pre-1991 (1951–1990):
• Focus on planned economic development.
• Emphasis on public sector, self-reliance, and import substitution.
• Slow GDP growth (~3.5% per annum).
• Agriculture dominant; industrial growth moderate.
2. Post-1991 Liberalization Phase:
• Economic reforms introduced: liberalization, privatization, globalization (LPG).
• Faster GDP growth, rise in service sector.
• Shift from agriculture to services in GDP contribution.
• Industrial reforms led to modernization and FDI inflow.
3. Regional and Sectoral Variation:
• Southern & Western states grew faster than Northern & Eastern ones.
• Services boomed in urban areas, agriculture remained stagnant in rural regions.
Institutional Framework
1. Asset Ownership in Agriculture:
• Land distribution highly unequal.
• Large landowners vs. landless laborers.
2. Asset Ownership in Industry:
• Dominance of few industrial houses before 1991.
• Limited access to capital and markets for small industries.
3. Policies for Agrarian Reform:
• Land ceiling laws, tenancy reforms, redistribution efforts.
• Goal: Reduce inequality and improve productivity.
4. Regulating Economic Power:
• MRTP Act (Monopolies and Restrictive Trade Practices Act) to control monopolies.
• Focus on decentralization and cooperative development.
Changes in Policy Perspectives After 1991
1. Liberalization of Economy:
• Reduced role of government in business.
• Greater private sector participation.
2. Weakening of Land and Labor Reforms:
• Focus shifted from redistribution to efficiency and growth.
3. Deregulation and Privatization:
• Large-scale disinvestment in PSUs.
• MRTP Act replaced with Competition Act (2002) to promote fair play.
4. New Institutions Introduced:
• SEBI (regulating capital markets), NITI Aayog (replacing Planning Commission).
Growth and Distribution; Unemployment & Poverty; Human Development; Environment
1. Growth vs. Distribution:
• Post-1991: Growth increased but inequality also widened.
• Urban areas developed faster than rural.
2. Unemployment:
• Rise in educated unemployment.
• Informal sector dominates employment.
3. Poverty:
• Decline in absolute poverty, but persistence in rural and tribal regions.
• Govt schemes like MGNREGA aimed to reduce rural poverty.
4. Human Development:
• HDI improved (literacy, health).
• Still lagging behind global standards.
5. Environmental Concerns:
• Rapid industrialization causing pollution, deforestation.
• Focus on sustainable development post-2000s.
Demographic Constraints
1. Population Growth:
• High population increases pressure on resources and employment.
• Demographic dividend (youth population) offers opportunity.
2. Urbanization:
• Rapid migration to cities causes housing, water, and job issues.
3. Age Structure:
• Need for skill development to absorb young labor force.
• Policies for elderly and dependent population also essential.
UNIT 5 SECTORAL TRENDS & ISSUES
07 April 2025 00:23

Sectoral Trends and Issues

Agriculture Sector
1. Agrarian Growth & Performance in Policy Phases:
• Pre-Green Revolution (Before 1966):
○ Traditional farming methods.
○ Low productivity.
○ Focus on self-sufficiency.
• First Phase of Green Revolution (1966–1980):
○ Introduced HYV seeds, fertilizers, irrigation.
○ Increased food grain production, mainly in Punjab, Haryana, and Western UP.
○ Regional imbalances grew.
• Second Phase of Green Revolution (1981 onwards):
○ Spread to Eastern and Southern India.
○ Diversification into pulses, oilseeds.
○ Technological advancements but uneven benefits.
2. Factors Influencing Productivity and Growth:
○ Access to irrigation and HYV seeds.
○ Government subsidies and credit.
○ Land reforms and farm size.
○ Climatic conditions and market access.
3. Role of Technology & Institutions:
○ Use of modern tools, biotechnology.
○ Support from institutions like ICAR, NABARD.
○ Co-operatives and rural banks provided financial help.
4. Price Policy:
○ Minimum Support Price (MSP) to protect farmers.
○ Aimed to stabilize farm income.
5. Public Distribution System (PDS) & Food Security:
○ PDS supplies essential food at subsidized rates.
○ Ensures availability for the poor.
○ Helps in food security and price control.
Industry and Services Sector
1. Phases of Industrialisation:
• Pre-1991 (License Raj):
○ Heavy control and licensing.
○ Focus on public sector industries.
• Post-1991 (Liberalization Era):
○ Deregulation and privatization.
○ Increased role of private and foreign players.
2. Rate & Pattern of Industrial Growth:
○ Mixed growth pattern pre-1991.
○ Rapid growth post-1991 in sectors like IT, telecom, automotive, pharma.
3. Public Sector:
○ Played a key role in infrastructure and heavy industries.
○ Criticized for inefficiency and losses.
○ Underwent reforms like disinvestment, performance auditing.
4. Small Scale Sector:
○ Promotes employment and entrepreneurship.
○ Faced competition post-liberalization.
○ Government support through subsidies, loans, and training.
5. Role of Foreign Capital:
○ Brings investment, technology, and global practices.
○ FDI and FII increased after 1991 reforms.
○ Important for economic growth.
Financial Sector
1. Structure:
○ Includes banking, insurance, capital markets, NBFCs.
2. Performance:
○ Expansion of banking network.
○ Increased financial inclusion through schemes like PM Jan Dhan Yojana.
3. Reforms:
○ Post-1991 reforms like deregulation of interest rates, new private banks, NPA management.
○ RBI played a regulatory role.
Foreign Trade and Balance of Payments
1. Structural Changes in Foreign Trade:
○ Shift from exports of primary goods to manufactured and service exports.
○ Increased trade with Asia, EU, and USA.
2. Performance:
○ Trade deficit remains a concern.
○ Service exports (IT, BPO) are strong contributors.
3. Trade Policy Debate:
○ Debate on free trade vs. protectionism.
 ○ Need to balance export promotion with domestic industry protection.
4. Export Policies & Performance:
○ Various schemes to boost exports like SEZs, MEIS.
○ Focus on product diversification and new markets.
5. Macro Economic Stabilisation & Structural Adjustment:
○ Introduced in 1991 to control fiscal deficit and inflation.
○ Included liberalization, privatization, and globalization.
6. India and the WTO:
○ Member since 1995.
○ Advocates fair trade and protection for farmers.
7. Role of FDI:
○ Brings in capital and technology.
○ Critical in sectors like telecom, retail, infrastructure.
8. Capital Account Convertibility:
○ Limited convertibility currently.
○ Full convertibility debated due to risks of capital flight and currency volatility.