Assignment Code: BECC-111/AST/TMA/2022-23

Course Code: BECC-111

Assignment Name: Indian Economy - I

Year: 2022-2023

Verification Status: Verified by Professor

Maximum Marks: 100

Answer all the questions

A. Long Answer Questions (word limit-500 words) 2 × 20 = 40 marks

1) Discuss the trends in the ‘sectoral growth/changes’ in India over the period 1951-2019.

Ans) The trends in the ‘sectoral growth/changes’ in India over the period 1951-2019 are as follows:

Savings

Investment, both public and private, is a prerequisite for employment creation. Savings is crucial for this. Through its Central Statistics Office (CSO), the Ministry of Statistics and Programme Implementation (MSPI) publishes information on savings by the economy's three main sectors: the household sector, the private corporate sector, and the public sector.

Investment

Three institutional sectors save and invest money. Households, private corporations, and the public sector are among them. Government and public corporations make up the public sector. Over the years 1991 to 2004, the total rate of investment (also known as the investment to GDP ratio) averaged 24.5 percent. This reached 30 percent in 2004–2005, and over the eight years between 2005 and 2013, or from 2005 to 2013, it averaged 35.4%.

Other sources like FDI, foreign remittances, etc. bridge the gap between domestic savings and total investment. Due to the declining trend in domestic savings and the rising trend in investment, more foreign capital has been coming into the country in recent years. The public sector savings have steadily decreased among the three components of domestic savings. For instance, in the early 1980s, the share of public sector savings was between 4 and 5 percent, but by 2015, it had fallen to just over 1 percent.

Employment

As was stated at the outset, structural change describes a significant change in the relative shares of employment and income that transfers the advantages of growth to those at the bottom of society. Additionally, it alludes to the transition of jobs from agriculture to industry. Such a change would occur over lengthy time horizons, for which the longest time series should ideally be used. Despite this, it is illustrative for the purposes of the current section to first examine the employment situation after 1991 and then compare it to that in the earlier period (i.e., 1951-2000). This would not only provide us with the post-reform scenario but also a total for all of the initiatives made during the nearly eight plan periods long pre-liberalization decades.

Urbanisation

The ratio of rural to urban population has changed by 13 percentage points over the five-decade period between 1961 and 2011 as a result of the transformation over the decades. The percentage of people living in rural areas has decreased by 13 percentage points, from 82 to 69 percent. The increase in the corresponding urban population of 13 percentage points is split between the pre-reform (1961–1991) and post-reform (1991–2011) periods by 7.5 and 5.7 percentage points, respectively.

A per-decade average of 2.5 for the three pre-reform decades of 1961–91 and 2.85 for the two post-reform decades of 1991–2011 is indicated by the ratio of 7.5:5.7. This indicates that the rate of urbanisation has accelerated since the end of the reform process. Therefore, the hypothesis that structural transformation of the economy will become more accelerated once the process firmly establishes itself in the economy is supported by the speeding up of reforms during the post-liberalization period.

2) Explain the policy implication for India in the context of conflict in ‘inequality or poverty’.

Ans) Income is a factor in the poverty indicators that Unit 8 takes into account. Since 2010, there has been an international effort to quantify poverty using various indicators of deprivation. The Oxford Poverty and Human Development Initiative (OPHI) and the UNDP jointly launched the multidimensional poverty index (MPI). The MPI is a measurement that considers the "incidence of poverty" and the "extent of deprivation," two broad factors.

The direct transfer of income to unskilled labour through public investment in infrastructure development and the empowerment of the poor through social sector investment are both necessary for the reduction of poverty. While the latter offers short-term relief, the former produces return over the long term. The various classes of people have varying capacities to gain advantages from social sector spending. The wealthier segments of the population have a higher level of this ability, while the poorer segments have a lower level. Therefore, this tendency has the feature of reducing poverty while escalating economic inequality.

The degree of disparity in the distribution of "assets, income, or consumption" is referred to as inequality. Contrarily, poverty is defined as the proportion of "assets, income, or consumption" that belongs to those at the bottom of this distribution. There is a distinction between absolute and relative poverty. A person is said to be in absolute poverty if they don't have enough money to survive. A standard of living that is comparable to the financial standards of people who live in a similar environment is referred to as relative poverty.

Therefore, "absolute poverty" is independent, whereas "relative poverty" is dependent. Therefore, it is more crucial to concentrate on reducing the overall number of people living in poverty. By doing this, it is ensured that the proportion of the poor in a population or economy decreases gradually over time. However, if it is possible to ensure that there are no unfavourable conditions that would encourage more new entrants into the poverty segment, absolute poverty can be reduced over time.

Evidence from various Indian states demonstrates a conflict between inequality and per capita income (PCI). This is supported by the relationship between inequality and PCI that has been observed in terms of its effects on poverty. This is accomplished by analysing data from the four NSSO "consumption expenditure surveys (CES)" conducted in 1993, 1999, 2004, and 2011. For this analysis, the "per capita NSDP (net state domestic product)" and the "official head count ratio (HCR) for poverty" for various Indian states are used.

The relationship between "income levels, poverty, and inequality" is such that inequality and income levels are both related to poverty. Evidence from Indian states demonstrates that while poverty and income levels clearly have an inverse relationship (Fig. 15.1a), there is no clearly inverse relationship between poverty and inequality. This demonstrates how poverty rates are lower in states with higher incomes and vice versa. As a result, it can be inferred that "an increase in PCI is both a necessary and sufficient condition for poverty alleviation."

The aforementioned indicates that, from a policy standpoint, at India's current level of development, the focus for reducing poverty must be through the country's economic strategy of growth. Growth-related gains in income make it possible to direct resources toward the development of the social sector. Through higher incomes, this would guarantee the poor long-term development benefits.

B. Medium Answer Questions (word limit-250 words) 3 × 10= 30 marks

3) Analyse the growth in the National Income of India over the different plan periods.

Ans) 1951 saw the release of the first report on national income estimates in India following its independence. A committee of national income (NI) composed of Dr. V.K.R.V. Rao and Prof. D.R. Gadgil worked on the report under the direction of Prof. P.C. Mahalanobis. The total national income for 1948–1949 was estimated to be Rs. 8,830 billion. Since then, NI estimates have been gathered and released yearly.

The Period of 1951-1980

Setting an achievement target and comparing the actual achievement to the target has long been a practise in India's planned development programmes. Table 3.1 displays the results for this score. Only twice during the three decades from 1951 to 1979 (the first and fifth plan periods) were we able to achieve the goal. India experienced a modest growth rate during this time period, so to speak.

The Period of 1980s Onwards

Compared to the slow growth rate experienced during the 1960s and 1970s, India's national income growth accelerated during the 1980s. The growth rates in NI that were attained during the sixth and seventh plan periods of the 1980s, as well as the following eighth plan period, were higher than the targeted growth rates. However, there was once more a decline in the growth rates of NI registered with reference to the targeted growth rates during the following three plan periods, namely the ninth, tenth, and eleventh plan periods.

4) Explain the trends in ‘demographic transition’ in India.

Ans) Countries move through the demographic transition process from having high birth and death rates to having low rates for both. High birth and death rates are typical in LDCs; as development slowly accelerates, death rates tend to decline before birth rates, leading to rapid population growth. Advanced nations typically have low rates of birth, death, and natural increase that is either very low or even negative.

Urbanisation

Societies become more urban through the process of urbanisation. It alludes to a shift in the population from rural to urban areas. The rate of growth of the urban population is therefore greater than that of the rural population in this instance.

Sex Ratio

The sex ratio, or the number of females per thousand males, is a way to quantify how gendered the population is. In developed nations, it has been noted that there are more females than males. The sex ratio in India, however, demonstrates that the culture is masculine with regard to this demographic. In India, the sex ratio dropped from 972 in 1901 to 933 in 2001, and then it slightly increased to 943 in 2011. It varies greatly among the states, from 1084 in Kerala to 879 in Haryana, and from 1037 in Pondicherry to 618 in Daman & Diu among the Union Territories (as per 2011 census).

Population Pyramid

Population Pyramids, also known as age-sex pyramids, are a beautiful and practical way to represent the population's age-sex distribution graphically. Two regular histograms placed on their sides form a pyramid. Although there are some conventions and unique features, the principles for plotting histograms and drawing pyramids are generally the same.

5) Outline the measures initiated to combat poverty in India during the post-2010 years.

Ans) India's definition of poverty during the first two five-year plans was the amount of energy needed to maintain an active and healthy lifestyle. For this, the recommended daily energy intake for adults was set at 2400 Kcal in urban areas and 2900 Kcal in rural areas. Based on this standard, the poverty line was established at a national minimum of Rs. 20 for rural areas and Rs. 25 for urban areas in 1960–1961. Different poverty line spending levels for rural and urban populations have been suggested by numerous experts who have conducted independent studies. The planning commission used the numbers that are being cited here. These estimates were not strictly related to nutritional needs, though they were also taken into consideration; rather, they represented a broad assessment of minimum needs.

Later, the approach based on per capita consumption expenditures was used for the sixth five-year plan (1980–1985). The average daily energy requirement for adults in rural and urban areas was reduced to 2400 Kcal and 2100 Kcal, respectively. Based on observed consumer behaviour in 1973–1974, it was determined that the poverty line was set at an average monthly consumer expenditure of Rs. 49 for rural areas and Rs. 57 for urban areas. Thus, the poverty line concept used at this point was a hybrid of normative and behavioural concepts. The method did not attempt to assess the population's nutritional status or take into account the prevalence of undernutrition and malnutrition. As a result, rather than actual income, consumption requirements were used to draw the poverty lines. As a result, the strategy concealed reliance on "debt, use of common property resources, and informal social security."

C. Short Answer Questions (word limit 100 words) 3 × 5=15 marks

6) Differentiate between the following.

(a) Absolute Poverty and Relative Poverty.

Ans)

Absolute Poverty

As we've already mentioned, absolute poverty is the condition of not being able to meet one's most fundamental needs. This means that if you live in complete poverty, you cannot afford the bare necessities of food, clothing, and shelter. In other words, your situation is desperate. "A situation in which people are deprived of safe drinking water, food, sanitation facilities, health care, shelter, and clothing," is how the World Bank defines absolute poverty.

Relative Poverty

Contrarily, relative poverty describes a situation in which your income is less than a specific proportion of the median income for the country. This indicates that you are considered to be in relative poverty if the median income in your nation is $100 and you earn $60. The amount of money required to live above the poverty line varies depending on the national median income in each country.

(b) Horizontal Inequality and Vertical Inequality.

Ans) From the viewpoint of intra-group (i.e., within a group) and inter-group (i.e., between groups) inequality, inequality can be distinguished. On the basis of this, two categories of inequalities, i.e., both vertical and horizontal inequality. Inequality between groups that have been created or defined by culture is referred to as horizontal inequality (i.e., inter-group e.g., by ethnicity, religion).

Vertical inequality is the term used to describe inequality between people or households. For a variety of reasons, the type and degree of vertical inequality are significant. One is to build a just society because egalitarian or more equal societies typically have higher levels of happiness. Second, the degree of poverty is determined by the degree of inequality for any given national income per capita. The number of people living in poverty around the world is a concern of the millennium development goals (MDGs).

(c) Physical and Social Infrastructure.

Ans)

Physical Infrastructure

Agriculture, industry, and trade are all production-related sectors with direct connections to physical infrastructure. It includes things like transportation, telecommunication, irrigation, and power. In India's economy, physical infrastructure has performed inconsistently.

Social Infrastructure

Education, healthcare, nutrition, housing, and access to clean water are all components of social infrastructure that play a key role in advancing human development, which in turn speeds up economic growth. The process of increasing people's options and level of wellbeing is known as human development. Depending on the stage of development of each society, the options change over time. To live a long and healthy life, to learn, and to have access to the resources required for a decent standard of living are the three choices that are most important to people.

7) Write short notes on the following.

(a) MPI.

Ans) The Cabinet Secretariat's mission on the MPI in India aims to use the monitoring mechanism of the Index to assess and benchmark poverty reduction in order to enhance the nation's performance and, as a result, reach out to the people who are most behind. It is hoped that the creation of the India MPI will spur competitiveness among the States and Union Territories and offer information on multidimensional poverty at the subnational and local levels.

(b) Objectives of PLFS.

Ans) The objective of PLFS is primarily twofold:

1. To estimate the key employment and unemployment indicators (viz. Worker population ratio, labour force participation rate, unemployment rate) in the short time interval of three months for the urban areas only in the ‘current weekly status’ (CWS).

2. To estimate employment and unemployment indicators in both ‘usual status’ (ps+ss) and CWS in both rural and urban areas annually.

Three Annual Reports covering both rural and urban areas giving estimates of all important parameters of employment and unemployment in both usual status (ps+ss) and current weekly status have been released. These three Annual Reports are brought out on the basis of data collected in PLFS during July 2017- June 2018, July 2018-June 2019 and July 2019-June 2020.

(c) Key Features of NEP 2020.

Ans) The Key Features of NEP 2020 are as follows:

1. universalization of education from early childhood through secondary education, with a "gross enrolment ratio (GER)" of 100% by 2030.

2. Expand universal access and the open schooling system to reintegrate the 2 crore out-of-school children into the educational system.

3. The 5 + 3 + 3 + 4 structure will take the place of the 10 + 2 system for the ages 3–8, 8–11, 11–14, and 14–18, respectively.

4. Board exams for classes 10 and 12 will be simplified to test core competencies rather than memorization of facts.

5. A "standards framework" based on online self-declaration in the public domain will change school governance for both public and private schools.