Chapter 2 Flashcards
Who was the chairman of India’s first National Income committee in 1951?
Prof. P.C Mahalanobis
What is the Hindu Rate of growth? Who coined this phrase?
The Hindu rate of growth is a term referring to the low annual growth rate of the planned economy of India before the liberalisations of 1991, which stagnated around 3.5% from 1950s to 1980s, while per capita income growth averaged 1.3%.
This phrase was coined by Professor Raj Krishna.
Trend in share of agriculture in GDP
Share of agriculture has declined from 53.1 % in 1950-51 to 14.5% in 2010-11
After that according to new method of calculating GVA, share of agriculture and allied services have declined from 18.9 % in 2011-12 to 17.6% in 2014-15
Share of industry in GDP(trend)
Increased rapidly up to 1991, them stagnated. According to new series 2011-12, share of industry in GVA has declined from 32.9% in 2011-12 to 29.7% in 2014-15
Reasons for the service sector being the major contributor to growth(4 points)
Economic growth and industrial development has led to demand for services like transport, communication, electricity, storage, finance etc
Rapid development of information technology
Increase in income of people has lead to more demand of services like hotels, transport,communication
Defence, civil administrator, health, education has also contributed to service sector
Features of occupation structure in india( 9)
- Agriculture is the main occupation. Which gives rise to disguised unemployment. Very little chance of reducing the burden of population on agriculture.
- Less development of industry leads to backwardness of Indian industry. Only 17% of the population engaged in industrial activities
- Unbalanced. Highly unbalanced, sectors are unequally developed. Too much reliance on agriculture.
- Per capita income, standard of living low. As yield of agriculture is low.
- Small villages: 76 % lives in rural villages
- Backward agriculture: 66.7% people engage in agriculture but still India has to import food whereas in US 2% people engage in agriculture and export surplus food. Very low yield in India.
- Increase in proportion of agricultural labourers
- Less development of tertiary activities like banking, communication, transport etc. 20.5 % of population engaged in tertiary activities vs. 66% in America
- No significant change in occupational structure for the last century
Reasons for low rate of savings in India (5)
- Low level of income
- Demonstration effect: imitating others to reduce saving
- Saving potential of agricultural sector not realised. Rich farmers indulge in conspicuous consumption
- Low saving in corporate sector
- Low public sector saving
Reasons for Low public sector saving (3)
Increased unproductive expenditure of the government
Increased financial burden of subsidies and interest payments
Many public sector enterprises are earning little profits or incurring losses
Causes of the slowdown of investment
Increase in policy rates to combat inflation. RBI increased the repo rate by 375 basis points (between 2010-2011), raising cost of borrowing in a bid to reduce demand
Lower demand of Indian export from ROW, especially developed countries
Policy bottlenecks which discourage investment( for example obtaining environmental permissions, or carrying out land acquisition)
What is LARR ?
Land Acquisition and Rehabilitation and Resettlement Bill
