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SMILE-2023
Special Module for Improvement of Learning in public Exams
=================================================

ECONOMICS (English Version)

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 ‘SMILE 2023’ - ECONOMICS TEAM MEMBERS

1. Ajith Kumar
HSST Economics
GHSS Muzhappilangad

2. Sugandhi P
HSST Economics
A K S G HSS Malappattam

3. Rehna Surjith
HSST Economics
Sacred Heart Girls HSS Thalassery

4. Prasad T
HSST Economics
GHSS Nedungome

5. Rema K V
HSST Jr. Economics
GHSS Koyyam
 2. INDIAN ECONOMY 1950-1990

Economic systems are classified into three, namely, Capitalism, Socialism and mixed economy.

Capitalism Socialism Mixed economy.

Price Mechanism Planning Price Mechanism and Planning
Profit Motive Welfare Motive Profit Motive and Welfare Motive
Private Property Government ownership Private Property and Government ownership

• In 1950, the Planning Commission was set up with the Prime Minister as its Chairperson. Now it is

renamed as NITI Aayog (It was established in 1st January 2015).

• P.C. Mahalanobis. ( Prasanta Chandra Mahalanobis) is known as the architect of Indian Planning)
Goals of Five Year Plans
i) Growth
ii) Modernisation
iii) Self-reliance
Iv) Equity
Reforms in agricultural sector
a) Land Reform b) Green Revolution.
Land Reforms
• Land reforms which primarily refer to change in ownership of land.
• Land reforms were started in order to bring equity in ownership of land.
• Land Ceiling: - Land ceiling means fixing the maximum size of land that an individual can own.
The Green Revolution

Green revolution refers to the large increase in production of food grains resulting from the use of high yielding
variety (HYV) seeds, irrigation, fertilizers etc .

Ingredients of Green Revolution

 Use of high yielding varieties (HYV) of seeds

 Mechanization of agriculture

 Irrigation facilities

 Use of insecticides and pesticides

 Use of chemical fertilizers

 Provision of loans at low rate of interest

Advantages and Disadvantages of Green Revolution

Advantages Disadvantages
Marketable Surplus Increase the disparities between small and big farmers
Self Sufficiency in food grains HYV crops were more prone to attack by pests
Buffer Stock of Food grains Soil degradation because of continuous and improper use
of chemicals fertilizers.
Helped low income group
.
The Debate Over Subsidies
Arguments in favour of subsidy

The following arguments are given in favour of subsidy:

 Subsidies needed to encourage farmers to test the new technology.

 In India farming is a risky business so Government should continue subsidies
 Helps the farmers to buy modern inputs
 Helps to reduce the gap between rich and poor farmers.

Arguments against subsidy

The following arguments are given against subsidy.
 Subsidy benefits fertilizer industries than the farmers.
 Money used for subsidy could have been used for public welfare.
 Financial burden to the government.
 Benefits large farmers in affluent regions only.

Industrial Policy Resolution 1956 (IPR 1956)

IPR 1956 formed the basis of the Second Five Year Plan. This resolution classified industries into THREE

categories

 The first category comprised industries which would be exclusively owned by the state.(strategic
industries)

 Second category consisted of industries in which the private sector could supplement the efforts of the
state sector.
 Third category consisted of the remaining industries which were to be in the private sector

Small-Scale Industry:

Advantages of small scale industries

 Less capital investment

 Labour intensive technology ( Generates more employment.)
 Less dependence on imports
 Less pollution (Environmental Friendly)
 Helps in Rural Development
[ Karve Committee was formed in 1955 to study on small scale industries]

TRADE POLICY: IMPORT SUBSTITUTION

Import substitution means replacing or substituting imports with domestic production.

This Protection policy was implemented in two ways: tariffs and quotas.
  Tariffs are a tax on imported goods.

 Quotas specify the quantity of goods which can be imported.

2. LIBERALISATION, PRIVATISATION AND GLOBALISATION: AN APPRAISAL

Background of economic reforms

 Inefficient management of Indian economy in 1980’s

 Increasing fiscal deficit
 Adverse balance of payment
 Gulf Crises
 Poor performances of PSU’s
 Increased public debt
 High inflation
 Reduction in foreign exchange reserves
 Inefficient governance system
India approached the International Bank for Reconstruction and Development (IBRD), popularly
known as World Bank and the International Monetary Fund (IMF),and received $7 billion as loan to manage the
crisis. In order to availing the loan these agencies asked the Government of India to liberalize and open up the
economy by removing restriction on the private sector, reduce the role of government and restrictions on
international trade.
New Economic Policy of 1991 (NEP 1991)
The new economic policy announced by the government has two parts

1. Stabilisation measures: it is the short term measures to control inflation and to remove balance of
payment crisis.
2. Structural Adjustment Programmes: It is the long term measures to improve the efficiency of the
economy.

The three components of New Economic Policy are Liberalisation, Privatisations and Globalisation.
(LPG).

LIBERALISATION
Liberalisation means removing all unnecessary controls and restrictions imposed by the government
on various sectors of economy.

Liberalisation was introduced to put an end to the restrictions and open various sectors of the economy.

Reforms carried out as a part of liberalization are given below.

1. Industrial sector reforms (Deregulation of industrial sector)

2. Financial sector reforms
3. Tax reforms
4. Foreign exchange reforms
5. Trade and investment policy reforms
1. Industrial sector reforms (Deregulation of industrial sector)

 Removal of Industrial Licensing (De-licencing)

 The number of industries reserved for the public sector has been reduced. (De-reservation of industries to
public sector.)
 Amendment of MRTP and FERA
 Many goods produced by small-scale industries have now been de-reserved (De-reservation of goods for
small scale sector).

2. Financial Sector Reforms

Financial sector includes financial institutions, such as commercial banks, investment banks, stock exchange
operations and foreign exchange market.

Reforms carried out in financial sector are given below

 Bank Branch licensing liberalized
 New generation private banks and foreign banks were allowed to operate in the country. (ICIC Bank,
HSBC Bank, AXIS Bank etc.)
 Insurance sector was opened up and private insurance companies were allowed to operate.
 Capital marked liberalised
 Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) were reduced.
 Foreign Institutional Investors (FII), such as merchant bankers, mutual funds and pension funds, are now
allowed to invest in Indian financial markets.

3. Tax Reforms
Tax reforms are concerned with the reforms in the government’s taxation, public expenditure and public debt
policies. ( The policy of the government regarding the level of government taxation, spending and debt is known
as fiscal policy) .

 Reduction in personal income tax rates

 Reduction in corporate tax
 Reduction in excise duty
 Reduction in customs duty
4. Foreign Exchange Reforms

 The Indian rupee was devalued against foreign currencies

 Market determined exchange system (Flexible Exchange Rate System) introduced.

5. Trade and Investment Policy Reforms:

 Quantitative restrictions on imports and exports were removed.
 Import liberalized
 Import licensing was abolished

 Export duties have been removed

 Reduction of tariff (import duties) rates

PRIVATISATION
Privatisation means transfer of ownership, management, and control of public sector enterprises to
the private sector.
 Government companies are converted into private companies in two ways
 By withdrawal of the government from ownership and management of public sector companies
 By outright sale of public sector companies.
Disinvestment : Privatisation of the public sector undertakings by selling off part of the equity of PSEs to the
private sector is known as disinvestment.

Purpose of disinvestment (Aims of disinvestment)

 Improve the financial discipline and facilitate modernization

 Better performance of public sector units through better management techniques
 It provides a strong impetus to the flow of Foreign Direct Investment (FDI)
 Raising the revenue of the government from the sale of equity.

GLOBALISATION

Globalization is generally refers to the integration of the economy of the country with the world
economy. Or it indicates the opening up of domestic economy for the world market.
Outsourcing

In outsourcing, a company hires regular services from other countries which was previously provided from within
the country.

Why India became a major ( Favourable) destination for global outsourcing?

 Growth of Information Technology (IT)
 Low wage rate
 Huge pool of educated and skilled human resources
 Proficiency in English language
World Trade Organisation (WTO)

The WTO was founded in 1995 as the successor organization to the General Agreement on Trade and Tariff
(GATT) which was established in 1948.

Aims of WTO

 Providing equal opportunities to all countries in the international market for trading purpose.
 To establish a rule based trading regime in which nations cannot place arbitrary and unjust restrictions on
trade.
 Extension of trade by including trade in services like banking, insurance, communication.
 To encourage multi-lateral trade rather than bilateral trade.

Bilateral Trade: The trade between two countries is known as bilateral rade
Multi-lateral trade: The trade between more than two countries

Indian Economy during reforms – An assessment

Reform and GDP

• GDP growth rate increased.
• Agriculture sector growth has slowed down.
• There were fluctuations in the growth rate of the industrial sector.
• Direct Foreign Investment, Foreign Institutional Investment has increased.
• Could not create enough employment opportunities.

Effects of reforms on agriculture

Reforms have not been able to benefit Indian agriculture. Growth rate of agricultural sector has been
declined .

Reasons for the decline in growth rate in agricultural sector

 Removal of agricultural subsidies.
 Rise in the cost of production of agriculture
 Fall in the price of agricultural products
 Lack of government investments
 Increased production of cash crops targeting higher exports has led to a food crisis.
 WTO trade agreement
Effects of reforms on industry
Industrial growth slow down during reforms. Various reasons for the slow growth in industrial sector is given
below
 Import of cheaper goods
 Domestic manufacturers are facing competetion from imports
 Lack of modern technology
 Lack of infrastructure investments
 Developed nations like USA do not removed barriers on India.

3. POVERTY

Poverty can be defined as social state in which an individual is unable to fulfill even the basic necessities of
life , like food, clothing, housing, education and health .
Common characteristics of the poor in India
 Malnutrition
 Indebtedness
 Illiteracy, ill health
 Widespread unemployment and underemployment
 Employed in unorganised sector and therefore exploited by employers
 No access to basic amenities like safe drinking water, sanitation facility, electricity etc.
 Lack of assets
 Gender discrimination

HOW ARE POOR PEOPLE IDENTIFIED?

In pre-independent India, Dadabhai Naoroji was the first to discuss the concept of a Poverty Line using ‘Jail Cost

of Living’.
Poverty line

It is an imaginary line which divides the people as poor and non-poor. Poverty line is a cutoff point on the line

of distribution, which usually divides the population of the country as poor & non poor. Based on this, in 2011-12,

the poverty line was defined for rural areas as consumption worth Rs.816 per person a month and for urban areas it

was Rs.1000 per person a month.

Head Count Ratio

Number of poor estimated as the proportion of people below poverty line.

Head Count Ratio = (Number of poor / Total Population ) x 100

Categorising Poverty

Category Description
Always poor All the time below the poverty line
Usually poor Rarely come above the poverty line
Churning poor Regularly move in and out of poverty
Occasionally poor Most of the time above poverty line but sometimes below the poverty line
Never Poor Always above the poverty line

Causes of Poverty

 Social, economic and political inequality

 Social exclusion
 Unemployment
 Indebtedness
 unequal distribution of income and wealth.
 Lack of capital formation
 Lack of infrastructure
 Lack of demand
 Increase in population

POLICIES AND PROGRAMMES TOWARDS POVERTY ALLEVIATION

The government’s approach to poverty reduction was of three dimensions. They are

 Growth oriented approach

 Creation of asset and employment to generate income
 Providing minimum Basic amenities to people
1. Growth oriented approach

The growth oriented approach assumes that the economic growth of the economy will reduce the magnitude of

poverty. It is based on the expectation that the effects of economic growth leads to rapid increase in gross

domestic product and per capita income would spread to poor sections of society (Trickle down).
2. Creation of asset and employment to generate income
Expanding self-employment and wage employment programmes are being considered as the major ways of
addressing poverty.
a) Self Employment Programmes
 Prime minister’s Rozgar Yojana(PMRY)
 Rural Employment Generation Programme (REGP)
 Swarna Jayanthi Gram Swarozgar Yojana (SGSY)
 Swarna Jayanthi Shahri Rozgar Yojana (SJSRY)
 National Rural Livelihood Mission (NRLM)
b) Wage Employment Programmes
 National Food for Work Programme
 Sampoorna Grameen Rozgar Yojana (SGRY)
 National Rural Employment Guarantee Programme (NREGP)

In 2005 Indian Parliament passed National Rural Employment Guarantee Act.

The act guaranteed 100 days wages employment to every rural households.
NREGP has now renamed as Mahatma Gandhi National Rural Employment Gurantee Programme
(MGNREGP).
3. Providing minimum Basic amenities to people
a) Food Security Programmes
 Public Distribution System
 Integrated Child Development Scheme (ICDS)
 Mid-day meal scheme
b) Social security programmes

 Aam Aadmi Bima Yojana

 Indira Gandhi National Old Age pension Scheme
 Janasree Bima Yojana
 Atal Pension Yojana
POVERTY ALLEVIATION PROGRAMMES — A CRITICAL ASSESSMENT

 Though many schemes have been implemented for poverty alleviation still poverty exists in many parts of
India.
 Benefits from poverty alleviation programmes have been appropriated by the non-poor.

 The amount of resources allocated for poverty alleviation programmes is not sufficient.
 Some officials are ill motivated, inadequately trained, corruption prone, etc resulted in inadequate
implementation of the programme.
 Non-participation of local level institutions in programme implementation is another set back.
 4 HUMAN CAPITAL FORMATION IN INDIA

Converting human beings through education and training into human resources is human capital formation.

SOURCES OF HUMAN CAPITAL

1. Investment in Education: Investment in education is considered as one of the main sources of human capital.

2. Investment in Health: Spending on health to improve the health status of the population is in other way of
spending on human capital.

3. Investment in on- the Job Training: On-the-job training under the supervision of skilled professionals
increases productivity.

4. Migration: People migrate in search of jobs that fetch them higher salaries than what may get in their native
places. In India, rural-urban migration is very rampant in which rural people migrate to cities in search of better
jobs.

5. Expenditure on Information: People spent to acquire information relating to the labour market and other
markets like education, health, etc.

5 RURAL DEVELOPMENT
Rural development essentially focuses on the action for the development of areas that are lagging behind in the

overall development of the village economy.

Some of the areas need fresh initiatives in rural India includes

 Development of human resources

 Land reforms.
 Development of the productive resources of each locality.
 Infrastructure development
 Special measures for alleviation of poverty.

Rural Credit

Rural Credit means provision of loans specially in production for agriculture and non-agricultural sectors. Credit
facilities in the rural areas have contributed a large increase in agricultural productivity and employment
facilities in non-agricultural sectors.

Steps taken by the Government to improve credit facilities

 Nationalization of 14 commercial banks in 1969 and 6 commercial banks in 1980

 Setting up of NABARD IN 1982, ( National Bank for Agriculture and Rural Development)
 Expansion of co-operative credit system
 Priority lending for agriculture
Sources of Rural Credit

The institutional structure of rural banking today consists of a set of multi-agency institutions, namely,

 Commercial banks
 Regional Rural Banks (RRBs),
 Cooperatives
 Land Development Banks.
 Self-Help Groups (SHGs)
The Self-Help Groups (SGHs) have been set up to promote thrift in small proportions by a minimum contribution
from each member. From the pooled money, credit is given to the needy numbers to be repayable in small
installments at reasonable interest rates. Kudumbashree is an example for Self-Help Group in Kerala. It is a
women oriented community based poverty reduction programme.)

Agricultural Marketing System

Agricultural marketing is a process which involves assembling, storage, processing, transportation,

packaging, grading and distribution of different agricultural commodities across the country.

Measures to Improve Agricultural Marketing

The government has initiated the following steps to improve agricultural marketing in India.

 Establishment of Regulated Markets

 Cooperative Marketing
 Provision of Infrastructural facilities like roads, railways, warehousing, old storage and processing units.
 Assurance of Minimum Support Price for agricultural products.

Emerging Alternate Marketing Channels

If the farmers directly sell their products to consumers, it increases their incomes. The following table shows some
of the examples of emerging marketing channels in India.

Apni Mandi Panjab, Hariyana, Rajasthan

Rythu Bazar Andhra Pradesh
Hadaspar Mandi Pune
Uzhar Sandies Tamil Nadu

Diversification of Agricultural Activity

Diversification includes two aspects one relates to change in cropping pattern and the other
relates to a shift of workforce from agriculture to other allied activities (Animal Husbandry, Fisheries,
Horticulture etc.).

Need of Diversification into Productive Activities

 Diversification provides productive livelihoods to rural people.
 Diversification reduces risk from agriculture sector
 Diversification reduce the number of people dependent on agriculture
 Provides more job opportunities.
Diversification – Different sectors

Animal Husbandry

 India, the farming community uses the mixed crop – livestock farming system (cattle, goats, fowl)
 Livestock Production provides increased stability in income, food security, transport, fuel and
nutrition for the society.
 Milk production in the country has increased by more than eight times between 1951-2014.
 ‘Operation Flood’ is the programme implemented by government of India to increase the milk production
in the country

Fisheries

 The fishing community regards the water body as ‘mother’ or ‘provider’.

 The water bodies consisting of sea, oceans, rivers, lakes, natural aquatic ponds, streams etc. are an integral
and life-giving source for the fishing community.
 There are two types of fishing, namely, Inland fishing (rivers, lakes, backwaters, ponds) and Marine
fishing (sea, oceans).
 Presently 64 per cent of fish production is the contribution of inland sources and the balance 34 per cent
from marine sources
 Today total fish production accounts for 0.8 per cent of the total GDP.

Underemployment, low per capita earnings, absence of mobility of labour to other sectors and a high rate of
illiteracy and indebtedness are some of the major problems fishing community face today.
Horticulture

 India has adopted growing of diverse horticultural crops such as fruits, vegetables, tuber crops, flowers,
medicinal and aromatic plants, spices and plantation crops.
 These crops play a vital role in providing food and nutrition and helps in reducing unemployment.
 Horticulture sector contributes nearly one-third of the value of agriculture output and six per cent of Gross
Domestic Product of India.
 India has emerged as a world leader in producing a variety of fruits like mangoes, bananas, coconuts,
cashew nuts and a number of spices.
 Flower harvesting, nursery maintenance, tissue culture, food processing etc are largely created
employment opportunities for women in rural areas.
 Horticulture has emerged as a successful sustainable livelihood option and needs to be encouraged widely.

Sustainable Development

Sustainable development is the development which aims to develop the present generation without effecting the
quality of life of future generation.

Organic Farming

Organic agriculture is whole system of farming that restores, maintains and enhances the ecological balance.
Advantages of Organic Farming

 Inexpensive process
 Generates income
 High nutritional value
 More employment opportunities
 More employment opportunities

7 EMPLOYMENT: GROWTH, INFORMALISATION AND OTHER ISSUES

WORKERS AND EMPLOYMENT

Activities which contribute to the Gross National Product (GNP) are called economic activities.
All those who are engaged in economic activities are called workers.

Participation of people in employment (Worker Population Ratio)

.
Worker Population Ratio is measured as the ratio between workers and total population of a country.

Worker Population Ratio = (Total Number of workers / population ) X 100

Categories of workers

 Regular salaried employees

 Self employed
 Casual wage labourers

Regular salaried employees

People employed in organised sector and getting regular salary and allowances are called Regular Salaried
Employees.
Self employed
Workers who own and operate an enterprise to earn their livelihood are known as Self Employed.
Casual wage labourers
Workers who get daily wages are called Casual Wage Labourers.

Sector wise distribution of workers

All economic activities are classified under three main heads. They are,
1. Primary sector 2. Secondary sector 3. Service sector

Agriculture and allied activities Mining and Quarrying Trade and Commerce
Manufacturing Transport and Storage
Electricity Education
Gas Health care etc.
Water Supply
Construction etc

Jobless Growth
Jobless growth is defined as a situation where GDP grows faster than the employment opportunities.
OR
In the Indian economy, without generating employment, we have been able to produce more goods and services
(GDP Growth). This phenomenon is referred as Jobless Growth.
Casualisation of workforce
The process of moving the workers from self employment and regular salaried employment to casual wage work is
called casualisation of workforce.

Informalisation of Indian Workforce

We can classify workforce into two categories namely, workers in formal sector ( organised sector) and workers
in informal sectors ( unorganised sector)

Formal sector ( Organised sector)

All the public sector establishments and those private sector establishments which employ 10 hired workers or
more are called formal sector.

The formal sector workers enjoy social security benefits, paid leave, medical benefits, maternity leave for
women, provident fund, gratuity, pension benefits etc.

Informal sectors ( Unorganised sector)

All other enterprises other than formal sector forms the informal sector.
Informal sector includes farmers, agricultural labourers, owners of small enterprises and people working in those
enterprises as self employed who do not have any hired worker.
 Workers and enterprises in the informal sector do not get regular income.
 They do not have any protection or regulation from the Govt.
 Workers are dismissed without any compensation.
 Technology used in this sector is outdated.

UNEMPLOYMENT
Unemployment may be defined as “a situation in which the person is capable of working both physically and
mentally at the existing wage rate, but does not get a job to work”.
Disguised unemployment
Disguised unemployment is a type of unemployment in which more workers are employed than the amount that is
actually required.
For example:
In rural areas, this type of unemployment is generally found in agricultural sector. In a family of 9 people, all are
engaged in the same agricultural plot. But if 4 people are withdrawn from it there will be no reduction in
output. So, these 4 people are actually facing disguised unemployment.
8. ENVIRONMENT AND SUSTAINABLE DEVELOPMENT
DEFINITION OF ENVIRONMENT

• Environment is defined as the total planetary inheritance and the totality of all resources. It includes all the
biotic and abiotic factors that influence each other.
• Biotic elements: All living elements like the birds, animals and plants, forests, fisheries etc. are biotic
elements.
• Abiotic elements include air, water, land rocks and sunlight are examples of abiotic elements of the
environment.

Functions of the Environment

The environment performs four vital functions:
 It supplies resources
Resources include both renewable and non-renewable resources.
Renewable resources are those which can be used without the possibility of the resource becoming
depleted or exhausted. Examples of renewable resources are the trees in the forests and the fishes in
the ocean.
Non-renewable resources, on the other hand, are those which get exhausted with extraction and use,
for example, fossil fuel.
 It assimilates waste
 It sustains life by providing genetic and bio diversity
 It also provides aesthetic services like scenery etc.
The environment is able to perform these functions without any interruption as long as demand on these
functions are within its carrying capacity.

Carrying capacity implies two things:

 Resource extraction should remain below the rate of resource regeneration
 Generation of wastes should remain within the absorptive capacity of the environment.

If these two conditions are not fulfilled, then environmental crisis occurs.

Absorptive capacity of the environment means the ability of the environment to absorb degradation.

Environmental issues
A. Global Warming
Increase in the temperature of the earth's atmosphere due to an increase in greenhouse gases,
In 1997 a conference on climate change was held in Kyoto at Japan. The conference agreed to reduce the
greenhouse gases and passed a resolution ie Kyoto Protocol.
B. Ozone Depletion
Ozone layer depletion is the gradual thinning of the earth’s ozone layer in the upper atmosphere caused due to the
release of chemical compounds containing gaseous bromine or chlorine from industries or other human
activities.
A conference held in Montreal, Canada, adopted Montreal Protocol which agreed to ban the use of ozone depleting
gases.

STATE OF INDIA’S ENVIRONMENT

The threat to India’s environment poses a dichotomy- threat of poverty-induced environmental degradation and, at
the same time, threat of pollution from affluence and rapidly growing industrial sector.

Air pollution, water contamination, soil erosion, deforestation and wildlife extinction is some of the most pressing
environmental concerns of India.
The priority issues identified in India are:
 Land degradation
 Biodiversity loss
 Air pollution with special reference to vehicular pollution in urban cities.
 Management of fresh water.
 Solid waste management.
Land degradation
Land degradation refers to a decline in the overall quality of soil, water or vegetation condition
Some of the factors responsible for land degradation are :
 (i) loss of vegetation occurring due to deforestation
 (ii) unsustainable fuel wood and fodder extraction
 (iii) shifting cultivation
 (iv) encroachment into forest lands
 (v) forest fires and over grazing
 (vi) non-adoption of adequate soil conservation measures
 (vii) improper crop rotation
 (viii) indiscriminate use of agro-chemicals such as fertilisers and
pesticides
 (ix) improper planning and management of irrigation systems
 (x) Extraction of ground water in the competing uses of land for forestry, agriculture, pastures,
human settlements and industries etc.

ENVIRONMENT PROTECTION MOVEMENT

 CHIPKO MOVEMENT
 Started for protecting forests in the Himalayas
 Began in 1973
 Led by Sunderlal Bahuguna
 APPIKO MOVEMENT
 Started in Karnataka
 Beagan in 1983
 Led by Panduranga Hegde

SUSTAINABLE DEVELOPMENT

Sustainable development is that process of development which meets the needs of present generation without
reducing the ability of future generation to meet their own needs.

STRATEGIES FOR SUSTAINABLE DEVELOPMENT

Use of Non-conventional Sources of Energy: India hugely dependent on thermal and hydro power plants to meet
its power needs. Both of these have adverse environmental impacts. Wind power and solar rays are good
examples of non-conventional energy sources and they are more eco-friendly.

LPG, Gobar Gas in Rural Areas: Households in rural areas generally use wood, dung cake or other biomass as
fuel. This practice has several adverse implications like deforestation, reduction in green cover, wastage of
cattle dung and air pollution. To rectify the situation, LPG, gobar gas plant is being provided through easy
loans and subsidy. It reduces household pollution to a large extent. Also, energy wastage is minimised.

CNG in Urban Areas: In Delhi, the use of Compressed Natural Gas (CNG) as fuel in public transport system has
significantly lowered air pollution.
Wind Power: In areas where speed of wind is usually high, wind mills can provide electricity without any adverse
impact on the environment.

Solar Power through Photovoltaic Cells: India is naturally endowed with a large quantity of solar energy in the
form of sunlight. Now, with the help of photovoltaic cells, solar energy can be converted into electricity.
These cells use special kind of materials to capture solar energy and then convert the energy into electricity.
This technique is also totally free from pollution.

Mini-hydel Plants: In mountainous regions, streams can be found almost everywhere. By using these streams we
can construct Minihydel power Plants. Such power plants are environment-friendly as they do not change the
land use pattern in areas where they are located more over they generate enough power to meet local demands.

Traditional Knowledge and Practices: Traditionally, Indian people have been close to their environment. They
practiced environment friendly agriculture system, healthcare system, housing, transport etc.

Biocomposting: In our quest to increase agricultural production during the last five decades we almost totally
neglected the use of compost and completely switched over to chemical fertilisers. It adversely affected, our
land, health, water bodies due to chemical contamination. Now Farmers, in large numbers all over the country,
have started using compost made from organic wastes of different types. Earthworms can convert organic
matter into compost faster than the normal composting process.

Biopest Control: With the advent of green revolution our farmers use more and more chemical pesticides for
higher yield. As a result, food products, soil, water bodies and even ground water were polluted with
pesticides. Even milk, meat and fishes were also contaminated. To meet this challenge now better methods of
eco friendly pest control measures were used. One such step is the use of pesticides based on plant products.
Mixed cropping and growing different crops in consecutive years on the same land ha

9 .Development Experiences of India -- A Comparative Study with Neighboring Countries

Development Strategies of India, China and Pakistan

 India, China and Pakistan became independent almost at the same time. India and Pakistan in became
independent in1947 and China became independent in 1949.
 All the three countries adopted planning strategy for economic growth. India started Five Year Plans in
1951, China in 1953 and Pakistan in 1956.
 India and Pakistan adopted similar strategies, such as creating a large public sector and raising public
expenditure on social development.
 Both India and Pakistan had adopted ‘mixed economy’ model but China had adopted ‘Command
Economy’ model of economic growth.
 Economic Reforms were implemented in China in 1978, in Pakistan in 1988 and in India in 1991.
China
People's Republic of China was established in 1949 under one-party rule and all the
means of production were also brought under government control.
  A Programme named ‘The Great leap Forward (GLF) campaign was initiated in 1958, which aimed at
industrialising the country on a massive scale.
 China introduced the ‘Great Proletarian Cultural Revolution (1966-1976)’, under which students and
professionals were sent to work and learn from the countryside.
 In rural areas, commune system was started, under which people collectively cultivated lands.
 In the initial phase, reforms were initiated in agriculture, foreign trade and investment sectors. In the later
phase, reforms were initiated in the industrial sector.
 The reforms process also involved dual pricing.
 To attract foreign investors, special Economics Zones (SEZ) were set up.

Pakistan
 Pakistan adopted a mixed economy system.
 Pakistan Introduced tariff protection for manufacturing of consumer goods, together with direct import
controls on competing imports.
 The introduction of Green Revolution and increase in public investment in infrastructure in select areas,
led to a rise in the production of food grains.
 In 1970s, Capital goods industries were nationalised.
 In 1988, structural reforms were implemented.
 Pakistan also received financial support from western nations and remittances from emigrants to the
Middle countries. This helped the country in stimulating economic growth.
 1. STATISTICS- INTRODUCTION
Meaning of Statistics:-
Statistics deals with the collection, analysis, interpretation and presentation of numerical data.
The term statistics is used in singular sense and plural sense

Plural sense :- In plural sense statistics means quantitative information or data or numerical facts systematically
collected.

Singular sense:- In singular sense statistics means various methods adopted for the collection , presentation,
analysis and interpretation of numerical data.

Statistics in Economics
Statistics helps an economist :
• to understand economic problems.
• to present economic facts in a precise and definite form.
• to condense mass data into a few numerical measures.
• to find relationships between different economic factors.
• to predict future trends and changes in the economy.
• To formulate plans and policies.

Quantitative and Qualitative data

Quantitative data: The data which can be measured numerically. Examples: income, age, height, weight, etc...
Qualitative data: The data which can not be measured numerically. Example, beauty, attitude, behaviour, gender,
intelligence, etc..

2. COLLECTION OF DATA

SOURCES OF DATA
There are two sources - Primary and Secondary
• Primary data is information collected directly by the enumerator.
Merits Demerits
Original data Raw data form
High degree of accuracy More expensive
More reliable. Needs more time

• Secondary data The data which have been collected and processed by some other agency.

Merits Demerits
Needs less time Less accurate
Less expensive Less reliable

Qualities of a good questionnaire

• It should not be too long.
• Number of questions should be minimum.
• The questionnaire should be easy to understand.
• The questions should be arranged in an order
• The series of questions should move from general to specific.
• It should be precise and clear.
• The question should not use double negatives.
• The question should not be a leading question
Mode of Primary data collection or Methods of Primary data collection
There are three basic ways of collecting primary data:
 Personal Interviews,
6. Mailing questionnaire)
7. Telephone Interviews.

Personal Interviews

This method is used when the researcher has access to all the members. The researcher (or investigator)
conducts face to-face interviews with the respondents

Merits Demerits
High Response Most expensive
Allows clarification Possibility of influencing respondents
Allows use of all types of questions More time-taking.
Better for using open-ended questions Difficult to cover wide areas

Mailing questionnaire

When the data in a survey are collected by mail, the questionnaire is sent to each individual by mail
with a request to complete and return it by a given date.

Merits Demerits
Least expensive Cannot be used by illiterates
Only method to reach remote areas Long response time
Maintains anonymity of respondents Does not allow explanation.

Best for sensitive questions Reactions cannot be watched.

No influence on respondents

Telephone Interviews
In a telephone interview, the investigator asks questions over the telephone.
Merits Demerits
Relatively low cost Limited use
Relatively less influence on respondents Reactions cannot be watched
Relatively high response rate Possibility of influencing respondents

Pilot Survey
A small scale survey conducted before the actual survey.

Uses of pilot survey (Advantages of pilot survey)

 It helps in pre-testing of the questionnaire.
 It helps to know the cost and time required for the actual survey.

CENSUS AND SAMPLE SURVEYS

Census or Complete Enumeration

A survey which includes every element of the population..
Population and Sample
Population in statistics means totality of the items under study.
A sample refers to a group or section of the population.
Methods of sampling:-
Sampling is the process of selection of sample from the population. Mainly, there are two methods of sampling.

Random sampling:- In random sampling each every unit of the population has an equal chance of being selected
as the sample.

The following are the important random sampling methods.

 Lottery method
 Tables of random number method
Lottery method:- Under this method, all items of the population are numbered on separate paper slips of identical
size and shape. Then these paper slips are put in to container and shuffled well. A blind selection of paper slips as
random.

Non random sampling:- In a non-random sampling each every unit of the population do not have an equal chance
of being selected as the sample.

SAMPLING AND NON-SAMPLING ERRORS

Sampling Errors
The difference between the actual value of a parameter of the population and its estimate (from the sample) is the
sampling error.
It is possible to reduce the magnitude of sampling error by taking a larger sample.

Non-Sampling Errors
Non-sampling errors can be defined as errors arising during the course of all survey activities other than sampling.

Some of the non-sampling errors are :

1. Errors in Data Acquisition 2. Non-Response Errors 3. Sampling Bias

National Level Agencies of Data Collection

Census of India National Sample Survey Organisation (NSSO)
Central Statistics Office (CSO) Registrar General of India (RGI)
Directorate General of Commercial Intelligence and Statistics (DGCIS), Labour Bureau

3. ORGANISATION OF DATA
Classification of Data

The arrangements of data in to groups or classes according to similarities.

Types of classification
 Chronological classification 2. Geographical or spatial classification
 Qualitative classification 4. Quantitative classification

Chronological classification:
Classification of the data based on the time (years, months weeks etc.).

Geographical or Spatial classification: Classification of data with reference to geographical location such as
countries, states , cities, districts, block etc.
Qualitative classification:
Classification of data on attributes or qualities.

Quantitative classification:
Classification of data on the basis of measurable or quantitative characteristics

VARIABLE

A characteristic which is capable of being measured and changes its value over time. They are broadly classified
into two.
(a) Discrete variable (b) Continuous variable

Discrete variable
Discrete variable are those variables that can take only certain values.

Continuous variable
Continuous variables are those variables that can takes any numerical value.

Frequency Distribution
Concepts with regard to construction of frequency distribution
 Class Limits:- These are two ends of a class, ie lower limit and upper limit.
 The class mid-point is the middle value of a class.

Upper Classlimit + Lower Class limit

Class mid-point=
2

 Class interval or Class width:- It is the difference between the upper class limit and lower class limit
Class interval = upper class Limit – Lower class Limit 
 Frequency: The number of observation corresponding to a particular class.

Class Frequency Lower Upper limit Class interval Mid point or

(f) limit Class mark
0-5 12 0 5 5–0= 5 (5+0)/2 = 2.5
5 – 10 10 5 10 10 – 5 = 5 (10+5)/2 = 7.5
10 – 15 18 10 15 5 12.5
15 – 20 15 15 20 5 17.5
20 – 25 5 20 25 5 22.5

Class-intervals are of two types:

a) Exclusive class intervals b) Inclusive class intervals

Exclusive class intervals:

The classes, by the exclusive method is formed in such a way
Class Frequency
that the upper class limit of one class equals the lower class limit
of the next class.
10 – 20 5
According to this method, an observation that is exactly equal
20 – 30 12 to the upper class limit would not be included in that class but
would be included in the next class.
30 – 40 10
 Under the method, the upper-class limit is excluded but the
40 – 50 6
lower class limit of a class is included in the interval.
Total frequency 33
Inclusive class intervals:
Class Frequency In this method upper limit of a class is not equal to the lower limit of the
0–9 8 next class.
10 – 19 10 In this case, values equal to the lower and upper limits of a class are
20 – 29 5 included in the frequency of that same class.
30 – 39 4
40 – 49 6

Frequency array

For a discrete variable, the classification of its data is known as a frequency array.

Uni variate frequency distribution : Frequency distribution of one variable.

Bi variate frequency distribution: Frequency distribution of two variables.

4. PRESENTATION OF DATA
There are generally three forms of presentation of data:

1. Textual or Descriptive presentation: In textual presentation, data are described within the text.
2. Tabular presentation: In a tabular presentation, data are presented in rows and columns.
3. Diagrammatic presentation

PARTS OF A TABLE

1. Table number 2.Title 3. Captions or Column Headings 4. Stubs or Row Headings

4. Body of the Table 5. Unit of Measurement 6. Source Note 7. Foot Note

DIAGRAMMATIC PRESENTATION OF DATA

This is the third method of presenting data. There are various kinds of diagrams in common use. Amongst them the
important ones are the following:

1).Geometric diagram:- Bar diagram and pie diagram come in the category of geometric diagram.
The bar diagrams (one dimensional diagram) are of three types:
1.simple, 2.multiple and 3.component bar diagrams.
Eg. Draw a simple bar diagram for the following
data 70
House Points 60
50
Red 40
Points 40
Green 50 Points
30
Blue 60 20
10
0
Red Green Blue
Houses
 Pie Diagram
A pie diagram is also a component diagram, but unlike a bar diagram, it is a circle broken diagram.
Eg.Dra

w a Pie diagram based on the following data.

House Points Angle
A 40 40 x 360 = 96°
150
B 50 50 x 360 = A
150 B
120° C
C 60 60 x 360 =
150
144°
Total 150

2). Frequency diagram: Data in the form of grouped frequency distributions are generally represented by
frequency diagrams like histogram, frequency polygon, frequency curve and ogive.
Histogram
• A histogram is a two dimensional diagram. We can have a bar diagram both for discrete and
continuous variables, but histogram is drawn only for a continuous variable.
• Histogram also gives value of
mode of the frequency
distribution.
30
Income No. of
Persons 25

0 - 1000 12 20
No. of
1000 – 2000 18
Persons 15
2000- 3000 27
3000 - 4000 15 10

5
0 1000 2000 3000 4000 Income
വരുമാനം

• A frequency polygon is a plane bounded by straight lines, usually four or more lines. Frequency
polygon is an alternative to histogram and is also derived from histogram itself.

Eg. Draw a frequency polygon for the data given below.

Class 0 – 10 10 – 20 20 – 30 30 – 40 40 - 50
Frequency 3 11 19 17 5
 Frequency polygon

• The frequency curve is obtained by drawing a smooth freehand curve passing through the
points of the frequency polygon as closely as possible.
• Ogive is also called cumulative frequency curve. As there are two types of cumulative
frequencies- ‘‘less than’’ and ‘‘more than’’. An interesting feature of the two ogives together is
that their intersection point gives the median.
•
Eg. Draw a less than ogive and more than ogive for the data given below.
Marks No. of students
10 - 20 6
20 – 30 9
30 – 40 10
40 – 50 15
50 – 60 12
60 – 70 8

Answer:
Mark No. of Less than Less than More than More than
student marks cumulative marks cumulative
s frequency frequency
10 - 20 6 20 6 10 60
20 – 30 9 30 15 20 54
30 – 40 10 40 25 30 45
40 – 50 15 50 40 40 35

50 – 60 12 60 52 50 20

60 – 70 8 70 60 60 8
 More than
Ogive

Less than
ogive

Arithmetic line graph: An arithmetic line graph is also called time series graph. In this graph, time is plotted along
x-axis and the value of the variable (time series data) along y-axis.

5. MEASURES OF CENTRAL TENDENCY

The measures of central tendency summarises the data in a single value.

The three most commonly used averages are:

Arithmetic Mean.
Median.
Mode.

Arithmetic Mean.

It is defined as the sum of the values of all observations divided by the number of observations and is usually
denoted by

Computation of Arithmetic Mean.

Individual series

∑X
= where ∑ X = ∑ of all observations
N
N=total number of observations
Example

Arithmetic mean of 40, 50, 60, 62, 73 is

∑X 40+50+60+ 62+ 73 285

= = = = 57
N 5 5
Discrete Series

= ∑ fX
∑f
Where ∑ fX = sum of the product of variable and frequencies

∑ f = sum of frequencies

Example
Marks of students in a test paper are 95,75 and 85 and the number of students are respectively 150, 15 and 35
respectively.

Marks of students(X) Number of fX ∑ fX

students(f) =
∑f
10 5 50 142
= = 7.8
5 4 20 18

8 9 72

∑ f =18 ∑ fX =142

Continuous Series

∑ fm
=
∑f
M = Mid values of each class

Obtain ∑ fm and apply formula

Example

Marks (x) No. of students(f) Mid value(m) fm

0-10 10 5 50 ∑ fm 1615
= = =24.85
∑f 65
10-20 12 15 180

20-30 25 25 625

30-40 5 35 175

40-50 13 45 585

∑ f =65 ∑ fm=1615

Properties of Arithmetic Mean

1. The sum of deviations of items about AM is always equal to zero. Ʃ (X- )=0
2. AM is affected by extreme values.

Median

Median is that positional value of the variable which divides the distribution into two equal parts.

Computation of median

Individual Series: To compute the median of an individual series,

 arrange the data in ascending or descending order

 then locate the middlemost item.

 value of the middlemost item will be the median.

 N +1
Median = Size of ( ) th item
2
Example

5,2,8,10,12

Arrange the data in ascending order 2,5,8,10,12

N +1 th 5+ 1 th 6
Median =Size of item = item= = 3rd item = 8
2 2 2
N +1
Discrete Series: In case of discrete series the position of median ie ( ) th item can be located through
2
cumulative frequencies.

Steps

1. Arrange the data in ascending and descending order

2. Find out C F

N +1 th
3. Median =Size of ( ) item
2
4. Locate that value in X variable through C F

Size(x) Frequency(f) Cumulative

Frequency(cf)

5 2 2
N +1 th
Median =Size of ( ) item
10 3 5 2
15 4 9 32+1 th
=Size of ( ) item
2
20 6 15
33 th
28 10 25 =Size of ( ) item
2
30 5 30
=Size of 16.5th item=28
35 2 32
Median=28
N=32

Continuous Series

N th
In continuous series median is located in ( ) item.
2
N
−c . f .)
(
Median = L+ 2 Xh
f
L = lower limit of the median class N = total frequency

cf = cumulative frequency of the class preceding the median class

f = frequency of the median class h = class width of the median class

Example

x f cf In the example median class is the value of (N/2) th item. Ie.

(170/2)=85th item of the series, which lies in 20-30 class
0-10 14 14 interval.
10-20 60 74 N/2=85 L=20 cf=74 f=36 i=10

20-30 36 110 N
−c . f .)
(
Median = L+ 2 Xh
30-40 44 154
f
40-50 16 170
(85−74) (11)
Median= 20+ X 10=20+ X 10
N=170 36 36

(110)
=20+ =20+3.01=23.01
36
Mode

Mode is the most frequently observed data value.

Computation of Mode

Individual Series:. In individual series, the mode is that value which repeats the highest number of times.

Example

20,30,39,20,35,30,11,30,45,30

Mode=30

Discrete Series: In discrete series the item having the highest frequency is taken as the mode.

X f

20 4

34 3

30 12 Mode=30

35 2

11 1

Continuous Series:

In continuous series, mode lies in the class having the highest frequency is selected as model class. Then mode is
determined using the formula:

D1
Mode = L+ Xh
D1+ D 2
where,

L = lower limit of the modal class

D1 = difference between the frequencies of the modal class and the class preceding it (ignoring the sign)
D2 = difference between the frequencies of the modal class and the class succeeding it (ignoring the sign)
h = class interval of the modal class
Example

Marks No. of Students L=20 D1=25-10=15

0-10 5 D2=25-15=10 h=10

10-20 10 D1
Mode = L+( )Xh
D1+ D 2
20-30 25
15
30-40 15 = 20+( ) X 10
15+10
40-50 10
15
= 20+( ) X 10
50-60 5 25
= 20+( 0.6 ) X 10

= 20+6 = 26

Uni modal Distribution: A distribution which has only one mode.

Bi modal Distribution: A distribution which has two modes.

Multi modal Distribution: A distribution which has more than two mods.
 7. CORRELATION
Correlation studies and measures the direction and intensity of relationship among variables.

Types of Correlation

Positive correlation: The correlation is said to be positive when the variables move together in the same direction.
Eg. Price and supply of a commodity, Sale of ice cream and temperature, Income and consumption.

Negative correlation: The correlation is said to be negative when the variables move in opposite direction. Eg.
Price and Demand of a commodity.

Scatter diagram
Scatter diagram is graphic method to measure correlation.

If all the plotted dots in a graph lie on a straight line sloping upward from left to right, correlation is perfectly
positive (Diagram a).

If all the plotted dots in a graph lie on a straight line sloping downward from right to left, correlation is perfectly
negative (Diagram b).

If plotted dots have a scatter around an upward rising line indicates a positive correlation (Diagram c).

If plotted dots have a scatter around a downward sloping line indicates a negative correlation (Diagram d).

If the plotted dots scattered around all the direction there is no correlation (Diagram e).

8. INDEX NUMBERS
Index number measures the average change in a group of related variables over two different periods of time.
Current year: Current year is the year for which average change is to be measured or index number is to be
calculated.
Base year: The period to which the comparison is made is known as base year. The index number of base year is
generally assumed to be 100.
Construction of Simple Index Numbers
There are two methods of constructing simple index numbers.
 Simple Aggregative Method
In this method, we use the following formula
 ∑P 1
P01 = x 100
ΣP ο
Here, P01 = Price index of current year

ΣP1 = Sum of prices of the commodities in the current year

ΣP0 = Sum of prices of the commodities in the base year
Example

Commodity Base year price Current year price

A 10 15 ∑P 1
P01 = x 100
ΣP ο
B 5 6
∑ 35
C 8 9 P01 = x 100 = 129.62
∑ 27
D 4 5

ΣP 0=27 ∑ P 1=35
Types of weighted index numbers

i) Laspeyre’s price index ii) Paasche’s price index

Laspeyre’s price index : A weighted aggregative price index number using base period quantities as weights is
known as Laspeyre’s price index.

∑P 1qο
P01 = x 100
ΣP ο q ο

Commodit 2000 2010

P1 q0 P0 q0
ies P0 q0 P1 q1

A 20 8 40 6 320 160 ∑P 1qο

P01 = x 100
ΣP ο q ο
B 50 10 60 5 600 500
2070
C 40 15 50 10 750 600 P01 = x 100
1660
D 20 20 20 15 400 400
= 124.69
∑ P 1q ο = 2070 ΣP ο q ο =1660

Paasche’s price index: A weighted aggregative price index number using current period quantities (q 1) as weights
is known as Paasche’s price index

∑P 1q1
P01 = x 100
ΣP ο q 1
Example

Commod 2000 2010

ities P 1q 1 P0q1
P0 q0 P1 q1

A 20 8 40 6 240 120 ∑P 1q1

P01 = x
ΣP ο q 1
B 50 10 60 5 300 250
 C 40 15 50 10 500 400 100

D 20 20 20 15 300 300 1340

P01 = x 100
1070
∑ P 1q 1 =
1340 ∑ P 0 q 1=1070 = 125.23

Consumer Price Index or Cost of Living Index Number or Retail Price Index

The consumer price index is the index number which measures the average change in retail prices.

Wholesale Price Index (WPI)

The Wholesale Price Index (WPI) measures the changes in the general price level.

Index of Industrial Production

The index number of industrial production measures changes in the level of industrial production comprising many
industries.

Sensex
Sensex is the short form of a Bombay Stock Exchange Sensitive Index. It consists of 30 stocks of leading
companies in the country.

Problems in construction of index numbers:

(i) Purpose of index number.

(ii) Selection of base year.

(iii) Selection of items.

(iv) Selection of sources of data

(v) Choice of the formula.

Index numbers in Economics

(i) To measure the purchasing power of money.

(ii) Knowledge of change in standard of living.

(iii) Adjustment in salaries and allowances.

(iv) Help in framing suitable policies.

9. Use of Statistical Tools

Steps towards making a project

1.Identifying a Problem or an Area of Study.

2.Choice of a Target Group

3.Collection of Data

4.Organization and Presentation of Data

5.Analysis and Interpretation

6.Conclusion.

7.Bibliography.