Eonomics-2

2-ECONOMICS POLICY OF INDIA 10806
1). Poverty Alleviation Programmes.

Poverty Alleviation Programmes aims to reduce the rate of poverty in the
country by providing proper access to food, monetary help, and basic
essentials to households and families belonging to below the poverty line
threshold.
According to the World Bank, Poverty is a pronounced deprivation in well-
being and comprises many dimensions. It includes low incomes and the
inability to acquire the basic goods and services necessary for survival with
dignity. Poverty also encompasses low levels of health and education, poor
access to clean water and sanitation, inadequate physical security, lack of
voice, and insufficient capacity and opportunity to better one’s life.
Poverty Alleviation
Poverty Alleviation is the set of steps taken in an economic and
humanitarian way to eradicate poverty in a country. According to the World
Bank, if a person is living on $1.90 a day or less, then he/she is living in
extreme poverty, and currently, 767 million people in the world fall under
that category. According to the last released official data, in 2011, 268
million people in India were surviving on less than $1.90 a day. Various
Programmes and Schemes under the Government of India were launched to
eradicate poverty and to provide basic amenities to poor households.
Schemes like Pradhan Mantri Awas Yojana and Housing for All by 2022 were
developed to provide housing to the rural and urban poor. The latest
government schemes like Start-Up India and Stand Up India focus on
empowering people to earn their livelihood.
Measuring BPL in India
The poverty line solely depends on the per capita income in India rather
than the level of prices. The poverty line is the minimum income required to
purchase the basic goods and services that are essential to satisfy the basic
human needs.
In India, the first official rural and urban poverty lines at the national level
were introduced in 1979 by Y. K. Alagh Committee. Criteria for the
measurement of BPL are different for the rural and urban areas.
Currently, according to the Tenth Five-Year Plan, the degree of deprivation
is measured with the help of parameters with scores given from 0–4, with
13 parameters.
Families with 17 marks or less (formerly 15 marks or less) out of a
maximum of 52 marks have been classified as BPL.
The poverty line is calculated every 5 years. According to the recent
estimation based on inflation, the threshold income should be more than Rs.
962 a month for urban areas and Rs 768 a month in rural areas i.e., above Rs.
32 a day in an urban area and above Rs. 26 a day in a rural area.
Poverty Alleviation Programmes in India
As per the 2011-2012 estimation by the Planning Commission of India, 25.7
% of the rural population was under the below-poverty line and for the
urban areas, it was 13.7 %. The rate of poverty in the rural areas is
comparatively higher than that in the urban areas due to the lack of proper
infrastructure, insufficient food supply, and poor employment system.
The major Poverty Alleviation Programmes that were developed with an
initiative to eradicate poverty are mentioned in the table below:
List of Poverty Alleviation Programmes in India
Name of the Year of Government Ministry Objectives

Scheme/Programme Formation
Integrated Rural 1978 Ministry of Rural To raise the families of identified target
Development Development groups living below the poverty line
Programme (IRDP) through the development of sustainable
opportunities for self-employment in the
rural sector.
Pradhan Mantri Gramin 1985 Ministry of Rural To create housing units for everyone along
Awaas Yojana Development with providing 13 lakh housing units to the
rural areas.
To provide loans at subsidized rates to the
people.
To augment wage employment

opportunities to the households by
providing employment on-demand and
through specific guaranteed wage
employment every year.
Indira Gandhi National 15th Ministry of Rural To provide pensions to the senior citizens of
Old Age Pension Scheme August Development India of 65 years or higher and living below
(NOAPS) 1995 the poverty line.
It provides a monthly pension of Rs.200 for

those aged between 60-79 years and Rs.500
for people aged above 80 years.
National Family Benefit August Ministry of Rural To provide a sum of Rs.20,000 to the
Scheme (NFBS) 1995 Development beneficiary who will be the next head of the
family after the death of its primary
breadwinner.
Jawahar Gram Samridhi 1st April Implemented by the Developing the infrastructure of the rural
Yojana (JGSY) 1999 Village Panchayats. areas which included connecting roads,
schools, and hospitals.
To provide sustained wage employment to

families belonging to the below poverty
line.
Annapurna 1999-2000 Ministry of Rural To provide 10 kg of free food grains to

Development eligible senior citizens who are not
registered under the National Old Age
Pension Scheme.
Food for Work 2000s Ministry of Rural It aims at enhancing food security through
Programme Development wage employment. Food grains are supplied
to states free of cost, however, the supply of
food grains from the Food Corporation of
India (FCI) godowns has been slow
Sampoorna Gramin – – The main objective of the scheme continues

Rozgar Yojana (SGRY) to be the generation of wage employment,
the creation of durable economic
infrastructure in rural areas and the
provision of food and nutrition security for
the poor.
Mahatma Gandhi 2005 Ministry of Rural The Act provides 100 days of assured
National Rural employment every year to every rural
Employment Guarantee Development household. One-third of the proposed jobs
Act (MGNREGA) would be reserved for women. The central
government will also establish National
Employment Guarantee Funds.
Similarly, state governments will establish

State Employment Guarantee Funds for
implementation of the scheme. Under the
programme, if an applicant is not provided
employment within 15 days s/he will be
entitled to a daily unemployment allowance.
National Food Security 2007 Ministry of To increase production of rice, wheat, pulses
Mission Agriculture and coarse cereals through area expansion
and productivity enhancement in a
sustainable manner in the identified
districts of the country
National Rural Livelihood 2011 Ministry of Rural It evolves out of the need to diversify the
Mission Development needs of the rural poor and provide them
with jobs with regular income on a monthly
basis. Self Help groups are formed at the
village level to help the needy
National Urban 2013 Ministry of Housing It focuses on organizing urban poor in Self
Livelihood Mission and Urban Affairs Help Groups, creating opportunities for skill
development leading to market-based
employment and helping them to set up self-
employment ventures by ensuring easy
access to credit
Pradhan Mantri Jan Dhan 2014 Ministry of Finance It aimed at direct benefit transfer of subsidy,
Yojana pension, insurance etc. and attained the
target of opening 1.5 crore bank accounts.
The scheme particularly targets the
unbanked poor
Pradhan Mantri Kaushal 2015 Ministry of Skill It will focus on fresh entrants to the labour
Vikas Yojana Development and market, especially labour market and class X
Entrepreneurship and XII dropouts
Saansad Aadarsh Gram 2014 Ministry of Rural To develop the institutional and physical
Yojana (SAGY) Development infrastructure in three villages by 2019. The
scheme aims to develop five ‘Adarsh
Villages’ or ‘Model Villages’ by 2024.
Pradhan Mantri Jeevan 2015 Ministry of Finance The scheme provides life coverage to the
Jyoti Bima Yojana poor and low-income sections of society.
The scheme offers a maximum assured
amount of Rs.2 lakhs
Pradhan Mantri Suraksha 2015 Ministry of Finance The scheme is an insurance policy to the
Bima Yojana people belonging to the underprivileged
sections of the society
National Maternity 2016 Ministry of Health & To provide a sum of Rs.6000 to a pregnant
Benefit Scheme Family Welfare mother who is aged above 19 years.
(MoHFW)
The sum is provided normally 12–8 weeks
before the birth in three instalments and
can also be availed even after the death of
the child.
Pradhan Mantri Ujjwala 2016 Ministry of It envisages the distribution of 50 million

Yojana (PMUY) Petroleum and LPG connections to women below the
Natural Gas poverty line
Pradhan Mantri Garib 2016 Ministry of Finance the scheme provides an opportunity to
Kalyan Yojana (PMGKY) declare unaccounted wealth and black
money in a confidential manner and avoid
prosecution after paying a fine of 50% on
the undisclosed income. An additional 25%
of the undisclosed income is invested in the
scheme which can be refunded after four
years, without any interest.
Solar Charkha Mission 2018 Ministry of Micro, It aims at Employment generation for nearly
Small and Medium one lakh people through solar charkha
Enterprises (MSME) clusters in rural areas
National Nutrition 2018 Ministry of Women to reduce the level of undernutrition and
Mission (NNM), Poshan and Child also enhance the nutritional status of
Abhiyan Development children in the country. Also, to improve the
nutritional outcomes of adolescents,
children, pregnant women and lactating
mothers
Pradhan Mantri Shram 2019 Ministry of Labour It is a central government scheme that is
Yogi Maan-Dhan (PM- and Employment introduced for old age protection and social
SYM) security of Unorganised Workers (UW)
Prime Minister Street 2020 Ministry of Housing It aims to provide micro-credit facilities to
Vendor’s AtmaNirbhar and Urban Affairs street vendors affected by COVID-19
Nidhi – PM SVanidhi (MoHUA) pandemic
2). Rural Development Programs Of India.

The Indian government has consistently prioritized rural development
initiatives aimed at uplifting the rural sector. The Ministry of Rural
Development, along with the Departments of Rural Development and Land
Resources, has been instrumental in formulating various schemes to
enhance the well-being of rural India.
Given the significant role of rural areas in the Indian economy, promoting
their progress is crucial for both the economic upliftment of the people and
broader social transformation. It is essential to encourage increased
community involvement in rural development programs, promote
decentralized planning, effectively implement land reforms, and provide
greater access to credit. These measures are vital to offering rural residents
improved opportunities for economic development.
Pradhan Mantri Gram Sadak Yojana (PMGSY)
This scheme was launched by then Prime Minister Atal Bihari Vajpayee on
25 December 2000. The motive of this scheme is to provide better rural road
connectivity in order to provide connectivity to the residents with less or no
connectivity at all. It seeks to poverty reduction by promoting access to
economic and social services.
Deen Dayal Upadhyaya Grameen Kaushalya Yojana
This scheme is a part of National Livelihood Mission. It aims to provide
better career opportunities for the rural youth by providing options to
increase the income of rural families. It was launched on 25th September
2014. It primarily focuses on the poor rural youth of age between 15 and 35.
Mahatma Gandhi National Rural Employment Guarantee Act
(MGNREGA)
This is one of the most important and effective scheme for rural
development. Mahatma Gandhi National Rural Employment Guarantee Act
(MGNREGA) of 2005 guarantees 100 days of employment to any rural

household adult who wants to do unskilled manual work in a financial year.
Sampoorna Grameen Rozgar Yojana (SGRY)
Sampoorna Grameen Rozgar Yojana (SGRY) was launched in 2001 with the
objective of providing better employment opportunities to the poor. Not just
this, It also aims to provide food to people in areas who live below the
poverty line with the purpose of improving their nutritional levels.
It has some other objectives too which includes providing social and
economic assets to the people living in rural areas.
Pradhan Mantri Awaas Yojana (Gramin)/ Indira Awas Yojana
Indira Awas Yojana was given a new name of Pradhan Mantri Gramin Awaas
Yojana in 2016. This is a welfare scheme launched by the Government with
the aim of providing housing to rural poor people in India. The objective of
this programme is reach the target of providing home to all Indian citizens
till 2022.
3). What Is Unemployment?

Unemployment is a situation when a person actively searches for a job and
is unable to find work. Unemployment indicates the health of the economy.
The unemployment rate is the most frequent measure of unemployment.
The unemployment rate is the number of people unemployed divided by the
working population or people working under labour force.
Unemployment rate = (Unemployed Workers / Total labour force) × 100
National Sample Survey Organization (NSSO) defines employment and
unemployment on the following activity statuses of an individual. NSSO, an
organization under MoSPI – Ministry of Statistics and Programme
Implementation measures India’s unemployment on three approaches:
Daily Status Approach: unemployment status of a person under this

approach is measured for each day in a reference week. A person having no
gainful work even for one hour in a day is described as unemployed for that
day.
Weekly Status Approach: This approach highlights the record of those
persons who did not have gainful work or were unemployed even for an
hour on any day of the week preceding the date of the survey.
Usual Status Approach: This gives the estimates of those persons who
were unemployed or had no gainful work for a major time during the 365
days.
Types of Unemployment in India
In India, there are seven types of unemployment. The types of
unemployment are discussed below:
Disguised Unemployment: This is a type of unemployment where people
employed are more than actually needed. Disguised unemployment is
generally traced in unorganised sectors or the agricultural sectors.
Structural Unemployment: This unemployment arises when there is a
mismatch between the worker’s skills and availability of jobs in the market.
Many people in India do not get job matching to their skills or due to lack of
required skills they do not get jobs and because of poor education level, it
becomes important to provide them related training.
Seasonal Unemployment: That situation of unemployment when people do
not have work during certain seasons of the year such as labourers in India
rarely have occupation throughout the year.
Vulnerable Unemployment: People are deemed unemployed under this
unemployment. People are employed but informally i.e. without proper job
contracts and thus records of their work are never maintained. It is one of
the main types of unemployment in India.
Technological Unemployment: the situation when people lose their jobs

due to advancement in technologies. In 2016, the data of the World Bank
predicted that the proportion of jobs threatened by automation in India is
69% year-on-year.
Cyclical Unemployment: unemployment caused due to the business cycle,
where the number of unemployed heads rises during recessions and
declines with the growth of the economy. Cyclical unemployment figures in
India are negligible.
Frictional Unemployment: this is a situation when people are unemployed
for a short span of time while searching for a new job or switching between
jobs. Frictional Unemployment also called Search Unemployment, is the time
lag between the jobs. Frictional unemployment is considered as voluntary
unemployment because the reason for unemployment is not a shortage of
jobs, but in fact, the workers themselves quit their jobs in search of better
opportunities.
Causes of Unemployment
The major causes of unemployment in India are as mentioned below:
Large population.
Lack of vocational skills or low educational levels of the working population.
Labour-intensive sectors suffering from the slowdown in private investment
particularly after demonetisation
The low productivity in the agriculture sector plus the lack of alternative
opportunities for agricultural workers that makes transition among the
three sectors difficult.
Legal complexities, Inadequate state support, low infrastructural, financial
and market linkages to small businesses making such enterprises unviable
with cost and compliance overruns.
Inadequate growth of infrastructure and low investments in the

manufacturing sector, hence restricting the employment potential of the
secondary sector.
The huge workforce of the country is associated with the informal sector
because of a lack of required education or skills, and this data is not
captured in employment statistics.
The main cause of structural unemployment is the education provided in
schools and colleges are not as per the current requirements of the
industries.
Regressive social norms that deter women from taking/continuing
employment.
Impact Of Unemployment
The unemployment in any nation have the following effects on the economy:
The problem of unemployment gives rise to the problem of poverty.
The government suffers extra borrowing burden because unemployment
causes a decrease in the production and less consumption of goods and
services by the people.
Unemployed persons can easily be enticed by antisocial elements. This
makes them lose faith in the democratic values of the country.
People unemployed for a long time may indulge in illegal and wrong
activities for earning money which increases crime in the country.
Unemployment affects the economy of the country as the workforce that
could have been gainfully employed to generate resources actually gets
dependent on the remaining working population, thus escalating socio-
economic costs for the state. For instance, a 1 % increase in unemployment
reduces the GDP by 2 %.
It is often seen that unemployed people end up getting addicted to drugs and
alcohol or attempts suicide, leading to losses to the human resources of the
country.
4). Public Distribution System.

The Public Distribution System (PDS) which evolved as a system of
management for food and distribution of food grains was relaunched as
Targeted Public Distribution System (TPDS) in June 1997. This programme
is controlled by the Ministry of Consumer Affairs, Government of India. TPDS
emphasizes on the implementation and identification of the poor for proper
arrangement and delivery of food grains. Therefore, the Targeted Public
Distribution System (TPDS) under the Government of India plays the same
role as the PDS but adds a special focus on the people below the poverty line.
The below-table will give a quick overview of Public Distribution System
(PDS) and Targeted Public Distribution System (TPDS) in India
Difference between Public Distribution System Both PDS and TPDS have same role, TPDS focuses more
and Targeted Public Distribution System (TPDS) on people below poverty line (BPL)
PDS relaunched as TPDS In June 1997
Targeted Public Distribution System (TPDS) – TPDS is jointly operated by Central Government and
Operated By State Government
Role of Central Govt in TPDS Procurement, Allocation, Transportation of food grains

to Food Corporation of India (FCI)
Role of State Govt in TPDS Allocation, Distribution of Food grains, Identify

beneficiaries, issue ration cards.
TPDS – Beneficiaries Beneficiaries Divided into 2 categories – Households

Below Poverty Line and Households Above Poverty
Line.
Targeted PDS
Targeted Public Distribution System (TPDS) is jointly operated by Central
and State Governments. The Targeted Public Distribution System (TPDS)
came into operation in June 1997 under the Government of India with a
focus on the poor. Under the operations of TPDS, the beneficiaries were
divided into two categories:
Households Below the poverty line (BPL)
Households Above the poverty line (APL)
Central Government is responsible for
Procurement of food grains
Allocation of food grains
Transportation of food grains to designated depots of Food Corporation of
India (FCI).
State Government is responsible for
Allocation and Distribution of foodgrains within the state.
Identification of eligible beneficiaries.
Issuance of ration cards.
Use of PDS
There are several benefits of PDS
It helps in maintaining the Food Security of the nation.
It helps in making sure that food is available for the poor at affordable
prices.
Maintains buffer stock of food grains which will help during the lean season
of crop production.
5). Problems In Agricultural Sector.

Farmers all over the world are plagued by several issues. These problems
indirectly and directly affect the farmer’s life. Furthermore, farming
practices and other aspects of agriculture can take up resources and time.
The problems faced by farmers are typically unnoticed in the food industry.
This article aims to highlight the major problems faced by farmers. They are:
Inadequate transport
Farmers in developing countries have a hard time transporting their
produce to markets due to lack of roads, vehicles and money. They often
have to carry their produce from the farm to local markets on foot or by
bicycle, which can be challenging and time-consuming. This means that they
often have to sell their produce at very low prices because they cannot
transport it to places where there is better demand for food.
Lack of capital
Farmers need capital to get their businesses off the ground and grow them
into successful operations. However, they often have little access to credit or
financing because lenders don’t understand their unique needs. The lack of
financial resources affects not only productivity but also affects the quality
of agricultural produce. Farmers in some developing countries do not have
access to adequate funds to invest in better technologies, machinery and
equipment which results in poor-quality agricultural produce.
Agricultural marketing
Agricultural marketing refers to the process of bringing a product from the
farmer to the consumer. It includes activities such as finding buyers for the
products, negotiating prices, transporting goods and getting feedback on
quality. Because there are many people involved in this process, it can be
quite challenging. Farmers have to find buyers who will pay them a fair price
for their goods while also ensuring that they don’t sell too cheap or too
expensively.
In many cases, they are forced to sell their products at a low price or even
give them away because they cannot find buyers. This situation creates an
incentive for small farmers not to produce more than what they need for
their own consumption.
Soil erosion
Soil erosion is a natural process that happens when wind or water moves
soil particles from one place to another. When this happens on a large scale,
it causes serious problems for farmers.
Soil erosion is caused by many factors including over-tillage of the soil,
which erodes soil quality and retains less water. When it floods, it removes
the top layers of soil very quickly. Soil erosion can be prevented by
controlling the amount of water used for irrigation, using mulch and cover
crops to protect soil from wind and water erosion, and preventing
overgrazing by livestock.
Irrigation problems
Irrigation is known to help improve agricultural production, and while
irrigation methods have improved to help increase the income of farmers,
there are still numerous irrigation-related hurdles that make it harder for
farmers to get income commensurate to their expenditure. The main
problems that farmers have around irrigation are:
Lack of mechanization
Climate change
Surface water overexploitation
Increased demand for water
Old irrigation infrastructure
Inadequate drainage
Inadequate lighting
Whether it’s because of droughts, floods, or just low rainfall, irrigation can
be difficult to maintain.
Farmers have often been forced to fall back on groundwater resources when
surface water sources dry up during droughts. In other cases, they’ve had no
choice but to rely on groundwater even when adequate surface water is

available. This can cause problems as groundwater levels drop and farmers
are unable to pump enough water to keep their crops alive through the dry
season.
Lack of high quality seeds
The quality of seed used in farming is essential in attaining a higher crop
yield. It is also important in getting sustained growth in agricultural
production. Distribution of high-quality seed is as important as seed
production. High-quality seeds are typically out of reach for most farmers,
especially marginal and small farmers due to their prohibitively high prices.
Lack of infrastructure in the agriculture sector
One of the biggest issues that farmers face is lack of infrastructure. This
includes poor roads, transportation facilities and so on. Farmers have to
depend on others for transport services which increase their costs
significantly. Without proper transportation facilities, it becomes difficult for
farmers to sell their produce at reasonable prices within their respective
localities or even outside their villages or townships.
Farmers are unable to get good quality seeds and pesticides at reasonable
prices. They also have to spend money on fertilizers and other inputs like
irrigation systems etc., which is quite high as compared to other countries
like China or USA where they have all the facilities available at their
doorstep.
Biocides, fertilisers, and manures
Biocides are used in the form of pesticides to kill insects and other pests that
destroy crops. However, they can also have harmful effects on humans and
animals who eat food that has been treated with them. This may result in
health problems such as cancer or infertility. Biocides are also linked to
water pollution because they can be washed into rivers or lakes by
rainwater after application onto crops.
Fertilisers and manures are important in providing the soil with the right
nutrients. Just as the human body requires nutrients to function optimally,
well-nourished soil can provide high crop yields. Research estimates that
around 70% of plant growth in agricultural production can be linked to
increased fertiliser application. Therefore, increased fertiliser use can be
seen as a measure of agricultural prosperity. There are various practical
difficulties in providing adequate fertilisers and manures in certain parts of
the world. In some regions, animal waste is used as manure to replenish the
soil, but this is often limited by the high costs and demand for fuel in rural
areas; chemical fertilisers are also expensive, making them out of reach to
the local farmers.
Loss of agricultural land
One of the major farmers problems has to be the loss of agricultural land, as
when more land is lost, it becomes increasingly difficult to produce the right
volume of food required to feed the entire population.
Lack of modern farming equipment
One of the major problems faced by farmers is the lack of adequate farm
equipment which can hamper their ability to adapt to the requirements of
modern farming practices. When farmers are trained using the equipment,
their lives can significantly develop. Implementation of said equipment is
important.
6).Food Security in India

The Food and Agricultural Organization (FAO) states that food security
emerges when all people at all times have physical and economic access to
sufficient, safe and nutritious food to meet their dietary needs and food
preferences for an active and healthy life. Food security has three important
and closely related components, which are listed below
Availability of food
Access to food
Absorption of food.
Laws on Food Security – India

In order to provide the Right to food to every citizen of the country, the
Parliament of India, enacted legislation in 2013 known as the National Food
Security Act, 2013. Also called the Right to Food Act, this Act seeks to
provide subsidized food grains to approximately two-thirds of India’s 1.33
billion population. Food Subsidy is the foundation on which the National
Food Security Act 2013 is implemented in India.
National Food Security Bill, 2013
This Bill was introduced in Lok Sabha on 7th August 2013
It was passed in Lok Sabha on 26th August 2013.
The National Food Security Bill was passed in Rajya Sabha on September 02,
2013.
Food Security Programmes of India
Public Distribution System. – A major chunk of Government Expenditure on
Food Security is spent on Food Subsidies which are implemented through
the Targeted Public Distribution System.
Mid Day Meal Scheme
Integrated Child Development Services Scheme.
The food management system and food price policy, to ensure food security
in India thus consists of three major instruments,
Procurement at minimum support prices,
The maintenance of buffer stocks, and the
Public Distribution System.
Nutritional Requirements of Poor People – Implementation
Currently, the food items provided by the central government for

distribution under PDS are rice, wheat, and sugar.
5 kg of food grains will be given to per person, per month at subsidized
prices. This rule is based on the National Food Security Act, 2013.
As per Antyodaya Anna Yojana, each of the households belonging to the
poorest of the poor section will be provided 35 kg of food grains per month
at subsidized prices.
The National Food Security Act, 2013 requires the central and state
governments to undertake steps to diversify commodities distributed under
PDS.
7). Green Revolution

The Green Revolution is referred to as the process of increasing agricultural
production by incorporating modern tools and techniques. Green Revolution
is associated with agricultural production. It is the period when agriculture
of the country was converted into an industrial system due to the adoption
of modern methods and techniques like the use of high yielding variety
seeds, tractors, irrigation facilities, pesticides, and fertilizers.
The method of green revolution focused on three basic elements, that are:
Using seeds with improved genetics (High Yielding Variety seeds).
Double cropping in the existing farmland and,
The continuing expansion of farming areas
Features
Introduced High Yielding Variety seeds in Indian agriculture.
The HYV seeds were highly effective in regions that had rich irrigation
facilities and were more successful with the wheat crop. Therefore, the
Green Revolution at first focused on states with better infrastructure such as

Tamil Nadu and Punjab.
During the second phase, the high yielding variety seeds were given to other
states, and crops other than wheat were also included in the plan.
The most important requirement for the high yielding variety seeds is
proper irrigation. Crops grown from HYV seeds need good amounts of water
supply and farmers could not depend on monsoon. Hence, the Green
Revolution has improved the irrigation systems around farms in India.
Commercial crops and cash crops such as cotton, jute, oilseeds, etc were not
a part of the plan. Green revolution in India mainly emphasized food grains
such as wheat and rice.
To enhance farm productivity green revolution increased the availability
and use of fertilizers, weedicides, and pesticides to reduce any damage or
loss to the crops.
It also helped in promoting commercial farming in the country with the
introduction of machinery and technology like harvesters, drills, tractors,
etc.
Impact of Green Revolution in India
Green Revolution has remarkably increased Agricultural Production.
Foodgrains in India saw a great rise in output. The biggest beneficiary of the
revolution was the Wheat Grain. The production increased to 55 million
tonnes in the early stage of the plan itself.
Not just limited to agricultural output the revolution also increased per Acre
yield. Green Revolution increased the per hectare yield in the case of wheat
from 850 kg per hectare to an incredible 2281 kg/hectare in its early stage.
With the introduction of the Green revolution, India reached its way to self-
sufficiency and was less dependent on imports. The production in the
country was sufficient to meet the demand of the rising population and to
stock it for emergencies. Rather than depending on the import of food grains
from other countries India started exporting its agricultural produce.
The introduction of the revolution inhibited a fear among the masses that
commercial farming would lead to unemployment and leave a lot of the
labour force jobless. But the result seen was totally different there was a rise
in rural employment. The tertiary industries such as transportation,
irrigation, food processing, marketing, etc created employment
opportunities for the workforce.
The Green Revolution in India majorly benefited the farmers of the country.
Farmers not only survived but also prospered during the revolution their
income saw a significant rise which enabled them to shift from sustenance
farming to commercial farming.
8). What is the Yellow Revolution?

The revolution launched in 1986- 1987 to increase the production of edible
oil, especially mustard and sesame seeds to achieve self-reliance is known as
the Yellow Revolution. Sam Pitroda is Known as the father of the Yellow
Revolution in India. Yellow Revolution targets nine oilseeds that are
groundnut, mustard, soybean, safflower, sesame, sunflower, niger, linseed,
and castor.
Features of the Yellow Revolution
The yellow revolution included incentives to farmers who were also
provided processing facilities that included irrigation, fertilizers, pesticides,
etc. transportation facility, minimum support price, warehousing, etc.
Under the revolution, many boards such as the National Dairy Board were
entrusted with responsibilities to promote oilseed production. The NDB has
the responsibility to increase groundnut oil production in Gujarat. Similarly,
the National Oilseeds and Vegetable Oils Development Board were
responsible for the production enhancement of oilseeds in non-traditional

areas.
Oilseeds Production Thrust was established to popularize the four major
oilseeds that are mustard, groundnut, soybean, and sunflower. Also, there
were about 3000 oilseed societies established with 13 lakh farmers and 25
hectares of cultivable land in a different state of the country.
Though India achieved self-sufficiency in oil production in the next ten
years, sadly the output of India does not meet its consumption. To meet
demand, India started to import oilseeds from other countries. India
imported about 5 million tonnes in 2007 from many countries like Malaysia,
Argentina, Brazil, etc.
Background Of Yellow Revolution in India
To ensure the success of the yellow revolution India launched Oil
Technological Mission in 1986. The Yellow revolution had the implantation
of hybrid mustard and sesame seeds which significantly increased the
production of edible oil which was also due to the use of improved
technology for oil production.
The Revolution marked the beginning of an entirely new era with floating
sunflowers in fields of Punjab, created many opportunities, and also helped
in covering socio-economic differences in the country. The oil production in
India was about 12 million tonnes when the revolution started which
doubled in 10 years to about 24 million tonnes.
Along with the use of the hybrid seed, various other measures were taken
such as the increase in agricultural land to about 26 million hectares, use of
modern technological inputs.
9). Liberalisation
Liberalisation is the process or means of the elimination of control of the
state over economic activities. It provides a greater autonomy to the
business enterprises in decision-making and eliminates government

interference.
Liberalisation in India
Since the adoption of the New Economic Strategy in 1991, there has been a
drastic change in the Indian economy. With the arrival of liberalisation, the
government has regulated the private sector organisations to conduct
business transactions with fewer restrictions.
For the developing countries, liberalisation has opened economic borders to
foreign companies and investments. Earlier, the investors had to encounter
difficulties to enter countries with many barriers.
These barriers included tax laws, foreign investment restrictions, accounting
regulations, and legal issues. Economic liberalisation reduced all these
obstacles and waived a few restrictions over the control of the economy to
the private sector.
Objectives
To boost competition between domestic businesses
To promote foreign trade and regulate imports and exports
To improve the technology and foreign capital
To develop a global market of a country
To reduce the debt burden of a country
To unlock the economic potential of the country by encouraging the private
sector and multinational corporations to invest and expand
To encourage the private sector to take an active part in the development
process
To reduce the role of the public sector in future industrial development
To introduce more competition into the economy with the aim of increasing
efficiency
Positive Impact of Liberalisation in India

Free flow of capital: Liberalisation has enhanced the flow of capital by
making it affordable for the businesses to reach the capital from investors
and take a profitable project.
Diversity for investors: The investors will be benefitted by investing a
portion of their business into a diversifying asset class.
Impact on agriculture: In this area, the cropping designs have experienced
a huge change, but the impact of liberalisation cannot be accurately
measured. Government’s restrictions and interventions can be seen from the
production to the distribution of the crops.
Economic Reforms during Liberalisation
Several sectors were affected by the impact of Liberalisation. A few
economic reforms were:
Financial Sector Reforms
Tax Reforms / Fiscal Reforms
Foreign Exchange Reforms / External Sector Reforms
Industrial Sector Reforms
10). NITI Aayog.

The NITI Aayog was formed on January 1, 2015. In Sanskrit, the word “NITI”
means morality, behaviour, guidance, etc. But, in the present context, it
means policy and the NITI stands for “National Institution for Transforming
India”. It is the country’s premier policy-making institution that is expected
to bolster the economic growth of the country. It aims to construct a strong
state that will help to create a dynamic and strong nation. This helps India to
emerge as a major economy in the world. The NITI Aayog’s creation has two
hubs called “Team India Hub” and “Knowledge and Innovation Hub”.
Team India: It leads to the participation of Indian states with the central
government.
The Knowledge and Innovation Hub: it builds the institution’s think tank
capabilities.
Objectives of NITI Aayog
The active participation of States in the light of national objectives and to
provide a framework ‘national agenda’.
To promote cooperative federalism through well-ordered support initiatives
and mechanisms with the States on an uninterrupted basis.
To construct methods to formulate a reliable strategy at the village level and
aggregate these gradually at higher levels of government.
An economic policy that incorporates national security interests.
To pay special consideration to the sections of the society that may be at risk
of not profiting satisfactorily from economic progress.
To propose strategic and long-term policy and programme frameworks and
initiatives, and review their progress and their effectiveness.
To grant advice and encourage partnerships between important
stakeholders and national-international Think Tanks, as well as educational
and policy research institutions.
To generate knowledge, innovation, and entrepreneurial support system
through a shared community of national and international experts, etc.
To provide a platform for resolution of inter-sectoral and inter-
departmental issues to speed up the accomplishment of the progressive
agenda.
To preserve a state-of-the-art Resource Centre, be a repository of research
on good governance and best practices in sustainable and equitable
development as well as help their distribution to participants.
To effectively screen and assess the implementation of programmes and

initiatives, including the identification of the needed resources to strengthen
the likelihood of success.
To pay attention to technology improvement and capacity building for the
discharge of programs and initiatives.
To undertake other necessary activities to the implementation of the
national development agenda, and the objectives.
NITI Aayog Composition
The NITI Aayog will comprise the following:
a) Prime Minister of India is the Chairperson
b) Governing Council consists of the Chief Ministers of all the States and
Lt. Governors of Union Territories in India.
c) Regional Councils will be created to address particular issues and
possibilities affecting more than one state. These will be formed for a
fixed term. It will be summoned by the Prime Minister. It will consist of
the Chief Ministers of States and Lt. Governors of Union Territories.
These will be chaired by the Chairperson of the NITI Aayog or his
nominee.
d) Special invitees: Eminent experts, specialists with relevant domain
knowledge, which will be nominated by the Prime Minister.
e) The full-time organizational framework will include, in addition to the
Prime Minister as the Chairperson:
i) Vice-Chairperson (appointed by the Prime Minister)
ii) Members:
Full-time
Part-time members: Maximum of 2 members from foremost
universities, leading research organizations, and other innovative
organizations in an ex-officio capacity. Part-time members will be on a
rotational basis.
iii) Ex Officio members: Maximum of 4 members of the Council of

Ministers which is to be nominated by the Prime Minister.
iv) Chief Executive Officer: CEO will be appointed by the Prime Minister
for a fixed tenure. He will be in the rank of Secretary to the
Government of India.
11). National Population Policy, 2000.

National Population Policy, 2000
The National Population Policy (NPP), 2000 is the central government’s
second population policy. The NPP states its immediate objective as
addressing the unmet needs for contraception, healthcare infrastructure,
and health personnel, and providing integrated service delivery for basic
reproductive and child healthcare.
The medium-term objective of the NPP 2000 was to reduce the Total
Fertility Rate (TFR) to replacement levels by 2010.
The TFR was to be 2.1 children per woman.
The long-term objective is “ to achieve a stable population by 2045, at a level
consistent with the requirements of sustainable economic growth, social
development, and environmental protection.”
Important features of National Population Policy
The NPP reinforces the vision of the government to encourage voluntary and
informed choices and citizens’ agreeability in order to achieve maximum
benefits from reproductive health services.
Making school education free and compulsory up to the age of 14 years and
also reducing the dropout rates of both boys and girls.
Decreasing the Infant Mortality Rate (IMR) to under 30 per 1000 live births
in the country (to be achieved by 2010 as prescribed when the NPP was
brought out).
Reducing the Maternal Mortality Rate (MMR) to under 100 per 1 lakh live
births (to be achieved by 2010 as prescribed when the NPP was brought
out).
Achieving universal immunization for all children against vaccine
preventable diseases.
Encouraging delayed marriage for girls (preferrably before 18 years and
above 20 years).
Achieving 80 percent institutional deliveries and 100 percent deliveries by
trained persons.
Attaining 100% registration of pregnancies, births, deaths and marriages.
Making available universal access to information/counseling, and services
for fertility regulation and contraception with a huge range of choices.
Containing the spread of AIDS, boosting better coordination between the
management of reproductive tract infections (RTI) and sexually transmitted
infections (STI) and the National AIDS Control Organisation (NACO).
Preventing and controlling communicable diseases.

Integrating Indian medicine systems (AYUSH) in reproductive and child
health services.
Vigourously furthering the small family norm.
Bringing about a convergence of all related social programmes so that family
planning and welfare becomes a people-centric programme.
12). EXIM Policy of India.

The EXIM (Export-Import) Policy contains guidelines governing the imports
and exports of products and services in and out of India. EXIM Policy’s
primary objective is to regulate and develop foreign trade by

facilitating imports into and exports from India.
The Foreign Trade Development and Regulation Act, 1992, provides for the
Indian government to announce the EXIM Policy every five years. Each EXIM
Policy announced by the Indian Government is valid for five years, and they
can amend, enhance or add new provisions to the policy every year on 31
March, taking effect from 1 April.
Objectives of EXIM Policy

To increase growth in exports and imports in India.
To stimulate long-term economic growth by expanding access to

components, intermediates, essential raw materials, consumables and
capital goods.
To improve agriculture service and industry competitiveness, create new

employment opportunities and encourage attaining internationally accepted
quality standards.
To supply high-quality goods and services at an affordable cost.
To encourage economic expansion by providing access to necessary raw

materials, capital goods, installations, consumables, intermediate products
and essential elements for expanding production and providing services.
To improve the technological productivity and potency of Indian agriculture,

services and companies, thus enhancing competitive power while creating
employment possibilities, and to accomplish globally acknowledged quality
norms.
To supply consumers with fine-condition services and goods at globally

competitive rates.
Features of EXIM Policy

The features of EXIM Policy 2023, effective from 1 April 2023 to 31 March
2028, are as follows:
Process Re-Engineering and Automation

The FTP emphasises export development and promotion based on
technology interface and principles of collaboration, moving away from an
incentive regime to a facilitating regime. The ongoing schemes
like EPCG, Advance Authorisation, etc.
Towns of Export Excellence
Four new towns, i.e. Mirzapur, Faridabad, Varanasi, and Moradabad, are
designated as Towns of Export Excellence (TEE) along with the existing 39
towns. The TEEs have priority access to export promotion funds under the
MAI (Market Access Initiative) scheme.
Recognition of Exporters
Exporter firms that are recognised based on export performance can be

partners in capacity-building initiatives on a best-endeavor basis. Two-star
and above status holders are encouraged to give trade-related training to
interested individuals based on a model curriculum.
Promoting Export From the Districts
The FTP aims to build partnerships with State Governments and take
forward the DEH (Districts as Export Hubs) initiative for promoting district-
level exports and accelerating the development of the grassroots trade
ecosystem.
Benefits of EXIM Policy

Promotes international trade.
Facilitates technology transfer.
Improves balance of payments.
Enhances competitiveness.
Boosts economic development and growth.

Creates employment opportunities.
Helps in enforcing liberalisation policy.
Increases foreign investment value.
Increases healthy competition between domestic traders and the

international market.
Creates diversified market development for consumers and manufacturers.
Availability of commodities at a lower cost.
14). Role Of Multinational Corporations In India’s Economic

Development.
Multinational corporations (MNCs) are enterprises that operate in multiple
countries, with assets or operations in more than one country. They play a
significant role in the global economy, including in India.
Positive Role of Multinational Corporations in India’s Economic
Development:
Foreign Direct Investment (FDI) Inflows: MNCs bring in capital through FDI,
which contributes to economic growth and infrastructure development.
For instance, companies like Coca-Cola and PepsiCo have invested heavily in India,
contributing to job creation and infrastructure development.
Technology Transfer: MNCs often bring advanced technology and know-how

to India, which helps in upgrading skills, processes, and products.
For example, automobile giants like Toyota and Volkswagen have introduced modern
manufacturing techniques and quality standards to the Indian automotive industry.
Employment Opportunities: MNCs create job opportunities, both directly

and indirectly, by establishing manufacturing units, research centers, and
service hubs.
Companies like Infosys and Accenture have created employment opportunities in the IT
sector, contributing to India’s services-led growth.
Market Expansion: MNCs facilitate market expansion by introducing new

products and services, thereby stimulating demand and consumption.
For instance, companies like Samsung and Apple have introduced cutting-edge consumer
electronics products to the Indian market, driving innovation and consumer choice.
Access to Global Markets: Indian companies often partner with MNCs to

access global markets through export-oriented strategies.
For example, partnerships between Indian pharmaceutical companies like Sun Pharma
and multinational pharmaceutical companies have enabled them to tap into global
markets, boosting exports and foreign exchange earnings.
Corporate Social Responsibility (CSR): Many MNCs engage in CSR activities,

contributing to social welfare, education, healthcare, and environmental
sustainability.
For instance, companies like Unilever and Procter & Gamble undertake CSR initiatives in
India aimed at improving sanitation, promoting hygiene, and empowering local
communities.
Negative Role of Multinational Corporations in India’s Economic

Development:
Exploitation of Resources: MNCs have been criticized for exploiting natural
resources and labor in India, leading to environmental degradation and
exploitation of workers.
For example, controversies have arisen over the mining practices of companies like
Vedanta Resources and Posco in India.
Market Domination and Monopoly: Some MNCs have been accused of

engaging in anti-competitive practices, stifling competition, and
monopolizing markets.
For instance, global giants like Amazon and Walmart have faced criticism for their
dominance in the Indian e-commerce sector, impacting small retailers and local
businesses.
Profit Repatriation: MNCs often repatriate profits to their home countries,

reducing the amount of capital reinvested in India’s economy.
For example, multinational oil companies repatriate a significant portion of their profits
earned from operations in India, affecting the country’s balance of payments.
Cultural Homogenization: The influx of MNCs can lead to the

homogenization of culture, eroding local traditions and values.
For instance, the proliferation of global fast-food chains like McDonald’s and KFC has
been associated with the decline of traditional Indian cuisine and dietary habits.
Labor Exploitation and Poor Working Conditions: Some MNCs have been
criticized for exploiting cheap labor and maintaining poor working
conditions in their Indian operations.
For example, garment manufacturers like Gap and H&M have faced allegations of labor
rights violations and unsafe working conditions in their supply chains.
Tax Avoidance and Evasion: MNCs have been accused of using complex tax
avoidance schemes to minimize their tax liabilities in India, depriving the
government of much-needed revenue.
For example, multinational technology companies like Google and Facebook have faced
scrutiny for their tax practices in India.
Conclusion:
While multinational corporations have contributed to India’s economic
development through FDI, technology transfer, job creation, and market
expansion, they have also been associated with negative impacts such as
resource exploitation, market domination, profit repatriation, cultural
homogenization, labor exploitation, and tax avoidance. Therefore, it is
crucial for policymakers to strike a balance between attracting foreign
investment and safeguarding national interests and socio-economic welfare.
15). Industrial Policy.

Industrial Policy is the set of standards and measures set by the Government
to evaluate the progress of the manufacturing sector that ultimately
enhances economic growth and development of the country.
The government takes measures to encourage and improve the
competitiveness and capabilities of various firms.
Objectives of Industrial Policy
To maintain steady growth in productivity.
To create more employment opportunities.
Utilize the available human resources better
To accelerate the progress of the country through different means
To match the level of international standards and competitiveness
New Industrial Policy, 1991
The New Industrial Policy, 1991 had the main objective of providing
facilities to market forces and to increase efficiency.
Larger roles were provided by
L – Liberalization (Reduction of government control)
P – Privatization (Increasing the role & scope of the private sector)
G – Globalisation (Integration of the Indian economy with the world
economy)
Because of LPG, old domestic firms have to compete with New Domestic
firms, MNC’s and imported items
The government allowed Domestic firms to import better technology to
improve efficiency and to have access to better technology. The Foreign
Direct Investment ceiling was increased from 40% to 51% in selected
sectors.
The maximum FDI limit is 100% in selected sectors like infrastructure

sectors. Foreign Investment promotion board was established. It is a single-
window FDI clearance agency. The technology transfer agreement was
allowed under the automatic route.
Phased Manufacturing Programme was a condition on foreign firms to
reduce imported inputs and use domestic inputs, it was abolished in 1991.
Under the Mandatory convertibility clause, while giving loans to firms, part
of the loan will/can be converted to equity of the company if the banks want
the loan in a specified time. This was also abolished.
Industrial licensing was abolished except for 18 industries.
Review of the Public sector under this New Industrial Policy, 1991 are:
Public sector investments (Disinvestment of Public sector)
De-reservations –Industries reserved exclusively for the public sector were
reduced
Professionalization of Management of PSUs
Sick PSUs to be referred to the Board for Industrial and financial
restructuring (BIFR).
The scope of MoUs was strengthened (MoU is an agreement between a PSU
and concerned ministry).
There are some state-wise Industrial policies that would be relevant for
UPSC aspirants to understand Industrial Policies better and in-depth.
16). Small Scale Industries.

Small scale industries are referred to as those industries in which the
process of manufacturing, production and servicing are done on a small
scale.
The investment on such industries is one time and these investments are
mostly done on plant and machinery, the total investment on such industries
do not exceed 1 crore.
In small scale industries, the manufacturing of goods and rendering of
services are done with the help of smaller machines and very limited
manpower.
Small scale industries or SSIs are known as the lifeline of an economy, which
is very important for a country like India. Being a labor intensive industry, it
is very helpful in creating employment opportunities for the population of
the country.
They are also a crucial part of an economy from a financial standpoint, as
they help in stabilising the per capita income of the country.
Characteristics of Small Scale Industries
Following are the characteristics of Small scale industries in India:
Small scale industries generally have a single ownership, which means it
either has a sole proprietorship structure or a partnership.
The management of the small scale industries rests with the owners and
therefore, the owner plays an active role in the day to day functions of the
business.
Small scale industries are very much labor intensive, hence there is limited
use of technology.
Small scale industries are flexible and adaptable to a changing business
environment, unlike the large industries.
Small scale industries work in a restricted area which makes them able to
meet local and regional requirements.
Objectives of Small Scale Industries
The objectives of small scale industries are as follows:
To create job opportunities for the population.

To help in the development of the rural areas of the economy.
To play an active role in reducing the regional imbalances in the nation.
To help in improving the standard of living for people in rural areas.
To ensure there is equal distribution of wealth and income
Examples of Small Scale Industries
Some examples of small scale industries are:
1.Paper Bags industries
2.Leather belt manufacturing industries
3.Small toys manufacturing industries
4.Bakeries
5.School stationeries
6.Water bottles manufacturing industries
7.Beauty parlours
8.Pickle manufacturing industries
9. Incense stick manufacturing industries
10. Paper plate manufacturing industries
17). Inflation
Inflation refers to the general increase in prices or the money supply, both of
which can cause the purchasing power of a currency to decline.
From a consumer’s point of view, inflation is often perceived in relation to
prices. We call it “inflation” when consumer goods and services across a
wide segment of the economy are rising in cost. From a theoretical
perspective, however, there are several ways to define inflation and the
factors that cause it.
Four theories of inflation, summarized
Four prevailing economic theories aim to define and explain inflation:
The quantity theory of money argues that inflation is determined by the
money supply. An increase in the amount of money in circulation will
directly cause a proportional increase in the price of goods and services over
time.
The demand-pull theory of inflation suggests that the cost of goods and
services rises when demand is greater than the available supply. This model
of supply/demand imbalance reflects one of the most common definitions of
inflation: “Too much money chasing too few goods.”
The cost-push theory attributes inflation to the rising cost of
production—whether raw materials or wages—amid a steady flow in
demand. An increase in these “input costs” will likely decrease
a manufacturer’s bottom line. To compensate, some manufacturers may
decide to transfer these extra costs to the consumer by charging higher
prices for the same unit of goods.
The structural theory of inflation describes a type of inflation that often
prevails in developing countries. It says inflation is caused by “structural”
weakness in a country’s capacity to produce goods or maintain an adequate
flow of supply. Poor infrastructure, outdated technologies, or inefficient
supply chains can contribute to general underproductivity, creating
imbalances between supply and demand. Inflation that stems from
structural issues may not be easily changed by monetary policy.
Inflation comes and goes. Although these theories form a solid basis for
understanding its root causes, a specific inflationary environment won’t
necessarily fall neatly into one category. It might be tied to one of the
scenarios described above, or it might be a combination. And sometimes, the
reasons aren’t clear.
18). Devaluation Of Currency In India.

In macroeconomics and contemporary monetary policy, a devaluation is the
formal setting by a monetary authority of a lower exchange rate for the
national currency in relation to a foreign reference currency or currency
basket in a fixed-exchange-rate system. Devaluation is the intentional
reduction in the value of a nation’s currency.
The currency’s value may be reduced at the government’s discretion.
Depreciating a currency lowers the cost of exports and can aid in reducing
trade deficits.
Devaluing a currency can be beneficial during such a time when an economy
is paralyzed due to a variety of factors.
The value of the Indian rupee was devalued on numerous occasions in the
past, and these actions eventually improved both the economy and the value
of the currency.
Due to a lack of funds, the Indian government devalued the rupee in 1949,
1966, during the war with China and Pakistan, and in 1991, during an
economic downturn.
19). Difference Between The Foreign Exchange Regulation Act

(FERA) And Foreign Exchange Management Act (FEMA)
The major differences between FERA and FEMA are:
Foreign Exchange Regulation Act (FERA) Foreign Exchange Management Act (FEMA)
Parliament of India passed the Foreign Parliament of India enacted the Foreign Exchange
Exchange Regulation Act in 1973 Management Act (FEMA) on 29 December 1999 replacing
FERA.
FERA came into force from January 1, 1974. FEMA came into force from June 2000.
FERA was repealed in 1998 by Vajpayee FEMA succeeded FERA

Government
FERA has 81 sections FEMA has 49 sections
FERA was conceived with the notion that FEMA was conceived with the notion that Foreign
Foreign Exchange is a scarce resource. Exchange is an asset.
FERA rules regulated foreign payments. FEMA focused on increasing the foreign exchange
reserves of India, focused on promoting foreign payments
and foreign trade.
The objective of FERA was conservation of The objective of FEMA is Management of Foreign
Foreign Exchange Exchange
The definition of “Authorized Person” was The definition of “Authorized Person” was widened
narrow.
Banking units did not come under the Banking units came under the definition of Authorized
definition of Authorized Person. Person.
If there was a violation of FERA rules, then it If there was a violation of FEMA rules, then it is
was considered as Criminal offence. considered as civil offence
A person accused of FERA violation was not A person accused of FEMA violation will be provided legal
provided legal help. help.
There was no provision for Tribunal, the There is provision for Special Director (Appeals) and
appeals were sent to High Courts Special Tribunal
For those guilty of violating FERA rules, there For those guilty of violating FEMA rules, they have to pay
was provision for direct punishment. a fine, starting from the date of conviction, if the penalty is
not paid within 90 days, then the guilty will be
imprisoned.
If there was a need for transferring of funds For External trade and remittances, there is no need for
for external operations, then prior approval of prior approval from the Reserve Bank of India (RBI).
the Reserve Bank of India (RBI) is required.
There was no provision for IT There is provision for IT
20). Privatisation
It means the transfer of ownership, management, and control of the public
sector enterprises to the private sector.
Privatisation can suggest several things including the migration of

something from the public sector to the private sector. It is also used as a
metonym for deregulation when a massively regulated private firm or
industry becomes less organised. Government services and operations may
also be (denationalised) privatised. In these circumstances, private entities
are tasked with the application of government plans or the execution of
government assistance that had earlier been the vision of state-run
companies. Some instances involve law enforcement, revenue collection, and
prison management.
Privatisation of the public sector companies by selling off parts of the equity
of PSEs to the public is known as disinvestment.
Objectives of Privatisation
Providing strong momentum for the inflow of FDI
Privatisation aims at providing a strong base for the inflow of FDI.

The increased inflow of FDI improves the financial strength of the economy.
Improving the efficiency of public sector undertakings (PSUs)
The efficiency of PSUs is improved by giving them the autonomy to make

decisions.
Some companies were given special categories of Navratna and Miniratna.
Ways of Privatisation
Government companies are transformed into private companies in two
ways.
Transfer of ownership
Government companies can be converted into private companies in the

following two ways:
By the withdrawal of the government from the ownership and management
of public sector companies
By the outright sale of public sector companies.

Disinvestment
Privatisation of the public sector undertakings by selling off parts of the

equity of PSUs to the private sector is known as disinvestment.
The purpose of the sale is mainly to improve financial discipline and
facilitate modernisation.
21). Public Sector Undertakings.

Public Sector Undertakings are a major part of the Indian economy that
comprises public services and enterprises and it provides services that
benefit the entire society. This article gives details on the objectives of
setting up PSU’s, their role in the upliftment of society, problems, and
reforms undertaken by them.
Public Sector – 3 Major Classifications
The public sector can be classified into:-
a) Departmental Undertaking – Directly managed by concerned ministry
or department. (e.g. Railways, Posts, etc.)
b) Non-Departmental Undertaking – PSU (e.g. HPCL, IOCL, etc.)
c) Financial Institution (e.g. SBI, UTI, LIC, etc.)
The rationale behind the establishment of PSU’s was Industrialisation and
the establishment of Capital Goods Industries and Basic Industries. The
organizations that are not a part of the public sector are termed as private
sector that works to raise profit for the organization.
Role of Public Sector in the Upliftment of Society
The public sector plays a major role in uplifting the economic condition of
society in various ways.
The major role of the Public sector can be explained below:
Public sector & capital formation – This sector has been a major reason
for the generation of capital in the Indian economy. A large amount of the
capital comes from the Public sector Units in India
Creation of Employment opportunities – Public sector has brought about
a major change in the employment sector in the country. They provide a lot
of opportunities under various domains and thus helps in uplifting the
Indian economy and society.
Development of Different Regions – The establishment of major factories
and plants has boosted the socio-economic development of different regions
across the country. Inhabitants of the region are impacted positively
concerning the availability of facilities like electricity, water supply,
township, etc.
Upliftment of Research and Development – Public sector units have been
investing a lot to introduce advanced technology, automated equipment, and
instruments. This investment would result in the overall cost of production.
22). What Is Fiscal Policy?

Fiscal Policy deals with the revenue and expenditure policy of the Govt. The
word fiscal has been derived from the word ‘fisk’ which means public
treasury or Govt funds.
Latest Update about Fiscal Policy of India:
a) The Union Budget 2021 has signalled the emphasis on
the Development Financial Institutions (DFIs) in the pursuit of long-
term infrastructure creation for the revival of the economy.
b) The establishment of the Dispute Resolution Committee (DRC) has
been proposed in the Union Budget 2021 that can help provide quick
relief to taxpayers in tax disputes.
Objectives of Fiscal Policy
The following are the objectives of the Fiscal Policy:
Higher Economic Growth

Price Stability
Reduction in Inequality
The above objectives are met in the following ways:
Consumption Control – This way, the ratio of savings to income is raised.
Raising the rate of investment.
Taxation, infrastructure development.
Imposition of progressive taxes.
Exemption from the taxes provided to the vulnerable classes.
Heavy taxation on luxury goods.
Discouraging unearned income.
Components of Fiscal Policy
There are three components of the Fiscal Policy of India:
Government Receipts
Government Expenditure
Public Debt
Government Receipts
The categorisation of the government receipts is given below:
a) Revenue Receipt
i) Tax Revenue
Direct Tax
Indirect Tax
ii) Non Tax Revenue
Fees
License and Permits
Fines and Penalties, etc
b) Capital Receipt
Loans Recovery
Disinvestments
Borrowing and other liabilities
23). Monetary Policy.

Monetary policy is adopted by the monetary authority of a country that
controls either the interest rate payable on very short-term borrowing or
the money supply. The policy often targets inflation or interest rate to
ensure price stability and generate trust in the currency.
The monetary policy in India is carried out under the authority of
the Reserve Bank of India.
Main objectives of monetary policy
Simply put the main objective of monetary policy is to maintain price
stability while keeping in mind the objective of growth as price stability is a
necessary precondition for sustainable economic growth.
In India, the RBI plays an important role in controlling inflation through the
consultation process regarding inflation targeting. The current inflation-
targeting framework in India is flexible.
Instruments of monetary policy
Some of the following instruments are used by RBI as a part of their
monetary policies.
Open Market Operations: An open market operation is an instrument

which involves buying/selling of securities like government bond from or to
the public and banks. The RBI sells government securities to control the
flow of credit and buys government securities to increase credit flow.
Cash Reserve Ratio (CRR): Cash Reserve Ratio is a specified amount of
bank deposits which banks are required to keep with the RBI in the form of
reserves or balances. The higher the CRR with the RBI, the lower will be the
liquidity in the system and vice versa. The CRR was reduced from 15% in
1990 to 5 % in 2002. As of 31st December 2019, the CRR is at 4%.
Statutory Liquidity Ratio (SLR): All financial institutions have to maintain
a certain quantity of liquid assets with themselves at any point in time of
their total time and demand liabilities. This is known as the Statutory
Liquidity Ratio. The assets are kept in non-cash forms such as precious
metals, bonds, etc. As of December 2019, SLR stands at 18.25%.
Bank Rate Policy: Also known as the discount rate, bank rates are interest
charged by the RBI for providing funds and loans to the banking system. An
increase in bank rate increases the cost of borrowing by commercial banks
which results in the reduction in credit volume to the banks and hence the
supply of money declines. An increase in the bank rate is the symbol of the
tightening of the RBI monetary policy. As of 31 December 2019, the bank
rate is 5.40%.
Credit Ceiling: With this instrument, RBI issues prior information or
direction that loans to the commercial bank will be given up to a certain
limit. In this case, a commercial bank will be tight in advancing loans to the
public. They will allocate loans to limited sectors. A few examples of credit
ceiling are agriculture sector advances and priority sector lending.
24). National Agriculture Policy.

Agriculture is described as the backbone of Indian economy, mainly because
of three reasons; One, agriculture constitutes largest share of country's
national income though the share has declined from 55 per cent in early
1950s t6 around 18 percent in 2006. Two, more than half of India's work
force is employed in agriculture sector. Three, growth of other sectors and
overall economy depends on performance of agriculture to a considerable
extent. Besides, agriculture is a source of livelihood and food security for
large majority of vast population of India.
To solve these problems, proper policy for agriculture sector is crucial. It is
thus difficult to provide a single broad policy prescription for promoting the
sector as a whole that's why different types of policies have to be designed
for different sector.
Some of the agricultural policies are of following types:
1) Policies for Institutional Reform: Itincludesthe fundamental changes in
access to land and reorganising the delivery systems.
2) Research and Development policy: India has a large and well organised
agricultural research establishment. The apex research organisation, the
Indian Council of Agricultural Research (ICAR) has a number of research
institutions, integrated research programmes with the national and
international institutions.
3) Agricultural Price Policy: The objective of price policy is to achieve food
self-sufficiency and protect consumers from scarcity-induced speculative
price rise.
4) Agricultural Trade Policy: These policies include the review of
experience in agricultural trade (Export and Import) and an examination of
future prospects.
5) Credit Policy: The purpose of credit policy is to ensure the provision of
credit to the' agricultural producers.
25). Globalization In India.

The term globalisation refers to the integration of the economy of the nation
with the world economy. It is a multifaceted aspect. It is a result of the
collection of multiple strategies that are directed at transforming the world
towards a greater interdependence and integration.
It includes the creation of networks and pursuits transforming social,
economical, and geographical barriers. Globalisation tries to build links in
such a way that the events in India can be determined by the events
happening distances away.
Globalisation in the Indian economy

India is one of the countries that succeeded significantly after the initiation
and implementation of globalisation. The growth of foreign investment in
the field of corporate, retail, and the scientific sector is enormous in the
country.
Indian society is changing drastically after urbanisation and globalisation.
The economic policies have had a direct influence in forming the basic
framework of the economy.
Economic policies established and administered by the government also
performed an essential role in planning levels of savings, employment,
income, and investments in the society.
Cross country culture is one of the critical impacts of globalisation on Indian
society. It has significantly changed several aspects of the country, including
cultural, social, political, and economical.
Advantages of Globalisation in India

Increase in employment: With the opportunity of special economic zones
(SEZ), there is an increase in the number of new jobs available. Including the
export processing zones (EPZ) centre in India is very useful in employing
thousands of people.
Another additional factor in India is cheap labour. This feature motivates the
big companies in the west to outsource employees from other regions and
cause more employment.
Increase in compensation: After globalisation, the level of compensation has

increased as compared to the domestic companies due to the skill and
knowledge a foreign company offers. This opportunity also emerged as an
alteration of the management structure.
High standard of living: With the outbreak of globalisation, the Indian
economy and the standard of living of an individual has increased. This
change is notified with the purchasing behaviour of a person, especially with
those who are associated with foreign companies. Hence, many cities are
undergoing a better standard of living along with business development.
Debate on Globalisation

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2-ECONOMICS POLICY OF INDIA 10806

1). Poverty Alleviation Programmes.

Name of the Year of Government Ministry Objectives

To augment wage employment

It provides a monthly pension of Rs.200 for

To provide sustained wage employment to

Annapurna 1999-2000 Ministry of Rural To provide 10 kg of free food grains to

Sampoorna Gramin – – The main objective of the scheme continues

Similarly, state governments will establish

Pradhan Mantri Ujjwala 2016 Ministry of It envisages the distribution of 50 million

2). Rural Development Programs Of India.

(MGNREGA) of 2005 guarantees 100 days of employment to any rural

3). What Is Unemployment?

Daily Status Approach: unemployment status of a person under this

Technological Unemployment: the situation when people lose their jobs

Inadequate growth of infrastructure and low investments in the

4). Public Distribution System.

PDS relaunched as TPDS In June 1997

Role of Central Govt in TPDS Procurement, Allocation, Transportation of food grains

Role of State Govt in TPDS Allocation, Distribution of Food grains, Identify

TPDS – Beneficiaries Beneficiaries Divided into 2 categories – Households

5). Problems In Agricultural Sector.

choice but to rely on groundwater even when adequate surface water is

6).Food Security in India

Laws on Food Security – India

Currently, the food items provided by the central government for

7). Green Revolution

Green Revolution at first focused on states with better infrastructure such as

8). What is the Yellow Revolution?

responsible for the production enhancement of oilseeds in non-traditional

business enterprises in decision-making and eliminates government

Positive Impact of Liberalisation in India

10). NITI Aayog.

To effectively screen and assess the implementation of programmes and

iii) Ex Officio members: Maximum of 4 members of the Council of

11). National Population Policy, 2000.

Preventing and controlling communicable diseases.

12). EXIM Policy of India.

primary objective is to regulate and develop foreign trade by

Objectives of EXIM Policy

To stimulate long-term economic growth by expanding access to

To improve agriculture service and industry competitiveness, create new

To supply high-quality goods and services at an affordable cost.

To encourage economic expansion by providing access to necessary raw

To improve the technological productivity and potency of Indian agriculture,

To supply consumers with fine-condition services and goods at globally

Features of EXIM Policy

Process Re-Engineering and Automation

Towns of Export Excellence

Exporter firms that are recognised based on export performance can be

Promoting Export From the Districts

Benefits of EXIM Policy

Facilitates technology transfer.

Improves balance of payments.

Boosts economic development and growth.

Creates employment opportunities.

Helps in enforcing liberalisation policy.

Increases foreign investment value.

Increases healthy competition between domestic traders and the

Creates diversified market development for consumers and manufacturers.

Availability of commodities at a lower cost.

14). Role Of Multinational Corporations In India’s Economic

Technology Transfer: MNCs often bring advanced technology and know-how

Employment Opportunities: MNCs create job opportunities, both directly