The document discusses several topics related to the Indian economy including economic development, national income analysis, planning in India, monetary policy, industrial policy, and industrial sickness. It provides definitions and explanations of key economic terms such as gross domestic product, gross national product, monetary policy, and industrial sickness. Factors that influence economic development and the objectives of economic planning in India are also summarized.
2. Economic Development
• It is a complex process which is influenced by
both economic & non-economic factors.
• Some of the economic factors are:
1. Economic system
2. Capital stock
3. Rate of capital accumulation
4. Capital output ratio in various sectors
5. Agricultural surplus
6. Foreign trade etc…
3. • Some of the non economic factors are:
1. Quantity & quality of Human resource
2. Social organisation
3. General education
4. Technical know-how
5. Political freedom
6. Corruption free environment
7. People’s will to develop the country
8. Natural resources
4. National Income Analysis
• NI is the money value of all final outcome of
all economic activities of the people in the
country.
• Gross domestic product (GDP) refers to the
market value of all final goods and services
produced within a country in a given period.
• GNP means the total of all business
production and service sector industry in a
country plus its gain on overseas investment.
5. GNP = market value of final goods & services +
incomes earned by the nationals in the foreign
countries – income earned locally but accruing
to foreigners.
GDP = market value of final goods & services
produced by residents in the country +
incomes earned locally by foreigners - income
received by nationals in the foreign countries.
6. Planning in India
• The economy of India is based in part on planning
through its five-year plans, which are developed,
executed and monitored by the Planning
Commission.
• Long term objectives of Planning are:
1. Increasing NI
2. Reduce inequalities
3. Eliminate poverty
4. Create full employment
5. Sectoral growth
7. Monetary Policy
• Government and Central Bank make use of
various fiscal and monetary measures to
achieve stability and growth by influencing
and regulating the behavior of the
consumers, investors and savers.
• These policies can help the overall economic
situation and business prospects.
• They encourage investment and production in
certain priority sectors and discourage them in
the non priority sectors.
• They can affect the aggregate demand and
supply and the levels of
employment, wages, interest, rent, prices and
profit.
8. What is Monetary Policy?
• Monetary policy refers to the policy regarding
money supply and bank credit in the country
and it is formulated and announced by the
Central Bank of the country ie. the RBI.
• In simple words, it refers to the policy of the
govt pertaining to the monetary matters in
the economic system.
• The scope of this policy spans the entire area
of economic transactions in the economy.
9. Instruments of Monetary Policy
• General (Quantitative) – Bank rate policy, open
market operations, Cash reserve ratio, statutory
liquidity ratio which affect the economy in general.
• Selective (Qualitative) – Minimum margins for
lending against specific securities, ceilings on volume
for credit, discriminatory rates of interest, moral
suasion which affects selective sectors and segments
of the economy.
General Credit Controls are inter-related and have to be
operated in co-ordination. All these instruments
affect the bank reserves.
10. Industrial policy
• It refers to govt policy towards the
establishment of industries, their working
conditions & management.
• First industrial policy was spelled out in the
year 1948.
• Policy of 1991 brought revolution in Indian
industries through introducing Licensing
Raj, abolishing MRTP, Foreign technology
liberlisation, Foreign Investment.
11. Industrial sickness
• Acc to RBI, a sick industrial unit is one which
has reported cash loss for the previous year of
its operation and in the judgement of the
financing bank is likely to incur each loss for
the current year and also in the following year.
• Causes for sickness in the industries can be
classified into:
1. Internal
2. External