The document discusses several topics related to the Indian economy: 1. It provides an overview of the Targeted Public Distribution System (TPDS) and its major deficiencies such as high exclusion/inclusion errors, non-viability of fair price shops, failure to fulfill price stabilization objectives, and leaks and diversions. 2. It notes that the agriculture sector plays a significant role in rural livelihoods, employment, and national food security in India. However, the share of agriculture in GDP has declined in recent years. 3. It discusses reforms to the industrial policy in 1956 and 1969, which focused on licensing and controlling monopolies. Recent trends in the industrial sector like declining growth are also summarized.

1. Indian Economy

2. N.DHINAKARAN
ASSISTANT PROFESSOR OF ECONOMICS
VIVEKANANDA COLLEGE
TIRUVEDAKAM WEST
MADURAI DISTRICT - 625234 TAMILNADU

3. a) It benefited only the urban poor.
b) It adds to budgetary deficit as it involves huge subsidy.
c) Food grains are sold at higher prices at FPS due to
government’s frequent upward revision of price.
d) The quantum of benefit to the poor has fallen.
e) There is wide leakage of PDS food grain procured from FCI
to the open market.

4. Targeted Public Distribution System ( TPDS):
 Under this scheme, the government issued special
cards to BPL (Below Poverty Line) families and sold
foodgrains to them at specially subsidised prices
with effect from June 1997.
Major Deficiencies of TPDS are:
a) High exclusion and inclusion errors.
b) Non-viability of FPS.
c) Failure in fulfilling the prices stabilisation objective.
d) Leakages and Diversion.

5.  Benefits go to a very small section of the population
 The system has an urban bias
 The burden of huge food subsidy
 High price of foodgrains
 Leakages from PDS
 Inefficient operation of FCI
 Regional disparities in distribution of benefits of PDS

6.  Economic transformation of a developing country like India crucially
depends on the performance of its agriculture and allied sector.
 This sector plays a significant role in rural livelihood, employment and
national food security.
 It happens to be the largest source of livelihoods in India. Proportion of
Indian population depending directly or indirectly on agriculture for
employment opportunities is more than that of any other sector in India.
 As high as 70 percent of its rural households still depend primarily on
agriculture for their livelihood, with 82 percent of farmers being small and
marginal.
 The share of agriculture and allied sectors in the Gross Value Added
(GVA) of the country at current prices has declined from 18.2 per cent in
2014-15 to 16.5 per cent in 2019-20

8. Industrial Policy Resolution – 1956 (IPR – 56)
The Industrial Policy Resolution of 1956 was based upon the Mahalanobis Model of
growth. This Model suggested that there should be an emphasis on the heavy
industries, which can lead the Indian Economy to a long term higher growth path.
Following were principal element of IPR – 1956
1.Three Fold Classification of the Industries
Schedule A Industries Schedule B Industries and Schedule C Industries
2 . Industrial Licensing
3.Industrial concessions
Industrial Policy Statement 1969
 This was a licensing policy.
 It aimed at solving the shortcomings of the licensing policy started by the
Industrial Policy of 1956.
 Monopolies and Restrictive Trade Practices (MRTP) Act was introduced
to enable the Government to effectively control the concentration of
economic power.
 The firms with assets of 25 crores or more were put under obligation of
taking permission from the Government of India before any expansion,
greenfield venture and takeover of other firms (as per the MRTP Act).
 Such firms came to be known as the ‘MRTP Companies’.

9. TRENDS IN INDUSTRIAL SECTOR
 Industrial sector performance in terms of its contribution in GVA
improved in 2018-19 over 2017-18.
 The low growth in industrial sector is primarily due to
manufacturing sector which registered a negative growth of 0.2 per
cent in 2019-20
 Index of Industrial Production (IIP) is a measure of industrial
performance It assigns a weight of 77.6 per cent to manufacturing
followed by 14.4 per cent to mining and 8.0 per cent to electricity.
Overall, IIP growth has moderated to 3.8 per cent in 2018-19
compared to 4.4 per cent in 2017-18.

10.  Unbalanced Industrial Structure
 Low Demand
 Regional Concentration
 Loss in Public Sector Industries
 Industrial Sickness
 Lack of Infrastructure
 Improper Location Base
 Lack of Capital
 Shortage of Industrial Raw Material
 . Higher Cost of Production and Low Quality of Goods
 License Policy

11.  Recent Foreign Trade Policy (2015-2020)
 Foreign trade policy 2015-2020 was announced by new NDA government on
April 1 2015.
1. Merchandise Export Form Indian Scheme (METS):
Earlier there were 5 different schemes which have been merged into a single
scheme merchandise export form India scheme (MEIS).
2. Service Export from India Scheme (SEIS):
Served from India scheme (SEIS) has been replaced with service export from
India scheme (SEIS).
3. Special economic zones [SEZ]
It is now proposed to extend chapter-3 incentives [METS and SEIS] to
units located in SEZ also.
4. Duty Credit Scrips to freely transferable and usable for payment of custom
duty, excise duty and service Tax.
5. Status Holders
Business leaders who have excelled in international trade and have
successfully contributed to country foreign trade are proposed to be
recognized as status holders. So status holders and given special treatment and
privileges to exporters.

12. 6. Boost To ‘’MAKE IN INDIA’’
Reduced Export obligation [EO] for domestic procurement
under EPCG Scheme.
7. Trade Facilitations and Ease of doing Business
An online filing of document / application and paperless trade in 24*7
environments.
8. Online inter-ministerial insulation:
With the objective to reduce the time for approval it is proposed to
implement online inter ministerial consultation in a phased manner.
9. Other New Initiative.
New initiatives for EOUS, EHTP, and STPS. EOUS, EHTPs have
been allowed to share infrastructural facilities among themselves
.
10. Additional ports allowed for Export Import:
Calicut Airport, Kerala, and Arakonam IED, Tamilnadu have been
notified as registered ports for import and export.

13. 11. Facilitating and Encouraging export of Dual are item (SCOMET):
Validity of SCOMET export authorization has been extended from the
present 12 months to 24 months.
12. Facilitating and Encouraging Export of Defence Exports.
Export obligation period for the category of defence , military store,
aerospace , and authorization will be 24 months or contracted duration of
the exporter whichever is later.
13. E-Commerce Exports:
Good falling in the category of hand loom products, Books, leather
footwear , toys and garments have FOB value to RS25000 under FTP.
Such export through foreign port office at New Delhi.
14. Quality Complaints and Trade Disputes:
In an endeavour to resolve quality complaints and trade disputes between
exporters and importers.
15. Vishakhapatnam and Bhimavaram added as Towns of Export Excellence.

14. 1. The All India Trade Union Congress( AITUC)
2. The Indian National Trade Union congress(INTUC)
3. The Hindu Mazdoor Sabha(HMS)
4. The United Trade Union Congress (UTUC)
5. Centre of the India Trade Unions(CITU)
6. Bhartiya Mazdoor Sangh (BMS)
7. United Trade Union Congress
8. National Labour Organisation
9. National Front of Indian Trade Union
10. Trade Union Coordination Centre

15.  The tertiary sector of the economy (also known as the service sector or the
service industry) is one of the three economic sectors.
 The services sector’s significance in the Indian economy has
continued to increase, with the sector now accounting for around 55
per cent of total size of the economy
 The various sectors that combine together to constitute service industry in
India are:
• Trade
• Hotels and Restaurants
• Railways
• Other Transport & Storage
• Communication (Post, Telecom)
• Banking
• Insurance
• Dwellings, Real Estate
• Business Services
• Public Administration; Defence
• Personal Services
• Community Services
• Other Services

16.  The services sector’s significance in the Indian economy has
continued to increase, with the sector now accounting for
around 55 per cent of total size of the economy .
 Two-thirds of total FDI inflows into India and about 38 per
cent of total exports.
 The share of services sector now exceeds 50 per cent of Gross
State Value Added in 15 out of the 33 states and UTs, with
this share more than 80 per cent in Delhi and Chandigarh.
 Bank credit to services sector, air passenger traffic and rail
freight traffic have witnessed a deceleration, while foreign
tourist arrivals and port traffic have continued to ease during
2019-20.

17.  Ministry of Statistics and Planning Implementation, services sector growth
(YoY) continued to moderate during 2019-20, reaching 6.9 per cent from
7.5 per cent in 2018-19
 By sub-sector, growth (YoY) in ‘financial services, real estate &
professional services’ decelerated to 6.4 per cent during 2019-20 and that
in ‘trade, hotels, transport, communication & broadcasting services’
remained on a downward trend, reaching 5.9 per cent in 2019- 20.
 However, ‘public administration, defence & other services’ witnessed an
acceleration in activity during 2019-20, with a growth (YoY) of 9.1 per
cent.

18.  Encourage capital formation
 Generating employment opportunity
 Financial help to Industries
 Encourage saving Habits of the people
 Financial aid to Consumer Activities
 Facilitate in implementing Monetary Policy
 Financial facilities for Trade
 Foreign Currency Loans
 Promotion of New Entrepreneurs
 Balanced Development
 Financial assistance to agriculture sector

19.  To curb inflation in the economy
 Provide safety and security
 Generates financial resources
 Employment generation
 Promotes economic growth
 Spreading of risk

20.  A good transport system can broaden the market for goods. It
can also make the movement of raw materials, fuel,
equipment, etc. to the places of production easy.
 The transport system in India includes Rail transport, Road
transport, Air transport, water transport and portal
connectivity. India has one of the largest road networks in the
world, largest railway system in Asia and second largest in the
world.

21.  Economic development depends on accessible information and communication to everyone in the
nation even it is required to all levels.
 The governments should try to ensure that traditional as well as new information technologies are
available to everyone in the nation.
 Communication also lies at the heart of marketing system, distribution and sharing information as
well as good governance.
Modern Means of Communication
 Radio Broadcasting
 Cinema
 Television
 Telegraph & Fax
 Telephone
 Satellite telephone
 Mobile Phone/Cell Phone:
 3G & 4G Mobile Telecommunications
 Videotelephony:
 Websites:
 Electronic Mail-email
 Teleconferencing:
 Audio Teleconferencing
 Video Teleconferencing
 Other Internet Based Means of Communication Face book- BlogSpot, Google Talk
Skype and Whatapp

22.  Social Interaction
 Communication and Sustainable Development
 Economic Planning
 Agricultural Development
 Circulation of Knowledge
 Education
 Awareness to Development
 Public Health Advocacy
 Communication, Entertainment and Human Resources:
 Communication for Poverty Reduction

23.  Meaning:
 Economic reforms refers to a set of economic policies
directed to accelerate the pace of growth and development.
 In 1991, the government of India initiated a series of
economic reforms to pull the economy out of the crises of
90’s. These reforms to known as New Economic Policy
(NEP).

24.  Fiscal Imbalance
 Increases in Prices
 Balance of Payments Crisis
 Foreign Exchange Reserves
 Dismal Performance of PSU’s (Public Sector Undertakings)
 Gulf Crisis

25.  Meaning:
 Liberalisation of the economy means freedom of the
producing units from direct or physical control imposed by
the government.
 Economic Reforms under Liberalisation
 1. Industrial Sector Reforms
 2.Fiancial Sector Reforms
 3.Fiscal Reforms
 4.External Sector Reforms

26. Three Main Elements of New Economic Policy
Liberalisation Privatisation Globalisation

27. 1.Industrial Sector Reforms
 Abolition of industrial Licensing
 Contraction of Public Sector
 De- reservation of Production Areas
 Expansion of Production Capacity
 Freedom to Import Capital Goods
2.Fiancial Sectors Reforms
 Financial sectors includes i) banking and non-banking fiancial
institutions ii) stock exchange market and iii) Foreign
exchange market.
 Leberlisationisation implied a substantial shift in the role of
the RBI from ‘a regulator to ‘a facilitator of the financial
markets.

28.  Free play of the market forces has led to the emergence of
private bankers both domestic as well as international in the
Indian banking industry.
 Liberalisation has allowed FII (Foreign Institutional
Investors) to invest in Indian financial markets.
3.Fiscal Reforms
 Fiscal reforms related to revenue and expenditure of the
government
 Tax reforms are the principal component of fiscal reforms
4. External Sector Reforms
 Foreign Exchange Reforms
 Foreign Trade Policy Reforms

29.  Meaning:
 Privatisation generally means the transfer of ownership from
and / or management of an enterprise from the public sector
to the private sector.
 Need for Privatisation
 Need for privatisation was mainly because of poor
performance of PSU.
 Leakage, pilferage, inefficiency and corruption had become
so rampant in PSUs that their privatisation was considered as
the only remedy.

30.  The following steps are taken for privatisation:
1. Sale of shares of PSUs
2.Disinvestment in PSU’s
3. Minimisation of Public Sector
Gains of Privatisation
 High productivity
 A competitive environment
 Diversification of production
 Variety of goods
Losses of Privatisation
 Profit motive
 Free play of market forces

31.  Meaning:
 Globalisation means integrating the economy of a country
with the economies of other countries under conditions of free
flow of trade and capital across borders.
 The term Globalisation has Four Parameters:
 Free flow of goods and services
 Free flow of capital
 Free flow of technology
 Free movement of labour

32.  1. Adoption of new, flexible production methods
 2.Restructure of Production methods
 3.Raise foreign capital
 4.Quality improvement
 5.Rise in Employment
 6. Rise in banking and foreign sector efficiency
 7.accelerate human development
 8.Enhance integration

33. 1. Devastation of local producers
2. Mounting Strikes
3. Public employees are worse off
4. Small business are adversely affected
5. Decline in income
6. Weak social safety net provisions
7. Raising depth of inequality

34. 1. External sector
2. Fiscal Pattern
3. Poverty and inequality
4. Human poverty
5. Education
6. Health
7. Employment
8. 8.Poverty alleviation programme
9. Service trade
10. Benefits to other sectors
11. FDI

35. Merits of the LPG Policies
1. Vibrant Economy
2. Stimulated to Industrial Production
3. A Check on Fiscal Deficit
4. A. Check on Inflation
5. Consumer’s Sovereignty
6. A substantial Increases in Foreign Exchanges Reserves
7. Flow of Private Foreign Investments
8. Recognition of India as an Emeging Economic Power
9. A Shift from Monopoly Market to Competitive Market

36. 1. Neglect of Agriculture
2. Urban Concentration of Growth Process
3. Economic Colonialism
4. Spread of Consumerism
5. Lopsided Growth Process
6. Cultural Erosion

37.  Foreign Direct Investment (FDI)
 Meaning:
 Foreign Direct Investment or FDI is defined as the investment
made by a company in the company situated outside the
country.
 Foreign Institutional Investor ( FII )
 Meaning:
 Foreign Institutional Investor or FII is when investors, most
commonly in the form of institutions that invest in the
country’s financial market.

38.  FII is a way to make quick money, the entry and exit to the
stock market are very easy. On the other hand, the entry and
exit are not easy in FDI.
 FDI brings long-term capital in the investee company whereas
FII may bring long or short term capital in the country.
 In the case of FDI, there is the transfer of funds, resources,
technology, strategies, know-how. Conversely, FII involves
the transfer of funds only.
 FDI increases job opportunities, infrastructural development
in the investee country and thus leads to economic growth,
which is not in the case of FII.
 FDI targets a particular company, but FII does not target a
particular company.

39.  Meaning:
 Demonetisation is a policy action of the government that withdraws
the status of “legal tender" from the existing currency. Once the
status of “legal tender” is withdrawn these notes lose their
acceptance as a medium of exchanges.
 Demonetization in India before 2016.
 In 1946, the Reserve Bank of India had demonetized Rs. 1,000 and
Rs. 10,000 currency notes which were then under circulation.
 In 1954, the Government introduced new currency notes of Rs.
1,000, Rs. 5,000, and Rs. 10,000
 In 1978, the Moraji Desai Government demonetized Rs. 1,000, Rs.
5,000, and Rs. 10,000 to curb illegal transactions and anti-social
activities.


40.  To plug financing to terrorists.
 To help unearth black money.
 To help reduce interest rates in the banking system.
 To help formalize India’s informal economy.
Merits of Demonization
 Increased Savings
 Lower lending rates
 Better economy
 Curbing anti-social activities
 Reducing counterfeit currency notes

41.  Liquidity crunch
 Welfare loss for the currency using population
 Consumption will be hit
 Loss of Growth momentum
 Impact on bank deposits and interest rate
 Impact on black money
 Impact on counterfeit currency

42.  Deglobalisation is the process of diminishing interdependence
and integration between certain units around the world,
typically nation-states. It is widely used to describe the
periods of history when economic trade and investment
between countries decline.

43. THANK YOU