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Anatomy of the Indian Economy

C hapter Three. Anatomy of the Indian Economy. Indian Economy - Overview. India was among the few poorest countries in the fifties. Govt. employed the technique of `democratic planning’ with the objective of economic development.

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Anatomy of the Indian Economy

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  1. Chapter Three Anatomy of the Indian Economy

  2. Indian Economy - Overview • India was among the few poorest countries in the fifties. • Govt. employed the technique of `democratic planning’ with the objective of economic development. • Five year plans were launched in 1951. Planning Commission was set up in 1950 with 8 members. • National Development Council in 1952 with members of Planning Commission and all state chief ministers.

  3. Profile of Indian Economy • Low per capita income US$ 460 (2000), 2390 $ (PPP) (Approx.) • Inequitable distribution of income and poverty • Predominance of agriculture • Contribution of Agricultural sector to GDP – 27% (Approx.) • 65% of India’s population are employed in agricultural sector • Rapid population growth 361 million - 1951 955 million - 1997 1016 million - 2000 • Unemployment • Technological Backwardness

  4. OBJECTIVES OF PLANNING Main – Growth with Social Justice Major objective – • Higher Economics Growth • Reduction of Inequality • Full Employment • Economic Self-Reliance • Modernisation of various sectors • Redressing regional imbalances in the economy

  5. FIVE YEAR PLANS (HISTORICAL PERSPECTIVES) • 1st five year plan (1951-56) : aimed at solving the problems of food crisis and shortage of raw materials and to create infrastructure. • 2nd plan (1956-61): Focus was on rapid industrialisation • 3rd plan (1961-66): Importance to `Balanced Regional Development’ • 4th plan (1969-74), 5th plan (1974-79), Annual plan (1979-1980 Janata Govt.), 6th plan (1980-85), 7th plan (1985-90) • Annual plans (1990-91 and 1991-92 during V. P. Singh’s and Chandrashekhar’s period). 8th plan (1992-97), 9th plan (1997-2002) • 10th plan (2002-07)

  6. TENTH FIVE YEAR PLAN Objectives and Targets: • Reduction of poverty ratio by 5% • Gainful employment opportunity creation (quality of employment etc.) • Reduction in the rate of population growth • Increase in literacy to 75% by 2007 • Reduction in infant mortality rate to 45 per 1000 live births by 2007 and to 28 by 2012 • Reduction in maternal mortality rate to 2 per 1000 live births by 2007 and to 1 by 2012

  7. ECONOMIC CRISIS AND REFORMS Macro Economic Crisis of early 1990s – three aspects • Fragile BoP situation • Inflationary Pressure • Fiscal Imbalance

  8. BoP Situation BoP scene was highly pres in 1990-91. Current account deficit which was $2.1 billion in 80-81 rose to $4.9 billion and further to $9.7 billion in 90-91. These growing deficits had to be financed by borrowing from abroad and as a consequence India’s external debt rose from 12% of GDP (80-81) to 23% of GDP in 90-91. $2 billion FOREX reserves in June 1991 were barely enough to meet the requirement of India’s 2 weeks’ import bills.

  9. Inflationary Pressures Rate of inflation was 10.3% in 1990-91 (based on WPI) Fiscal Imbalances From 4.1% of GDP in 1975-76, Fiscal Deficit rose to 7.5% in 1984-85 and further to 8.4% in 1990-91.

  10. ECONOMIC REFORMS Liberalisation, Privatisation and Globalisation Distinct Strands of Reforms I. Macro Economic Stabilisation • Control of Inflation • Fiscal Adjustment and Reforms • Measure for BoP Improvement (Devaluation etc.) II. Structural Reforms • Trade and Capital Flow (External Sector Reforms) • Industrial Deregulation • Disinvestment • Financial Sector Reforms

  11. ANALYSIS OF SECTORS 1. External Sector 2. Industrial Sector 3. Agricultural Sector 4. Service Sector 5. Social Sector and Poverty Alleviation

  12. Social Sector in DetailMajor Poverty Alleviation and Employment Generation Programmes Pradhan Mantri Gramodaya Yojana (PMGY) PMGY was launched in 2000-2001 in all states and Union Territories (Uts). The PMGY envisages allocation of Additional Central Assistance (ACA) to the States and UTs for providing selected basic minimum services in order to focus on certain priority areas.

  13. Major Poverty alleviation and employment generation programmes contd. IRDP and Swarnajayanti Gram Swarozgar Yojna (SGSY) Based on the review and restructuring of the erstwhile Integrated Rural Development Program and allied schemes, SGSY was launched in April, 1999 and is the only self employment programme currently being implemented. The objective of the SGSY is to bring the assisted Swarozgaris above the poverty line by providing them income generating assets through bank credit and Government subsidy. In IRDP, loan was given to poor individuals. SGSY is based on group approach being implemented through Gram Sabhas as a micro-finance programme.

  14. Major Poverty alleviation and employment generation programmes contd. Rural Housing Schemes Rural housing schemes such as Indira Awaas Yojana (IAY) aim at providing dwelling units, free of cost, to the poor families of the Scheduled Castes (SCs), Scheduled Tribes (STs), and also the non-SC/ST persons Below Poverty Line (BPL) in the rural areas.

  15. Major Poverty alleviation and employment generation programmes contd. Pradhan Mantri Gram Sadak Yojana (PMGSY) The PMGSY, was launched in December 2000, to provide road connectivity to 1.6 lakh unconnected habitations with population of 500 persons or more in the rural areas by the end of the Tenth Plan period. Antyodaya Anna Yojana (AAY) AAY was launched in December 2000. Under the scheme 1 crore of the poorest among the BPL families covered under the targeted public distribution system are identified.

  16. Major Poverty alleviation and employment generation programmes contd. Valmiki Ambedkar Awas Yojana (VAMBAY) The VAMBAY was launched in December 2001 to ameliorate the conditions of the urban slum dwellers living below the poverty line without adequate shelter. Construction and up-gradation of dwelling units.

  17. GROWTH PERFORMANCE IN THE FIVE YEAR PLAN PERIOD

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