Managerial Economics-Juraz-4th Module

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Managerial Economics (B.Com)

MODULE IV
An Overview of Indian Economy
Basic characteristics of Indian economy

1.Low per capita income
2.Agriculture based economy
3.Over population
4.Income disparities
5.Lack of capital formation
6.Backwardness of infrastructure development
7.Unemployment and underemployment
8.Use of outdated technologies
9.Low productivity
10.Higher poverty
Factors that led to the opening of Indian economy
1. Balance of payment crises
2. Rise in fiscal deficit
3. Debt trap
4. Poor performance of the industrial sector
5. Very low foreign exchange resources
6. Iraq war
7. Inflation
8. Poverty and unemployment
Gross domestic product (GDP)
It is the total value of final goods and services produced during a
given period within the geographical boundaries of a country.
Gross national Product (GNP).
It is the total value of final goods and services produced during a
given period by the citizens of a country, no matter where they live.
Per Capita Income
It is the mean income of the people in an economic unit such as a
country or city.
WTO
WTO is an organisation to supervise and liberalise international
trade.
Indian economy under WTO regime
A. WTO and Indian agriculture
1. Reduction in domestic support
2. Market access
3. TRIPS(Trade related intellectual property right)
4. Disbanding public distribution system
B. TRIMS and India
C. Social clause and India
D. TRIPS and India
E. WTO and Indian industry.
Major issues in Indian economy
1. Low per capita income
2. High proportion of the people below poverty line
3. Low level of productivity
4. Problem of unemployment
5. Population pressure
6. Lack of heavy industries
7. Law agricultural productivity
8. Parallel economy
Unemployment
It refers to a situation in which the workers who are capable of
working and willing to work do not get employment.
Types of unemployment
1. Voluntary unemployment: It is a situation where a person is not
working when works is available.
2. Under employment: It is a situation where people are working
fewer hours than they wish.
3. Disguised unemployment: It is a situation where more people are
engaged in a job than required.
4. Open unemployment: It is a condition in which people have no
work to do.
5. Seasonal unemployment: It is a situation where people are
unemployed at particular time in a year.
6. Cyclical unemployment: It is associated with business cycle.
7. Frictional unemployment: It is a result of voluntary employment
transitions within an economy.
8. Structural unemployment: It results absence of demand for
certain type of workers.
9. Technological unemployment: It is the loss of jobs caused by
technological changes.
Underemployment
It refers to people are working in a lower capacity than they are
qualified.
Full employment
It is an economic situation in which all available labour resources are
used in the most efficient possible way.
Causes of unemployment in India
1. High population
2. Slow growth rate of economy
3. Inappropriate technology
4. Inappropriate education system
5. Rural urban migration
6. Defective manpower planning
7. Cause of underemployment
8. Inadequate irrigation facilities
Remedial measures by the government to reduce unemployment
1. Integrated rural development programme
2. Training for self employment
3. Employment in foreign countries
4. Self employment to educated unemployed youth
5. Employment exchanges
6. Employment guarantee scheme.
Poverty
It is a condition in which an individual or household lacks the
financial resources to afford a basic minimum standard of living.
Poverty line
It is the level of income to meet the minimum living conditions.
Types of poverty
Absolute poverty Relative poverty
It is a condition where It is a condition where
household income is insufficient households receives 50% less
to afford basic necessities of life. income than average median
incomes.
Causes of poverty in India
Economic Socio cultural Political Administrative
courses causes causes causes
Capital Joint family Govts negative Red tap-ism
deficiency system attitude
Economic Poor social Corruption Inefficient
depression overheads administrative
machinery
Population Liberal
spending on
social
ceremonies
Inflation
Unemployment
Government programmes for poverty alleviation(Measures taken
by government to eradicate poverty)
A. Self employment and wage employment programmes
1. Prime Ministers Rozgar Yojana (PMRY)
2. Rural Employment Generation Programme (REGP)
3. Swarna Jayanti Shahari Rozgar Yojana (SJSRY)
4. Jawahar Rozgar Yojana (JRY)
5. Nehru Rozgar Yojana (NRY)
6. National Rural Employment Guarantee Programme (NREGP)
B. Food security programmes
1.Public Distribution System (PDS)
2.Integrated Child Development Scheme (ICDS)
3.Mid Day Meals at School (MDMS)
4.Annapurna Scheme (AS)
5.Antyodaya Anna Yojana (AAY)
C. Social security programmes
1.Aam Aadmi Bima Yojana
2.Indira Gandhi National Old Age Pension Scheme
3.Rashtriya Swastika Bima Yojana
4.Atal Pension Yojana
5.Janasree Bima Yojana
Causes of inequality income distribution in India
1. Difference in occupations
2. Private ownership of property
3. Policy of the government
4. Chronic unemployment
5. High tax evasion
6. Corruption
7. Privatization
Inflation
Inflation is a process of rising and a falling value of money.
Causes of inflation
1. Increase in public expenditure
2. Increase in private expenditure
3. Increase in exports
4. Reduction in taxation
5. Increase in wage, salary and pension
6. Shortage of factors of production
7. Hoarding by traders
8. Exchange rate fluctuation
9. Deficit financing
10. Black money
Measures to control inflation
Monetary measures Fiscal measures
Rise bank rate Increase in taxes
Sale of government securities Public borrowing
Increase marginal requirements Over-valuation of domestic
currency
Consumer credit control Increase savings
Demonetization of currency Reduction in public expenditure
Types of inflation
A) Classification on the basis of production and supply
1. Production inflation
When production falls, there is dis equilibrium in supply and
demand, it results production inflation.
2. Commodity inflation
There is no change in production, but prices increase and
spontaneous increase in demand results commodity inflation.
3. Profit inflation
Due to invention, cost of production falls, price are not reduced,
profits are increased. This is known as profit inflation.
4. Cost pull inflation
It refers to an increase in the general price level due to cost of
production.
B) On the basis of speed of inflation
1. Creeping inflation
Under this the price level rises slowly. It rises approximately by 2%
annually under creeping inflation.
2. Walking inflation
This is faster than creeping inflation approximately 5%.
3. Running inflation
Price level rises very fast approximately 10%.
4. Hyper inflation (Galloping)
It is a dangerous type of inflation; the price rises every minutes.
Disinflation
It is a decrease in the rate of inflation.
Parallel Economy
Parallel economy is the functioning of an unsanctioned sector in the
economy whose objectives run in opposite to the objective of the
official sector. It is also called black economy.
Causes of generating black money or emergence of parallel
economy
1. High rate of taxes.
2. Ineffective enforcement of tax laws.
3. Donation to political parties.
4. Privatisation.
5. Hawala transactions.
6. Transaction in urban real estates.
Role of parallel economy
1. Provides job and income.
2. Promotes savings.
3. Essential products and services at affordable prices.
4. Save economy from crisis.
5. Increase liquidity.
6. Encourages international trade.
Evil effects of parallel economy
1. Under estimation.
2. Loss of revenue to the government.
3. Increasing gap between rich and poor.
4. Lavish consumption spending.
5. Weakening of the institutions.
Role of government in market economy
1. Provide economy with legal structure.
2. Protect the environment
3. Protect private property.
4. Stabilise economy and encourage economic growth.
5. Provide infrastructure.
This is just a short note based on syllabus of Managerial economics.

For full details of the subject, please refer text book.
For Juraz study materials, Please Contact
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JuRa’Z -Enhance Your Commerce Skills With Us

Managerial Economics (B.Com)

Basic characteristics of Indian economy

This is just a short note based on syllabus of Managerial economics.

For Juraz study materials, Please Contact

8089778065 (whatsapp only)

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