New Economic Policy- Class 12th Indian economy development notes

Click below for surprise Gifts

                   

Meaning of  economic reforms and new economic policy :-

Economic reforms refer to a set of economic policies that accelerate the rate of prosperity and growth.

To get the economy out of the economic crisis of 1990, the Government of India made several economic policies in 1991, which are called (NEP).

New economic policy:-

Need for new economic policy or economic reforms :-

For these reasons the need for a new economic policy was felt 

1) High fiscal deficit

Fiscal deficit refers to the borrowing taken by the government due to excess of expenditure over income during a year.

Fiscal deficit was estimated at 5.4 percent of GDP in the year 1981-82.

It increased to 8.4 percent of GDP in 1990-91

It was almost a 'debt trap' situation for the government

2) Reduction in foreign exchange reserves

In 1990–91, India's foreign exchange reserves were so depleted that they were barely enough to pay 10 days' worth of import bills.

It was worth Rs 8151 crore in 1986-87.

They remained at Rs 6252 crore in 1989-90

3) Satisfactory performance of public sector enterprises

Public capital worth several thousand crores of rupees has been invested in the growth and development of public sector enterprises, but most of them have become breeding centers of corruption, resulting in huge losses. To reverse this trend, a new economic policy was needed.

Liberalization means freedom of productive units from direct or physical control imposed by the government. 

Before 1991, the government had imposed various types of controls on private enterprises in the domestic economy.

Like- industrial license

Import license

The government estimated that as a result of these controls many shortcomings had arisen in the economy.

1) Efficiency was promoted

2) GDP growth rate decreased

For all these reasons, liberalization of the economy was considered a major component of the new economic policy. 

Economic reforms under liberalization Important reforms under liberalization

1) Industrial sector reforms 

The real meaning of liberalization is to free the industrial sector of the economy from control.

Abolition of industrial licensing 

A new economic policy was announced in July 1991, according to which licenses for all industries except 5 have been abolished.

The industries for which license is required are

1- Alcohol

2- Cigarette

3- Defense equipment

4- Industrial explosion

5- Dangerous chemicals

expansion of production capacity 

Production capacity was earlier linked to license. License means freedom from restrictions on production capacity.

what to produce

how much to produce

The producer himself will take this decision considering the market conditions.

Privatization

Privatization means the private sector acquiring full or partial ownership of the table sector enterprises and getting them managed.

need for privatization

Due to poor performance of public sector enterprises, the need for privatization was felt.

The main role of public sector units during the five year plans was

The structural change in the Indian economy was brought about by the expansion of public sector enterprises.

There was a fundamental increase in the percentage contribution of industry to GDP

Theft, inefficiency and corruption in public sector enterprises had increased so much that their privatization was considered the only solution.

Therefore, in 1991, the government decided to gradually liquidate public enterprises by selling their shares to the private sector.

Advantages and disadvantages of privatization 

( Benefit )

Privatization means giving priority to self-interest over social interest.

Kaleji Karan expects that the private entrepreneur operates in a domestic and international competitive environment.

Private business competition inspires modernization and progress

Privatization promotes diversification in production

Unlike the public sector, the private sector always benefits. Multinational companies use it for expansion and diversification of production. This is a proof of this fact.

(losses)

In this, social interest is not given priority but profit is given priority.

In privatization, market forces work independently. In this process goods are produced only for those individuals who have the means to purchase them. 

When prices rise, sections of the society remain deprived.

Major policy principles to encourage globalization of Indian economy 

1- Reduction in tariffs 

Tariff barriers have been removed on most goods traded between India and the rest of the world to promote competition. 

2- Long term trade policy 

In line with economic reforms, the foreign trade policy was implemented for a long period i.e. five years.

Its main feature is that it is a liberal policy, under its policy, all controls and restrictions on foreign trade are removed. It promotes open competition, import and export of any other goods except some specific goods. is done.

Evaluation of LPG Policies 

LPG policies mean policies of liberalization (L), privatization (P) and globalization (G).

Evaluation of LPG policies means evaluation of the New Economic Policy (NEP).

Policy of economic reforms started in 1991

2) Consumer dominance 

Consumer dominance has certainly expanded over time

This shows that a wide variety of goods and services are available to consumers in different world markets.

Demerits of LPG policies 

1) Neglect of agriculture

GDP has prospered but the agriculture sector has suffered a serious setback and its growth rate has slowed down significantly (2-3 percent per annum).

For this reason, India is facing a growing gap between rural and urban needs. 

In fact, slow development of agriculture can also become a hindrance in the development of industrial sector.

The reason for this is before us 

Agriculture sector is an important source of raw materials for the industry sector.

Agriculture sector is an important source of demand for industrial goods like tractors and threshers.

(cultural decline)

Indian society has suffered cultural decline due to globalization.

1) Today every person is financially independent and wants to be rich, but he is forgetting this.

He has his own family and also has responsibilities towards the society.

Loyalty to one's family and faith in society, which was once considered an integral part of Indian culture are a far cry these days.

Strategy of Industrial Development (1947- 1990)- Class 12th Indian economy notes

Importance of industry

Industry plays an important role in the prosperity and development of a country. 

1] Source of employment

Employment is an important source. It becomes important when agriculture is already overburdened and the labor force grows rapidly. 

This labor force can get gainful employment only outside agriculture and at this time industry plays an important role.

2] Source of mechanized means of farming

Industry plays an important role in mechanization of farming. In farming machines like 

1] Tractor

2] Thresher 

The use of technology has become possible only due to the development and prosperity of industries. 

It is because of mechanization in farming that India (for the second most populous country in the world) has been successful in producing enough food grains. 

3] Development of infrastructure

Industrialization leads to development of infrastructure in the economy.

Industry expands in different parts of the country. With the expansion of industry, infrastructure facilities in the form of means of transport and communication, banking, insurance services etc. expand.

Industrial Policy of 1956 Manifesto of the major role of the state

It was announced by the Industrial Policy of 1956 that the government would play a major role in the process of industrialization. 

1] Main features of industrial policy 

1] Industrial Licensing 

Made it necessary to obtain a license from the government to set up an industry in the private sector.

The basic idea behind the licensing policy was to encourage industries in backward areas of the country. 

This was done to encourage regional equality 

It was necessary to obtain a license to set up a new enterprise.

Existing enterprises were also required to obtain a license from the government to expand their production capacity. 

2] Industrial concessions

Many types of exemptions were provided to private enterprises for setting up industries in backward areas of the country. 

These concessions included

1] Tax holiday – exemption from payment of tax for a period of time 

2] Electricity supply at concessional rates 

Industrial concessions were intended to encourage regional equality.

Development of small scale industries

1] Development of large scale industry to create infrastructure facilities. 

2] Development of small scale industry for social justice as well as employment opportunities. 

At the beginning of planning in 1950, this industry was called a small scale industry in which the investment was not more than Rs 5 lakh.

Key features of the strategy of industrial development during the period 1050 – 1990 

1] Public enterprises played a greater role in the process of industrialization.

2] Private enterprises had only a secondary role in the process of industrialization and that too under the Permit License Raj.

3] The process of industrialization focused on import substitution 

4] It means that high priority was given to the production of such goods which were imported from the rest of the world. Its objective was to become self-reliant. 

5] Large scale industry was to be developed to create a strong infrastructure in the country. 

6] Small scale industry was to be developed to achieve the objectives of employment and equality.  

 Positive effects:-

1] Economic growth received a major boost. Industrial production increased significantly at about 6% per annum during the period 1950 – 1990.

2] The development of large-scale industry strengthened the structural structure of the Indian economy.

3] The development of small scale industries had a solid contribution in achieving the objective of development with social justice. 

 Negative effects:-

1] As a result of protection of domestic industry, the development of domestic industry was encouraged but it failed to achieve international level quality. 

2] Saving foreign exchange through import substitution proved to be an efficient policy tool of the government.

Our foreign exchange reserves began to dwindle

By the end of 1990, these reserves reached their lowest level.

We had to pledge our gold reserves to the World Bank to get loans from abroad

Human Capital Fotmation ! Indian Economy Development class 12 Notes

 Human Capital:-

Human capital refers to the stock of skill and expertise found in a nation at any particular time. It is the total sum of skills and expertise of those engineers, doctors, teachers and all types of workers who Are engaged or have the ability to be engaged in the production process.

Human Capital Formation:-

This means that the process of increase in the stock of human capital over time is called human capital formation.

Determinants and sources of human capital formation

Determinants of human capital mean the sources of human capital formation:-

This is the way in which the stock of human capital increases

1) Expenditure on education

Expenditure on education is most important to increase the number of production work force in the country. Most of the families spend a lot on education even if they have to take loan for it.

The result obtained from this type of expenditure is more than the investment.

A person who spends on education can earn very good income for a long period of life

2) Expenditure on health

There is an old saying that a healthy mind resides in a healthy body.

Expenditure on health makes a person more efficient and productive.

A healthy person adds more to the gross domestic product (GDP) of a nation than a sick person.

3) Study Program for Adults 

In addition to formal education at primary, secondary and university levels, government and non-governmental organizations (NGOs) provide study programs for adults to become more proficient in their field of work.

How human capital formation contributes to development

Innovation in skills

Human capital formation helps in bringing innovation in skills. This change is the end stream of prosperity and development.

The greater the number of skilled and uneducated people, the greater will be the possibility of innovative changes in the field of production and other sectors and other economic activities.

Problems of human capital formation in India:-

Human capital formation faces some serious problems. 

1) Increasing population-

Rapidly increasing population is adversely affecting the quality of human capital.

Because due to this the per capita availability of existing facilities is decreasing.

These are the facilities

1- Housing

2- Cleaning system

3- Hospital

4- Education

5- Power supply

Due to decreasing availability of these facilities the quality of life decreases.

 2) Brain drain -

A serious threat to the process of human capital formation in the country is from those persons

Those who were born in India and received education and training from here, then migrate to a developed country.

Highly qualified people are mostly scientists, doctors, educationists etc.

All this is described as the problem of brain drain

For this reason the process of human capital formation is slowing down.

Education – an essential element of human resource development:-

Education means a process of teaching, training and learning by which knowledge is improved and skills are developed in schools and colleges. According to the 2011 census, in India only 74.04 percent of the population is literate. Apart from this, the literacy rate in the developed countries of the world is between 90% to 95%.

Q- Importance of education and its objectives

1) Education makes citizens responsible

2) It develops science and technology

3) It develops people's brain

4) It develops human personality

Q- Development of education sector in India 

1- Higher education

After independence, there has been a lot of development in the field of higher education in the country.

About 903 universities are providing higher education in the country.

The total number of colleges in the country for general education is 39050.

2) Technical, medical, agricultural education

After independence the number of all these institutions has increased a lot.

In 1951, there were 43 diploma level polytechnic institutions.

But now their number has increased to 1914. There are 3400 recognized engineering colleges providing degree level education in different subjects.

15 lakh students can get admission in these institutions every year.

At present, there are 289 medical colleges running in which 32815 students can get admission.

The number of dental colleges is 282 in which 22680 students can get admission.

Many agricultural research institutes and agricultural universities have been established in the country to provide technical education and agricultural education.

3- Rural education

Education has expanded greatly in rural areas also. For this purpose, National Council for Rural Higher Education has been established.

14 rural educational institutions are working under this council. Free education is provided to the children of Scheduled Castes and Tribes in all the states.

Unemployment in India class 12 notes

 Unemployment:-

By this we mean a situation in which people are ready and capable of working at the prevailing wage rate but still they do not get work. 

workers:-

A worker is a person who is engaged in some kind of employment to earn something or to earn a living. A person who is engaged in production activity and contributes to the process of GDP through his limits. 

Self employed and hired labor:-

Laborers (people who do any employment)

These are divided into two parts

Self Employed Workers 

Hired Workers

Self employed laborer:-

These are those people who are engaged in their own trade or business.

Example

A farmer who works in his own field An entrepreneur who works in his own factory 

Hired laborers

These are the people who work for others. They offer their services to others and receive salary in return for the work. It is also possible that they receive salary in kind.

Example

like a school teacher

Like small farmers in the landlord's fields

irregular and regular laborers

casual laborer

They are hired on daily wages. The employers do not employ them on regular basis, that is, they are not given daily work. They are not given social security benefits like provident fund pension.

regular laborer

Their names are written on the permanent salary list of the owners. They are entitled to social security benefits like pension and provident fund. 

 Note

It has always been seen that irregular laborers are unskilled laborers, like a laborer working somewhere where a house is being built. On the contrary, a regular laborer is always a skilled laborer, like an engineer working in a factory. 

Workforce:-

Work force refers to people actually working and not to those who are willing to work (but are not working). 

Workforce = Labor Force – Number of people who are not working but are willing to work. 

Size of workforce in india

The workforce in India is approximately 40 crore people.

The workforce consists of approximately 70% male and 30% female workers. 

About 70% of the workforce is found in rural areas and 30% in urban areas. 

The percentage of female work force is around 30% in rural areas but 20% in urban areas.

Economic and social consequences of unemployment

1- Economic results

2- No use of manpower

To the extent that people remain unemployed in the country, to that extent human resources cannot be used in the country, it is a wastage of the society. 

loss of production

To the extent that manpower is not utilized, there is loss of production. Unemployed people do not contribute to production even though they have the capacity to do so. 

social consequences

1- Social unrest

Terrorism can arise due to many elements but the contribution of self-despair due to unemployment is no less important in it. 

2- Class struggle

Unemployment divides society into rich and poor, leading to class conflict, which further promotes social unrest. 

Suggestions regarding solving the problem of unemployment in India

Production technology

The technology of production should be according to the resources and needs of the country. In place of capital-intensive technology, labor-intensive technology should be used. Emphasis should be laid on the establishment of such industries from which production can start immediately. 

Increase in production

To increase employment, it is necessary to increase the production of agricultural and industrial sectors in the country. The development of small and big industries should be encouraged. Foreign trade should be encouraged. The production of minerals and plantations should be increased. The more the production, the less the labor. There will be more demand and more employment opportunities. 

Government policy and programs

Pradhan Mantri Gramodaya Yojana

This scheme was started in 2001. Its objective is to develop areas to improve the standard of living of the people in rural areas.

1- Area

2- Health       

3- Housing            

4- Education             

5- Drinking water   

6- Development of roads

Three projects have been included under-

Pradhan Mantri Gram Sadak Yojana

Prime Minister Rural Housing Scheme

Prime Minister Rural Drinking Water Scheme

Jaiprakash Employment Guarantee Scheme

The objective of this scheme is to provide guaranteed employment in very backward districts of the country. 

Prime Minister Employment Scheme-

This scheme has been created to provide employment to educated unemployed youth.

This scheme provides a loan of ₹ 100000 to a person for setting up his own enterprise and ₹ 200000 for other activities. 

Development of small and cottage industries-

 With the aim of eliminating poverty and unemployment, many special measures have been taken by the government for the development of small and cottage industries (through the expansion of small and cottage industries). 

Minimum requirements program-

Minimum Necessity Program was implemented in the Fifth Plan to raise the standard of living of the poor people. 

This program was started to improve education, rural health, rural water supply, rural roads, rural electrification, rural housing.

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):-

Under this Act, all those persons who are willing to work at the minimum wage rate will be given work for a minimum period of 100 days. Those who want to get employment will have to reach the rural areas where the employment work is being started. 

Under this scheme, in the current financial year till 14 January 2018, 4.6 crore families got employment.

Class 11 Economics - MCQs on Consumer Behaviour

 MCQs on Consumer Behaviour :-

Q.Maximum satisfaction of the consumer with his given level of income is

a. Consumer behaviour 

b. Consumer's equilibrium 

c. Consumer's disequilibrium 

Answer - (c)

Q. Want satisfying power of a commodity is

a. Production

b. Consumption

c. Utility

Answer - (c)

Q. Utility is measured in............. numbers

a. Cardinal 

b. Ordinal

c. Points

Answer - (b)

Q. Which among the following is the determinant of demand?

a. Price of goods

b. Income of the consumer

c. Tastes

d. All of these

Answer - (d)

Q. In the consumer's equilibrium, the budget line .......... the indifference curve.

a. Intersects

b. Is parallel to

c. Is tangent to

Answer - (c)

Class 11 Economics - MCQs on Introduction to Microeconomics

 

MCQs on Introduction to Microeconomics :-

Q. Who is the father of economics?

a. A. Marshall

b. Adam Smith

c. Samuelson

Answer - (b)

Q. The main cause of economic problem is

a. Wants

b. Saving

c. Scarcity

Answer - (c)

Q. Is economics a science or an art?

a. Only science

b. Only art

c. Both a science and an art

Answer - (c)

Q. The study of individual comes under which branch of economics

a. Macroeconomics

b. Microeconomics

c. Price Theory

Answer - (b)

Q. What type of science is economics?

a. Normative

b. Positive

c. Both Normative and Positive

Answer - (c)

Q. Which of the following is an economic activity?

a. Production

b. Consumption

c. Distribution

d. All of these

Answer - (d)

Statistics for Economics Class 11 Notes - Chapter 2 Collection of Data

 Collection of Data

Data ( Definition ) -

    The term data refers to the quantitative information or to the technique of dealing with such quantitative information.

Sources of data -

                The main sources of data are:-

a. Internal  or published sources, and

b. External or unpublished sources.

Primary data -

           The term primary data refers to the statistical material collected by original observation, measurement or counting in the course of investigation.

 Secondary data -

        The term secondary data refers to the statistical material collected from someone else's record and not by original observations.

Method of Collecting Primary Data-

      The different methods of collecting primary data are -

a. Direct Personal Investigation.

b. Indirect Oral Investigation.

c. Schedule and Questionnaire.

d. Information collected through Local Correspondents.

Method of Collecting Secondary Data-

     Secondary data can be obtained from the following sources -

a. Government Publication.

b. Semi-Government Publication. 

c. Others publication like publication of Trade Association or Chamber of Commerce, Newspapers and Periodicals, Research Bureaus etc.

Statistics for Economics Class 11 Notes - Chapter 1 Introduction

 Statistics (Definition)

                Statistics refers to that branch of science that deals with the collection, classification, presentation, tabulation and interpretation of numerical data, collected in a systematic manner for a pre- determined purpose.

Statistics in singular sense :-

            In singular sense, statistics is defined in the sense of statistical methods. In other words, in singular sense, statistics is defined as the science which deals with the methods of collecting, presenting, comparing and interpreting numerical data, collected in a systematic manner for a pre-determined purpose.

Statistics in plural sense :-

                In plural sense, statistics is defined as the aggregate of numerical facts which are expressed, enumerated or estimated in a systematic manner for a predetermined purpose.

Characteristics of statistics:-

                The characteristics of statistics are as follows:-
a. Statistics are aggregates of facts.
b. Statistics are affected to a market extent by multiplicity of causes.
c. Statistics are numerically expressed.
d. Statistics are enumerated or estimated according to reasonable standards of accuracy.
e. Statistics are collected in a systematic manner.

Limitations of statistics:-

        Two important limitations of statistics are:-

1. Statistics deals with aggregates of facts, the study of individual measurement lies outside the scope of statistics.

2. Statistics are numerical statements of facts. The characteristics which cannot be expressed in numbers are incapable of statistical analyses.

Importance of statistics in economic planning:-

                Statistics is of great importance in economic planning. Statistical data are used in framing suitable economic policies for solving various economic problems such as poverty, unemployment, disparities in the distribution of income and wealth. Statistics help the government to bring about changes in its fiscal and monetary policy.

Rural Development Class 12 Notes Economics

Rural Development ( Definition ) :-

        The term 'rural development' refers to the developmental initiatives undertaken for the economic and social upliftmen of the rural areas that are lagging behind in developmental aspects. In other words, rural development imply the economic and social growth of of rural areas with some effective developmental initiatives.

Objectives of Rural Development -

    In general, the main objectives of rural development are the following 

1. Increasing production and productivity in the agricultural sectors.

2. Generating alternative sources of livelihood in the rural sectors.

3. Promoting education and health care in the rural areas.

4. Infrastructure development.

5. Poverty alleviaition

Rural Credit:-

       Rural credit refers to the amount of loan that is taken by the rural farming community. Farmer requires credit for various reasons like buying agricultural machinery and tools, high-yield seed, fertilizers and pesticides, irrigation purposes, etc.

Sources of Rural Credit:-

1. Non-Institutional Sources-

       Non-institutional sources of rural credit is basically the traditional sources of credit availability in the rural economy. This very source includes money lenders, relatives, traders, commission agents etc.

2. Institutional Sources:-

       The institutional sources of credit includes cooperative credit, cooperative bank, regional rural bank, land development bank, National Bank for Agricultural and Rural Development(NABARD), self-help groups, etc.

Agricultural Marketing:-

        Agricultural Marketing in general refers to the process of storing, processing, transporting, packaging, grading and distributing various agricultural commodities and agricultural related products throughout the country.

Problems of Agricultural Marketing in India:-

         There are lots of problems associated with agricultural marketing in India some of these are as follows-

a. Insufficient storage facilities-

        There is acute shortages of good storage facilities for crops and foodgrains which resulted in serious crops loses due to damaged by insects, rat and rain.

b. Lack of proper transportion:-

      Due to lack of proper transport facilities couple with insufficient all-weather roads the farmers more often are unable to reach the marketplace to sell their agricultural produces at a fair price.

c. Lack of market information:-

     There is lack of adequate and reliable information regarding the prevailing prices of the agricultural produce in the different market as a result of which the farmers more often are denied of decent price of their agricultural produce.

d. Lack of grading and standardization:-

       There is lack of grading and standardization of the agricultural produces as a result of which the farmers are not able to get the required fair price of the goods.

Human Capital Formation Class 12 Notes

 Human Capital Formation-

Human capital formation refers to the process of accumulation of the stock of people who possess the required skill, education, knowledge and expertise and hence in turn, heps in the production processes. In other words, the term 'human capital formation' refers to the increase in the stocks of human capital, that is, the stock of skilled and capable people of a particular country over a period of time. Economic development of a country requires the proper and optimum utilization of both human capital and physical capital.

Human Capital -

        The term 'human capital' refers to the stock of skills, knowledge, education and expertise of people of a particular country at a given period of time.

Physical Capital -

        The term 'physical capital' refers to all those inputs that helps in the production processes, namely plant and machinery, building, factory, etc.

Sources of Human Capital Formation:-

    The various sources of human capital formation are -

a. Expenditure on education

b. Expenditure on health

c. On-the-Job training

d. Expenditure on migration 

e. Expenditure on acquiring information

Importance of Human Capital Formation:-

                        Human capital formation is of utmost importance due to -

a. It increases production and productivity.

b. It leads to control of high population growth rate.

c. It improves the quality of life.

d. It increases life expectancy.

e. It leads to effective and optimum utisilation of physical capital.

Problems faced by Human Capital Formation:-

      The main problems faced by human capital formation are given below-

a. Insufficient resources

b. Raising population i.e. high growth rate of population

c. Brain-drain

d. Insufficient manpower management

e. Lack of proper on the job training in agricultural sector

Poverty Class 12 Notes Economics

 Poverty :-

              Poverty refers to the situation where a section of the society is unable to meet the minimum necessities or  requirement of life like food, clothing, housing,  education and health facilities etc.

Poverty Line :-

         Poverty line is the cut-off point on the line of distribution which divides the population or the society of the country into poor and non-poor.

Head - Count Ratio :-

                    Head - count ratio refers to the number of poor people which is estimated as the proportion of the people who are below the poverty line.

Relative Poverty :-

                    Relative poverty refers to the situation wherein the income level of the household or people is a certain percentage below the minimum income that is required to maintain the basic living standards like food, clothing, health care and shelter.

Absolute Poverty :-

                 Absolute poverty is defined as the condition where the income of the people or household is below the necessary level that is required to maintain the basin living standards such as food, clothing, health care and shelter.

Characteristics of Poor People :-

                The main characteristics of poor people are - 

1. Hunger and malnutrition.

2. Poor health.

3. Limited economic opportunities.

4. Debt trap.

5. Lack of credit facilities.

Causes of Poverty in India:-

              The main causes of poverty in India are as follows -

1. Slow economic growth rate.

2. Low per-capita income.

3. Low agricultural productivity.

4. High rate of growth of population.

5. High rate of unemployment.

6. Lack of credit facilities.

7. High price rises.

8. Inefficient resource utilization.

Minimum Calories Intake:-

       In India, the minimum calories consumption should be 2400 calories in rural areas and 2100 calories in urban areas.

Indian Economy on the Eve of Independence Class 12 Notes CBSE Economics Chapter 1

 Introduction:-

         The Indian economy before the arrival of the British was  an independent, self-reliant and prosperous economy. The advent of the British who uses the vibrant economy's resources to their advantage had gradually turned the Indian economy into a underdeveloped economy with stagnant agricultural sector and slow industrial growth rate. 

Features of the Indian Economy on the eve of Independence:-

The Indian Economy on the eve of Independence was dominated by the following features :

1. Stagnant economy -

                      The Indian economy during that period witnessed slow or negligible growth rate resulting in high unemployment, massive poverty etc.

2. Backward economy -

                 Indian economy of that period was basically backward and per capita income was very low.

3. Agricultural backwardness  -

                       The agricultural sectors are totally backward, primitive in nature, and dependent on monsoon and hence agricultural productivity is very low. 

4. Industrial backwardness -

                The industrial sectors are also very backward with minimal basic and heavy industries.

Agricultural Sector on the eve of Independence:-

a. Low agricultural productivity -

                       The overall agricultural productivity in that period was very low. 

b. Dependence on rainfall -

                   The agricultural sector is mainly dependent on rainfall due to non-availability of proper irrigation facilities.

c. Small and fragmented land holding -

                   The average land holdings is small and fragmanted which resulted in poor yields .

d. Commercialisation of agriculture -

               There is forced commercialisation of agriculture. The cultivators are forced to shift from food crop to cash crops.

Demographic profile during British rule :-

1) Birth rate and death rate

Both birth rate and death rate were very high, about 48 and 40 per thousand.

The state of high birth rate and high death rate explains the state of widespread poverty found in the country.

2) Infant death 

Infant mortality rate means the death rate of children under 1 year of age.

This was also very high, it was around 218 per thousand, currently it is 34000.

High infant mortality rates are related to extreme poverty and indicate less developed health services

3) life expectancy

Life expectancy means the average life span of a person

She was only 32 years old at that time

Presently it has increased to 68 years

Low life expectancy reflects lack of health care facilities and lack of awareness.

4) Literacy rate

Literacy rate means people who can read and write

At that time it was about 16%. This is also a sign of social and economic backwardness. Female literacy was only 7%.

This is an indicator of gender discrimination found in the society.

Industrial area at the time of independence:-

Decline of handicrafts-

India's handicraft industry, before British rule

Was famous all over the world for its quality

This industry declined due to British rule.

This happened because of the policies of the British government

State's discriminatory tariff policy

Under this policy:-

Raw materials were exported from India without export duty

British industrial products were imported into India without import duty

Heavy duties imposed on export of Indian handicraft products

The quantity of British goods increased more in the Indian market, the sale of Indian handicraft goods started decreasing. 

result of this

Handicrafts declined in India:-

1) Extinction of royal courts

Before the British rule, different parts of the country were ruled by Nawabs, Kings and Emperors. They patronized Indian handicrafts due to which Indian handicrafts gained international fame.

The beginning of British rule was the end of native royal courts, as a result, handicrafts began to decline.

2) Arrival of Railways in India

With the arrival of railways in India, the market size of low cost British goods started increasing and the market of high cost Indian goods started shrinking, as a result handicrafts declined.

3) Competition from goods made by machines

Britain's machine-made goods had very low production costs.

Handicraft items made in India could not stand up to their competition.

The quality of goods manufactured by machines was much higher than that of Indian handicraft goods.

 Positive impact of British rule in India:-

1) New employment opportunities

The expansion of railways and roads provided many new opportunities for economic and social development. 

2) Control famine

Due to the expansion of means of transport, fertilizers started being delivered quickly to drought affected areas and famines were controlled.

3) Monetary system of exchange

An important change in the Indian economy was that the barter system was replaced by the currency exchange system.

This made large-scale production convenient

            

Balance of Payment – CBSE Notes for Class 12 Macro Economics

 Balance of Payment:-

             The term balance of payments or balance of payments of a country refers to the systematic record of all the International transactions for a given financial year. In other words, the balance of payments of a country is the systematic record of all transactions in goods, services and assets between the residents of a country and the residents of foreign country during a financial year.

Classification of Economic Transactions in BOP :-

           Economic transactions in balance of payments are broadly categorized as given below -

a. Visible Items : 

            This category include all types of physical goods that are exported and imported during a financial period.

b. Invisible Items:

           

         The invisible items refers to all types of services given and received during a financial year.

c. Unilateral Transfers:

             Unilateral transfers refers to those transactions between countries which does not involves payment like government transfer which includes grants, gifts and aids.

d. Capital Transfers:

              This category includes both capital receipts and capital payments like borrowings, capital repayments, sales of assets etc.

Components of BOP :-

             Balance of payments accounts in general are broadly classified under the following heads -

a. Current Account

b. Capital Account

Current Account :

                 Current account refers to the account of BOP which is a systematic records of imports and exports of goods and  services and unilateral transfers. 

Capital Account:

                Capital account refers to the account of BOP which is a systematic records of all transactions between the domestic country and foreign countries and which causes a change in the assets or liability of the country.

Items of Current Account:- 

           The main items of current account are listed below:

a. Export and import of Visible Items or Goods.

b. Export and imports of Invisible Items or Non-Materials Goods or Services.

c. Unilateral Transfers.

Items of Capital Account:-

            The main items of capital  account are listed below:

a. Direct Investment.

b. Portfolio Investment.

c. Loans.

d. Banking Capital Transactions.

Balance of Trade :-

               Balance of trade refers to the the net difference of the Import and export of all visible items between the  residents of a country and residents of the foreign countries during a given period of time. When the export of visible goods are greater than the imports of visible goods we have a surplus balance of trade. On the contrary, when the exports of visible goods are less than the imports of visible goods we have a deficit balance of trade.

Autonomous Items of BOP;-

              Autonomous items of the balance of payment refers to  those items of balance of payment which is related to such international economic transaction as are determined by the motive of profit maximisation and not to maintain equilibrium in balance of payments. These items are known as the first items in the balance of payment as they are recorded as a first items before calculating deficit or surplus in balance of payment ..