Economics

Economics 

 

• Study of production and distribution of goods and services 

• Economic Variables 

  1. Price 

  2. Demand & Supply 

  3. Money Flows 

  4. Output-Input Ratios 

 

Economics of Happiness 

• Concerned with all cost of the economy 

  • Costs 

  • Suicides 

  • Crimes etc 

• Activity 

  •  

 

 

Production 

 

4 requirement/Factors: 

1. Land and resources 

2. Labour 

3. Physical Capital - variety of inputs 

   • Fixed capital - that can be used over many year like machine, building 

   • Working capit 

     • raw mat 

     • money in hand 

4. Human Capital - Entrepreneurs - Knowledge and Enterprise 

• MONEY is only a facilitator in acq of these goods. 

 

 

Economic Activities: 

• Market  

• Non-market - self-consumption 

 

 

Development 

For comparing countries, their income is an imp attribute. 

Avg income = per capita 

 

World Dev Report by World Bank 

• High Income Countries - $ 12,236 (Rs. 8 lakh) (First World Countries) 

• Upper Middle 

• Lower-Middle 

• Low 

2. Land 

 

Hectare = 100 m2 

 

Irrigation 

• In India, less than 40% is irrigated 

Multiple cropping 

Modern techniques - fertilizers (earlier cow dung), HYV seeds, irrigation (dams, elec, canal), tractors 

 

Fertilizers provide minerals immediately but cant be retained by the soil for long. They escape  

And pollute groundwater, lakes, rivers. Kill bacteria  

3. Human Capital Formation 

Development of Human Resource 

 

Education, training, medical care 

Empowerment of all the sections, economic growth, population control 

 

Resources are useful only when we have that technology to use them or locate them. 

 

Quality of population  

1. literacy rate,  

2. health and  

3. skill 

Literate - popu above 7 who is able to read, write & perform basic arithmetic. 

Literacy Rate (2011 census) 

• India - 74 

1. Kerala - 94% (2001 - 90%) 

2. Tripura in 2013 claimed that it surpassed Kerala with 95% 

3. Lakshadweep - 92 

4. Bihar - lowest - 63 

5. Telengana - 2nd lowest - 66 

6. Rajasthan - lowest female lite rate - 52% 

 

Labour Force 

• All persons who are working as well as who are looking for work 

• Thus, includes unemployed also. 

1. Main worker - 183 days 

2. Marginal Worker - less than 183 days 

3. Non-Worker 

 

Unemployment  

• people who are willing to work for wages and have actively looked for work in past 4 weeks - involuntary idleness 

1. Open - not working 

2. Seasonal - in particular season 

3. Disguised/under employmt- they appear to be employed. 

• 1/3 of agri workers in India are disguisedly unemployed. 

4. Frictional -  temp transitions by employers & workers - workers move from one job to another job or looking for the Ist job - short term - employer don’t find qualified indi & hence, didn’t hire. 

5. Cyclical - cyclical trends in industry - unemp goes up when ind is low & vice-versa 

   1. When overall demand cant support full emp 

   2. Irregular ups & downs 

6. Structural - due to change in the structure of the eco - for eg. Change from labour intensive to a capital intensive 

7. Voluntary - either not seeking work or are in transition from one job to another (quitting one job in search of another) -  

   1. MIND IT: Even quitting job for another AND Then Searching for another is Volu 

8. Involuntary - willing to work 

• Daily status & weekly status 

• Unemp Trap - when people are not willing to join work bcoz of low allowances - better to feed on govt's social security measures. 

• Care Eco 

  • Work done by women at home taking care of aged, children & chores 

  • Not inc in GDP 

 

Govt Scheme 

• MUDRA 

• Skill India 

• Stand-Up India 

• Make in India 

 

Poverty - multi-dimensional problem 

• Landlessness 

• Unemployment 

• Size of families 

• Illiteracy 

• Poor health 

• Child labour 

• Helplessness 

Hunger and lack of shelter 

Lack of clean water and sanitation facility 

• Poverty is not like cancer where  every maligned cell could be eliminated - Instead, poverty is being obese. The fight is hard and slow and victories are partial. 

 

Poverty line  

Rural 

• 2,400 calorie/ person /day 

• Rs. 368 /month /head  

Urban 

• 2,100 calories /person /day 

• Rs. 558 /month /head 

International 

• $1.90 per day per head 

 

Points based system on 13 Socio economic indicators 

• Since 2002 

• Each indicator has 4 marks.  

• Hence, a total of 52 marks.  

• BPL < 17 out of 52 

 

Vulnerable Groups 

 

Causes: 

• Britishers 

• Population 

• Income inequality 

• Lack of land resource 

 

Steps are of two major types: 

• Promotion of growth 

• Anti-poverty steps 

 

Food Security: 

• Availability 

• Accessibility 

• Affordability 

• Absorption 

 

Famine - wide spread deaths due to starvation and epidemic caused by forced use of contaminated water or decaying food 

 

Hunger  

Chronic hunger - diet persistently inadequate in terms of quantity or quality (nutrition) 

Seasonal Hunger - cycles of food growing and harvesting. 

Acute Hunger - inadequate food put their lives & livelihood in immediate danger 

Nutritional  

 

Buffer Stock -  

• stock of food grains namely wheat and rice procured by the govt. through Food Corporation of India at MSP and to sell at a lower price - Issue Price. 

• 4 Five Yr Plan 1969-74 

• 4 Purposes: 

  1. Food security 

  2. Monthly release of food grains u/PDS 

  3. Emergency situation 

  4. Price stabilization & Market intervention 

Currently, 26 crops are under MSP. 

1. 7 cereals 

2. 5 pulses 

3. 8 oilseeds 

4. 2 Coconut - Copra & De-husked coconut 

5. 2 Fibres - Cotton, jute 

6. Sugarcane - FRP 

7. Tobacco 

Market Intervention Scheme (MIS) 

• Price support mech 

• Perishable & horticulture 

• Procurement in the event of fall in prices 

Public Distribution System - ration shops/Fair Price Shop  under Ministry of Consumer Affairs, Food, and Public Distribution -   

By Amartya Bhushan 

• APL family 15 kg  of food grain (wheat or rice) /month 

• BPL family 35kg  

• AAY - poorest of poor - 35 kg 

• Annapoorna Scheme - Indigent seniors - 10 kg free 

Open Market Sale OMS Scheme  

• Selling of food grain in open market to enhance the supply especially during the deficit. 

• Now, done through e-auction. 

• ONLY wheat & rice 

• Don’t confuse with Open Market Operations OMO 

 

Implementation issue -  

All india level consumption - 1 kg per person per month 

300 gm in Bh, Orr  

1. Sectors 

 

Based on employment conditions: 

Organized - terms of emp are regular  

 

Unorganized sector - workers are less than 10 - an enterprise owned by indi or self-employed workers and engaged in production or sale or service, and where the enterprise employs less than 10 workers. 

• 50% of GDP 

• 80% of workforce 

 

employed persons in 2011-12 on usual status basis (last 1 yr) were 47.41 crore, of which 82.7% of workforce was in unorganized sector. 

 

The Ministry of Labour has categorized the unorganized labour force under Four groups in terms of: 

1. Occupation - Farmer, fisherman 

2. nature of employm - Labourers - bonded, contract, migrant 

3. service categories (for service or IC) - Midwives, domestic workers, barbers 

4. specially distressed categories - Scavengers, drivers of animal vehicle 

 

 National Commission for Enterprises in the Unorganized Sector (NCEUS) 

 

legislations for construction workers  

1. Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996  

2. Building and Other Construction Workers’ Welfare Cess Act, 1996. 

3. Unorganised Workers’ Social Security Act, 2008 

   1. Life & disability cover 

   2. Old age protec 

   3. Health benefit 

   4. Nat Social Sec Board 

   5. Registration