Question and Answer forum for K12 Students
The compilation of these Economics Notes makes students exam preparation simpler and organised.
Come the last week of February the entire country is gripped by budget fervour! Surely you know how much importance we give the budget in our country. Why is it so? What exactly does the budget spell out? Let us learn about a few concepts regarding the economic policies carried in the budget.
The compilation of this Globalisation and the Indian Economy Notes makes students exam preparation simpler and organised.
Imagine a small village market where all are free to come and sell their products at whatever price they desire. There are no limitations on control of their products or the prices. This is a globalised trade. Anyone, in general context referring to any country, that can participate to set up, acquire, merge industries, invest in equity and shares, sell their products and services in India. But how does globalisation work? What are its effects on the Indian economy? Let us study in-depth it below.
Humans have moved into a phase where everything is accessible without any difficulty. What if you weren’t able to buy goods from an online site managed by an international brand? It might make you feel angry, or irritated. The world wasn’t always open to free trade or cross-border investments. It was around two to three decades ago when the concept of ‘globalization’ was spread far and wide. This allowed nations to carry out trade and other activities in a systematic manner.
India was one of the prime nations which gained immensely post the introduction & implementation of globalization. The rise of foreign investment in the retail, corporate and scientific sectors is very much evident in the nation. For further learning about globalization and India, it is crucial to get familiar with the prime concept, that is, globalization.
Globalization is the free movement of people, goods, and services across boundaries. This movement is managed in a unified and integrated manner. Further, it can be seen as a scheme to open the global economy as well as the associated growth in trade (global). Hence, when the countries that were previously shut to foreign investment and trade have now burned down barriers.
Considering a precise definition, countries that abide by the rules and regulations set by WTO (World Trade Organization) are part of globalization. These procedures include oversees trade conditions among countries. Apart from this, there are other organizations such as the UN and different arbitration bodies available for supervision. Under this, non-discriminatory policies of trade are also enclosed.
When we talk about globalization and the Indian economy, one name strikes our mind, that is, Dr. Manmohan Singh. He was the finance minister in the 1990s when globalization was fully implemented and experienced in India. He was the frontman who framed the economic liberalization proposal. Since then, the nation has gradually moved ahead to become one of the supreme economic leaders in the world.
Below mentioned are some of the quick reactions which were felt after the introduction of globalization:
After 1991, the rise in GDP that dropped to 13% in 1991 -92 extended momentum in the following five years (1992-2001). Moreover, the annual average rate of growth in GDP was recorded to be 6.1%.
Furthermore, export growth skyrocketed to 20% in 1993-94. For 1994-95, the figures were recorded to be 18.4 percent. Export growth statistics in recent years have been very impressive.
Rise in Employment: With the opening of SEZs or Special Economic Zones, the availability of new jobs has been quite effective. Furthermore, Export Processing Zones or EPZs are also established employing thousands of people. Another factor is cheap labor in India. This has motivated big firms in the west to outsource work to companies present in this region. All these factors are causing more employment.
The surge in Compensation: After the outburst of globalization, the compensation levels have stayed higher. These figures are impressive as compared to what domestic companies might have presented. Why? The level of knowledge and skill brought by foreign companies is obviously advanced. This has ultimately resulted in the modification of the management structure.
Improved Standard of Living and Better Purchasing Power: Wealth generation across Indian cities has enhanced since globalization has fully hit the nation. You can notice an improvement in the purchasing power for individuals, especially those working under foreign organizations. Further, domestic organizations are motivated to present higher rewards to their employees. Therefore, a number of cities are experiencing better standards of living together with business development.
If we are discussing globalization and the Indian economy, then talking about the negative effects is also important. The informal sector is purposely not listed in the labor legislation. For example, informal workers aren’t the subject considering the 1948 Factories Act. This scheme covers vital factors such as common working conditions, safety, and health, the ban on child labor, working hours, etc. Also, globalization has caused poor health, disgraceful working conditions, as well as bondage, happening in different parts of the country.
Example:
Question:
Do you think the impact of globalization hasn’t been uniform?
Answer:
Looking at the trend and its uprising since all these years, the answer is yes! To be precise, globalization has proven advantageous to professional and skilled individuals, primarily from urban regions. The unskilled population hasn’t gained enough out of globalization. For example, industries, as well as service firms, have been supported by this scheme more effectively as compared to the agricultural sector. The rise of MNCs has been quite significant after globalization. However, small producers are bound to face tough competition.
The compilation of these Economics Notes makes students exam preparation simpler and organised.
Globalisation is a term everyone is familiar with. It’s a change everyone wants to be a part of. And India isn’t far behind. Globalisation in terms of the economy has had great impacts on all the countries. So, how does the Indian economy look like in terms of globalisation? Let us study in-depth below.
The compilation of these Food Security in India Notes makes students exam preparation simpler and organised.
Imagine a situation where you have to struggle to have a proper meal during the day. Doesn’t it sound weird? Don’t be shocked as this is the situation prevailing in many nations. The struggle to manage food resources is an issue which quickly impacts a region. If we skip a meal or two, hunger strikes in full swing. There have been several areas in India that are hit by famine and drought in the past, leading to widespread hunger. Hence, let us try to understand the importance of food security, storage, and management in a precise manner.
What do you understand by the term ‘Food Security’? It is surely not the protection of food, but a larger concept associated with feeding the whole population. In simple terms, you can call it the ability to guarantee on a long-term plan an arrangement of nutritionally sufficient food supply.
Under food security, there are basically four stages which completely highlight its definition and motive. These are mentioned below:
Presently, India is facing a situation which is called the triple affliction of malnutrition. There are pieces of evidence gathered from national surveys combined with smaller studies that stress this issue. For example, based on the National Family Health Survey(2005–06), a third of married women in India hold a BMI (Body Mass Index) less than normal. This also indicated that 28% of men added to the same class.
Undernutrition is a result of multiple factors; however, food security lies at the core of it. You can categorize food security as a situation where all people have physical, economic, and social access to adequate, nutritious, and safe food. In addition, the scheme works to fulfill their dietary requirements and food preferences for leading a healthy life.
In India, food security infers to nutritional security and the fulfillment of individual capabilities. Also, people are the prime focus, even though community-level or household-level food security is a suitable concern.
How can you ensure food security in India?
Food security in any country can be ensured if the three dimensions of food security are checked upon. So, what are these three dimensions?
The outbreak of the National Food Security Mission has been a blessing for India. It has laid the foundation to augment the production of cereals and pulses. Most of this has happened to support production increase across the eastern regions of India.
There has been a strong and ongoing trend concerned with the diversification of non-cereal as well as high-value supplies. Under high-value supplies, dairy, vegetables, and fruits are included. Also, investments in the agricultural sector have stayed strong post the period 2004–05. This is associated with both public and private investments.
Sources of Foodgrains Across the Nation
One of the foundations of food security is the capability to grow self-sufficient. It means, the ability to harvest crops in the nation without any assistance from external sources. Currently, some of the prime food grain regions in India are as follows:
Rice is mainly grown in Assam, Bihar, West Bengal, Eastern Uttar Pradesh, Eastern Madhya Pradesh, and Kashmir valley. Moreover, Andhra Pradesh, Tamil Nadu, Orissa, Karnataka, Kerala, and Coastal areas of Maharashtra are also active rice-growing regions. Interestingly, rice has also been grown in the chief irrigated sections of Punjab and Haryana.
Wheat production is focused in the regions of Uttar Pradesh, Haryana, Punjab, Bihar, and parts of Rajasthan.
Millets such as jowar, Ragi, and bajra are also grown in the country. To be precise, Bajra requires a warm region, therefore is dominant in Rajasthan. Whereas, Ragi is considered as a rain-fed yield grown in Karnataka and Tamil Nadu.
At last, pulses are grown both as Kharif and Rabi crops. The winter season crops or Rabi crops, include Peas and Masoor. On the other hand, Kharif crops include Urad, Arharand Moong. Additionally, the primary gram generating areas are Uttar Pradesh, Madhya Pradesh, and Rajasthan.
Example:
Question:
How has the Green Revolution made India self-sufficient in terms of food grains?
Answer:
Specifically, in the late 1960s, the introduction of the Green Revolution motivated Indian farmers to cultivate HYV (high-yielding varieties) seeds. This trend led to increasing in the production of food grains, particularly rice and wheat. Moreover, after the outburst of the Green Revolution India has avoided famines even during worse weather conditions.
The compilation of these Economics Notes makes students exam preparation simpler and organised.
According to World Health Organization (WHO), food security is a situation when all people at all times have physical and economic access to sufficient and nutritious food that meets their dietary needs and food preference for an active and healthy life. Food security is a challenge that is becoming a hard target to achieve as the days pass. But how did this crisis of food security arise on the first note? What does one mean by it? And, most importantly what does food security in India look like in comparison to the global food security scenario? Let us find answers to these questions and more.
The compilation of this Environment and Sustainable Development Notes makes students exam preparation simpler and organised.
We all have learnt about the ill effects of Environment degradation in our lives. But have you ever considered the economic cost of environmental degradation? or the economic benefits of Sustainable Development? Let us educate ourselves about concepts.
This lesson breaks down the meaning and functions of the environment in the context of economic growth. The idea of environmental degradation, its causes and impacts are highlighted. The concluding section of the lesson introduces the concept of sustainable development as introduced in the Brundtland Report of 1987 and explains the way forward to save the environment.
Achieving economic development is vital to a country. But what if it comes at the cost of environmental degradation? With globalization opening the doors of economic development for so many countries, there is a serious concern regarding how far we are being able to save the environment and not hamper its constituents.
To understand the impact of economic growth and development on the environment, we need to be aware of the concept of sustainable development as an alternative solution.
Environment: Meaning and Functions
The ‘environment’ refers to the totality of resources and the total planetary inheritance we have received. It includes biotic (animals, plants, birds, etc.) and abiotic (sun, land, water, mountains, etc.) components. It explains the inter-relationship that exists between the abiotic and biotic components.
The environment performs four crucial functions:
1. Supplying Resources: The environment contains both renewable (air, water, land) and non-renewable (fossil fuels) resources. While the former are reusable and do not get depleted soon, non-renewable resources come with the fear of depletion.
2. Assimilating Waste: Economic activities generate waste which the environment absorbs through natural processes.
3. Sustenance of Life: The environment comprises abiotic components that aid the living of biotic components. In the absence of elements such as air, water, land, etc. there would be no life on the planet.
4. Aesthetic Value: The environment adds aesthetic value to life. The mountains, oceans, seas, landmasses and other scenery of the environment enhance the quality of life.
Environmental Degradation
Economic activities such as production and consumption have led to environmental degradation over the last few years. This is recognizable from the fact that there is a certain carrying capacity of the environment. When the rate of extraction of resources exceeds the rate of their regeneration, the environment fails to perform its activities. The resulting phenomenon is called environmental degradation.
Resources are limited and therefore, their overutilization is leading to their extinction. The waste generated is also exceeding the absorptive capacity of the environment.
Let us understand more about Diversification into Productive Activities here in detail
Rivers and other waterways are getting increasingly polluted due to the excessive dumping of wastes into them. This has led to poor water quality for consumption. The rate of use of non-renewable resources has not only depleted their limited reserves but also led to pollution tendencies.
The increasing emphasis is therefore on renewable sources or on devising other sources of generating energy. Different kinds of pollution have harmed the environment as well as man’s well-being. Air and water pollution particularly contribute to air and water-borne diseases and ill-health. Ozone layer depletion and global warming are other severe problems resulting from such degradation.
Global Environmental Crisis
Environmental degradation can be broken down into particular problems that plague the global community, as under:
Global Warming
It refers to the gradual increase in the lower atmosphere of the Earth. The main cause of global warming is recognized to be the release of greenhouse gases like carbon dioxide into the atmosphere. These gases can absorb heat and thus, contribute to global warming. Other causes are deforestation and the burning of fossil fuels like coal and petroleum. Global warming has led to the melting of polar ice caps and an average increase in temperatures all over.
Ozone Layer Depletion
It is the phenomenon of depletion in the amount of ozone in Earth’s stratosphere. The main cause of ozone depletion is the release of substances called chlorofluorocarbons (CFCs) into the atmosphere. These are compounds including chlorine, bromine compounds that are used as cooling substances in air conditioners, refrigerators, etc.
Ozone layer depletion implies that the Earth gets more and more exposed to the ultraviolet rays of the sun. These rays are excessively harmful to human health and are known to cause skin cancer to human beings. They also affect the growth of aquatic and terrestrial plants.
Concerted efforts are required to deal with the global environmental crisis. The concept of sustainable development, thereby, comes into play. Some of the measures that can be undertaken to control the crisis that already underway includes:
Pollution Control: Air, water, noise, soil are some of the major forms of pollution plaguing the environment today. Pollution control boards can be set up or regulatory standards must be enforced to keep pollution within lowest levels.
Forest Conservation: Increased industrialization has come at the cost of deforestation. The implication of forests being cut down is that the ecology is significantly affected. Afforestation measures need to be taken and forest conservation regulations must be seriously implemented.
Social Awareness: Until people are made aware of the graveness of the situation, the problem of environmental degradation cannot be dealt with. Creating awareness through campaigns and movements can help avert the problem of the ongoing environmental crisis.
Waste Management: Solid waste management must be carefully managed in urban areas. Rural waste has the potential of being used as natural manure by converting it into compost.
Water Management: Rainwater harvesting and conservation of water can help with the long-term potent problem of scarcity of water.
Implementation of Policy Programmes: Enactment of environment-centric acts and policies is not enough. Their effective implementation and careful observation are what will actually make a difference to environmental conservation efforts.
The idea of environmental conservation gains real momentum if we are able to conserve resources and use them in a manner that they are sufficiently available for the coming generation as well. The United Nations Conference on Environment and Development (UNCED) defines this using the concept of sustainable development. It explains sustainable development as a process that provides for the present generation without compromising on the needs of future generations.
Sustainable development has gained momentum as a larger movement over the years. We now associate it with improving living standards, poverty alleviation, nutritional improvements, minimizing social and cultural instability, and resource depletion.
The Brundtland Commission lays emphasis on the idea of passing on an environment with enough and good-quality resources to the future generation, just as we have bequeathed from our previous generations.
The features of sustainable development include a sustained rise in per capita income (PCI) worldwide, rational usage of resources, pollution checks, population control, and relative dependence on renewable sources of energy to meet future generations’ needs.
The Way Forward with Sustainable Development
The planet must shift to renewable sources of energy as compared to the regular thermal or hydropower plants that lead to climatic degradation. Solar energy is an effective alternative that we can harness using photovoltaic cells. It is less costly and environmentally friendly.
A shift to wind energy is also an option. Setting up windmills in areas with high-speed wind can help convert the natural resource into electricity for commercial or household usage. Another effective solution can come through the use of natural manure or bio-compost as a substitute for chemical fertilizers. This helps avert soil erosion and soil pollution. Subsidized LPG as a fuel in rural areas and CNG as a fuel for vehicles in urban areas could lead the way forward.
The rest of the change can come majorly through increased awareness and consciousness. Only when the gravity of the situation and moral responsibility towards forthcoming generations is realized can we pass on a healthy environment to them.
Example:
Question:
Classify the following as renewable or non-renewable resources: trees, fish, petroleum, coal, water, and iron-ore.
Answer:
Trees, fish, and water are reusable and come without any fear of depletion. These are renewable resources. Petroleum, coal, and iron-ore are limited and come with the fear of getting depleted. They are classified as non-renewable resources.
The compilation of these Economics Notes makes students exam preparation simpler and organised.
We are all aware that our economy faces some major problems. Job creation, lowering GDP, rising inflation etc. But did you know that in pursuit of economic progress we have paid a huge cost in terms of the pollution and degradation of our environment? In fact, the environment and economics are more closely linked than you would believe. Let us explore this relation. Let us learn more about the environment and sustainable development goals.
The compilation of these Employment: Growth, Informalisation and Other Issues Notes makes students exam preparation simpler and organised.
Did you know India has one of the highest unemployment rates in Asia? In 2017 it was at 3.4%. One of the most crucial concerns of any economy is unemployment. This lesson elaborates on the concept and calculation of the unemployment rate, its causes, and how it differs in rural and urban India.
Unemployment is a regularly used term and normally refers to those who are ‘out of work’. In strictly economic terms, the unemployed include all those who are able and willing to work but cannot find work. This includes the pool of persons who seek work through employment exchanges, friends, relatives, and other contacts and express their willingness to get employed, owing to the lack of work. Economists define an unemployed person as one who is unable to get work for even one hour during half a day.
The three major sources of official data on employment in India include:
We use the following formula to calculate it:
Unemployment Rate = (No. of Unemployed Persons / Total Labourforce) × 100
Here, labour force refers to all those persons willing and able to engage in productive activity or work.
1. Rural Unemployment
India has roughly 70% of its population living in rural areas. Agriculture forms the mainstay of the rural population. But, not enough employment is available for all those living in the rural areas. This leads to unemployment, which can take three forms open, seasonal, and disguised.
2. Open Unemployment
This refers to the situation in rural areas where people who are willing and actually able to work cannot find any work.
3. Disguised Unemployment
This particularly plagues the Indian agrarian scenario. In this case, more workers than required are engaged on the farm, where not all of them are actually productively contributing to creating output. Thus, the marginal physical productivity of many workers is zero. This happens when almost the entire family engages in farm production.
4. Seasonal Unemployment
The case with this is that workers remain out of work for a particular season. For example, workers hired only for the harvest season remain unemployed for the remaining part of the year. Or, if the industry itself is seasonal, workers naturally remain unemployed during the off-season.
5. Urban Unemployment
The unemployed in the urban areas has increased considerably over the years. Normally, the number of the urban unemployed is registered with unemployment exchange boards. It can also take various forms, as under-
6. Industrial Unemployment
Those illiterate persons who are willing and able to work in factories or industries in urban areas but cannot find work fall in this category. As rural-urban migration increases, urban unemployment also does.
7. Educated Unemployment
The most horrifying kind of unemployment is when the educated youth are unable to find appropriate jobs to suit their qualifications. With an improvement in education over time, skilled workers have increased in number but the number of available jobs has not increased correspondingly. This causes educated unemployment.
8. Technological Unemployment
This type of unemployment takes place every time technology upgrades and the existing workforce is unable to cope with the new technology. If the skills required to meet the new technology do not match the existing skill-sets of the employed workers and they cannot adapt, they become unemployed. Upgradation is a natural process, with cyclical obsolescence as one set of technology becomes irrelevant and gets replaced by another.
To be able to deal with the problem of unemployment, it is now necessary for you to understand its causes in a country like ours. A slow rate of economic growth would mean that the national output is not increasing by much. It indicates that not enough jobs are being created to absorb the workers able and willing to work. Put simply, labour supply far exceeds existing job opportunities.
Another reason particular to India is its population growth rate. The number of people looking for jobs has multiplied manifold over the years as the population growth rate has soared high. The rising population proves to be a burden on the number of jobs that can actually be created in an economy with its limited resources. The recent population explosion is a contributing factor to decreased employment in the country.
Over-dependence on technology, domestic or foreign, has led to technological unemployment. This is because of less requirement of manual labour to accomplish tasks with greater dependence on machines and technology.
The lack of adequate fund allocation and financial resources to curb unemployment is also leading it to rise. Proper governmental programs targeting the unemployed population, if not well-implemented, harm the employment situation of the country. Lack of committed support to deal with the job crisis causes employment to fall.
The government has a key role to play in employment generation in the country. In fact, it must persevere to increase the employment levels of the country. In the light of this, governments in the past have acted to deal with unemployment in India. The National Rural Employment Guarantee Act (NREGA) was passed in 2005. The NREGA seeks to provide 100 days of guaranteed wage employment to rural households willing to perform unskilled manual work. It makes special provisions for women and for the distance within which the job must be available to job-seekers for convenience.
State and federal governments, over the years, have played a key role in enacting other social security programmes, providing unemployment allowances and conducting training programmes, and encouraging on-the-job training to absorb more skilled labour into jobs.
The government has also strived to provide direct employment in government departments and offices at various positions and levels. It also helps in indirect employment through the production of goods and services that aid the ability of the private sector to invite more job applicants and create opportunities. One of the main allied objectives of these policy programmes is the idea of poverty alleviation, with other emphases on health, nutrition, a standard of living, education, road-building, infrastructure, and rural development.
Example:
Question:
Sanjeev gets work for two hours a day. For the rest of the day, he is looking for work. Can you classify him as an unemployed person?
Answer:
Yes, Sanjeev is unemployed. This is as per the economists’ definition of unemployment that if a person does not get employment for even one hour during half a day, he is called ‘unemployed’. Sanjeev is employed for only two hours during a day and spends the remaining part of the day looking for work. So, he can be called unemployed.
The compilation of this Employment: Growth, Informalisation and Other Issues Notes makes students exam preparation simpler and organised.
What is meant by ‘employment’ and what is its connection with the term ‘work’? Is there a difference between the two? This chapter focuses, in length, on the economic definition of work, worker, labour force, workforce, and employment. Let us dive right in.
To understand the issues of employment, let us first understand the relevance of ‘work’. Work helps us to earn a living. But more importantly, work gives us a sense of worth to be able to do something and lends meaning to our being. It is our way of contributing to the national income of the country.
By that definition, a ‘worker’ is one who is bound by a contractual agreement or one who gets rewards from working or is self-employed. There can be different types of workers defined on the basis of certain parameters.
Types of Workers
Hired Worker:
These are workers who are employed by others (employers) and receive a salary/wage as compensation for work. Hired workers may again be of two types:
Casual Worker:
These are workers who are engaged by employers on a temporary basis for some specific work. They are not permanent and do not receive any social security or other work benefits. Example: Construction workers are contracted only for specific projects and not hired permanently. Seasonal workers such as those engaged on the farm only during the harvest season are also classified as casual workers.
Regular Salaried Worker:
These are workers hired by employers on a permanent basis and are paid regular salaries/wages for their work. Example: Chartered accountants, teachers, sports trainers at a sports club.
Self-Employed:
The other set of workers are those who are not employed by some employer but who own and work for their own enterprise. Example: Proprietors, business persons.
In the urban areas, in India, 41% of workers are self-employed and 59% are hired. In rural areas, 54% are self-employed and 46% are hired. The percentage of self-employed persons is more in the rural areas as the workers there are usually engaged in working on their own farms. Contrarily, in the urban areas, workers tend to be employed in factories or offices in a larger proportion than their rural counterparts.
The term ‘employment’ refers to the state of being employed. It is the relationship between an employer and employee, usually. Employment for people varies in the sense that some of them are employed for the entire year, while the others are employed for only some portion of the year.
Worker and Workforce
All the persons in a country who are engaged in productive activities i.e. in activities that contribute to the national product of the country constitute the workforce. Statistics on the workforce reveal that 70% of the workforce is constituted in rural areas, while only 30% belong to the urban areas. Out of the rural workforce, only 26% are female workers.
In the urban areas, the figure drops to 14%. The overall female percentage of the workforce is 30%, while the remaining 70% is constituted by males. It is important to note the formula for the workforce participation ratio:
Participation Ratio = (Total Workforce/ Total Population) × 100
Note that the workforce discussed earlier is different from another concept called labour force. It refers to the number of workers willing and able to offer their labour at a wage rate. This is nothing but labour supply. It refers to the work workers are willing and able to do at a given wage rate.
The participation rate in rural areas is 41% and higher than that in urban areas (35% only). The overall participation rate in the country stands at a low figure of slightly over 39%. This means that even while more people may be working, only a small chunk is engaged in productive activity. Even then, the participation rate is higher in rural areas. Even the female participation rate is higher in rural than urban areas.
Sectors of the Economy
Based on the engagement of workers in different kinds of employment, the economy can be broadly divided into three sectors:
Primary: Constitutes agriculture and allied activities. The Primary sector continues to employ the maximum number of workers in our country, even though the number has dropped over the years.
Secondary: Mainly includes the manufacturing activities, along with electricity, gas, water supply, and construction. Workers have shifted from agriculture to other forms of productive activity. This is also followed by rural to urban migration. A country’s transformation in employment from agriculture to secondary and tertiary sectors is called structural transformation.
Tertiary: Comprises the service sector i.e. transport and communication, banking, insurance, trade, storage, etc.
Example:
Question:
What is a worker-population ratio and what is its significance?
Answer:
Worker -population ratio is the ratio of the workers who are contributing to productive activities in a country to its total population. The population figure is the total number of people residing in a country at a point of time. It is useful to give an idea about the employment situation of a country. It indicates what proportion of the population is actually contributing to the production of goods and services in the country. The ratio is usually multiplied by 100 for percentage values.
The compilation of these Economics Notes makes students exam preparation simpler and organised.
One of the most worrying problems our country faces is that of employment. With our ever-growing population and increasing literacy rates, jobs are running out. What are the biggest challenges we face regarding employment? So what can the government do about it? Let us learn more about employment.