Economic Growth is a narrower concept than economic development. It is an increase in a country's real level of national output which can be caused by an increase in the quality of resources (by education etc.), increase in the quantity of resources & improvements in technology or in another way an increase in the value of goods and services produced by every sector of the economy. Economic Growth can be measured by an increase in a country's GDP(gross domestic product).

1. Chanderprabhu Jain College of Higher Studies & School of Law
Plot No. OCF, Sector A-8, Narela, New Delhi – 110040
(Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India)
Semester: B. Com - V Semester
Name of the Subject:
INDIAN ECONOMY
Unit-1

2. Economic Growth and Development

3. Economic Growth is a narrower concept than
economic development. It is an increase in a
country's real level of national output which can be
caused by an increase in the quality of resources (by
education etc.), increase in the quantity of resources
& improvements in technology or in another way
an increase in the value of goods and services
produced by every sector of the economy. Economic
Growth can be measured by an increase in a
country's GDP(gross domestic product).
Economic Growth and Development

4. Economic development is a normative concept i.e.
it applies in the context of people's sense of morality
(right and wrong, good and bad). The definition of
economic development given by Michael Todaro is
an increase in living standards, improvement in self-
esteem needs and freedom from oppression as well
as a greater choice.

5. The Human Development Index (commonly abbreviated
HDI) is a summary of human development around the
world and implies whether a country is developed, still
developing, or underdeveloped based on factors such as
life expectancy, education, literacy, gross domestic
product per capita. The results of the HDI are published
in the Human Development Report, which is
commissioned by the United Nations
Development Program(UNDP) and is written by
scholars, those who study world development and
members of the Human Development
Report Office of the UNDP.

6. Difference between economic growth and
economic development.
Economic Growth does not take into account the
size of the informal economy. The informal economy
is also known as the black economy which is
unrecorded economic activity. Development
alleviates people from low standards of living into
proper employment with suitable shelter. Economic
Growth does not take into account the depletion of
natural resources which might lead to
pollution, congestion & disease.

7. Development however is concerned with
sustainability which means meeting the needs of the
present without compromising future needs. These
environmental effects are becoming more of a
problem for Governments now that the pressure has
increased on them due to Global warming.

8. Basis Economic Development Economic Growth
Economic development implies Economic growth
changes in income, savings and refers to an increase
investment along with progressive in the real output of
changes in socio-economic goods and services
structure of country (institutional in the country.
and technological changes).
Growth relates to a
gradual increase in
Development relates to growth of one of the components
human capital indexes, a decrease of Gross Domestic
Factors: in inequality figures, and structural Product:
changes that improve the general consumption,
population's quality of life. government spending,
investment, net
exports.

9. Basis Economic Development Economic Growth
Measurement:
Qualitative.HDI (Human
Development Index),
gender- related index
(GDI), Human poverty
index (HPI), infant
mortality, literacy rate etc.
Quantitative.
Increase in real GDP.
Shown by PPF.
Concept: Normative concept
Narrower concept
than economic
development

10. Basis Economic
Development
Economic Growth
Effect:
Brings qualitative and
quantitative changes in the
economy
Brings quantitative changes
in the economy
Relevance:
Economic development is
more relevant to measure
progress and quality of life in
developing nations.
Economic growth is a more
relevant metric for progress
in developed countries. But
it's widely used in all
countries because growth is a
necessary condition for
development.

11. Basis Economic
Development
Economic Growth
Effect:
Brings qualitative and
quantitative changes in the
economy
Brings quantitative changes
in the economy
Relevance:
Economic development is
more relevant to measure
progress and quality of life in
developing nations.
Economic growth is a more
relevant metric for progress
in developed countries. But
it's widely used in all
countries because growth is a
necessary condition for
development.

12. Semester: B. Com - V Semester
Name of the Subject:
INDIAN ECONOMY
Unit-III

13. Importance of Large Scale
Industries
Balanced Economy
Increase in Wealth
More capital Formation
Increase in Employment
Increase in Employment
Increase in National Income
Less Pressure of Population on Agriculture

14. Importance of Large Scale
Industries
Economic Stability
Development of Agriculture
National Defence
Self Dependence
Exp[ort Promotion
Import Substitution
Increase in Government Income
Increase in Standard of Living
Low Cost goods

15. Core Features of Iron & Steel
Industry
-Iron and Steel industry is of great importance
among the basic and key industries of India.
-These industries are essential for the
economic and social development of the
country and also very crucial for its defence.
-Consumption of iron and steel is an index of
industrial development of a country.

16. Key Points of Iron & Steel
Industry
Production of iron and steel in India
constitutes 1.5% of world & 6.7% of Asia’s
production.
India was the 4th largest producer of steel in
2012
China is the largest producer of steel in the
world
A cumulative capital worth Rs. 90000 crore is
lying invested in this industry

17. Development of Iron & Steel
Industry
-In 1830 the first attempt was made to
manufacture iron with modern techniques in
south India
-In 1907 setting up of Tata iron and steel
works at Sakchi (Jamshedpur) Bihar
-In 1919 Indian iron and steel works was setup
at Burnpore near Asansol in Bengal
-In 1923 Mysore iron and steel works was
founded at Bhadavati(Mysore)

18. Development of iron & steel
industry
- In 1973 government established Steel
Authority of India Ltd.(SAIL) for the
development of iron and steel industry.
A National Steel institute has been established
at Puri to cater to the needs of training,
service, consultancy and research and
development of the steel producing belt of
southern and eastern regions

19. Types of Steel Plants in India
- Integrated steel plants
-Mini steel plants

20. Integrated steel plants
- Large steel plants are included in it.
-These produce soft steel n large quantity
-Currently nine of these steel plant working in
the public sector which are Bhilai , Durgapur,
Rourkela , Bokaro , IISCO,Alloy steel
plant,saleem steel plant , Vishveshwarya steel
plant and Vishakhapatnam steel plant of
these first eight are owned and managed by
Steel Authority of India(SAIL

21. Mini steel plants
-These producing steel by electric furnaces
Steel is manufactured out of scrap and sponge
iron
-Presently there are 196 mini steel plants in
India of which 179 are producing steel
They account for the 30% steel production of
the country

22. Problems of Iron and steel
industry
•Scarcity of coal & power
•Obsolete Machinery & backward Technology
•Dependence on foreign investment
•Problem of transport
•Lack of efficient engineers
•High prices
•Industrial disputes

23. Problems of Iron and steel
industry
-Less utilization of production capacity
-Disequilibrium between demand and supply
-Excess staff
-Threat from international competition
-Hike in prices of steel scrap

24. Suggestions for the
improvement of Steel industry
-Improvement in techniques
-Diversification
-Arrangement of best quality coal
-Use of full capacity
-Efficient management of public sector
enterprises
-Development of small factories
-Solution of labour problem

25. Semester: B. Com - V Semester
Name of the Subject:
INDIAN ECONOMY
Unit-IV

26. Introduction: Fiscal Policy
 Fiscal Policy is a part of macro economics.
 This policy is also known as budgetary policy.
 One major function of the government is to stabilize
the economy.
 Current indian govt wants to achieve fiscal deficit
target by not reducing expenditure but increasing tax
collection.
 Keynesian economics, when the government changes
the levels of taxation and governments spending, it
influences aggregate demand and the level of
economic activity.

27. Meaning: Fiscal Policy
• The word fisc means ‘state treasury’ and fiscal policy
refers to policy concerning the use of ‘state treasury’ or
the government finances to achieve the macroeconomic
goals.
• Fiscal policy involves the decisions that a government
makes regarding collection of revenue, through taxation
and about spending that revenue.
• It is sister strategy to monetary policy through which a
central bank influences a nation’s money supply.

28. Objectives of Fiscal Policy
1. Development by effective mobilisation of resources
2. Reduction in inequalities of income and wealth
3. Price stability and control of inflation
4. Employment generation
5. Reducing the deficit in the balance of payment
6. Increasing national income
7. Development of infrastructure

29. Instrumentsof Fiscal policy
Instruments of Fiscal
Policy
Budget Taxation
Public
expenditure
Public debt

30. Public Expenditure
• Public expenditure is spending made by the
government of a country on collective needs and
wants such as pension, provision, infrastructure, etc.
• Public expenditure is an important component of
aggregate demand.
• Public expenditure include Revenue expenditure and
capital expenditure.

31. Public Debts
“ public debt is defined as any money owned by a
government agency”
• Internal borrowings
Borrowings from the public means of treasury bills and
govt. bonds.
Borrowings from the central bank
• External borrowings
Foreign investment
International organizations like World Bank &IMF
Market borrowings

32. Types of Fiscal Policy
Fiscal policy
Discretionary
policy
To cure
recession
Increase in
Govt.
expenditure
Reduction
of taxes
To control
inflation
Raising taxes
to control
inflation
Disposing of
budget
surplus
Non-discretionary
fiscal policy
Personal
income
taxes
Transfer
payment
Corporate
Income
taxes
Corporate
dividend
policy

33. Concept of Deficit
• Revenue Deficit = Revenue Expenditure – Revenue
Receipts
• Fiscal Deficit = Total Expenditure (that is Revenue
Expenditure + Capital Expenditure) – Total Receipts
(that is all Revenue and Capital Receipts other than
loans taken)

34. Achievements of Fiscal Policy in India
• Mobilization of resources
• Increase in savings
• Increase in capital formation
• Incentives to investment
• Reduction in Income and wealth Inequalities
• Reduction in inter regional variations

35. Fiscal Reforms in India
• Simplification of taxation system
• Improving tax to GDP ratio
• Reduction in rates of direct taxes
• Reforms in indirect taxes
• Introduction of service tax

36. Contd…
• Reduction in non-plan government expenditure
• Reduction in subsidies
• Closure of sick public sector companies
• Disinvestment of public sector units
• Efforts to reduce government administrative expenses

37. Conclusion
• Thus, the fiscal policy encompasses two separate but related
decisions; public expenditures and the level and structure of
taxes. It occupies the central place for maintaining full
employment without inflationary forces in the economy.
With its various instruments it influences the economic
stability of an economy. The fiscal policy of the Indian
government has been very successful in several fields such
as mobilization of resources for economic development,
increasing rate of savings and capital formation, developing
cottage and small scale industries ,reducing the incidence of
poverty etc.

38. Functions of the Planning Commission of India
• To make an assessment of the resources of the country
and to see which resources are deficient.
• To formulate plans for the most effective
and balanced utilization of country's resources.
• To indicate the factors which are hampering economic
development.
• To determine the machinery, that would be necessary
for the successful implementation of each stage of plan.
• Periodical assessment of the progress of the plan.
Contd…

39. Functions of the Planning Commission of India
• The commission is seeing to maximize the output with
minimum resources with the changing times.
• The Planning Commission has set the goal of constructing a
long term strategic vision for the future.
• It sets sectoral targets and provides the catalyst to the
economy to grow in the right direction.
• The Planning Commission plays an integrative role in
the development of a holistic approach to the
formulation of policies in critical areas of human
and economic development.

40. Plan Target Actual
First Plan (1951 – 56) 2.9% 3.6%
Second Plan (1956 – 61) 4.5% 4.3%
Third Plan (1961 – 66) 5.6% 2.8%
Plan Holiday
Fourth Plan (1969 – 1974) 5.7% 3.3%
Fifth Plan (1974 – 79) 4.4% 4.8%
Sixth Plan (1980 – 85) 5.2% 6.0%
Seventh Plan (1985 – 90) 5.0% 6.0%
Eighth Plan (1992 – 97) 5.6% 6.8%
Ninth Plan (1997 – 2002) 6.5% 5.4%
Tenth Plan (2002 – 2007) 8.0% --

41. Eighth Five-Year Plan (1992 - 97)
• The eighth plan was postponed by two years
because of political uncertainty at the Centre
Worsening Balance of Payment position and
inflation during 1990-91.
• The plan undertook drastic policy measures
to combat the bad economic situation and to
undertake an annual average growth of 5.6%.
• Some of the main economic outcomes during eighth
plan period were rapid economic growth,
high growth of agriculture and allied sector,
and manufacturing sector, growth in exports
and imports, improvement in trade and current
account deficit.

42. Ninth Five Year Plan (1997- 2002)
• It was developed in the context of
four important dimensions:
– Quality of life
– generation of productive employment
– regional balance and
– self-reliance

43. Objectives of the Ninth Five Year Plan
• To prioritize agricultural sector and emphasize on the
rural development
• To generate adequate employment opportunities and
promote poverty reduction
• to stabilize the prices in order to accelerate the growth rate of
the economy
• to ensure food and nutritional security.
• to provide for the basic infrastructural facilities like
education for all, safe drinking water, primary health care,
transport, energy
• to check the growing population increase
• to encourage social issues like women empowerment,
conservation of certain benefits for the Special Groups of the
society

44. Tenth Five Year Plan (2002 - 2007)
• Attain 8% GDP growth per year.
7.7%
• Reduction of poverty ratio by 5percentage
points by 2007.
Achieved
• Providing gainful and high-quality
employment at least to the addition to the
labour force.
•Reduction in gender gaps in literacy and wage
rates by at least 50% by 2007.

45. • Accelerate GDP growth from 8% to 10%.
• Increase agricultural GDP growth rate to 4% per year.
• Create 70 million new work opportunities and reduce educated unemployment
to below 5%.
• Raise real wage rate of unskilled workers by 20 percent.
• Reduce dropout rates of children from elementary school from 52.2% in 2003-04
to 20% by 2011-12.
• Increase literacy rate for persons of age 7 years or above to 85%.
• Raise the sex ratio for age group 0-6 to 935 by 2011-12 and to 950 by
2016-17.
• Ensure that at least 33 per cent of the direct and indirect beneficiaries of all
government schemes are women and girl children.
• Connect every village by telephoneby November 2007 and provide broadband
connectivity to all villages by 2012.
• Increase forest and tree cover by 5 percentage points.
Eleventh Five Year Plan (2007 - 2012)