9-2 The various activities have been classified into three main sectors i.e.

, primary, secondary and tertiary. Primary sector includes agriculture, forestry, animal husbandry, fishing, poultry farming, mining, and quarrying. Manufacturing is included in the secondary sector. Trade, transport, communication, banking, education, health, tourism, services, insurance etc. are included in the tertiary sector. The activities in this sector result in the production of goods and services. These activities add value to the national income. These activities are called economic activities. Economic activities have two parts . market activities and non-market activities. Market activities involve remuneration to any one who performs i.e., activity performed for pay or profit. These include production of goods or services including government service. Non-market activities are the production for self-consumption. These can be consumption and processing of primary product and own account production of fixed assets. The plan outlay on education has increased from Rs 151 crore in the first plan to Rs 43,825 crore in the tenth plan. The expenditure on education as a percentage of GDP rose from*Infant mortality rate (IMR) has come down from 147 in 1951 to 75 in 2000. **Crude birth rates have dropped to 26.1 and ***death rates to 8.7 within the same duration of time. 0.64% in 1951.52 to 3.98% in 2002.03 (Budgetary estimate). The literacy rates have increased from 18% in 1951 to 65% in 2001. Vulnerability to poverty is a measure, which describes the greater probability of certain communities (say, members of a backward caste) or individuals (such as a widow or a physically handicapped person) of becoming, or remaining, poor in the coming years. Anti-Poverty Measures Removal of poverty has been one of the major objectives of Indian developmental strategy. The current anti-poverty strategy of the government is based broadly on two planks (1) promotion of economic growth (2) targeted anti-poverty programmes. National Rural Employment Guarantee Act (NREGA) 2005 was passed in September 2005. The Act provides 100 days assured employment every year to every rural household in 200 districts. Later, the scheme will be extended to 600 districts National Food for Work Programme (NFWP), which was launched in 2004 in 150 most backward districts of the country. The programme is open to all rural poor who are in need of wage employment and desire to do manual unskilled work. It is implemented as a 100 per cent centrally sponsored scheme and foodgrains are provided free of cost to the states. Once the NREGA is in force, the NFWP will be subsumed within this programme. Prime Minister Rozgar Yozana (PMRY) is another scheme which was started in 1993. The aim of the programme is to create self-employment opportunities for educated unemployed youth in rural areas and small towns. Rural Employment Generation Programme (REGP) was launched in 1995. The aim of the programme is to create selfemployment opportunities in rural areas and small towns. Food security means availability,accessibility and affordability of food to all people at all times. Thus, food security is ensured in a country only if (1) enough food is available for all the persons (2) all persons have the capacity to buy food of acceptable quality and (3) there is no barrier on access to food. What is Buffer stock? Buffer Stock is the stock of foodgrains, namely wheat and rice procured by the government through Food Corporation of India (FCI). The FCI purchases wheat and rice from the farmers in states where there is surplus production. The farmers are paid a pre-announced price for their crops. This price is called Minimum Support Price. The MSP is declared by the government every year What is the Public Distribution System? The food procured by the FCI is distributed through government regulated ration shops among the poorer section of the society. This is called the public distribution system (PDS). Ration shops are now present in most localities, villages, towns and cities. There are about 4.6 lakh ration shops all over the country. Ration shops also known as Fair Price Shops keep stock of foodgrains, sugar, kerosene oil for cooking. *There are three kinds of ration cards: (a) Antyodaya cards for the poorest of the poor; (b) BPL cards for those below poverty line; and (c) APL cards for all others.

three important food intervention programmes were introduced: Public Distribution System (PDS) for food grains (in existence earlier but strengthened thereafter); Integrated Child Development Services (ICDS) (introduced in 1975 on an experimental basis) and Food-for-Work** (FFW) (introduced in 1977.78). In 1992, Revamped Public Distribution System (RPDS) was introducted in 1,700 blocks in the country. in 2000, two special schemes were launched viz., Antyodaya Anna Yojana*** (AAY) and the Annapurna Scheme (APS) with special target groups of .poorest of the poor. and .indigent senior citizens., respectively +Subsidy is a payment that a government makes to a producer to supplement the market price of a commodity. Subsidies can keep consumer prices low while maintaining a higher income for domestic producers. 10-1 development Hence, we compare the average income which is the total income of the country divided by its total population. The average income is also called per capita income. In World Development Report 2006, brought out by the World Bank, this criterion is used in classifying countries. Countries with per capita income of Rs 4,53,000 per annum and above in 2004, are called rich countries and those with per capita income of Rs 37,000 or less are called low-income countries. India comes in the category of low-income countries because its per capita income in 2004 was just Rs 28,000 per annum. The rich countries, excluding countries of Middle East and certain other small countries, are generally called developed countries. Infant Mortality Rate (or IMR) indicates the number of children that die before the age of one year as a proportion of 1000 live children born in that particular year. Literacy Rate measures the proportion of literate population in the 7 and above age group. Net Attendance Ratio is the total number of children of age group 6-10 attending school as a percentage of total number of children in the same age group. 2 SECTORS OF THE INDIAN ECONOMY When we produce a good by exploiting natural resources, it is an activity of the primary sector. Why primary? This is because it forms the base for all other products that we subsequently make. Since most of the natural products we get are from agriculture, dairy, fishing, forestry, this sector is also called agriculture and related sector. The secondary sector covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity. it is also called as industrial sector. Since these activities generate services rather than goods, the tertiary sector is also called the service sector. Service sector also includes some essential services that may not directly help in the production of goods. For example, we require teachers, doctors, and those who provide personal services such as washermen, barbers, cobblers, lawyers, and people to do administrative and accounting works. The value of final goods and services produced in each sector during a particular year provides the total production of the sector for that year. And the sum of production in the three sectors gives what is called the Gross Domestic Product (GDP) of a country. It is the value of all final goods and services produced within a country during a particular year. GDP shows how big the economy is. In India, the mammoth task of measuring GDP is undertaken by a central government ministry This kind of underemployment is hidden in contrast to someone who does not have a job and is clearly visible as unemployed. Hence, it is also called disguised unemployment. Right to Work in 200 districts of India. It is called National Rural Employment Guarantee Act 2005 (NREGA 2005). Under NREGA 2005, all those who are able to, and are in need of, work have been guaranteed 100 days of employment in a year by the government DIVISION OF SECTORS AS ORGANISED AND UNORGANISED 3 This is known as double coincidence of wants. What a person desires to sell is exactly what the other wishes to buy banks in India these days hold about 15 per cent of their deposits as cash Collateral is an asset that the borrower owns (such as land, building, vehicle, livestocks, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid. 4 globalistion Globalisation is this process of rapid integration or interconnection between countries. MNCs are playing a major role in the globalisation process. More and more goods and services, investments and technology are moving between countries. Liberalisation of foreign trade and foreign investment policy Removing barriers or restrictions set by the government is what is known as liberalization

the central and state governments in India are taking special steps to attract foreign companies to invest in India. Industrial zones, called Special Economic Zones (SEZs), are being set up. SEZs are to have world class facilities: electricity, water, roads, transport, storage, recreational and educational facilities. Companies who set up production units in the SEZs do not have to pay taxes for an initial period of five years. In this chapter, we looked at the present phase of globalisation. Globalisation is the process of rapid integration of countries. This is happening through greater foreign trade and foreign investment. MNCs are playing a major role in the globalization process. More and more MNCs are looking for locations around the world that are cheap for their production. As a result, production is being organized in complex ways. Technology, particularly IT, has played a big role in organising production across countries. In addition, liberalisation of trade and investment has facilitated globalisation by removing barriers to trade and investment. At the international level, WTO has put pressure on developing countries to liberalise trade and investment. While globalisation has benefited well-off consumers and also producers with skill, education and wealth, many small producers and workers have suffered as a result of the rising competition. Fair globalisation would create opportunities for all, and also ensure that the benefits of globalisation are shared better

A major step taken in 1986 by the Indian government was the enactment of the Consumer Protection Act 1986, popularly known as COPRA India has been observing 24 December as the National Consumers Day. It was on this day that the Indian Parliament enacted the Consumer Protection Act in 1986.
12 microeconomics 1-introduction Scarcity(kami,abhav)
The allocation of scarce resources and the distribution of the final goods and services are the central problems of any economy.

Production Possibility Frontier The collection of all possible combinations of the goods and services that can be produced from a given amount of resources and a given stock of technological knowledge is called the production possibility set of the economy. Macroeconomics Macroeconomics tries to address situations facing the economy as a whole. Adam Smith, the founding father of modern economics, had suggested that if the buyers and sellers in each market take their decisions following only their own self-interest, economists will not need to think of the wealth and welfare of the country as a whole separately. But economists gradually discovered that they had to look further. Macroeconomic policies are pursued by the State itself or statutory bodies like the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and similar institutions. Typically, each such body will have one or more public goals to pursue as defined by law or the Constitution of India itself. Macroeconomics, as a separate branch of economics, emerged after the British economist John Maynard Keynes published his celebrated book The General Theory of Employment, Interest and Money in 1936.
a capitalist economy can be defined as an economy in which most of the economic activities have the following characteristics (a) there is private ownership of means of production (b) production takes place for selling the output in the market (c) there is sale and purchase of labour services at a price which is called the wage rate (the labour which is sold and purchased against

wages is referred to as wage labour). To come back to our discussion on the measure of final output, that part of our final output that comprises of capital goods constitutes gross investment of an economy1.

This deletion, which is made from the value of gross investment in order to accommodate regular wear and tear of capital, is called depreciation. Net Investment = Gross investment Depreciation Depreciation is thus an annual allowance for wear and tear of a capital good.2 In other words it is the cost of the good divided by number of years of its useful life.

CIRCULAR FLOW OF INCOME AND METHODS OF CALCULATING NATIONAL INCOME

there may fundamentally be four kinds of contributions that can be made during the production of goods and services (a) contribution made by human labour, remuneration for which is called wage (b) contribution made by capital, remuneration for which is called interest (c) contribution made by entrepreneurship, remuneration of which is profit (d) contribution made by fixed natural resources (called land), remuneration for which is called rent. We can measure the uppermost flow (at point A) by measuring the aggregate value of spending that the firms receive for the final goods and services which they produce This method will be called the expenditure method. If we measure the flow at B by measuring the aggregate value of final goods and services produced by all the firms, it will be called product method. At C, measuring the sum total of all factor payments will be called income method The above mentioned sketchy illustration of an economy is admittedly a simplified one. Such a story which describes the functioning of an imaginary economy is called a macroeconomic model. The Product or Value Added Method
The term that is used to denote the net contribution made by a firm is called its value added. The replacement investment is same as depreciation of capital. If we include depreciation in value added then the measure of value added that we obtain is called Gross Value Added. If we deduct the value of depreciation from gross value added we obtain Net Value Added. In economics, the stock of unsold finished goods, or semi-finished goods, or raw materials which a firm carries from one year to the next is called inventory. Inventory is a stock variable.

change in inventories takes place over a period of time. Therefore it is a flow variable. Inventories are treated as capital. Addition to the stock of capital of a firm is known as investment. Therefore change in the inventory of a firm is treated as investment. Gross value added of firm, i (GV Ai) Gross value of the output produced by the firm i (Qi) Value of intermediate goods used by the firm (Zi) GV Ai Value of sales by the firm (Vi) + Value of change in inventories (Ai) Value of intermediate goods used by the firm (Zi)
If we sum the gross value added of all the firms of the economy in a year, we get a measure of the value of aggregate amount of goods and services produced by the economy in a year (just as we had done in the wheat-bread example). Such an estimate is called Gross Domestic Product (GDP). Thus GDP Sum

total of gross value added of all the firms in the economy Expenditure Method

For example, the profits earned by the Korean-owned Hyundai car factory will have to be subtracted from the GDP of India. The macroeconomic variable which takes into account such additions and subtractions is known as Gross National Product (GNP). It is, therefore, defined as follows GNP GDP + Factor income earned by the domestic factors of production employed in the rest of the world Factor income earned by the factors of production of the rest of the world employed in the domestic economy Hence, GNP GDP + Net factor income from abroad
NNP at factor cost National Income (NI ) NNP at market prices (Indirect taxes Subsidies) NNP at market prices Net indirect taxes (Net indirect taxes Indirect taxes Subsidies)

We can further subdivide the National Income into smaller categories. Let us try to find the expression for the part of NI which is received by households. We shall call this Personal Income (PI). First, let us note that out of NI, which is earned by the firms and government enterprises, a part of profit is not distributed among the factors of production. This is called Undistributed Profits (UP). We have to deduct UP from NI to arrive at PI, since UP does not accrue to the households. Similarly, Corporate Tax, which is imposed on the earnings made by the firms, will also have to be deducted from the NI, since it does not accrue to the households. Personal Income (PI) NI Undistributed profits Net interest payments made by households Corporate tax + Transfer payments to the households from the government and firms. Personal Disposable Income (PDI ) PI Personal tax payments Non-tax payments. Personal Disposable Income is the part of the aggregate income which belongs to the households. They may decide to consume a part of it, and save the rest
in order to compare the GDP figures (and other macroeconomic variables) of different countries or to compare the GDP figures of the same country at different points of time, we cannot rely on GDPs evaluated at current market prices. For comparison we take the help of real GDP. Real GDP is calculated in a way such that the goods and services are evaluated at some constant set of prices (or constant prices). Since these prices remain fixed, if the Real GDP changes we can be sure that it is the volume of production which is undergoing changes. Nominal GDP

the ratio of nominal GDP to real GDP gives us an idea of how the prices have moved from the base year (the year whose prices are being used to calculate the real GDP) to the current year. In the calculation of real and nominal GDP of the current year, the volume of production is fixed. Therefore, if these measures differ it is only due to change in the price level between the base year and the current year. The ratio of nominal to real GDP is a well known index of prices. This is called GDP Deflator. Thus if GDP stands for nominal GDP and gdp stands for real GDP then, GDP deflator = GDP gdp .

Money and Banking Economic exchanges without the mediation of money are referred to as barter exchanges