ECONOMY BOOK INDEX

ELEVENTH

EDITION 201 1-12

Indian Economy Performance and Policies Uma Kapila if New, thoroughly revised Eleventh Edition, 2011-12 •k Based on latest recommended readings (restructured course) it Designed to serve as a textbook for B.Com (H)

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CONTENTS Preface

23

SECTION -1

Basic Issues in Economic Development 1. Economic Development, Under Development and Human Development -

27

Introduction

- What does Development Mean - Economic Growth and Economic Development - The New View of Economic Development • Development as a Multi-dimensional Process •

Three Core Values of Development

- Development, Freedom and Opportunities - Human Development • Human Development Index • Sustainable Human Development - What Makes Development Unsustainable? — Policy for Sustainable Development - State of Human Development in India

2. The Environment and Development -

42

Introduction

- The Basic Issues • Defining Sustainable Development ...Conic/....

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Indian Economy: Performance and Policies

...Contd....

• • • • • •

— The Three Pillars of Sustainable Development — The Rio Earth Summit and Agenda 21 — Sustainable Development and Environmental Accounting Population, Resources and the Environment Poverty and the Environment Growth versus the Environment Rural Development and the Environment Urban Development and the Environment Global Warming and Climate Changing — Defining Dangerous

- The Indian Case '

Consequences of Environmental Plunder

- Public Policy - Climate Change • Status of Climate Change Negotiations • Actions taken by India on Climate Change

SECTION - II

Indian Economy at Independence 3. India's Economy at Independence - Introduction — The Relative Importance of Various Industrial Activities • Composition of National Income • The Working Force - The Agrarian Scene • Stagnating Agriculture • Causes — Regressive Organic Structure — Internal Drain of Capital — Poor Technology — India's Industrial Production and its Structure • India's Industrial Resources • The Decline of Traditional Industry and the Development of Modern Industry

56

Contents in Detail

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- Some other Economic Indicators of Economic Backwardness - Some Positive Features

SECTION - III

Policy Regimes 4. Planning in India: Development Strategy and Role of State

69

- Evolution of Planning - Structural Constraints and the Development Strategy - Role of the State as Visualised in the Fifties - Evolution of Strategy and Priorities ' Changing Perceptions • Role of Planning in a Market Economy • Redefining the Role of State

5. Economic Reform and Liberalisation

84

- Debate on Liberalisation - Economic Reform • The Background • The Macroeconomic Crisis • Ratiofiale for the Reforms • Macroeconomic Reforms — Structural Reforms ° Implementation of the Agenda o Removal of QRs o Industrial Policy Reforms — Impact of Reforms — Fiscal Adjustment and Stabilisation — Impact of Economic Reforms on the Vulnerable Sections - Conclusion -

The Next Round of Reforms ...Contd..

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Indian Economy: Performance and Policies

...Contd....

SECTION - IV

Growth, Development and Structural Change . 6. India's Growth Experience -

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103

The Performance Phases of Growth Periodisation of Indian Growth Experience ~~ ' Assessment of Performance Causal Factors What Next' Growth Drivers Growth Prospects International Comparisons Sustaining High Growth • Outward Orientation: Export Promotion Strategy vs. Import Substitution Strategy Performance on Inclusiveness ' Multidimensionality of Inclusion Growth and Structural Change Growth and Sectoral Shares, Cross-Country Evidence and Indian Experience • Share of Services in GDP • What are the Factors behind the Dynamism of the Services Sector in India Inter-Regional Disparities in Growth and Development The Way Ahead Conclusion

7. Institutional Reforms for Agricultural Growth - Land Systems at the Time of Independence • Feudal Agrarian Structure - Policies for Restructuring Agrarian Relations • Economic Arguments in Favour of Land Reform - Land Reform Legislation in India • Abolition of Intermediaries

138

Contents in Detail

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Ceiling on Landholdings Tenancy Reforms Consolidation of Holdings Cooperative Farming

- Impact of Land Reforms on the Agrarian Structure - Emerging Perspectives and Policy Issues

8. Unemployment and Employment Perspective .-.

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153

- Concepts and Measurement • Labour Force and Workforce Participation Rates

- Long-term Trends in Employment Situation: 1983 through 2005 - Informalisation of Employment - What Explains Lack of Growth in Formal Sector Employment? - Growth and Employment - Employment Perspective - Weaknesses in Past Performance - Employment and Labour Policy - Indian Labour Laws and Labour Markets - Public Employment Programme for the Unorganised Workers: The Case ofNREGA '

National Rural Employment Guarantee Act — An Overview of the Scheme — The Performance — Success Stories — Remaining Gaps

- Conclusion

9. Poverty in India

181

- Magnitude and Determinants '

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The Selection of Poverty Lines

Poverty and Inclusive Growth Methodology for Estimation of Poverty and BPL Households Expert Groups for Estimating Poverty and BPL Families Reduction in Poverty ...Contd...

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Indian Economy: Performance and Policies

...Contd....

- Comparison of India and China < in Terms of Poverty Reduction - Poverty Alleviation in Development Debate • Causes of Poverty • Growth Poverty Relationship — Growth and Poverty Reduction • Growth and Inequality • Globalisation and Poverty Reduction • Growth, Employment and Poverty • Growth Pattern and Poverty i - Poverty Alleviation Programmes • Programme for Socially Disadvantaged • Land Reforms • Public Distribution System. • Self Employment Programmes • Wage Employment Programmes - Some Critical Issues in Choice of Programme • Self versus Wage Employment Programmes • Spatial Dimension and Area Focus • Poor in General versus Hardcore Poor • Public Investment in Human Capital and Public Goods - Concluding Remarks

10. Demographic Constraint: Interaction between Population Change and Economic Development

208

- Economic Development and Population Growth • The Theory of Demographic Transition • The Microeconomic Theory of Fertility • How Does Population Growth affect Economic Development - India's Demographic Transition • Causes of High Birth Rate — Social Factors — Economic Factors o Poverty ° Lack of Social Security ° Illiteracy, Ignorance and Belief in Fate ° Ineffective Family Planning • Fertility Rate • Causes of Decline in Death Rate — Control of Epidemics — Control of Famines

Curiums in Detail

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— Improved Medical Facilities — Spread of Maternity Homes — Impact of Economic Development Measures to Reduce Birth Rate Concerns about Population Growth Gender Equity and the Demographic Transition Population Policy since 1947 National Population Policy, 2000 • Objectives of National Population Policy Implications of Mortality Decline for the Future Human Resource Development Health Care as a Social Responsibility The Experience of Kerala and Tamil Nadu Policy Shift Essential to Check Population Growth Enabling Factors The Future

SECTION-V Sectoral Trends and Issues 11. Agriculture: The Problem of Productivity

241

- Importance of Agriculture in National Economy • Agriculture as a Source of Employment • Linkage between Agriculture and Other Sectors - Productivity in Indian Agriculture • Low Levels of Productivity • Causes of Low Productivity - General Causes — Institutional Causes — Technological Factors

12. Agricultural Growth, Performance and Policies

249

- The Institutional Context

- The New Technology • Characteristics of New Technology - Better Agricultural Practices ...Contd....

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Indian Economy: Performance and Policies

... Contd....

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• Economic Aspects of New Technology • Three Phases of Green Revolution - The First Phase, 1966-1972 - Debacle and the Second Phase, 1973-1980 - The Third Phase, 1981-1990 Reform Period, 1991 to the Present Deceleration in Agriculture Growth < Agricultural Growth during 2005-06-2010-11 Instability in Ouput • Regional Disparities and Intra-Personal Disparities New Technology and Environmental Degradation Major Factors Affecting the Growth Potential • Lack of Long Term Policy Perspective • Investment in Agriculture and Subsidies • Lagging Research and Development Efforts • Technology Generation and Dissemination • Rising Soil Degradation and Over-exploitation of Ground Water • Degradation of Natural Resources Rural Distress in Post-reform India National Policy for Farmers, 2007 High Value Commodities: The Future Sources of Growth in Agriculture Reforming the Three Ts: Investments, Incentives, and Institutions • Reforming Incentives — Price and Marketing Policy • Reforming Institutions — Marketing and Warehouse Facilities — Reforming Land and Credit Markets Challenges and Outlook

13. Food Security, Public Distribution and Agricultural Price Policy -

Pre-green Revolution Green Revolution 'Post-Reform Revolution Food Management • Food Procurement Policy • Price and Distribution Controls in the Food Grain Market • Public Distribution System (PDS)

278

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Contents in Detail

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• Food Subsidy • Buffer Stock Food Security Recent Policy Initiatives Food Security and Future Sources of Growth in Agriculture Agricultural Price Policy • Removal of Export Restraints

14. Globalisation and Indian Agriculture.:..;

296

- Emerging Trends and Impact of Globalisation - India and WTO - Major Issues in the Context of Globalisation

15. Industrial Growth and Policy

302

- The Industrial Scene at Independence - Industrial. Control Regime 1950s to 1970s • Performance of the Industrial Licensing System - Industrial Policy Reforms 1980s - The Policy Regime in the 1990s - New Economic Policy 1991 ' Opening up to Foreign Investment • Public Sector Reforms, Privatisation and Infrastructure - Industrial Policy: Recent Policy Initiatives - Industrial Policy Eleventh Plan - Industrial Growth • Phases of Industrial Growth • Industrial Growth in the 90s • Comparative Growth Rates in the 80s and the 90s - Relative Contribution of Sectors to Total Production - The Manufacturing Slowdown (1996-2002) • Factors Causing the Slowdown: Some Hypotheses - Infrastructure Constraints in the Industrial Sector - Recovery in Industrial Growth since 2002-03 - Industrial Growth Since 2007-08 • Developments that Impacted the Slow down and Recovery - Raw Material Costs - The Shrinkage in Demand - The Recovery - Why did Manufacturing Sector's Share in Total Employment Stagnate - Other Aspects of Industrial Change ...Contd....

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Indian Economy; Performance and Policies

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...Contd....

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- fl^Ay *//rf the Reforms Fail to Deliver the Expected Results? • Labour Market Regidity Hypothesis • Infrastructure Bottlenecks - What Should be Done Now? - Conclusions

16. Public Sector in the Indian Economy

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331

- The Rationale ' ., - • - Performance of Central Public Sector Undertakings • Output and Capital Formation • Fall in Public Sector Employment Growth • Improvement in Efficiency of Thermal Power Plants • Central PSEs' Profitability — Reasons and Implications - Public Sector and 1991 Industrial Policy • Policies toward CPSEs and their Implementation - Privatisation • Privatisation: Indian Experience since 1991

17. Micro and Small Enterprises (MSEs)

346

— Role ofSMEs in Global Economy: International Scenario — Defining MSEs—MSMED Act, 2006 — Role of MSEs in Indian Economy • To Generate Large-Scale Employment • To Sustain Economic Growth and Increase Exports • For Making Growth Inclusive — Globalisation and Small Industry Performance ' Infrastructure — Economic — Technological — Financial • Marketing — Future Prospects of Small Industry — New Initiatives — Summary and Conclusions

18. Services in the Indian Growth Process — Importance of the Services Sector for India • Services GDP • Services Employment in India

362

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Contents in Detail

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— Growth and Sectoral Shares, Cross Country Evidence and Indian Experience • Services GDP: International Comparison • • Share of Services in Employment • FDI in Services in India • Services Exports — Important Services for India — Which Services have Grown Rapidly? — Factors Underlying the Services Growth — World Trade in Services Sector — India's Services Trade • India's Services Exports • India's Services Imports • Liberalisation of Services in India • India and Trade Negotiations in Services — Challenges and Outlook

19. The Financial Sector: Structure, Performance and Reforms

381

— Financial Sector Development in India • Institutional Structure — Financial Sector Reforms ' Directions of Reforms • Administered Structure of .Interest Rate • Autonomy, Prudential Regulations and Supervision • 1991 and After: The Reform Years — Financial Sector and Monetary Policy: Objectives and Reforms — Banking Sector • Spread of Banking • Capital Position and Asset Quality • Competition and Efficiency • Productivity — Some Emerging Issues • Growth Challenges for the Financial Sector

20. Foreign Trade

394

— Constraints arising from Foreign Trade and Import Substitution based Policies — Exports and Imports: Broad Trends • Exports — Composition of India's Exports ...Contd....

20

Indian Economy: Performance and Policies »

... Contd....

- Direction of Exports • Imports . - Composition of Imports - Direction of Imports • Services Trade - Special Economic Zones (SEZs) - Challenges and Outlook - Appendix: Balance of Trade

21. Balance of Payments and Trade Policy - Concepts - Trade Policy: An Overview • Import Substitution based Strategy - Towards Efficient Import Substitution • Trade Policy since 1991 - Outward Orientation Focusing on Export Promotion • Recent Trade Policy Measures

- Tariff Reforms -

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• Contingency Trade Policy and Non-tariff Measures Trade Policy Reforms: Some Challenges for the Medium and Long Term India's Balance of Payment Trends 1950-2000 • The Decades of Fifties and Sixties • Balance of Payments in the Seventies - A Decade of Comfort • Balance of Payments in the Eighties - The Period of Difficulties up to 1981-82 - Easing of Pressure 1982-83 to 1984-85 - The Build-up to the Crisis 1985-1990 • Balance of Payments in the Nineties - The Crisis: 1990-1992 • Balance of Payment during 2006-07 to 2009-10 External Debt • International Comparison Foreign Exchange Reserves • Approach • Developments • Issues Foreign Exchange Rate Policy Concluding Remarks

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Contents in Detail

22. Foreign Capital

21

445

- Introduction - The Debate on the Role of Foreign Capital - Forms of Foreign Capital • Foreign Direct Investment • Portfolio Capital • External Aid • Commercial Debt Capital - FDI Policy: A Historical Perspective • First Phase 1950-1967 • Second Phase 1967-1980 • Third Phase 1980-1990 • Fourth Phase-1991 Onwards - Liberalisation: Trends and Patterns in FDI Inflows • Changes in Sectoral Composition • Changes in the Sources of FDI • Pattern of FDI by Type of Approvals • FDI Outlook - Concluding Remarks and Policy Lessons

23. Globalisation: India and the W T O

461

- Globalisation • Historical Development - Gains and Losses from Globalisation • Trade in Goods and Services • Movement of Capital • Financial Flows - Concerns and Fears - Improving the International Architecture for Integration - World Trade Organization - India and the WTO • India's Participation in WTO Meetings • WTO Negotiations and India • India's Stand on Various Issues

Questions

479

Glossary

489

Select Bibliography

501