Programme: Year: 2nd

Certificate/Diploma/Degree/

UG(R)/PG/Ph.D.
Semester: Third

Class:

Credits Subject: INDIAN ECONOMY

Theory:4

Tutorial:0

Practical:0

Course Title: INDIAN ECONOMY

Code:

NEP BBA
302

Course Objectives:

A clear understanding of the key concepts and ideals of functioning of Indian Economy.

To provide a basic understanding of the nature of the policies formulation and their implementation.

To aware the students regarding economic problems like unemployment, poverty, and inflation
prevailing in Indian economy and various steps or measures taken by government to curb them.

To have deep insight into different industrial policies of government over different time periods.

To learn about various strategies of economic planning in India.

Nature of Paper: Core

Minimum Passing Marks/Credits:40

L:40

T:

P: (In Hours/Week)
Theory - 1 Hr. = 1 Credit

Practical- 2 Hrs.=1 Credit (4Hrs./Week=4Credits)

Unit Contents No. of Lectures

Allotted

I Structure of Indian Economy: 08

Meaning of Economy, Concept of economic growth &

development, characteristics of Indian economy, Changes in
occupational structure in India.

II Historical Perspective & Problems in Indian economy: 08

Indian economy in Pre & Post Independence period: Economy

on eve of independence (challenges & features), economy in
post-independence India (Challenges & Features), An overview
of Economic resources of India.

Economic problems: Population, Poverty, inequality, Parallel

economy, Unemployment, Balanced Regional development, Low
capital formation & Industrial Sickness.

III Planning & Economic development of Indian economy: 08

Economic Planning in India: Objectives, Critical evaluation of

five-year plans, NITI AAYOG, Industrial policy 1991, New
Manufacturing policy, Agriculture Policy.

Government Budgeting: Budget terminology, Types of Budgets,

Benefits of Budgeting, Flaws in budgeting process, Budget
analysis, Merger of Railway & General Budget.

IV Indian Economy- Investment Model & Emerging Issues: 08

Investment Models: Measures of investment, factors affecting

investment, PPP Model.

Classification of Investment (FDI, Venture Capital, Angel

Investors & Start-ups, M&A).
 Savings & Investment Trends, Portfolio Investment & Foreign
Institutional Investment, Role of Development Banking.

V Indian Economy & Foreign Trade: 08

Concept, Significance, Foreign exchange reserves, Balance of

Payment, Balance of Trade, Export- Import Policy, Foreign
exchange management act (FEMA), Export Promotion &
Qualitative restrictions, GATT, TRIPS, TRIMS.

Reference / Text Books:

Datt, G. & Mahajan, A. (2013), Indian Economy (67th Edition), S Chand & Company (P) Ltd., New
Delhi, India.

Puri, V.K. (2017), Indian Economy: Its Development Experience, Himalaya Publishing House, New
Delhi, India.

Mishra, S.K. (2005), Indian Economy, Himalaya Publishing House, New Delhi, India.

Evaluation/Assessment Methodology

Max. Marks

1) Class tasks/ Sessional Examination 18

2) Presentations /Seminar 3

3)Assignments 4

4) Research Project Report

75

5) ESE

Total: 100

Prerequisites for the course:

 UNIT 1

Structure of Indian Economy:

Meaning of Economy, Concept of economic growth & development, characteristics of Indian

economy, Changes in occupational structure in India.

Meaning of Economy:

The term "economy" refers to the system by which a country or region organizes and manages
its resources, including the production, distribution, and consumption of goods and services. It
encompasses various activities, such as manufacturing, trade, finance, and services, that
collectively determine how wealth is generated, allocated, and utilized within a society.

Concept of Economic Growth & Development

Understanding the concepts of economic growth and economic development is essential for
analyzing the progress and well-being of any economy. Though often used interchangeably,
these terms have distinct meanings and implications.

1. Economic Growth

Economic growth refers to the increase in the production and consumption of goods and services
in an economy over time. It is usually measured by the rise in a country’s Gross Domestic
Product (GDP) or Gross National Product (GNP).

Key Characteristics of Economic Growth:

 Quantitative Measure: Economic growth is a numerical increase in the value of goods

and services produced by an economy.
 GDP Focus: The most common metric for economic growth is GDP, which reflects the
total market value of all finished goods and services produced within a country during a
specific period.
 Short-Term Perspective: Economic growth often focuses on short-term gains, such as
annual increases in output or income.
 No Consideration of Distribution: Economic growth does not account for how the
benefits of increased production are distributed among the population.

2. Economic Development

Economic development is a broader and more qualitative concept that encompasses

improvements in the overall quality of life, well-being, and economic health of a country. It
involves not just growth in GDP but also enhancements in factors like health, education, equity,
and environmental sustainability.

Key Characteristics of Economic Development:

 Qualitative Measure: Economic development considers the overall improvement in

living standards, including access to education, healthcare, and clean water, as well as the
reduction of poverty and inequality.
 Sustainable Growth: It emphasizes sustainable growth that meets the needs of the
present without compromising the ability of future generations to meet their own needs.
 Human Development Focus: Economic development includes human development
indicators such as literacy rates, life expectancy, and the Human Development Index
(HDI).
 Social and Institutional Progress: Economic development requires institutional changes
like better governance, legal reforms, and social inclusion.

Importance of Economic Growth and Development:

Enhanced Living Standards: Economic growth leads to higher incomes, improved living
standards, and better quality of life for individuals. As an economy expands, people have access
to more goods and services, leading to increased well-being.

Job Creation: Growing economies create job opportunities. New businesses emerge, existing
ones expand, and industries thrive. This generates employment, reduces unemployment rates,
and fosters economic stability.

Investment and Innovation: Economic growth attracts investment. When an economy is

expanding, investors are more likely to put their money into productive ventures. Innovation and
technological advancements also flourish during periods of growth.

Fiscal Revenues: A growing economy generates higher tax revenues for the government. These
funds can be used for public services, infrastructure development, education, and healthcare.

Global Competitiveness: Economically strong nations are better positioned in the global arena.
They can negotiate favorable trade agreements, attract foreign investment, and participate
actively in international affairs.

Poverty Reduction: Economic growth contributes to poverty alleviation. As incomes rise and
job opportunities increase, more people can escape poverty and improve their standard of living.
Factor Affecting Economic Development:

Economic development is influenced by a variety of factors, each contributing to the overall progress
and prosperity of a region or nation. Here are some key factors affecting economic development:

1. Human Capital: The skills, education, and health of the workforce are crucial. A well-
educated and healthy population can drive innovation, productivity, and economic
growth.
2. Infrastructure: Adequate infrastructure, including transportation, communication, and
utilities, supports economic activities and facilitates trade and investment.
3. Institutions: Effective institutions and governance, including a stable legal framework,
property rights, and anti-corruption measures, provide an environment conducive to
economic development.
4. Investment: Both domestic and foreign investment are essential for growth. Investment
in industries, technology, and businesses drives economic expansion and job creation.
5. Economic Policies: Government policies related to taxation, trade, and regulation can
either promote or hinder economic development. Policies that encourage
entrepreneurship, innovation, and competition are beneficial.
6. Natural Resources: Availability and management of natural resources like minerals, oil,
and land can significantly impact economic development. Sustainable management is key
to ensuring long-term benefits.
7. Technology: Technological advancement and innovation boost productivity and can
create new industries and opportunities for economic growth.
8. Social Factors: Social stability, including factors such as inequality, social cohesion, and
public services, affects economic development. High levels of inequality or social unrest
can impede progress.
9. Globalization: Integration into the global economy through trade, investment, and
international cooperation can provide access to markets, technology, and resources,
driving economic growth.
10. Entrepreneurship: The presence of a dynamic entrepreneurial sector encourages
innovation, business creation, and economic diversification.
11. Demographics: Population growth, age distribution, and migration patterns can influence
economic development by affecting the labor market, consumption patterns, and overall
economic activity.
12. Environment: Environmental sustainability and climate conditions also play a role.
Managing environmental challenges and adapting to climate change are crucial for long-
term development.
Characteristics of Indian Economy

The Indian economy is characterized by its large size, diversity, and rapid growth. Key features
include:

1. Agrarian Basis: Historically, agriculture has been the backbone of the Indian economy,
employing a significant portion of the population. Despite the growth of the industrial and
services sectors, agriculture still plays a crucial role in the economy.
2. Mixed Economy: India operates a mixed economy, combining features of both capitalist and
socialist economies. The private sector and the government both play vital roles in economic
activities.
3. High Population: India is the most populous country in the world, which presents both
opportunities and challenges. A large labor force can drive economic growth, but it also
creates pressure on resources and infrastructure.
4. Diverse Industrial Structure: India has a varied industrial base, with industries ranging
from traditional handicrafts to modern information technology and biotechnology sectors.
5. Service Sector Dominance: The services sector is the largest contributor to India's GDP,
encompassing industries like IT, telecommunications, finance, and tourism.
6. Economic Disparities: There are significant regional and income disparities within India.
Some states and regions are highly developed, while others lag behind in terms of economic
and social indicators.
7. Rapid Economic Reforms: Since the liberalization in 1991, India has implemented various
economic reforms to open up the economy, encourage foreign investment, and promote
industrialization.

Changes in Occupational Structure in India

The occupational structure of an economy refers to the distribution of the workforce across
different sectors: agriculture, industry, and services. In India, the occupational structure has
undergone significant changes over the years.

1. Pre-Independence Period: Before independence, agriculture was the dominant sector,

employing the vast majority of the population. The industrial sector was underdeveloped, and
the services sector was minimal.
2. Post-Independence Period: Post-independence, India focused on industrialization and
economic planning. The Five-Year Plans aimed at diversifying the economy and reducing
dependence on agriculture. The Green Revolution in the 1960s boosted agricultural
productivity but did not substantially reduce the proportion of the population dependent on
agriculture.
3. Post-Liberalization Period: The economic reforms of 1991 marked a significant shift in
India's occupational structure. The industrial and services sectors expanded rapidly, attracting
 a larger share of the workforce. The IT and software services boom in the late 1990s and
early 2000s transformed the employment landscape.
4. Current Trends: Today, agriculture remains the dominant sector in terms of employment in
India, followed by the service sector and industry. Despite the growth of these other sectors,
a significant portion of the Indian population continues to rely on agriculture for their
livelihood.

The changes in occupational structure reflect the broader economic transformation of India from
an agrarian to a diversified economy. This shift is crucial for achieving sustainable economic
growth and improving living standards.

The structure of the Indian economy:

The structure of the Indian economy can be analyzed in detail through its various sectors, forms
of organization, and ownership patterns:

1. On the basis of Sectors

The Indian economy is traditionally divided into three main sectors:

 Primary Sector: This sector focuses on the extraction and harvesting of natural
resources. It includes activities such as agriculture, mining, forestry, and fishing. While
historically dominant, contributing significantly to GDP and employment, its role has
diminished in recent years as the economy has diversified. However, it remains crucial,
particularly for rural employment and food security.
 Secondary Sector: This sector involves manufacturing and industry. It processes raw
materials from the primary sector into finished goods. Key industries include
manufacturing, construction, and electricity generation. The secondary sector has grown
considerably due to industrialization and economic reforms, contributing substantially to
the GDP and providing employment in urban areas.
 Tertiary Sector: Also known as the service sector, this includes services such as trade,
transportation, communication, banking, finance, education, and healthcare. Over the past
few decades, the tertiary sector has become the largest contributor to India's GDP,
reflecting the country's shift towards a service-oriented economy. This sector is vital for
economic growth, urbanization, and employment generation.

2. On the basis of Organization

The Indian economy can be further categorized by the nature of its organization:

 Organized Sector: This includes enterprises that are formally registered with the
government and comply with labor laws, tax regulations, and other statutory
requirements. This sector encompasses large corporations, multinational companies, and
government-owned enterprises. The organized sector is essential for structured
employment, adherence to standards, and economic stability.
  Unorganized Sector: This sector consists of enterprises that are not officially registered
and do not strictly adhere to labor laws or tax regulations. It includes small-scale
businesses, artisans, street vendors, and agricultural laborers. Despite its informal nature,
the unorganized sector is a significant part of the Indian economy, providing employment
to a vast segment of the population, particularly in rural areas.

3. On the basis of Ownership

The ownership of enterprises within the Indian economy can be classified into two main types:

 Public Sector: Enterprises owned and controlled by the government fall under this
category. Public sector undertakings (PSUs) play a critical role in providing essential
services, infrastructure, and strategic industries. Examples include Indian Railways,
Bharat Heavy Electricals Limited (BHEL), and Oil and Natural Gas Corporation
(ONGC). The public sector is also involved in sectors considered vital for national
security and public welfare.
 Private Sector: This sector is owned and managed by private individuals, companies, or
corporations. It encompasses a wide range of industries, including information
technology, manufacturing, retail, and finance. The private sector has expanded
significantly since the economic liberalization of the 1990s, becoming a driving force for
innovation, efficiency, and economic growth. Notable examples include companies like
Reliance Industries, Tata Group, and Infosys.

Classification of Economics:

Economics can be classified in different ways based on various criteria. Here are the classifications of
economics based on development and system:

On the Basis of Development

(A) Developed Economics: This refers to the economic studies of nations that are highly
industrialized and have high standards of living, advanced technological infrastructure, and
stable economic growth. Examples include the United States, Germany, and Japan.

Characteristics:

1. High Standard of Living: Countries with developed economies have a high per capita
income and a high standard of living. Citizens typically enjoy access to quality healthcare,
education, and housing.
2. Advanced Technological Infrastructure: Developed economies have well-established and
advanced technological systems, including modern transportation, communication networks,
and industrial infrastructure.
3. Diversified Economy: These economies are typically diversified, with a strong industrial
base, service sector, and advanced manufacturing. Agriculture usually plays a minor role in
GDP.
4. Low Unemployment Rates: Developed countries often experience low levels of
unemployment and stable job markets, with a high proportion of skilled labor.
5. High Human Development Index (HDI): These countries score high on the HDI, which
measures life expectancy, education level, and income.
6. Stable Political and Economic Systems: Developed economies generally have stable
political institutions and well-functioning legal and financial systems, which contribute to
economic stability.

(B) Developing Economics: This deals with the economics of countries that are in the process of
industrialization and improving their economic infrastructure. These countries have lower
standards of living compared to developed nations but are working towards economic
growth. Examples include India, Brazil, and South Africa.

Characteristics:

1. Moderate to Low Standard of Living: Developing countries have a lower per capita
income compared to developed countries, and citizens may have limited access to quality
healthcare, education, and housing.
2. Growing Industrialization: These economies are in the process of industrialization. They
are transitioning from agriculture-based economies to ones focused more on manufacturing
and services.
3. Higher Population Growth: Developing countries often have higher population growth
rates, which can strain resources and infrastructure.
4. Income Inequality: There is typically significant income inequality, with a large gap
between the wealthy and the poor.
5. Improving Infrastructure: Infrastructure in developing economies is improving but still
lags behind that of developed countries. Investments in transportation, communication, and
energy are ongoing.
6. Dependence on Agriculture: Although industrialization is increasing, a significant portion
of the population may still rely on agriculture for their livelihood.
7. Vulnerable to Economic Shocks: Developing economies are more vulnerable to external
economic shocks, such as fluctuations in global commodity prices or financial crises.

(C) Underdeveloped Economics: This focuses on economies that are characterized by low
levels of industrialization, high levels of poverty, and lack of basic infrastructure. These
countries often rely heavily on agriculture and have limited access to modern technology.
Examples include many countries in Sub-Saharan Africa.
Characteristics:

1. Low Standard of Living: Underdeveloped countries have very low per capita income, and
many people live in poverty with limited access to basic necessities like food, clean water,
healthcare, and education.
2. Primitive Technology and Infrastructure: The technological and infrastructural base is
often outdated or inadequate, leading to inefficiencies in production and distribution.
3. High Dependence on Agriculture: These economies are primarily agrarian, with a large
portion of the population engaged in subsistence farming. Industrialization is minimal or
absent.
4. High Unemployment and Underemployment: There are high levels of unemployment and
underemployment, with a large informal sector where jobs are often low-paying and
unstable.
5. Low Human Development Index (HDI): Underdeveloped countries typically score low on
the HDI, reflecting poor health, low education levels, and limited economic opportunities.
6. Political Instability: These economies often experience political instability, corruption, and
weak governance, which further hinder economic development.
7. Lack of Diversification: The economies are not diversified, relying heavily on a few
commodities or agricultural products for export, making them vulnerable to market
fluctuations.
8. Examples: Many countries in Sub-Saharan Africa, such as Chad, Niger, and the Democratic
Republic of the Congo.

On the Basis of Economic System

Type of Economic Systems

1. Socialist Economics System

2. Capitalist Economics System
3. Mixed Economic System

Socialist Economic System

Meaning:

A socialist economic system is a way of organizing a society's economy where the government
or the community collectively owns and manages the resources and industries that produce
goods and services. The main goal of socialism is to create a society where everyone has more
equal opportunities and resources. This is done through careful planning and control by the
government. Example, China, Vietnam, Cuba, North Korea etc

Characteristics of a Socialist Economic System

1. State Ownership: In a socialist system, major industries, resources (like oil, minerals), and
utilities (like electricity, water) are owned and run by the government or by groups
 representing the people. This means the state decides how these resources are used and
distributed.
2. Central Planning: Unlike in capitalist economies where businesses make decisions based on
profit, in socialism, the government plans and decides what goods should be produced, how
much should be produced, and at what price. This planning is aimed at meeting the needs of
society as a whole, not just making money.
3. Income Redistribution: Socialists focus on reducing the gap between rich and poor. They
do this by taxing the wealthy more and using that money to fund social programs like
healthcare, education, and housing for everyone. The goal is to ensure that everyone has a
basic standard of living.
4. Limited Market Role: While there are markets in socialist economies, they are controlled
and regulated by the government. Prices of goods and services are often set by the
government to prevent companies from charging too much and to ensure that everyone can
afford basic necessities.
5. Limited Private Property: Socialism limits how much property and wealth individuals can
own. Private property exists, but it's not as widespread as in capitalist systems where
individuals or companies can own large businesses and properties.

Merits of a Socialist Economic System

1. Reduced Income Inequality and Poverty: Socialism aims to reduce income disparities by
redistributing wealth through progressive taxation and social welfare programs. This ensures
that basic needs such as healthcare, education, and housing are accessible to all citizens,
regardless of their income level.
2. Social Welfare and Universal Services: Socialist systems typically prioritize social welfare,
providing universal access to essential services such as healthcare, education, and public
utilities. These services are funded through public expenditure and aim to ensure equitable
access for all citizens.
3. Stability and Economic Planning: Centralized economic planning allows for strategic
allocation of resources based on societal needs rather than market demand alone. This can
lead to more stable economic conditions and effective crisis management during periods of
economic downturn.
4. Public Ownership of Key Industries: Socialist economies often feature state ownership or
collective ownership of key industries, utilities, and natural resources. This ensures that
economic resources are used for the collective benefit rather than private profit, promoting
equitable distribution and public control.
5. Worker Rights and Empowerment: Socialist systems prioritize workers' rights, fair wages,
and labor protections. Strong labor laws and regulations aim to prevent exploitation, ensure
safe working conditions, and empower workers through collective bargaining and
participation in decision-making processes.
Demerits of a Socialist Economic System

1. Bureaucratic Inefficiencies and Delays: Centralized economic planning and government

control can lead to bureaucratic inefficiencies, delays in decision-making, and slow response
to changing economic conditions or consumer preferences.
2. Lack of Incentives for Innovation and Entrepreneurship: Socialist economies may face
challenges in fostering innovation and entrepreneurship due to reduced incentives for risk-
taking and private investment. Without competitive market dynamics and profit motives,
there may be less innovation in technology, product development, and business expansion.
3. Potential for Market Distortions: Government intervention and price controls in socialist
systems can distort market signals, leading to inefficiencies, resource misallocation, and
imbalances in supply and demand. State-set prices may not reflect true market value,
resulting in shortages or surpluses of goods and services.
4. Risk of Authoritarianism and Political Control: Socialist systems that concentrate
economic and political power in the hands of the state may increase the risk of
authoritarianism, political repression, and government overreach. Limited private property
rights and centralized control can suppress individual freedoms, dissent, and diversity of
opinions.
5. Dependency on Government Support: Extensive social welfare programs funded by high
taxes can create dependency on government support among citizens. This dependency may
discourage self-reliance, entrepreneurial initiatives, and personal responsibility for economic
well-being.

Capitalist Economic System

Meaning: Capitalism is an economic system where businesses and individuals own and control
resources like land, factories, and technology. They operate these resources to make a profit.
Prices, production, and distribution of goods and services are determined by competition in a free
market. Example, UK, USA, Japan, Australia etc

Characteristics:

1. Private Ownership: Individuals and companies own property and businesses. They have the
right to decide how to use these resources to generate profit.
2. Profit Motive: Businesses aim to maximize profits. They make decisions based on what will
make them the most money, driving competition and innovation.
3. Market Competition: Prices and production are set by supply and demand. When demand is
high, prices go up, encouraging more production. Competition between companies keeps
prices fair and quality high.
4. Limited Government Intervention: Governments intervene minimally in economic
activities. They focus on maintaining fair competition and enforcing laws rather than
controlling prices or production.
5. Consumer Influence: Consumers influence what products and services are produced by
choosing what to buy. Businesses respond to consumer preferences to stay competitive.

Merits of Capitalist Economic System

1. Efficiency: Competitive markets in capitalism allocate resources efficiently. Businesses

strive to produce goods and services that consumers demand at competitive prices, leading to
optimal use of resources.
2. Innovation: The profit motive incentivizes businesses to innovate and develop new products
and technologies. Competition among firms drives continuous improvement and
technological advancements.
3. Consumer Choice: Capitalism offers consumers a wide variety of goods and services to
choose from. Competition encourages businesses to cater to diverse consumer preferences
and quality standards.
4. Economic Growth: Capitalist economies often experience higher economic growth rates due
to dynamic entrepreneurship, investment in productive activities, and efficient resource
allocation.
5. Individual Freedom: Capitalism promotes individual economic freedom where individuals
can own property, start businesses, and pursue economic opportunities based on their skills
and interests.

Demerits of Capitalist Economic System

1. Income Inequality: Capitalism can lead to significant income disparities where wealth and
opportunities are concentrated among a small percentage of the population. This inequality
can contribute to social unrest and instability.
2. Market Failures: Market failures such as monopolies, externalities (e.g., pollution), and
information asymmetry (e.g., misleading advertising) can occur. These failures can lead to
inefficiencies and unfair outcomes that harm consumers and society.
3. Financial Instability: Capitalist economies are prone to financial crises and economic
downturns due to speculative bubbles, excessive risk-taking, and inadequate regulation of
financial markets.
4. Environmental Impact: Pursuit of profit in capitalism may prioritize short-term gains over
long-term sustainability. This can result in environmental degradation, depletion of natural
resources, and climate change impacts.
5. Social Cohesion Challenges: Extreme income inequality and individualistic values in
capitalism can strain social cohesion and solidarity. This can undermine social trust and
cohesion, leading to societal divisions and conflicts.

Mixed Economic System

Meaning: A mixed economic system blends elements of capitalism and socialism. It aims to
balance private enterprise with government intervention to achieve economic growth, social
welfare, and fair distribution of wealth. Example, India, France, Germany, Canada etc.

Characteristics:

1. Coexistence of Sectors: Private businesses, public enterprises (owned by the government),

and cooperative ventures (owned by groups of workers) operate alongside each other.
2. Government Intervention: The state regulates key industries, enforces fair competition, and
provides social services like healthcare and education. It also redistributes income through
taxes and welfare programs.
3. Market Mechanisms: Prices and production are influenced by both market forces (like
supply and demand) and government policies (like taxes and subsidies).
4. Social Welfare Programs: Governments provide social safety nets such as healthcare,
unemployment benefits, and pensions to support citizens in need.
5. Property Rights: Private property is protected, but regulations prevent excessive
accumulation of wealth and promote fair competition.

Merits of Mixed Economic System

1. Social Welfare: A mixed economy provides social safety nets such as healthcare, education,
and unemployment benefits to ensure basic needs are met for all citizens, promoting social
stability and well-being.
2. Economic Stability: Government intervention in a mixed economy can stabilize the
economy by moderating extreme fluctuations in business cycles, reducing unemployment,
and preventing financial crises.
3. Innovation with Social Responsibility: By combining profit incentives with social welfare
goals, a mixed economy fosters innovation while ensuring that businesses operate
responsibly, considering social and environmental impacts.
4. Balanced Economic Growth: Mixed economies aim for balanced economic growth that
benefits both individuals and society as a whole, reducing income inequality and promoting
inclusive economic development.
5. Public Goods Provision: The government in a mixed economy can efficiently provide
public goods and services that may not be adequately supplied by the private sector alone,
such as infrastructure and national defense.

Demerits of Mixed Economic System

1. Government Inefficiency: Excessive government intervention and bureaucratic

inefficiencies can slow down decision-making, reduce economic dynamism, and hinder
private sector innovation and entrepreneurship.
2. Regulatory Burdens: Over-regulation and complex regulatory frameworks in a mixed
economy can create barriers to entry for businesses, stifle competition, and discourage
investment and economic growth.
3. Political Interference: Political influence on economic decisions and policies in a mixed
economy can lead to cronyism, favoritism towards specific industries or interest groups, and
distortions in market outcomes.
4. Risk of Dependency: Extensive social welfare programs and government subsidies in a
mixed economy may create dependency among individuals and businesses, reducing
incentives for self-reliance and personal responsibility.
5. Complexity and Uncertainty: Balancing the interests of private enterprise, social welfare
objectives, and government regulation in a mixed economy can be challenging and may lead
to uncertainty in economic policy and outcomes.

UNIT -2

Historical Perspective & Problems in Indian economy:

Indian economy in Pre & Post Independence period: Economy on eve of independence
(challenges & features), economy in post-independence India (Challenges & Features), An
overview of Economic resources of India.

Economic problems: Population, Poverty, inequality, Parallel economy, Unemployment,

Balanced Regional development, Low capital formation & Industrial Sickness.

Economy on eve of independence (challenges & features):

On the eve of independence in 1947, India's economy faced several challenges and exhibited specific
features that shaped its socio-economic landscape. Here’s a detailed look at these challenges and
features.

Features:

1. Agrarian Dominance:
o The Indian economy was largely agrarian, with most people engaged in farming.
Agriculture was the primary economic activity, and rural areas were central to the
economy.
2. Limited Industrialization:
o Industrial development in India was minimal. The country had only a few industries, and
industrial growth was constrained by policies that favored British economic interests
over local industrial development.
3. Economic Exploitation and Dependency: