Author: B2B

1. Monetary Economics: Barter System, Definition, Function and Evolution of Money
2. Central Banking in India: Functions of RBI
3. Monetary Policy in India: Inflation, deflation, Recessionary and Inflationary Scenarios
4. Monetary Policy tools and Money Supply in India
5. Monetary Policy Agreement in India

 

1. India’s Balance of Payments: Current Account, Capital Account, Goods and Services Account
2. India’s BOP Performance: Balance of Payment versus Balance of Trade, Current Account versus Capital Account
3. FDI and FPI in India, External Commercial Borrowings, Foreign Exchange Reserves in India
4. Foreign Exchange Rate Determination in India and Types of Exchange Rate
5. Capital and Current Account Convertibility in India

 

Sustainable Development Goals and India

• The Sustainable Development Goals (SDGs), otherwise known as the Global Goals, are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity.
• The 17 Goals build on the successes of the Millennium Development Goals, while including new areas such as climate change, economic inequality, innovation, sustainable consumption, peace and justice, among other priorities.
• The goals are interconnected – often the key to success on one will involve tackling issues more commonly associated with another.
• The SDGs work in the spirit of partnership and pragmatism to make the right choices now to improve life, in a sustainable way, for future generations.
• They provide clear guidelines and targets for all countries to adopt in accordance with their own priorities and the environmental challenges of the world at large.

The SDGs are an inclusive agenda. They tackle the root causes of poverty and unite us together to make a positive change for both people and planet. “Poverty eradication is at the heart of the 2030 Agenda, and so is the commitment to leave no-one behind,” UNDP Administrator Achim Steiner said. “The Agenda offers a unique opportunity to put the whole world on a more prosperous and sustainable development path. In many ways, it reflects what UNDP was created for.”

The Goals

Goal 1: No Poverty

Targets

• By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions.
• Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable.
• By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance.
• By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks and disasters.
• Ensure significant mobilization of resources from a variety of sources, including through enhanced development cooperation, in order to provide adequate and predictable means for developing countries, in particular least developed countries, to implement programmes and policies to end poverty in all its dimensions.
• Create sound policy frameworks at the national, regional and international levels, based on pro-poor and gender-sensitive development strategies, to support accelerated investment in poverty eradication actions.

Goal 2: Zero Hunger

Targets

• By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round
• By 2030, end all forms of malnutrition, including achieving, by 2025, the internationally agreed targets on stunting and wasting in children under 5 years of age, and address the nutritional needs of adolescent girls, pregnant and lactating women and older persons
• By 2030, double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous peoples, family farmers, pastoralists and fishers, including through secure and equal access to land, other productive resources and inputs, knowledge, financial services, markets and opportunities for value addition and non-farm employment
• By 2030, ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production, that help maintain ecosystems, that strengthen capacity for adaptation to climate change, extreme weather, drought, flooding and other disasters and that progressively improve land and soil quality
• By 2020, maintain the genetic diversity of seeds, cultivated plants and farmed and domesticated animals and their related wild species, including through soundly managed and diversified seed and plant banks at the national, regional and international levels, and promote access to and fair and equitable sharing of benefits arising from the utilization of genetic resources and associated traditional knowledge, as internationally agreed
• Increase investment, including through enhanced international cooperation, in rural infrastructure, agricultural research and extension services, technology development and plant and livestock gene banks in order to enhance agricultural productive capacity in developing countries, in particular least developed countries
• Correct and prevent trade restrictions and distortions in world agricultural markets, including through the parallel elimination of all forms of agricultural export subsidies and all export measures with equivalent effect, in accordance with the mandate of the Doha Development Round
• Adopt measures to ensure the proper functioning of food commodity markets and their derivatives and facilitate timely access to market information, including on food reserves, in order to help limit extreme food price volatility.

Goal 3: Good Health and Well Being

Targets

• By 2030, reduce the global maternal mortality ratio to less than 70 per 100,000 live births
• By 2030, end preventable deaths of newborns and children under 5 years of age, with all countries aiming to reduce neonatal mortality to at least as low as 12 per 1,000 live births and under-5 mortality to at least as low as 25 per 1,000 live births
• By 2030, end the epidemics of AIDS, tuberculosis, malaria and neglected tropical diseases and combat hepatitis, water-borne diseases and other communicable diseases
• By 2030, reduce by one third premature mortality from non-communicable diseases through prevention and treatment and promote mental health and well-being
• Strengthen the prevention and treatment of substance abuse, including narcotic drug abuse and harmful use of alcohol
• By 2020, halve the number of global deaths and injuries from road traffic accidents
• By 2030, ensure universal access to sexual and reproductive health-care services, including for family planning, information and education, and the integration of reproductive health into national strategies and programmes
• Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all
• By 2030, substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination
• Strengthen the implementation of the World Health Organization Framework Convention on Tobacco Control in all countries, as appropriate
• Support the research and development of vaccines and medicines for the communicable and noncommunicable diseases that primarily affect developing countries, provide access to affordable essential medicines and vaccines, in accordance with the Doha Declaration on the TRIPS Agreement and Public Health, which affirms the right of developing countries to use to the full the provisions in the Agreement on Trade Related Aspects of Intellectual Property Rights regarding flexibilities to protect public health, and, in particular, provide access to medicines for all
• Substantially increase health financing and the recruitment, development, training and retention of the health workforce in developing countries, especially in least developed countries and small island developing States
• Strengthen the capacity of all countries, in particular developing countries, for early warning, risk reduction and management of national and global health risks

Goal 4: Quality Education

Targets

• By 2030, ensure that all girls and boys complete free, equitable and quality primary and secondary education leading to relevant and Goal-4 effective learning outcomes
• By 2030, ensure that all girls and boys have access to quality early childhood development, care and preprimary education so that they are ready for primary education
• By 2030, ensure equal access for all women and men to affordable and quality technical, vocational and tertiary education, including university
• By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship
• By 2030, eliminate gender disparities in education and ensure equal access to all levels of education and vocational training for the vulnerable, including persons with disabilities, indigenous peoples and children in vulnerable situations
• By 2030, ensure that all youth and a substantial proportion of adults, both men and women, achieve literacy and numeracy
• By 2030, ensure that all learners acquire the knowledge and skills needed to promote sustainable development, including, among others, through education for sustainable development and sustainable lifestyles, human rights, gender equality, promotion of a culture of peace and non-violence, global citizenship and appreciation of cultural diversity and of culture’s contribution to sustainable development
• Build and upgrade education facilities that are child, disability and gender sensitive and provide safe, nonviolent, inclusive and effective learning environments for all
• By 2020, substantially expand globally the number of scholarships available to developing countries, in particular least developed countries, small island developing States and African countries, for enrolment in higher education, including vocational training and information and communications technology, technical, engineering and scientific programmes, in developed countries and other developing countries
• By 2030, substantially increase the supply of qualified teachers, including through international cooperation for teacher training in developing countries, especially least developed countries and small island developing states

Goal 5: Gender Equality

Targets

• End all forms of discrimination against all women and girls everywhere
• Eliminate all forms of violence against all women and girls in the public and private spheres, including trafficking and sexual and other types of exploitation
• Eliminate all harmful practices, such as child, early and forced marriage and female genital mutilation
• Recognize and value unpaid care and domestic work through the provision of public services, infrastructure and social protection policies and the promotion of shared responsibility within the household and the family as nationally appropriate
• Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decisionmaking in political, economic and public life
• Ensure universal access to sexual and reproductive health and reproductive rights as agreed in accordance with the Programme of Action of the International Conference on Population and Development and the Beijing Platform for Action and the outcome documents of their review conferences
• Undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance and natural resources, in accordance with national laws
• Enhance the use of enabling technology, in particular information and communications technology, to promote the empowerment of women
• Adopt and strengthen sound policies and enforceable legislation for the promotion of gender equality and the empowerment of all women and girls at all levels

Goal 6: Clean Water and Sanitation

Targets

• By 2030, achieve universal and equitable access to safe and affordable drinking water for all
• By 2030, achieve access to adequate and equitable sanitation and hygiene for all and end open defecation, paying special attention to the needs of women and girls and those in vulnerable situations
• By 2030, improve water quality by reducing pollution, eliminating dumping and minimizing release of hazardous chemicals and materials, halving the proportion of untreated wastewater and substantially increasing recycling and safe reuse globally
• By 2030, substantially increase water-use efficiency across all sectors and ensure sustainable withdrawals and supply of freshwater to address water scarcity and substantially reduce the number of people suffering from water scarcity
• By 2030, implement integrated water resources management at all levels, including through transboundary cooperation as appropriate
• By 2020, protect and restore water-related ecosystems, including mountains, forests, wetlands, rivers, aquifers and lakes
• By 2030, expand international cooperation and capacity-building support to developing countries in water- and sanitation-related activities and programmes, including water harvesting, desalination, water efficiency, wastewater treatment, recycling and reuse technologies
• Support and strengthen the participation of local communities in improving water and sanitation management

Goal 7: Affordable and Clean Energy

Target

• By 2030, ensure universal access to affordable, reliable and modern energy services
• By 2030, increase substantially the share of renewable energy in the global energy mix
• By 2030, double the global rate of improvement in energy efficiency
• By 2030, enhance international cooperation to facilitate access to clean energy research and technology, including renewable energy, energy efficiency and advanced and cleaner fossil-fuel technology, and promote investment in energy infrastructure and clean energy technology
• By 2030, expand infrastructure and upgrade technology for supplying modern and sustainable energy services for all in developing countries, in particular least developed countries, small island developing States, and land-locked developing countries, in accordance with their respective programmes of support

Goal 8: Decent Work and Economic Growth

Targets

• Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries
• Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors
• Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services
• Improve progressively, through 2030, global resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation, in accordance with the 10-year framework of programmes on sustainable consumption and production, with developed countries taking the lead
• By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value
• By 2020, substantially reduce the proportion of youth not in employment, education or training
• Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms
• Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment
• By 2030, devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products
• Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all
• Increase Aid for Trade support for developing countries, in particular least developed countries, including through the Enhanced Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries
• By 2020, develop and operationalize a global strategy for youth employment and implement the Global Jobs Pact of the International Labour Organization

Goal 9: Industry, Innovation and Infrastructure

Targets

• Develop quality, reliable, sustainable and resilient infrastructure, including regional and trans-border infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all
• Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries
• Increase the access of small-scale industrial and other enterprises, in particular in developing countries, to financial services, including affordable credit, and their integration into value chains and markets
• By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities
• Enhance scientific research, upgrade the technological capabilities of industrial sectors in all countries, in particular developing countries, including, by 2030, encouraging innovation and substantially increasing the number of research and development workers per 1 million people and public and private research and development spending
• Facilitate sustainable and resilient infrastructure development in developing countries through enhanced financial, technological and technical support to African countries, least developed countries, landlocked developing countries and small island developing States 18
• Support domestic technology development, research and innovation in developing countries, including by ensuring a conducive policy environment for, inter alia, industrial diversification and value addition to commodities
• Significantly increase access to information and communications technology and strive to provide universal and affordable access to the Internet in least developed countries by 2020

Goal 10: Reduce Inequalities

Targets

• By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average
• By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status
• Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices and promoting appropriate legislation, policies and action in this regard
• Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality
• Improve the regulation and monitoring of global financial markets and institutions and strengthen the implementation of such regulations
• Ensure enhanced representation and voice for developing countries in decision-making in global international economic and financial institutions in order to deliver more effective, credible, accountable and legitimate institutions
• Facilitate orderly, safe, regular and responsible migration and mobility of people, including through the implementation of planned and well-managed migration policies
• Implement the principle of special and differential treatment for developing countries, in particular least developed countries, in accordance with World Trade Organization agreements
• Encourage official development assistance and financial flows, including foreign direct investment, to States where the need is greatest, in particular least developed countries, African countries, small island developing States and landlocked developing countries, in accordance with their national plans and programmes
• By 2030, reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent

Goal 11: Sustainable Cities and Communities

Targets

• By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums
• By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all, improving road safety, notably by expanding public transport, with special attention to the needs of those in vulnerable situations, women, children, persons with disabilities and older persons
• By 2030, enhance inclusive and sustainable urbanization and capacity for participatory, integrated and sustainable human settlement planning and management in all countries
• Strengthen efforts to protect and safeguard the world’s cultural and natural heritage
• By 2030, significantly reduce the number of deaths and the number of people affected and substantially decrease the direct economic losses relative to global gross domestic product caused by disasters, including water-related disasters, with a focus on protecting the poor and people in vulnerable situations
• By 2030, reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality and municipal and other waste management
• By 2030, provide universal access to safe, inclusive and accessible, green and public spaces, in particular for women and children, older persons and persons with disabilities
• Support positive economic, social and environmental links between urban, peri-urban and rural areas by strengthening national and regional development planning
• By 2020, substantially increase the number of cities and human settlements adopting and implementing integrated policies and plans towards inclusion, resource efficiency, mitigation and adaptation to climate change, resilience to disasters, and develop and implement, in line with the Sendai Framework for Disaster Risk Reduction 2015-2030, holistic disaster risk management at all levels
• Support least developed countries, including through financial and technical assistance, in building sustainable and resilient buildings utilizing local materials

Goal 12: Responsible Production and Consumption

Targets

• Implement the 10-year framework of programmes on sustainable consumption and production, all countries taking action, with developed countries taking the lead, taking into account the development and capabilities of developing countries
• By 2030, achieve the sustainable management and efficient use of natural resources
• By 2030, halve per capita global food waste at the retail and consumer levels and reduce food losses along production and supply chains, including post-harvest losses
• By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle, in accordance with agreed international frameworks, and significantly reduce their release to air, water and soil in order to minimize their adverse impacts on human health and the environment
• By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse
• Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle
• Promote public procurement practices that are sustainable, in accordance with national policies and priorities
• By 2030, ensure that people everywhere have the relevant information and awareness for sustainable development and lifestyles in harmony with nature
• Support developing countries to strengthen their scientific and technological capacity to move towards more sustainable patterns of consumption and production
• Develop and implement tools to monitor sustainable development impacts for sustainable tourism that creates jobs and promotes local culture and products
• Rationalize inefficient fossil-fuel subsidies that encourage wasteful consumption by removing market distortions, in accordance with national circumstances, including by restructuring taxation and phasing out those harmful subsidies, where they exist, to reflect their environmental impacts, taking fully into account the specific needs and conditions of developing countries and minimizing the possible adverse impacts on their development in a manner that protects the poor and the affected communities

Goal 13: Climate Actions

Targets

• Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries
• Integrate climate change measures into national policies, strategies and planning
• Improve education, awareness-raising and human and institutional capacity on climate change mitigation, adaptation, impact reduction and early warning
• Implement the commitment undertaken by developed-country parties to the United Nations Framework Convention on Climate Change to a goal of mobilizing jointly $100 billion annually by 2020 from all sources to address the needs of developing countries in the context of meaningful mitigation actions and transparency on implementation and fully operationalize the Green Climate Fund through its capitalization as soon as possible
• Promote mechanisms for raising capacity for effective climate change-related planning and management in least developed countries and small island developing States, including focusing on women, youth and local and marginalized communities

Goal 14: Life Below Water

Targets

• By 2025, prevent and significantly reduce marine pollution of all kinds, in particular from land-based activities, including marine debris and nutrient pollution
• By 2020, sustainably manage and protect marine and coastal ecosystems to avoid significant adverse impacts, including by strengthening their resilience, and take action for their restoration in order to achieve healthy and productive oceans
• Minimize and address the impacts of ocean acidification, including through enhanced scientific cooperation at all levels
• By 2020, effectively regulate harvesting and end overfishing, illegal, unreported and unregulated fishing and destructive fishing practices and implement science-based management plans, in order to restore fish stocks in the shortest time feasible, at least to levels that can produce maximum sustainable yield as determined by their biological characteristics
• By 2020, conserve at least 10 per cent of coastal and marine areas, consistent with national and international law and based on the best available scientific information
• By 2020, prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, eliminate subsidies that contribute to illegal, unreported and unregulated fishing and refrain from introducing new such subsidies, recognizing that appropriate and effective special and differential treatment for developing and least developed countries should be an integral part of the World Trade Organization fisheries subsidies negotiation
• By 2030, increase the economic benefits to Small Island developing States and least developed countries from the sustainable use of marine resources, including through sustainable management of fisheries, aquaculture and tourism
• Increase scientific knowledge, develop research capacity and transfer marine technology, taking into account the Intergovernmental Oceanographic Commission Criteria and Guidelines on the Transfer of Marine Technology, in order to improve ocean health and to enhance the contribution of marine biodiversity to the development of developing countries, in particular small island developing States and least developed countries
• Provide access for small-scale artisanal fishers to marine resources and markets
• Enhance the conservation and sustainable use of oceans and their resources by implementing international law as reflected in UNCLOS, which provides the legal framework for the conservation and sustainable use of oceans and their resources, as recalled in paragraph 158 of The Future We Want

Goal 15: Life on land

Targets

• By 2020, ensure the conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems and their services, in particular forests, wetlands, mountains and drylands, in line with obligations under international agreements
• By 2020, promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests and substantially increase afforestation and reforestation globally
• By 2030, combat desertification, restore degraded land and soil, including land affected by desertification, drought and floods, and strive to achieve a land degradation-neutral world
• By 2030, ensure the conservation of mountain ecosystems, including their biodiversity, in order to enhance their capacity to provide benefits that are essential for sustainable development
• Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity and, by 2020, protect and prevent the extinction of threatened species
• Promote fair and equitable sharing of the benefits arising from the utilization of genetic resources and promote appropriate access to such resources, as internationally agreed
• Take urgent action to end poaching and trafficking of protected species of flora and fauna and address both demand and supply of illegal wildlife products
• By 2020, introduce measures to prevent the introduction and significantly reduce the impact of invasive alien species on land and water ecosystems and control or eradicate the priority species
• By 2020, integrate ecosystem and biodiversity values into national and local planning, development processes, poverty reduction strategies and accounts
• Mobilize and significantly increase financial resources from all sources to conserve and sustainably use biodiversity and ecosystems
• Mobilize significant resources from all sources and at all levels to finance sustainable forest management and provide adequate incentives to developing countries to advance such management, including for conservation and reforestation
• Enhance global support for efforts to combat poaching and trafficking of protected species, including by increasing the capacity of local communities to pursue sustainable livelihood opportunities

Goal 16: Peace, Justice and Strong Institutions

Targets

• Significantly reduce all forms of violence and related death rates everywhere
• End abuse, exploitation, trafficking and all forms of violence against and torture of children
• Promote the rule of law at the national and international levels and ensure equal access to justice for all
• By 2030, significantly reduce illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organized crime
• Substantially reduce corruption and bribery in all their forms
• Develop effective, accountable and transparent institutions at all levels
• Ensure responsive, inclusive, participatory and representative decision-making at all levels
• Broaden and strengthen the participation of developing countries in the institutions of global governance
• By 2030, provide legal identity for all, including birth registration
• Ensure public access to information and protect fundamental freedoms, in accordance with national legislation and international agreements
• Strengthen relevant national institutions, including through international cooperation, for building capacity at all levels, in particular in developing countries, to prevent violence and combat terrorism and crime
• Promote and enforce non-discriminatory laws and policies for sustainable development

Goal 17: Partnership for the Goals

Targets

Finance

• Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection
• Developed countries to implement fully their official development assistance commitments, including the commitment by many developed countries to achieve the target of 0.7 per cent of ODA/GNI to developing countries and 0.15 to 0.20 per cent of ODA/GNI to least developed countries ODA providers are encouraged to consider setting a target to provide at least 0.20 per cent of ODA/GNI to least developed countries
• Mobilize additional financial resources for developing countries from multiple sources
• Assist developing countries in attaining long-term debt sustainability through coordinated policies aimed at fostering debt financing, debt relief and debt restructuring, as appropriate, and address the external debt of highly indebted poor countries to reduce debt distress
• Adopt and implement investment promotion regimes for least developed countries

Technology

• Enhance North-South, South-South and triangular regional and international cooperation on and access to science, technology and innovation and enhance knowledge sharing on mutually agreed terms, including through improved coordination among existing mechanisms, in particular at the United Nations level, and through a global technology facilitation mechanism
• Promote the development, transfer, dissemination and diffusion of environmentally sound technologies to developing countries on favourable terms, including on concessional and preferential terms, as mutually agreed
• Fully operationalize the technology bank and science, technology and innovation capacity-building mechanism for least developed countries by 2017 and enhance the use of enabling technology, in particular information and communications technology

Capacity building

• Enhance international support for implementing effective and targeted capacity-building in developing countries to support national plans to implement all the sustainable development goals, including through North-South, South-South and triangular cooperation

Trade

• Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization, including through the conclusion of negotiations under its Doha Development Agenda
• Significantly increase the exports of developing countries, in particular with a view to doubling the least developed countries’ share of global exports by 2020
• Realize timely implementation of duty-free and quota-free market access on a lasting basis for all least developed countries, consistent with World Trade Organization decisions, including by ensuring that preferential rules of origin applicable to imports from least developed countries are transparent and simple, and contribute to facilitating market access

Systemic issues

• Policy and institutional coherence
  
• Enhance global macroeconomic stability, including through policy coordination and policy coherence
• Enhance policy coherence for sustainable development
• Respect each country’s policy space and leadership to establish and implement policies for poverty eradication and sustainable development
• Multi-stakeholder partnerships
• Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources, to support the achievement of the sustainable development goals in all countries, in particular developing countries
• Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships
• Data, monitoring and accountability
• By 2020, enhance capacity-building support to developing countries, including for least developed countries and small island developing States, to increase significantly the availability of high-quality, timely and reliable data disaggregated by income, gender, age, race, ethnicity, migratory status, disability, geographic location and other characteristics relevant in national contexts
• By 2030, build on existing initiatives to develop measurements of progress on sustainable development that complement gross domestic product, and support statistical capacity-building in developing countries

 

Millennium Development Goals and India

In 2000, 189 nations made a promise to free people from extreme poverty and multiple deprivations. This pledge became the eight Millennium Development Goals to be achieved by 2015. In September 2010, the world recommitted itself to accelerate progress towards these goals.

The MDGs consists of eight goals, and these eight goals address myriad development issues. The eight (8) Goals are as under:

Eighteen (18) targets were set as quantitative benchmarks for attaining the goals. The United Nations Development Group (UNDG) in 2003 provided a framework of 53 indicators (48 basic + 5 alternative) which are categorized according to targets, for measuring the progress towards individual targets.

A revised indicator-framework drawn up by the Inter-Agency and Expert Group (IAEG) on MDGs came into effect in 2008. This framework had 8 Goals, 21 targets and 60 indicators. India has not endorsed this revised framework.

MDG and India Progress

MDG 1: Eradicate extreme poverty and hunger.

Target: Halve, between 1990 and 2015, the proportion of people whose income is less than one dollar a day.

India’s Progress:

• The all India Poverty Head Count Ratio (PHCR) estimate was 47.8% in 1990. In order to meet the target, the PHCR level has to be 23.9% by 2015. In 2011-12, the PHCR at all India level is 21.9%, which shows that, India has already achieved the target well ahead of time.
• During 2004-05 to 2011-12, the Poverty Gap Ratio reduced both in rural and urban areas. While the rural PGR declined from 9.64 in 2004-05 to 5.05 in 2011-12 in the urban areas it declined from 6.08 to 2.70 during the same period.

Target: Halve, between 1990 and 2015, the proportion of people who suffer from hunger.

India’s Progress:

• It is estimated that in 1990, the proportion of underweight children below 3 years as 52%. In order to meet the target, the proportion of under-weight children should decrease to 26% by 2015.
• The National Family Health Survey shows that, the proportion of under-weight children below 3 years declined from 43% in 1998-99 to 40% in 2005-06. At this rate of decline the proportion of underweight children below 3 years is expected to reduce to 33% by 2015, which indicates India is falling short of the target.

MDG 2: Achieve Universal Primary Education

Target: Ensure that by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary education.

India’s Progress:

• The Net Enrolment Rate (NER) in primary education (age 6-10 years) was estimated at 84.5 per cent in 2005-06 (U-DISE) and the NER has increased to 88.08 per cent in 2013-14 (U-DISE), and is unlikely to meet the target of universal achievement.
• The youth (15-24 years) literacy rate has increased from 61.9% to 86.14 per cent during the period 1991-2011 and the trend shows India is likely to reach 93.38% which is very near to the target of 100% youth literacy by 2015. At national level, the male and female youth literacy rate is likely to be at 94.81% and 92.47%.

MDG 3: Promote Gender Equality and Empower Women

Target: Eliminate gender disparity in primary, secondary education, preferably by 2005, and in all levels of education, no later than 2015.

India’s Progress:

• At present, in primary education the enrolment is favourable to females as Gender Parity Index (GPI) of Gross Enrolment Ratio (GER) is 1.03 in 2013-14.
• In Secondary education also gender parity has achieved GPI of GER is 1 in 2013-14 and in tertiary level of education, the GPI of GER is 0.89 in 2012-13. 9
• As per Census 2011, the ratio of female youth literacy rate to male youth literacy rate is 0.91 at all India level and is likely to reach the level of 1 by 2015.
• As in January 2015, India, the world’s largest democracy, has only 65 women representatives out of 542 members in Lok Sabha, while there are 31 female representatives in the 242-member Rajya Sabha and hence presently the proportion of seats in National Parliament held by women is only 12.24% against the target of 50%.

MDG 4: Reduce Child Mortality

Target: Reduce by two-thirds, between 1990 and 2015, the under-five Mortality Rate.

India’s Progress:

• Under Five Mortality Ratio (U5MR) was estimated at 125 deaths per 1000 live births in 1990. In order to achieve the target, the U5MR is to be reduced to 42 deaths per 1000 live births by 2015. As per Sample Registration System 2013, the U5MR is at 49 deaths per 1000 live births and as per the historical trend, it is likely to reach 48 deaths per 1000 live births, missing the target narrowly. However, an overall reduction of nearly 60% happened during 1990 to 2013, registering a faster decline in the recent past, and if this rate of reduction is sustained, the achievement by 2015 is likely to be very close to the target by 2015.
• In India, Infant Mortality Rate (IMR) was estimated at 80 per 1,000 live births in 1990. As per SRS 2013, the IMR is at 40 and as per the historical trend; it is likely to reach 39 by 2015, against the target of 27 infant deaths per 1000 live births by 2015. However, with the sharp decline in the recent years, the gap between the likely achievement and the target is expected to be narrowed.
• The Coverage Evaluation Survey estimates the proportion of one year old children immunised against measles at 74% in 2009. Although, there is substantial improvement in the coverage which was 42% in 1992-93, yet at this rate of improvement, India is likely to achieve about 89% coverage by 2015 and thus India is likely to fall short of universal coverage.

MDG 5: Improved Mental Health

Target: Reduce by three quarters between 1990 and 2015, the Maternal Morality Ratio.

India’s Progress:

• In 1990, the estimated MMR was 437 per 1,00,000 live births. In order to meet the MDG target, the MMR should be reduced to 109 per 1,00,000 live births by 2015. As per the latest estimates, the MMR status at all India level is at 167 in 2011-13. As per the historical trend, MMR is likely to reach the level of 140 maternal deaths by 2015, however, assuming the recent sharper decline is sustained, India is likely to be slightly nearer to the MDG target.

MDG 6: Combat HIV/AIDS, Malaria and Other Diseases.

Target: Have halted by 2015 and begun to reverse the spread of HIV/AIDS.

India’s Progress:

• The prevalence of HIV among Pregnant women aged 15-24 years is showing a declining trend 8 from 0.89 % in 2005 to 0.32% in 2012-13.
• According to NFHS –III in 2005-06, Condom use rate of the contraceptive prevalence rate (Condom use to overall contraceptive use among currently married women, 15-49 years, was only 5.2 % at all India level.
• According to Behavioural Surveillance Survey (BSS), the national estimate for proportion of population aged 15-24 years with comprehensive correct Knowledge of HIV/AIDS (%) in 2006 was 32.9% reporting betterment from 2001 (22.2%).

Target: Have halted by 2015 and begun to reverse the incidence of Malaria and other major diseases.

India’s Progress:

• The Annual Parasite Incidence (API) rate – Malaria has consistently come down from 2.12 per thousand in 2001 to 0.72 per thousand in 2013, but slightly increased to 0.88 in 2014 (P) but confirmed deaths due to malaria in 2013 was 440 and in 2014 (P), 578 malaria deaths have been registered.
• In India, Tuberculosis prevalence per lakh population has reduced from 465 in year 1990 to 211 in 2013. TB Incidence per lakh population has reduced from 216 in year 1990 to 171 in 2013. Tuberculosis mortality per lakh population has reduced from 38 in year 1990 to 19 in 2013.

MDG 7: Ensure Environment Sustainability.

Target: Integrate the principle of sustainable development into country policies and programmes and reverse the loss of environmental resources.

India’s Progress:

• As per assessment in 2013, the total forest cover of the country is 697898 sq.km which is 21.23% of the geographic area of the country.
• During 2011-2013, there is an increase of 5871 sq. km in forest cover.
• The network of Protected Areas comprising 89 National Parks and 489 Sanctuaries giving a combined coverage of 155475.63 km² in 2000, has grown steadily over the years. As of 2014, there are 692 Protected Areas (103 National Parks, 525 Wildlife Sanctuaries, 4 Community Reserves and 60 Conservation reserves, covering 158645.05 km2 or 5.07% of the country’s geographical area.
• Per-capita Energy Consumption (PEC) (the ratio of the estimate of total energy consumption during the year to the estimated mid-year population of that year) increased from 6205.25 KWh in 2011-12 to 6748.61 KWh in 2012-13, thus, the percentage annual increase of 8.76%.
• In 2010, consumption of CFC is estimated at 290.733 ODP tonnes (ODP –Ozone Depletion Potential), down from 5614 ODP tones in 2000. From the year 2000, the CFC consumption decreased steadily till 2008, but showed minor increase in 2010.
• As per Census 2011, 67.3% households are using solid fuels (fire wood / crop residue/cow dung cake/ coke, etc) for cooking against 74.3% in 2001. Census 2011, further reveals that, in Rural areas 86.5% households and in Urban areas 26.1% households are using solid fuels for cooking.

TARGET: Halve, by 2015 the proportion of people without sustainable access to safe drinking water and basic sanitation

India’s Progress:

• During 2012, at all India level, 87.8% households had access to improved source of drinking water while 86.9% households in rural and 90.1% households in urban area had access to improved source of drinking water.
• The target of halving the proportion of households without access to safe drinking water sources from its 1990 level to be reached by 2015, has already been achieved in rural areas and is likely to be achieved in urban areas. At all India level also, the target for access to improved source of drinking water has already been achieved.

TARGET: By 2020, to have achieved a significant improvement in the lives of at least 100 million slum dwellers

India’s Progress:

• Census 2011 reported that 17.2% of urban households are located in slums.
• The percentage of slum households to urban households (slum reported towns) is 22.17%. Census recorded a 37.14% decadal growth in the number of slum households.
• Census further reveals that in 2011, 17.37% of the urban population lives in slums. The Percentage of population in slum households to urban households (slum reported towns) is 22.44%.

MDG 8: Develop a Global Partnership for Development

Target: In co-operation with the private sector, make available the benefits of new technologies, especially information and communication.

India’s Progress

• The overall tele-density in the country has shown tremendous progress and is at 76% as on 31st July 2014.
• The internet subscribers per 100 population accessing internet through wireline and wireless connections has increased from 16.15 in June 2013 to 20.83 in June 2014.

India’s Progress in a Nutshell

Measures of Economic Development

Green GDP

• Green GDP is a term used for expressing GDP after adjusting for environment degradations.
• Green GDP is an attempt to measure the growth of an economy by subtracting the costs of environmental damages and ecological degradations from the GDP
• The concept was first initiated through a System of National Accounts.
• The System of National Accounts (SNA) is an accounting framework for measuring the economic activities of production, consumption and accumulation of wealth in an economy during a period of time. When information on economy’s use of the natural environment is integrated into the system of national accounts, it becomes green national accounts or environmental accounting.
• The process of environmental accounting involves three steps viz. Physical accounting; Monetary valuation; and integration with national Income/wealth Accounts.
• Physical accounting determines the state of the resources, types, and extent (qualitative and quantitative) in spatial and temporal terms.
• Monetary valuation is done to determine its tangible and intangible components.
• Thereafter, the net change in natural resources in monetary terms is integrated into the Gross Domestic Product in order to reach the value of Green GDP.

Green GDP and India

• While explicitly green GDP is not measured in India, but environmental accounting has been done in India from last 2 decades
• A Framework for the Development of Environmental Statistics (FDES) was developed by the Central Statistics Office (CSO) of India in the early 1990s. The Compendium of Environment Statistics is being released since 1997.
• As per the recommendations of Technical Working Group on Natural Resource Accounting (NRA) in the later 1990s, a pilot project on NRA in the State of Goa was initiated during 1999-2000. Thereafter, resource accounting studies were carried out in 8 states on a different set of natural resources. Later a Technical Advisory Committee was constituted in the year 2010 under the Chairmanship of Dr Kirit Parikh to bring out a Synthesis Report combining the findings of all these studies. The report recommended the preparation of a National Accounting Matrix that would include environmental accounts. The High powered expert group under Partha Dasgupta was constituted subsequently in 2011 with the mandate of developing a framework for green national accounts of India and for preparing a roadmap to implement the framework.
• Following the guidance of International Organisation of Supreme Audit Institutions (INTOSAI) on the framework for of environmental auditing, the supreme audit institution of India (CAG) also conducts an environmental audit in India. This process was formalised with the introduction of specialized guidelines for the conduct of environmental audits. This laid down broad guidelines to enable India’s auditors to examine whether the auditee institutions gave due regard to the efforts of promulgating sustainability development and environmental concerns, where warranted.
• Thus, in India, the Environmental audit is conducted within the broad framework of Compliance Audit and Performance Audit at the central level by the Office of Principal Director of Audit (Scientific Departments) and by the state Accountant Generals (Audit) at the state level. Over the years, more and more states have taken up environmental audits. This compliance as well as performance audits have been printed in the respective state/ central audit reports and presented to Legislature/Parliament. All these reports deal with the environmental themes of water issues, air pollution, waste, biodiversity and environmental management systems. All the environment audits done at the state level and at the central level since 2001 are collated in the CAG report on environmental audit.

Gender Inequality Index

• Gender inequality remains a major barrier to human development. Girls and women have made major strides since 1990, but they have not yet gained gender equity.
• The disadvantages facing women and girls are a major source of inequality. All too often, women and girls are discriminated against in health, education, political representation, labour market, etc.—with negative consequences for development of their capabilities and their freedom of choice.
• The GII is an inequality index. It measures gender inequalities in three important aspects of human development—reproductive health, measured by maternal mortality ratio and adolescent birth rates; empowerment, measured by proportion of parliamentary seats occupied by females and proportion of adult females and males aged 25 years and older with at least some secondary education; and economic status, expressed as labour market participation and measured by labour force participation rate of female and male populations aged 15 years and older.
• The GII is built on the same framework as the IHDI—to better expose differences in the distribution of achievements between women and men. It measures the human development costs of gender inequality. Thus, the higher the GII value, the more disparities between females and males and the more loss to human development.
• The GII sheds new light on the position of women in 159 countries; it yields insights in gender gaps in major areas of human development. The component indicators highlight areas in need of critical policy intervention, and it stimulates proactive thinking and public policy to overcome systematic disadvantages of women.

Gross National Happiness Index

• Gross National Happiness is a term coined by His Majesty the Fourth King of Bhutan, Jigme Singye Wangchuck in the 1970s. The concept implies that sustainable development should take a holistic approach towards notions of progress and give equal importance to non-economic aspects of well-being.
• “How are you?” We ask that question of one another often. But how are we doing – as a country, a society? To answer that question, Bhutan uses its Gross National Happiness (GNH) Index.
• In 2015, a total of 91.2% of Bhutanese were narrowly, extensively, or deeply happy. 43.4% were extensively or deeply happy. The aim is for all Bhutanese to be extensively or deeply happy. Bhutan is closer to achieving that aim in 2015 than it was in 2010.
• GNH is a much richer objective than GDP or economic growth. In GNH, material well-being is important, but it is also important to enjoy sufficient well-being in things like community, culture, governance, knowledge and wisdom, health, spirituality and psychological welfare, a balanced use of time, and harmony with the environment.

The four pillars of GNH:

The Nine Domains of GNH

Criticism of GNH

• From an economic perspective, critics state that because GNH depends on a series of Subjective judgments about well-being, governments may be able to define GNH in a way that suits their interests
• Other critics say that international comparison of well-being will be difficult in this model; proponents maintain that each country can define its own measure of GNH as it chooses and that comparisons over time between nations will have validity. GDP provides a convenient, international scale.
• Research demonstrates that markers of social and individual well-being are remarkably transcultural: people generally report greater subjective life satisfaction if they have strong and frequent social ties, live in healthy ecosystems, experience good governance, etc. Nevertheless, it remains true that reliance on national measures of GNH would render international comparisons of relative well-being more problematic since there is not and is not likely ever to be a common scale as “portable” as GDP has been with other countries.

Human Development Index

• The Human Development Index (HDI) is a statistical tool used to measure a country’s overall achievement in its social and economic dimensions. The social and economic dimensions of a country are based on the health of people, their level of educational attainment and their standard of living.
• Pakistani economist Mahbub ul Haq created HDI in 1990 which was further used to measure the country’s development by the United Nations Development Program (UNDP). Calculation of the index combines four major indicators: life expectancy for health, expected years of schooling, mean of years of schooling for education and Gross National Income per capita for the standard of living.

Why do we require HDI?

• Firstly, GDP method of calculating progress ignores non-income aspects like education and health thus, for example, Arab countries have high GDP per-capita, but the progress in health and education field is limited in those countries which do not get measured in GDP. Similarly, in countries like Cuba and Sri Lanka GDP per capita is low, but the quality of life is much better than many high GDP per capita countries of the Arab world and Latin America because of high-quality indicators in social sectors. HDI will overcome this problem
• Secondly, GDP per capita ignores income inequality or distribution of wealth in a country for example in countries of Latin America have high GDP per capita but due to skewed income distribution, the masses are excluded from growth process.
• The HDI was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone

Method of calculating HDI

• The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living. The HDI is the geometric mean of normalized indices for each of the three dimensions.

(a)Life Expectancy Index assessment

• The minimum value for life expectancy is fixed at 20 years in the new calculation. The maximum value for life index is kept at 83.2 years.
• Formula to calculate Life Expectancy Index (LEI) = Life Expectancy of a country -20/ 83.2-20

(b) Education Index assessment
Education Index (EI) assessment is composite of two indices. They are
1. Mean Years of Schooling Index (MYSI)
2. Expected Years of Schooling Index (EYSI)

• Formula to calculate Mean Years of Schooling Index (MYSI) = Mean years of schooling – 0/ 13.2 – 0
• Formula to calculate Expected Years of Schooling Index (EYSI) = Expected Years of Schooling – 0/ 20.6 – 0

(C) Income Index assessment

• To calculate this index, goal posts are set as per observations during 1980 – 2010 in various countries. Gross National Income per capita is taken as a measure to calculate new Income Index in new HDI. Minimum income is set as $163, and maximum income is set as $108,211.
• Formula to calculate Income Index = Log (Country’s GNIpc) – Log ($163) / Log ($108,211) – Log ($163)

How to calculate Human Development Index as per new method?
Formula to calculate Human Development Index (HDI) = (Life Expectancy Index X Education Index X Income Index) 1/3
New Human Development Index (HDI) is geometric mean of Life Expectancy Index (LEI), Education Index (EI) and Income Index (II).

After this calculation total value will be between 0 and 1. As per the values gained, countries will be placed in the list of the division of countries. They are divided into very high human development, high human development, medium high human development and low high human development countries

Global Trends in HDI

• The Scandinavian countries which include Norway, Sweden, Denmark etc. are world leaders in HDI since most of them occupy positions within top 10 in HDI list and Norway always tops the list. According to 2015 HDI rankings, Norway is top ranked country. The reasons why these countries are performing so well In HDI are manifold. These countries have high per capita income, along with this positive state interference in education and health along with a well-developed social security system ensure that these countries maintain their dominance in HDI ranking.
• Among India’s neighbours, Bhutan and Bangladesh figure in Medium development category. Pakistan (ranked 146) and Nepal (145) are in the ‘low development’ category, while Sri Lanka (73) is in the ‘high development’ category.
• The five countries that made up the bottom of the list were Niger (0.348), Central African Republic (0.350), Eritrea (0.391), Chad (0.392) and Burundi (0.400).

Strength of HDI index

• There is widespread use of HDI to compare development levels, and it does reveal clear global patterns.
• Does not solely concentrate on economic Growth, and takes into consideration that there are other, more social, ways to measure progress.
• Increase in education and health shows an improvement in countries progress index.

Weaknesses of HDI index

• The fact that the HDI uses GDP per capita in its calculations opens many criticisms. Here are some of them.
• GDP per capita does not give an indication of the income distribution. Issues about Rich and poor divide etc
• GDP does not show how the income is spent by the government. Some countries spend more on military than on health care
• The range of variables included by the HDI is too narrow and does not include much-needed factors such as the % of people living on under 1$ a day
• Out of the three main constituents of the HDI, some factors are more important than others. The HDI is flawed for this reason as the score of the three is averaged out.
• When knowledge is measured it only takes into account what children learn at school not in the family. And so maybe knowledge statistics may be distorted if the family play more of a role in education in the home.
• Longevity can also be distorted as the life expectancy of a person does not consider how healthy the life was led. i.e. A person aged 90 years old but has suffered serious illness in the last 30 years of their life would have a higher HDI value compared to a 70-year-old who has led a very healthy life.
• Countries like are countries with booming economic growth. And also, it has well-developed health and education sector. There is no religious freedom, there’s censorship on the internet, and the state is everywhere.
• Data from some developing countries may not be very reliable and may be difficult to confirm.
• The measures chosen may seem very arbitrary to some because there are another way of measuring relative qualities in health and education
• No indication in the education index about access to education for all groups in society.

The HDI and India

• India’s human development index (HDI) ranking for 2015 puts Asia’s third largest economy among a group of countries classed as “medium” in the list, as opposed to “low” in the 1990s, thanks to factors such as an increase in life expectancy and mean years of schooling in the past 25 years.
• But the bad news from the report released on Tuesday in Stockholm is that regional disparities in education, health and living standards within India—or inequality in human development—shave off 27% from India’s HDI score.
• As it stands, India is ranked 131 out of 188 countries in a list that is topped by Norway.

• India’s HDI value for 2015 is 0.624—which puts the country in the medium human development category but behind fellow South Asian countries like Sri Lanka and the Maldives.
• India’s 2015 score is up from 0.428 in 1990, i.e. an increase of 45.8% between 1990-2015.
• India’s improved HDI value is second among BRICS countries, with China recording the highest improvement—48%.
• Between 1990 and 2015, India’s life expectancy at birth increased by 10.4 years, mean years of schooling increased by 3.3 years and expected years of schooling increased by 4.1 years,” the report said, adding that India’s Gross National Income, or GNI, per capita, increased by about 223.4% during the same period.
• In South Asia, countries that are close to India in HDI rank with a comparable population size are Bangladesh and Pakistan, which are ranked 139 and 147, respectively.
• The HDI report also showed that almost 1.5 billion people in developing countries live in multi-dimensional poverty. Of this, 54%, or 800 million people, are in South Asia while 34% are in Sub-Saharan Africa.

 

Real versus Nominal GDP

Nominal GDP is the money value of all the goods and services produced in a year. Nominal GDP is calculated at the current market prices. However, Nominal GDP does not truly indicate the real performance of the economy as the prices changes over time.

Back to Basics: Suppose, India as a country only produced cars in its economy. In the year 2016, India produced 100 Cars which were sold at RS 100,000 each. India’s GDP in this case will be RS 10,00,00,00 (100*100000).

In the year 2017, supposedly due to demonetization India only produced only 90 Cars, but their price has risen to RS 15,0000. India’s GDP in the year 2017 will be 1,35,00,000.

The Increase from RS 10,00,00,00 to RS 1,35,00,000 is the nominal GDP. The GDP of India has risen not because we have produce more units of Car but because the prices of the car have increased.

Therefore, the Nominal GDP does not capture the changes in the real economy.

 

Real GDP

The real GDP is calculated as the money value of all the goods and services produced in a year using the constant set of market prices that have prevailed in the certain chosen base year. The Real GDP is calculated at a fixed set of prices so that only the changes in real output or real production of goods and services is captured.

Back to Basics: Suppose, India as a country only produced cars in its economy. In the year 2016, India produced 100 Cars which were sold at RS 100,000 each. India’s GDP in this case will be RS 10,00,00,00 (100*100000).

In the year 2017, supposedly due to demonetization India only produced only 90 Cars. If we take the year 2011-12 as the base year and assumes that the price of the car in that year was RS 90,000. Then, India’s Real GDP will be 90*90,000= 81,00,000.

The Nominal GDP is RS 1,35,00,000 whereas the Real GDP is RS 81,00,000. The difference is due to the prices which have risen from 90,000 in the base year to RS 15,00,00 in the current year.

Limitations of the Concept of GDP/Economic Growth

Note for Students: The following examples will make it clear why GDP is not a perfect measure of Well Being.

• Suppose, due to unemployment in the economy the youth drifts towards Crime. To overcome the crime rate, the government decides to hire more police personnel. Due to the hiring of police personnel, the economic activity in the economy increased as the newly employed personnel will be paid salaries, which they will spend on purchasing goods and services. Hence Production of Goods and services will increase. The final outcome is increase in the GDP.

Now tell me is this increase in the GDP is worth considering? The GDP has risen due to wrong reason, i.e., increase in crime.

In the above case, the GDP fails to capture the deteriorating situation of the society.

• Suppose, the Government of India decides to mine resources from the fragile Western Ghats. The mining of the resource leads to the production of resources which are used in the production of goods and services. The increased production will lead to increase in the GDP.                                 But, due to mining activity, the population near the Ghats were disposed of or removed. At the same time, the mining activity has made the region prone to flooding. The floods in the coming year will destroy valuable life and property. The loss due to dispossession and flooding will not be captured in the calculation of the GDP. Thus, in this case also GDP has risen but at the cost of negative externality in the form of loss of livelihood and lives.

Economic Growth versus Economic Development

The two-argument provided above are also valid for the shortcomings of growth.

Economic Growth is a monetary concept. It only takes into account the value of goods and services produced in the economy. It tells how much a country has progressed in terms of economic indicators like GDP, Per Capita Income, Production, employments etc. It measures only quantifiable outcomes.

Let’s Understand Growth

The First Stage:

The story so far is very impressive a business-friendly government with pro-business policy increased growth and employment.

The Second Stage:

The Third Stage

The Fourth and Final stage: The Crisis

The above model is just an easy explanation of a complex system. Is it really the pro-business policies of the government that have led to the crisis?

The answer is no. It is the lack of balanced policy or a single point focus on the growth that has led to the crisis.

What has the Government missed in the process?

• If at the very beginning, along with pro-business policies, the government had adopted the policies to promote education, skill development, research and innovation, health and social empowerment, the outcome could have been very different. A progressive education and health sector along with technological advancement would have taken care of skilled and educated labour needed in the production processes.

The First lesson, therefore, is “Along with the policies to promote Physical Capital the government must promote the policies of Human Capital”. Therefore, the first difference, “Promotion of Physical Capital is a growth oriented measure, but promoting the Human capital along with Physical Capital is a development oriented measure”.

• In the above setup, the government had adopted a policy of excessive deregulation of the economy. The problem with excessive deregulation is that it does more harm than good. If the government have moved cautiously with the deregulation, it could have avoided the crisis.

If for example, when the first stage boom had happened, the government should have adopted the policy of promoting new firms by encouraging competition, by providing the new firms with opportunities in the form of lower taxes, interest-free capital. Instead, the government followed the existence firms demand of more rebates, more deregulation which created a monopoly like the situation with restricting enter. The new firms would have competed with the older firms, and in the process, the poor performing firms would have thrown out of the market, and the best surviving firms could have produced efficiently and at a much lower price.

The second lesson, therefore, is “The role of government is to promote competition and healthy environment for the firms to operate and not to practice Crony Capitalism in nexus with old firms”. Therefore, the policy of excessive deregulation along with creating a monopoly kind structure is a growth oriented move, but promoting and encouraging new firms through fair competition is a development oriented measure”.

• The government promoted a policy of Land reforms which favoured firms and Businesses. Instead, the government must have come up with a policy which could have taken care of the poor and farmers. The government should have provided land at the fair market price along with the provision of forcing firms to undertake developmental activities like promoting primary health centres, secondary schools and another social sector initiative like computer training and skilling of rural youth who have lost their lands. This could have fastened the land reform process and makes it more acceptable to poor.

The Third lesson, therefore, is “A balanced approach towards resource redistribution does more good as compare to a one-sided measure of promoting business welfare”. The governments must force the firms to provide essential services in the areas of the land takeover. Therefore, land acquisition along with welfare of the region is a development measure.

• The last point is with respect to labour reforms. The flexibility of the labour market is the need of the hour. But it should be done keeping in mind the welfare of the labour. The government must do labour reforms which promote healthy employment along with bringing the labour in the social security net. The opening up of labour markets by killing unions and bargaining power of labour will only lead to labour exploitation and labour unrest and business loss. A better approach is to make labour market flexible for both employer and employee so that they can move out easily from one job to another. This can be done through proper contracts, well-functioning legal system, working social security net for labourers and skilling and training of labourers.

Therefore, the fourth lesson “Labour Market reforms carried with the welfare of the labour is a development oriented measure”.

The story in a nutshell, therefore, is “Growth is only a necessary condition and not a sufficient condition for promotion of well-being and raising the standard of living of the people”.

ECONOMIC GROWTH	ECONOMIC DEVELOPMENT
Economic growth refers to an increase over time in a country`s real output of goods and services (GNP) or real output per capita income.	Economic development implies an upward movement of the entire social system in terms of income, savings and investment along with progressive changes in socioeconomic structure of country (institutional and technological changes)
Economic Growth relates to a gradual increase in one of the components of Gross Domestic Product: consumption, government spending, investment, net exports.	Development relates to the growth of human capital indexes, a decrease in inequality figures, and structural changes that improve the general population’s quality of life.
It is a Quantitative concept. Increases in real GDP.	It is a Qualitative concept. it includes HDI (Human Development Index), gender- related index (GDI), Human poverty index (HPI), infant mortality, literacy rate etc.
It only Brings quantitative changes in the economy	Its effect is that it Brings Qualitative changes in the economy.
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. Growth is concerned with increase in the economy’s output	Economic development is more relevant to measure progress and quality of life in developing nations. like India where there is rampant inequality in the distribution of wealth. Concerned with structural changes in the economy for example generally economic development is associated with fall in the share of Agriculture in the total GDP, while the increase in the share of manufacturing in the total GDP.

 

Measures of Economic Development

1. GREEN GDP

• Green GDP is a term used for expressing GDP after adjusting for environment degradations.
• Green GDP is an attempt to measure the growth of an economy by subtracting the costs of environmental damages and ecological degradations from the GDP
• The concept was first initiated through a System of National Accounts.
• The System of National Accounts (SNA) is an accounting framework for measuring the economic activities of production, consumption and accumulation of wealth in an economy during a period of time. When information on economy’s use of the natural environment is integrated into the system of national accounts, it becomes green national accounts or environmental accounting.
• The process of environmental accounting involves three steps viz. Physical accounting; Monetary valuation; and integration with national Income/wealth Accounts.
• Physical accounting determines the state of the resources, types, and extent (qualitative and quantitative) in spatial and temporal terms.
• Monetary valuation is done to determine its tangible and intangible components.
• Thereafter, the net change in natural resources in monetary terms is integrated into the Gross Domestic Product in order to reach the value of Green GDP.

Green GDP and India

• While explicitly green GDP is not measured in India, but environmental accounting has been done in India from last 2 decades
• A Framework for the Development of Environmental Statistics (FDES) was developed by the Central Statistics Office (CSO) of India in the early 1990s. The Compendium of Environment Statistics is being released since 1997.
• As per the recommendations of Technical Working Group on Natural Resource Accounting (NRA) in the later 1990s, a pilot project on NRA in the State of Goa was initiated during 1999-2000. Thereafter, resource accounting studies were carried out in 8 states on a different set of natural resources. Later a Technical Advisory Committee was constituted in the year 2010 under the Chairmanship of Dr Kirit Parikh to bring out a Synthesis Report combining the findings of all these studies. The report recommended the preparation of a National Accounting Matrix that would include environmental accounts. The High powered expert group under Partha Dasgupta was constituted subsequently in 2011 with the mandate of developing a framework for green national accounts of India and for preparing a roadmap to implement the framework.
• Following the guidance of International Organisation of Supreme Audit Institutions (INTOSAI) on the framework for of environmental auditing, the supreme audit institution of India (CAG) also conducts an environmental audit in India. This process was formalised with the introduction of specialized guidelines for the conduct of environmental audits. This laid down broad guidelines to enable India’s auditors to examine whether the auditee institutions gave due regard to the efforts of promulgating sustainability development and environmental concerns, where warranted.
• Thus, in India, the Environmental audit is conducted within the broad framework of Compliance Audit and Performance Audit at the central level by the Office of Principal Director of Audit (Scientific Departments) and by the state Accountant Generals (Audit) at the state level. Over the years, more and more states have taken up environmental audits. This compliance as well as performance audits have been printed in the respective state/ central audit reports and presented to Legislature/Parliament. All these reports deal with the environmental themes of water issues, air pollution, waste, biodiversity and environmental management systems. All the environment audits done at the state level and at the central level since 2001 are collated in the CAG report on environmental audit.

Gender Inequality Index

• Gender inequality remains a major barrier to human development. Girls and women have made major strides since 1990, but they have not yet gained gender equity.
• The disadvantages facing women and girls are a major source of inequality. All too often, women and girls are discriminated against in health, education, political representation, labour market, etc.—with negative consequences for development of their capabilities and their freedom of choice.
• The GII is an inequality index. It measures gender inequalities in three important aspects of human development—reproductive health, measured by maternal mortality ratio and adolescent birth rates; empowerment, measured by proportion of parliamentary seats occupied by females and proportion of adult females and males aged 25 years and older with at least some secondary education; and economic status, expressed as labour market participation and measured by labour force participation rate of female and male populations aged 15 years and older.
• The GII is built on the same framework as the IHDI—to better expose differences in the distribution of achievements between women and men. It measures the human development costs of gender inequality. Thus, the higher the GII value, the more disparities between females and males and the more loss to human development.
• The GII sheds new light on the position of women in 159 countries; it yields insights in gender gaps in major areas of human development. The component indicators highlight areas in need of critical policy intervention, and it stimulates proactive thinking and public policy to overcome systematic disadvantages of women.

Gross National Happiness Index

• Gross National Happiness is a term coined by His Majesty the Fourth King of Bhutan, Jigme Singye Wangchuck in the 1970s. The concept implies that sustainable development should take a holistic approach towards notions of progress and give equal importance to non-economic aspects of well-being.
• “How are you?” We ask that question of one another often. But how are we doing – as a country, a society? To answer that question, Bhutan uses its Gross National Happiness (GNH) Index.
• In 2015, a total of 91.2% of Bhutanese were narrowly, extensively, or deeply happy. 43.4% were extensively or deeply happy. The aim is for all Bhutanese to be extensively or deeply happy. Bhutan is closer to achieving that aim in 2015 than it was in 2010.
• GNH is a much richer objective than GDP or economic growth. In GNH, material well-being is important, but it is also important to enjoy sufficient well-being in things like community, culture, governance, knowledge and wisdom, health, spirituality and psychological welfare, a balanced use of time, and harmony with the environment.
• The four pillars of GNH:

• The Nine Domains of GNH

Criticism of GNH

• From an economic perspective, critics state that because GNH depends on a series of Subjective judgments about well-being, governments may be able to define GNH in a way that suits their interests
• Other critics say that international comparison of well-being will be difficult in this model; proponents maintain that each country can define its own measure of GNH as it chooses and that comparisons over time between nations will have validity. GDP provides a convenient, international scale.
• Research demonstrates that markers of social and individual well-being are remarkably transcultural: people generally report greater subjective life satisfaction if they have strong and frequent social ties, live in healthy ecosystems, experience good governance, etc. Nevertheless, it remains true that reliance on national measures of GNH would render international comparisons of relative well-being more problematic since there is not and is not likely ever to be a common scale as “portable” as GDP has been with other countries.

Human Development Index

• The Human Development Index (HDI) is a statistical tool used to measure a country’s overall achievement in its social and economic dimensions. The social and economic dimensions of a country are based on the health of people, their level of educational attainment and their standard of living.
• Pakistani economist Mahbub ul Haq created HDI in 1990 which was further used to measure the country’s development by the United Nations Development Program (UNDP). Calculation of the index combines four major indicators: life expectancy for health, expected years of schooling, mean of years of schooling for education and Gross National Income per capita for the standard of living.

Why do we require HDI?

• Firstly, GDP method of calculating progress ignores non-income aspects like education and health thus, for example, Arab countries have high GDP per-capita, but the progress in health and education field is limited in those countries which do not get measured in GDP. Similarly, in countries like Cuba and Sri Lanka GDP per capita is low, but the quality of life is much better than many high GDP per capita countries of the Arab world and Latin America because of high-quality indicators in social sectors. HDI will overcome this problem
• Secondly, GDP per capita ignores income inequality or distribution of wealth in a country for example in countries of Latin America have high GDP per capita but due to skewed income distribution, the masses are excluded from growth process.
• The HDI was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone

Method of calculating HDI

• The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living. The HDI is the geometric mean of normalized indices for each of the three dimensions.

(a)Life Expectancy Index assessment

• The minimum value for life expectancy is fixed at 20 years in the new calculation. The maximum value for life index is kept at 83.2 years. 
• Formula to calculate Life Expectancy Index (LEI) = Life Expectancy of a country -20/ 83.2-20

 (b) Education Index assessment
Education Index (EI) assessment is composite of two indices. They are 
1. Mean Years of Schooling Index (MYSI)
2. Expected Years of Schooling Index (EYSI)

• Formula to calculate Mean Years of Schooling Index (MYSI) = Mean years of schooling – 0/ 13.2 – 0
• Formula to calculate Expected Years of Schooling Index (EYSI) = Expected Years of Schooling – 0/ 20.6 – 0

   (C)  Income Index assessment

• To calculate this index, goal posts are set as per observations during 1980 – 2010 in various countries. Gross National Income per capita is taken as a measure to calculate new Income Index in new HDI. Minimum income is set as $163, and maximum income is set as $108,211.
• Formula to calculate Income Index = Log (Country’s GNIpc) – Log ($163) / Log ($108,211) – Log ($163)

How to calculate Human Development Index as per new method?
Formula to calculate Human Development Index (HDI) = (Life Expectancy Index X Education Index X Income Index) 1/3
New Human Development Index (HDI) is geometric mean of Life Expectancy Index (LEI), Education Index (EI) and Income Index (II).

After this calculation total value will be between 0 and 1. As per the values gained, countries will be placed in the list of the division of countries. They are divided into very high human development, high human development, medium high human development and low high human development countries

Global Trends in HDI

• The Scandinavian countries which include Norway, Sweden, Denmark etc. are world leaders in HDI since most of them occupy positions within top 10 in HDI list and Norway always tops the list. According to 2015 HDI rankings, Norway is top ranked country. The reasons why these countries are performing so well In HDI are manifold. These countries have high per capita income, along with this positive state interference in education and health along with a well-developed social security system ensure that these countries maintain their dominance in HDI ranking.
• Among India’s neighbours, Bhutan and Bangladesh  figure in Medium development category. Pakistan (ranked 146) and Nepal (145) are in the ‘low development’ category, while Sri Lanka (73) is in the ‘high development’ category.
• The five countries that made up the bottom of the list were Niger (0.348), Central African Republic (0.350), Eritrea (0.391), Chad (0.392) and Burundi (0.400).

Strength of HDI index

• There is widespread use of HDI to compare development levels, and it does reveal clear global patterns.
• Does not solely concentrate on economic Growth, and takes into consideration that there are other, more social, ways to measure progress.
• Increase in education and health shows an improvement in countries progress index.

Weaknesses of HDI index

• The fact that the HDI uses GDP per capita in its calculations opens many criticisms. Here are some of them.
• GDP per capita does not give an indication of the income distribution. Issues about Rich and poor divide etc
• GDP does not show how the income is spent by the government. Some countries spend more on military than on health care
• The range of variables included by the HDI is too narrow and does not include much-needed factors such as the % of people living on under 1$ a day
• Out of the three main constituents of the HDI, some factors are more important than others. The HDI is flawed for this reason as the score of the three is averaged out.
• When knowledge is measured it only takes into account what children learn at school not in the family. And so maybe knowledge statistics may be distorted if the family play more of a role in education in the home.
• Longevity can also be distorted as the life expectancy of a person does not consider how healthy the life was led. i.e. A person aged 90 years old but has suffered serious illness in the last 30 years of their life would have a higher HDI value compared to a 70-year-old who has led a very healthy life.
• Countries like are countries with booming economic growth. And also, it has well-developed health and education sector. There is no religious freedom, there’s censorship on the internet, and the state is everywhere.
• Data from some developing countries may not be very reliable and may be difficult to confirm.
• The measures chosen may seem very arbitrary to some because there are another way of measuring relative qualities in health and education
• No indication in the education index about access to education for all groups in society.

The HDI and India

• India’s human development index (HDI) ranking for 2015 puts Asia’s third largest economy among a group of countries classed as “medium” in the list, as opposed to “low” in the 1990s, thanks to factors such as an increase in life expectancy and mean years of schooling in the past 25 years.
• But the bad news from the report released on Tuesday in Stockholm is that regional disparities in education, health and living standards within India—or inequality in human development—shave off 27% from India’s HDI score.
• As it stands, India is ranked 131 out of 188 countries in a list that is topped by Norway.

• India’s HDI value for 2015 is 0.624—which puts the country in the medium human development category but behind fellow South Asian countries like Sri Lanka and the Maldives.
• India’s 2015 score is up from 0.428 in 1990, i.e. an increase of 45.8% between 1990-2015.
• India’s improved HDI value is second among BRICS countries, with China recording the highest improvement—48%.
• Between 1990 and 2015, India’s life expectancy at birth increased by 10.4 years, mean years of schooling increased by 3.3 years and expected years of schooling increased by 4.1 years,” the report said, adding that India’s Gross National Income, or GNI, per capita, increased by about 223.4% during the same period.
• In South Asia, countries that are close to India in HDI rank with a comparable population size are Bangladesh and Pakistan, which are ranked 139 and 147, respectively.
• The HDI report also showed that almost 1.5 billion people in developing countries live in multi-dimensional poverty. Of this, 54%, or 800 million people, are in South Asia while 34% are in Sub-Saharan Africa.

 

Ministry of Health and Family Welfare has released Operational Guidelines for Planning and Implementation of Family Participatory Care (FPC) for improving newborn health.

The new guidelines have been released by the government for improving health of babies in special units across the country.

Key facts

1. The guidelines will serve as a guiding document for those intending to introduce FPC in their facility as an integral part of facility based newborn care.
2. The operational guidelines of FPC are for all stakeholders involved in the process of planning and delivering newborn care.
3. Under the guidelines—Operational Guidelines for Planning and Implementation of Family Participatory Care (FPC)—parent-attendants will be trained in newborn care through a structured programme including an audio-visual module and a training guide. The staff at a newborn care unit would provide continuous supervision and support.
4. The guidelines address various aspects of attitudes, infrastructural modifications and practice that will help in establishing FPC at Special Newborn Care Units (SNCU) such as sensitization of State and District Managers on FPC, prioritization of SNCUs for initiating FPC etc.

Background

FPC has emerged as an important concept of health care which provides for partnership between health care staff and families for care of sick newborns. Under FPC, the capacities of parents-attendants are built in newborn care through a structured training programme (audio -visual module and a training guide). The staff at newborn care unit will provide continuous supervision and support. Provisions for infrastructure and logistics strengthening required for implementing FPC are ensured in the annual state Program Implementation Plan (PIP).

Need for family participation

Sick and newborn are highly vulnerable and require careful nurturing in order to survive the neonatal period and first year of life. In recent years, health experts have found that if parents are trained during the stay of their babies in hospital to provide supportive care to sick newborns, it helps in not only improving survival of babies after discharge but also provides for psycho-social and developmental needs of the newborn.

In this regard, Family Participatory Care has emerged as an important concept of health care which provides for partnership between health care staff and families in care of sick newborns admitted in the SNCU. The move is expected to bring down infant mortality.

National Income Accounting in India

National income of a country can be defined as the total market value of goods and services produced in the economy in a year.

The three-important measure of calculating National Income of a country are:

• The sum of the value of all final goods and services produced.
• The sum of all incomes accruing to factors of production, i.e., Rent, Interest, Profit and Wages.
• The sum of consumer’s expenditure, net investment, and government expenditure on goods and services.

Circular Flow of Income in a Three Sector Economy

• The modern economy is a monetary economy. Money changes hand from one sector to another.
• The Household sector supplies their services like labour, land, Capital and entrepreneurial abilities to firms and receives payments in return in terms of money.
• In the first stage of the model, the Household sector provides their services of labour, land, capital and entrepreneurial skills to the Business firms.
• In the second stage, the Business firms pay back in monetary terms to the Household sector in the form of Wages, Rent, Interest and Profits.
• In the third stage, the money received by household is spent on the goods and services produced by the firms in the form of consumption expenditure. At the same time, the Firms provides their goods and services to the Household in return for the money.
• Thus, we see, that money flows from business firms to households as payments for a factor of production (Labour, Land, Rent and Entrepreneurial skills), and then it flows from Household to firms when Household purchased goods and services produced by the firms. This money flow is called circular flow of income.

Saving and Investment in the Circular Flow

• Along with consumption, the household also saves part of their money.
• When Household saves, their expenditure on purchase of goods and services decline. The decline in the purchase will result in a decline in money received by firms. This will result in less money flow to the household as the firms will reduce hiring and production operations. Thus, saving act as a leakage from the economic system.
• But the important question to ask is, where will savings go in the economy?
• The savings in the economy does not lead to any reduction in aggregate spending and income as the savings flows back into the economic system through Financial Markets (Banks, Stock markets, insurance etc.)
• From Financial Markets, the savings flows back to the Business firms who borrow them and invest it into new forms of investments.
• Thus, the saving which is a leakage in the system also flows back into the system through investment by a firm which acts as injections.

Government Sector in the Circular Flow

• Government affects the economy in a number of ways. The main components of government intervention are in the form of taxes, spending and borrowings.
• Government purchase goods and services just as household and firms do.
• Government financed its expenditure through taxes and borrowings.
• The money flow from Household and firms to the government is in the form of taxes.
• The other form of money flow from Household and firms to government is in the form of Borrowings through financial markets.
• The Government pay back to household and firms in the form of provision of public goods like health, education, Policing, National Defence etc.

National Income and National Product

Gross National Product	Gross Domestic Product
GNP is the total market value of all final goods and services produced in a year in a country.	GDP is the value of all final goods and services produced by the normal residents as well as non-residents in the domestic territory of the country but does not includes Net Factor Income from Abroad.
The important thing to remember about GNP is that it is measured at market prices/value.	The important point to remember is whatever is produced in India, whether by an Indian or foreign national is part of Indian GDP.
To calculate GNP, only the final goods and services produced in an economy during in a given year must be counted. No intermediate goods and services should be included in GNP.	The key difference between GNP and GDP is the exclusion of Net Factor Income Abroad from GDP.
GNP includes only those goods and services that are produced by the residents of India whether working in India or Abroad.	GDPMP = GNPMP – Net Factor Income from Abroad.
Net Factor Income from Abroad: The sum of factor incomes like rent, wages, interest and profits generated within the domestic country is called domestic factor income. The domestic factor income includes both incomes earned by residents as well as non-residents/foreigners working in India. At the same time, Indian go abroad to work and earn wages, salaries, profits and rents. Now the Net Factor income abroad= the difference between factor income received by the residents of India working abroad and the factor income paid to the foreign residents for working in India. GNP includes Net Factor Income Abroad	GDP = Consumption + Gross Private Investment + Government Expenditure + Net Exports Net Exports= Exports – Imports. If we want to calculate Net Domestic Product from the GDP, then we just have to minus depreciation from the Gross Private Investment. NDP= Consumption + Net Private Investment + Government Expenditure + Net Exports. Where, Net Private Investment= Gross Private Investment – Depreciation.
GNP= Consumption + Gross Private Investment + Government Expenditure + Net Exports + Net Factor Income from Abroad.

Net National Product or National Income

• In the production of GNP of a year, a country uses some fixed assets or capital goods like Machinery, Equipments and technology etc.
• The capital goods like machinery, building and equipment’s undergo regular wear and tear during the production process, which reduces their value. This fall in the value of capital assets due to regular wear and tear is called depreciation.
• When the Depreciation is deducted from the Gross National Product, then we get Net National Product.
• It simply means to include all market value of goods and services produced in a year after deducting depreciation.
• NNPMP = GNP- Depreciation.

National Income at Factor Cost

• National Income from Factor Cost is also called National Income of a country.
• National Income means the sum of all incomes earned by the citizens in the form of Rent, Wages, Interest and Profits.
• The difference between National Income at Factor Cost and National Income at Market Price (NNPMP) arises from the fact that indirect taxes and subsidies cause the market price to be different from the factor income received by the citizens.
• Example, A mobile handset of Rs10,000 purchased by you includes a GST of 12%. In this case, while the market price of RS 10,000 includes the GST. The factor of production used to produce mobile handset will only get RS 8800. Thus, the difference between market price and factor cost is the tax.
• Similarly, a subsidy results in the market price of a product to be less than the factor cost.
• Therefore, while calculating National Income, we must deduct indirect taxes and add subsidies into Net National Product at Market Price.
• NNPFC = NNPMP – Indirect Taxes + Subsidies.

Personal Income

• Personal Income includes the sum of all incomes actually received by all the individuals or households during a given year.
• The individual pays income taxes, firms pay corporate taxes, individual also contribute towards social securities in the form of Cess etc., and some individuals receive social security benefits (transfer payments) like pension, unemployment allowances from the government.
• In order to move from National Income to Personal Income of individuals and firms, we must deduct all forms of direct taxes and social security contribution by the individuals and must add transfer payment received by the individuals.
• The basic idea here is to subtract all those income from National Income that is earned by an individual but has not been received like taxes and add all those incomes which are received by the individuals but has not been earned like Old age Pensions.
• Personal Income= National Income – (Undistributed Corporate Profits+ Corporate Taxes + Social Security Contribution) + (Transfer Payments).

GNP	GDP	NNPMP	NNPFC	Personal Income
GNPMP= Consumption + Gross Private Investment + Government Expenditure + Net Exports + Net Factor Income from Abroad.	GDPMP = GNPMP – Net Factor Income from Abroad.	NNPMP = GNPMP – Depreciation.	NNPFC = NNPMP – Indirect Taxes + Subsidies.	Personal Income= National Income (NNPFC) – (Undistributed Corporate Profits+ Corporate Taxes + Social Security Contribution) + (Transfer Payments).

 

By
Himanshu Arora
Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University

 

 

• The Protection of Civil Rights (PCR) Act, 1955: For SC.

• The Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989: For SC and ST.

• The National Commission for Backward Classes Act, 1993: For Backward Classes.

• Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.

• National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability Act, 1999.

• Rehabilitation Council of India Act, 1992. : For PWD.

• Maintenance and Welfare of Parents and Senior Citizens Act, 2007: For Social Defence.

• Dowry Prevention Act.

• Protection of women from domestic violence Act 2005.

• Institutions for the Development of Vulnerable Sections

• National Institute of Social Defence.

• Deen Dayal Upadhyaya Institute of Physically Handicapped, New Delhi.

• National Institute for the Orthopedically Handicapped, Kolkata.

• National Institute of Visually Handicapped, Dehradun.

• National Institute of Mentally Handicapped, Secunderabad.

• Ali Yavar Jung National Institute for the Hearing Handicapped, Mumbai.

• National Institute of Rehabilitation Training and Research, Cuttack.

• National Institute for the Empowerment of Persons with Multiple Disabilities, Chennai.

• Swami Vivekanand National Institute of Rehabilitation, Training & Research (SVNIRTAR), Orissa.

• The Indian Sign Language Research and Training Centre, New Delhi.

• The National Scheduled Castes Finance and Development Corporation.

• The National Safai Karamcharis Finance and Development Corporation.

• The National Backward Classes Finance and Development Corporation.

• The National Handicapped Finance and Development Corporation.

• Artificial Limbs Manufacturing Corporation, Kanpur.

• Dr. Ambedkar Foundation.

• Babu Jagjivan Ram National Foundation

• Bodies for the development of vulnerable sections

• National Commission for Scheduled Castes.

• National Commission for Backward Classes.

• National Commission for Safai Karamcharis.

• National Commission for Scheduled Tribes – NCST.

• Statutory Bodies for vulnerable sections.

• The Rehabilitation Council of India.

• The Chief Commissioner for Persons with Disabilities.

• The National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities.

• National Commission for Women, New Delhi, India.

• National Commission for Protection of Child Rights.

• National Consumer Disputes Redressal Commission.

• National Human Rights Commission, New Delhi, India

 

Constitutional Provisions

1. Article 23: Prohibition of traffic in human beings and forced labour.
2. Article 24: Prohibition of employment of children in factories, etc.
3. Article 37: Application of the principles contained in this Part (DPSP).
4. Article 38: State to secure a social order for the promotion of welfare of the people.
5. Article 39: Certain principles of policy to be followed by the State.
6. Article 39A: Equal justice and free legal aid.
7. Article 46: Promotion of Educational and Economic interests of Scheduled Castes, Scheduled Tribes and other weaker sections.

Social Safeguards

1. Article 17: Abolition of Untouchability.
2. Article 25: Freedom of conscience and free profession, practice and propagation of religion.

Political Safeguards

1. Article 330: Reservation of seats for Scheduled Castes and Scheduled Tribes in the House of the People.
2. Article 332: Reservation of seats for Scheduled Castes and Scheduled Tribes in the Legislative Assemblies of the States.
3. Article 334: Reservation of seats and special representation to cease after sixty years.
4. Article 243D: Reservation of seats (in Panchayats).
5. Article 243T: Reservation of seats (in Municipalities).

Agency for Monitoring Safeguards

1. Article 338: National Commission for Scheduled Castes.

Jobless Growth in India: Reasons and Consequences

The Consequences of Jobless Growth in India

Unemployment in India: Causes

Consequences of Unemployment.

 

Unemployment in India

Back to Basics. What is Unemployment?

Unemployment is a phenomenon that occurs when a person who is capable of working and is actively searching for the work is unable to find work.

People who are either unfit for work due to physical reason or do not want to work are excluded from the category of unemployed.

The most frequent measure of unemployment is unemployment rate. The unemployment rate is defined as a number of unemployed people divided by the number of people in the labour force.

Labour Force: Persons who are either working (or employed) or seeking or available for work (or unemployed) during the reference period together constitute the labour force.

Measure of Unemployment in India

Usual Status Approach	Weekly Status Approach	Daily Status Approach
Usual Status approach records only those persons as unemployed who had no gainful work for a major time during the 365 days preceding the date of survey and are seeking or are available for work. The status of activity on which a person has spent the relatively long time of the preceding 365 days prior to the date of survey is considered to be the usual principal activity status of the person.	The weekly status approach records only those persons as unemployed who had no gainful work for a major time during the seven days preceding the date of survey.	In the Daily status approach, current activity status of the person with regard to whether employed or unemployed or outside labour force is recorded for each day in the reference week. The measure adopts half day as a unit of measurement for estimating employment or unemployment.
The Usual Status captures long-term unemployment in the economy.	The weekly status approach captures both the long-term open chronic unemployment and the seasonal unemployment.	The approach is most inclusive than the other two. Since it also captures the days of unemployment of those who are recorded as employed on the weekly status approach.
The Usual Principal Activity status (UPS), written as Usual Status (PS), is determined using the majority time criterion and refers to the activity status on which h/she spent longer part of the year. Principal usual activity status is further used to classify him in/out the labour force. For instance, if an individual was ‘working’ and/or was ‘seeking or available for work’ for a major part of the year preceding the date of the survey then h/she is considered as being part of the ‘Labour Force’. For example, if an individual reports as having worked and sought/available for work for seven months during the year or having sought or available for work for seven months then h/she is classified as being in the Labour Force.	A person is considered to be employed if he or she pursues any one or more of the gainful activities for at least one-hour on any day of the reference week. On the other hand, if a person does not pursue any gainful activity, but has been seeking or available for work, the person is considered as unemployed.	A person who works for 4 hours or more but up to 8 hours on a day is recorded as employed for the full day. A person who works for 1 hour or more but less than 4 hours is recorded as employed for the half day. Accordingly, a person having no gainful work even for 1 hour in a day is described as unemployed for a full day.

Types of Unemployment

Frictional Unemployment	Cyclical Unemployment
The minimum amount of unemployment that prevails in an economy due to workers quitting their previous jobs and are searching for the new jobs is called Frictional Unemployment.	Cyclical unemployment is due to deficiency or fall in effective demand from consumers which leads to fall in production and low demand for labour. Cyclical unemployment is a type of unemployment which is related to the cyclical trends of booms and recessions called as the business cycle. If an economy is doing good, cyclical unemployment will be at its lowest and will be the highest if the economy faces recession.
The major reasons for frictional unemployment are lack of information about the availability of jobs and lack of mobility on the part of workers (it means workers are not willing to travel to a distant place or a new state for employment).	The major reason for this type of unemployment is lack of demand in the economy and slowdown of economic activity. When the demand for goods and services is low, then the firms stop the production due to rise in the unsold stock. As a result of stopping production, the firms lay off workers and unemployment rises.
Frictionally unemployed person remains unemployed for a very short period of time.	This type of unemployment is for a long period of time and worker remains unemployed during the entire phase of slow down or recession.
This type of unemployment is of voluntary nature.	This type of unemployment is of involuntary nature.

Voluntary Unemployment	Involuntary Unemployment
Voluntary unemployment refers to a situation where workers are either not seeking for work or are in transition from one job to another (quitting one job in search of another better job).	Involuntary unemployment refers to a situation where workers are seeking work and are willing to work but are unable to get work.
Voluntary unemployment remains in an economy during all the time. As there will always be some workers, who quit their previous jobs in search of new ones.	Involuntary unemployment happens in an economy during the time of depression and fall in aggregate demand for goods and services.

Structural Unemployment	Seasonal Unemployment
Structural unemployment refers to a situation which arises due to change in the structure of the economy. Example: An economy transforms itself from a Labour intensive economy to a Capital intensive economy. Structural unemployment usually occurs due to the mismatch of skills. Example, due to advance technological progress, the production of cars is done through robotic machines rather than traditional Machines. As a result, those workers who do know how to operate the new and advanced machines will be removed. The unemployment happened because the current workers do not have the required skills as wanted by their employers.	Seasonal unemployment occurs during certain seasons of the year. In some industries and occupations like agriculture, holiday resorts etc., production activities take place only in some seasons. Therefore, they offer employment for only a certain period of time in a year. People engaged in such type of activities may remain unemployed during the off-season.
Technological Advancement, Robotics, Artificial Intelligence, Mechanisation and Automation are the main causes of Structural unemployment.	Seasonal unemployment mainly occurs in Agricultural sector, Tourism sector and in factories producing seasonal goods.

Back to Basics: Disguised Unemployment

• Disguised unemployment is a situation especially prevalent in poor and developing countries.
• Disguised unemployment is when too many people are employed than what is required to produce efficiently. This kind of employment is not at all productive.
• It is not productive in a sense that production does not suffer even if some of the employed people are withdrawn.
• The key point to remember is that the marginal productivity of labourers under disguised unemployment is zero. The labourers are employed physically, but not economically.

Example: In a piece of 5 Acres land, 5 family members are employed to grow 100 Kgs of rice. The maximum rice that can be grown on the land is 100 Kg only. Now, the family decides to employ additional two members of its family on the same land. In such a scenario, the additional two members will not contribute anything in production since maximum production has already been reached. The additional two members will only end up congesting the farm land. Hence, they both are disguisedly unemployed.

Member 1 20 Kg

Member 2 20 Kg

Member 3 20 Kg

Member 4 20 Kg

Member 5 20 Kg

Since maximum output of 100 Kg is already reached.

Member 6 & 7 contribution will be 0 Kg.

The situation of disguised unemployment is most prevalent in the agriculture sector of the underdeveloped countries. The key idea is that the amount of population in agriculture which can be removed from it without any change in the method of cultivation, without leading to any reduction in output.

Back to Basics: Under Employment.

Underemployment is the most dangerous kind of unemployment in an economy. Underemployment is a situation under which People with a higher level of skills are employed in less productive jobs. It simply means that the Labour force of the economy is not fully utilised as per their skills and experience.

Example: an individual with an engineering or management degree working as a clerk or accountant in a firm or a social science graduate working as a pizza delivery boy.

The consequence of Underemployment.

 

The constitution does not describe the term backward classes.

It is up to the centre and the states to postulate the classes that belong to this group. However, it is understood that classes that are not represented adequately in the services of the state can be termed, backward classes.

Further, the President can, under Art. 340 constitute a commission to investigate the condition of socially and educationally backward classes. Based on this report, the president may specify the backward classes. Commission for Enquiring into Conditions of Backward Classes

1. Article 340: Appointment of a Commission to investigate the conditions of backward classes.

Safeguards relating to Educational & Public Employment

1. Article 15: Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth.
2. Article 16: Equality of opportunity in matters of public employment.
3. Art. 15 (4): “Nothing in this article or in article 29(2) shall prevent the state from making any provisions for the advancement of any socially and economically backward classes of citizens or for Scheduled Castes and Scheduled Tribes.” This clause started the era of reservations in India. You may please note that Art. 15(4) talks about backward classes and not backward castes thus caste is not the only criterion for backwardness and other criteria must also be considered.
4. Art. 15 (5): This clause was added in 93rd amendment in 2005 and allows the state to make special provisions for backward classes or SCs or STs for admissions in private educational institutions, aided or unaided.
5. Art. 16(4): This clause allows the state to reserve vacancies in public service for any backward classes of the state that are not adequately represented in the public services.
6. Art. 16 (4A): This allows the state to implement reservation in the matter of promotion for SCs and STs.
7. Art. 16(4B): This allows the state to consider unfilled vacancies reserved for backward classes as a separate class of vacancies not subject to a limit of 50% reservation.

Constitutional Provisions for Women

There are numerous legal provisions to enhance the status of women which is a more susceptible group in Indian society.

1. Art. 15(3): It permits the state to make special provisions for women and children. Several acts such as Dowry Prevention Act have been passed including the most recent one of Protection of women from domestic violence Act 2005.
2. Art. 23: Under the fundamental right against exploitation, flesh trade has been banned.
3. Art. 39: Guarantees equal pay to women for equal work. In the case of Randhir Singh vs Union of India, SC held that the concept of equal pay for equal work is indeed a constitutional goal and is capable of being enforced through constitutional remedies under Art. 32.
4. Art. 40: Provides 1/3 reservation in panchayat.
5. Art. 42: Offers free pregnancy care and delivery.
6. Art. 44: It compels the state to implement unchanging civil code, which will help progress the condition of women across all religions. It has, however, not been implemented due to politics.
7. In the case of Sarla Mudgal vs the Union of India, SC has held that in the Indian Republic there is to be only one nation i.e. Indian nation and no community could claim to be a separate entity on the basis of religion. There is a plan to provide reservation to women in parliament as well.

Constitutional Provisions for Children

• Art. 19 A: Education up to 14 yrs has been made a fundamental right. Thus, the state is required to provide school education to children.

In the case of Unni Krishnan vs the State of AP, SC held that right to education for children between 6 to 14 yrs of age is a fundamental right as it flows from Right to Life. After this decision, education was made a fundamental right explicitly through 86th amendment in 2002.

• Art. 24: Children have a fundamental right against exploitation and it is prohibited to employ children below 14 yrs of age in factories and any hazardous processes.

Recently the list of hazardous processes has been updated to include domestic, hotel, and restaurant work.

Several PILs have been filed in the benefit of children. For example, in MC Mehta vs the State of TN, SC has held that children cannot be employed in match factories or which are directly connected with the process as it is hazardous for the children.

In the case of Lakshmi Kant Pandey vs the Union of India, Justice Bhagvati has laid down guidelines for adoption of Indian children by foreigners.

• Art. 45: Urges the state to provide early childhood care and education for children up to 6 yrs of age.

Age and high levels of economic necessity and/or disability combine to create high levels of vulnerability to long-lasting poverty. While old age pension schemes are in place neither the small amounts made available nor the hassle of accessing them make this a solution to the problem of chronic poverty among the elderly.

With the high occurrence of chronic ailments and health care needs of the elderly, declining family size, migration and breakdown of traditional family structures that provided support, this group of the population is awfully vulnerable to poverty.

Constitutional Provisions for Aged

In Constitution of India, entry 24 in list III of Schedule IV deals with the “Welfare of Labour, including conditions of work, provident funds, liability for workmen’s compensations, invalidity and Old age pension and maternity benefits.

Further, Item No. 9 of the State List and Item No. 20, 23 and 24 of the Concurrent List relates to old age pension, social security and social insurance, and economic and social planning.

Article 41 of the Directive Principle of the State Policy has particular relevance to Old Age Social Security. According to this Article, “the State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in case of undeserved want.”