Indian Economy : Performance and Policy

14th Ed.: 2013-14

Uma Kapila

Preface

Section - I
Basic Issues in Economic Development
 

 1. Economic Development and
     Under Development
 – Introduction
 – What Does Development Mean
 – Economic Growth and Economic Development
 – The New View of Economic Development
   • Development as a Multi-dimensional Process
   • Three Core Values of Development
 – Development, Freedom and Opportunities
 – The Three Objectives of Development
 – The Millennium Development Goals
 – Developed and Underdeveloped Countries
 – Defining the Developing World
 – Characteristics of the Developing World:
    Diversity within Commonality
   • Lower Levels of Living and Productivity
   • Lower Levels of Human Capital
   • High Rate of Population Growth and Dependency Burden
   • Higher Levels of Inequality and Absolute Poverty
   • Greater Social Fractionalisation
   • Larger Rural Populations but Rapid Rural-to-Urban Migration
   • Substantial Dependence on Agricultural Production and Lower
     Levels of Industrialisation and Manufactured Exports
   • Underdeveloped Financial and Other Markets
   • Lingering Colonial Impacts
   • External Dependence
 – Nature of Indian Economy

 2. Human Development
 – Human Development
   • Human Development Index
 – A Changing World, A More Global South
   • Are there Limits to Human Development?
   • Sustainability, Equity and Human Development
    – What Makes Development Unsustainable?
 – The Current State of Human Development
 – State of Human Development in India

 

Section - II
Basic Features of Indian Economy at Independence
 

 3. India’s Economy at Independence.
 – Introduction
 – The Relative Importance of Various Industrial Activities
   • Composition of National Income
   • The Working Force
 – The Agrarian Scene
   • Stagnating Agriculture
   • Causes
    – Regressive Organic Structure
    – Internal Drain of Capital
    – Poor Technology
 – India’s Industrial Production and Its Structure
   • India’s Industrial Resources
   • The Decline of Traditional Industry and the
      Development of Modern Industry
 – Some Positive Features

 

Section - III
Policy Regimes
 

 4. Economic Planning: Evolution and Strategy.
 – Evolution of Planning
 – Role of the State as Visualised in the Fifties
 – Early Experience with Five Year Plans
 – Changing Perceptions
 – Role of Planning in a Market Economy
 – Redefining the Role of State
 

 5. Economic Reform.
 – Debate on Liberalisation
 – The Background
 – The Macroeconomic Crisis
 – Rationale for the Reforms
 – Macroeconomic Reforms
   • Structural Reforms
    –  Implementation of the Agenda
     ¡ Industrial Policy Reforms
     ¡ Trade Policy Reforms
     ¡ Removal of QRs
     ¡ Exchange Rate Reforms
     ¡ Capital Markets
     ¡ Financial Sector
 – Economic Progress Post-1991
   • Fiscal Adjustment and Stabilisation
 – Impact of Economic Reforms on the Vulnerable Sections
 – Conclusion
 – The Next Round of Reforms

 

Section - IV
Growth, Development and Structural Change
 

 6. Growth and Structural Changes since 1951.
 – Periodisation of Indian Growth Experience
 – India's Growth Turnaround
   • 2003-2008 The Best Phase in Growth
   • Recent Deceleration since 2011
 – Investment
 – Growth Prospects
   • Risk Factors and Constraints
 – Performance on Inclusiveness
   • Multidimensionality of Inclusion
 – The Need for Faster Growth
 – International Comparisons
 – Growth and Structural Change
   • Share of Services in GDP
   • What are the Factors behind the Dynamism of
     the Services Sector in India
 – Inter-Regional Disparities in Growth and Development
 – The Way Ahead
 – Growth Prospect: An Assessment
 

 7. Land Reforms.
 – Objective of Land Reforms
 – Effects of Land Reforms on Productivity and Poverty


 8. Unemployment and Employment

 

Perspective.
 – Concepts and Measurement
   • Labour Force and Workforce Participation Rates
 – Some Characteristics of the Indian Labour Market
 – Trend and Pattern of Employment Growth
   • Growth in Employment, GDP and Employment Elasticity
   • Organised Versus Unorganised Sector Employment
   • Sectoral Employment Shares
 – Quality of Employment and Disparities
 – Weaknesses in Past Performance
 – Employment and Labour Policy
 – Indian Labour Laws and Labour Markets
 – Public Employment Programme for the
    Unorganised Workers: The Case of NREGA
   • An Overview of the Scheme
   • The Performance
   • Success Stories
   • Remaining Gaps
 – Employment Perspective

 9. Poverty in India.
 – Magnitude and Determinants
   • The Selection of Poverty Lines
 – Multidimensional Poverty Index
 – Reduction in Poverty
 – Comparison of India and China in Terms
   of Poverty Reduction
   • Causes of Poverty
   • Growth and Poverty Reduction
   • Growth and Inequality
   • Growth, Employment and Poverty
   • Growth Pattern and Poverty
 – Poverty and Inclusive Growth
   • Non-income Poverty Dimensions
 – Poverty Alleviation Programmes
   • Programme for Socially Disadvantaged
   • Land Reforms
   • Public Distribution System
   • Public Investment in Human Capital and Public Goods
   • A Stronger Welfare System and Improved Social
    Service Provision are Needed
 – Concluding Remarks
 

 10. Demographic Constraint: Population
     Change and Economic Development.
 – Economic Development and Population Growth
   • The Theory of Demographic Transition
   • The Microeconomic Theory of Fertility
   • How does Population Growth Affect Economic Development
 – India’s Demographic Transition
   • Causes of High Birth Rate
    – Social Factors
    –  Economic Factors
     ¡ Poverty
     ¡ Lack of Social Security
     ¡ Illiteracy, Ignorance and Belief in Fate
     ¡ Ineffective Family Planning
   • Fertility Rate
   • Causes of Decline in Death Rate
    – Control of Epidemics
    – Control of Famines
    – Improved Medical Facilities
    – Spread of Maternity Homes
    – Impact of Economic Development
 – Measures to Reduce Birth Rate
 – Concerns about Population Growth
 – Gender Equity and the Demographic Transition
 – Population Policy since 1947
 – National Population Policy, 2000
   • Objectives of National Population Policy
 – The Experience of Kerala and Tamil Nadu
 – Enabling Factors
 – India's Demographic Dividend
   • 'Window of Opportunity' for India
   • Estimated Demographic Bonus for India
   • India's Response to 'Window of Opportunity'
 – The Future
 

Section- V
Sectoral Trends and Issues
 

V.1. Agriculture:
 11. Agriculture: Role and Growth Performance.
 – Importance of Agriculture in National Economy
   • Linkage between Agriculture and Other Sectors
 – Agricultural Growth
   • Role of Institutional and Technological Factors in
    Agriculture Growth
   • The New Technology
    – Characteristics of New Technology
     ¡ Better Agricultural Practices
    – Economic Aspects of New Technology
 – Green Revolution
   • Three Phases of  Green Revolution
     –  The First Phase, 1966-1972
     –  Debacle and the Second Phase, 1973-1980
     –  The Third Phase, 1981-1990
 – Reform Period, 1991 to the Present
 – Deceleration in Agriculture Growth
 – Performance of the Agriculture Sector during the
   Eleventh Five Year Plan (2007-2012)
 – Instability in Ouput
 – Regional Disparities and Intra-Personal Disparities
 – New Technology and Environmental Degradation
 – Major Factors Affecting the Growth Potential
   • Lack of Long Term Policy Perspective
   • Investment in Agriculture and Subsidies
   • Lagging Research and Development Efforts
   • Technology Generation and Dissemination
   • Rising Soil Degradation and Over-exploitation of Ground Water
   • Degradation of Natural Resources
 – Rural Distress in Post-Reform India
 – National Policy for Farmers, 2007
 – High Value Commodities: The Future Sources of
    Growth in Agriculture
   • Potential of Secondary Agriculture
 – Reforming the Three 'I's: Investments, Incentives, and Institutions
   • Reforming Incentives
    – Price and Marketing Policy
   • Reforming Institutions
    – Marketing and Warehouse Facilities
    – Reforming Land and Credit Markets
 – Challenges and Outlook
 

 12. Agricultural Price Policy, Food Management
     and Food Security.
 – Agricultural Price Policy
 – Food Management
   • Food Procurement Policy
   • Price and Distribution Controls in the Food Grain Market
   • Public Distribution System (PDS)
   • Food Subsidy
   • Buffer Stock
 – Recent Policy Initiatives
 – Food Security and Future Sources of Growth in Agriculture
 – Pre-Green Revolution
 – Green Revolution
 – Post-Reform Revolution

V.2. Industry and Services:
 13. Industrial Policy.
 – The Industrial Scene at Independence
 – Industrial Control Regime 1950s to 1970s
 – Performance of the Industrial Licensing System
 – Industrial Policy Reforms 1980s
 – The Policy Regime in the 1990s
 – New Economic Policy 1991
   • Opening up to Foreign Investment
   • Public Sector Reforms and Privatisation
 – Industrial Policy: Recent Policy Initiatives
 – Industrial Policy Eleventh Plan
 – Industrial Policy Objectives for the Twelfth Plan
   and Beyond
   • The Architecture of a Strategy to Accelerate
     Growth of Manufacturing
   • Three Components of India’s Manufacturing
     Strategy and Plan

 14. Industrial Growth since 1951
 – Industrial Growth
   • Phases of Industrial Growth
   • The Pre-Reform Regime
   • Industrial Growth in the 90s
   • Comparative Growth Rates in the 80s and the 90s
    – Relative Contribution of Sectors to Total Production
    – The Manufacturing Slowdown (1996-2002)
   • Factors Causing the Slowdown: Some Hypotheses
    – Infrastructure Constraints in the Industrial Sector
 – Recovery in Industrial Growth since 2002-03
   • Recent Industrial Growth
 – Index of Industrial Production (IIP)
 – Why has Growth Moderated since 2011-12?
   • Investment in the Industrial Sector
   • Credit Flow to the Industrial Sector
 – Why did Manufacturing Sector's Share in Total
   Employment Stagnate
 – Other Aspects of Industrial Change
 – Why did the Reforms Fail to Deliver the Expected Results?
 – India's Unique Pattern of Development
   • Labour Market Regidity Hypothesis
   • Infrastructure Bottlenecks
   • The Cost of Doing Business
 – What Should be Done Now?
   • Balanced Growth
   • Integrating into Global Networks
   • Improving Physical Infrastructure
 – National Manufacturing Policy (NMP) Nov. 2011
 – Conclusions

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

 16. Public Sector in the Indian Economy
 – The Rationale
 – Performance of Central Public Sector Undertakings
   • Output and Capital Formation
   • Fall in Public Sector Employment Growth
   • Central PSEs’ Profitability
    – Reasons and Implications
 – Public Sector and 1991 Industrial Policy
   • Policies toward CPSEs and their Implementation
 – Privatisation
   • Privatisation: Indian Experience since 1991

 17. Services in the Indian Growth Process.
 – Importance of the Services Sector for India
     Services GDP
     Services Employment in India
 – Growth and Sectoral Shares, Cross Country Evidence
   and Indian Experience
     Services GDP: International Comparison
     State-wise Comparison of Services
 – Important Services for India
 – Which Services have Grown Rapidly?
 – Factors Underlying the Services Growth
 – World Trade in Services Sector
 – India’s Services Trade
     India’s Services Exports
     India’s Services Imports
     India’s Balance of Trade in Services
     FDI in India's Service Sector
 – Liberalisation of Services in India
     India and Trade Negotiations in Services
     India Moving towards a Services-led Export Growth
 – Challenges and Outlook

18.  Foreign Direct Investment
 – Introduction
 – Role of FDI
 – FDI Policy: A Historical Perspective
     First Phase 1950-1967
     Second Phase 1967-1980
     Third Phase 1980-1990
     Fourth Phase–1991 Onwards
 – Trends in FDI Inflows
     Investment Climate and Prospects for FDI Inflows
 – Quality of FDI Inflows
     Sectoral Composition
     Impact of FDI on Growth and Domestic Investment
     FDI and Export-Platform Production
 – FPI Inflows and their Impact
 – India as an Emerging Source of FDI Outflows
 – Concluding Remarks and Policy Lessons
     Policy Lessons
     Changes in Sectoral Composition
     Changes in the Sources of FDI
     FDI Outlook

V.3. Financial Sector:

 19. The Financial Sector: Structure, Performance and Reforms.
 – Growing Importance of Finance in India
 – Financial Sector Development in India
     Institutional Structure
     Capital Markets
     Money Markets
     1991 and After: The Reform Years
     Role of Competition
     Capital Adequacy and Government Ownership in
    the Banking Sector
 – Conclusion

V.4. External Sector:
 20. Foreign Trade and Trade Policy.
 – Constraints Arising from Foreign Trade and
    Import Substitution-based Policies
 – Exports and Imports: Broad Trends
   • Exports
    – Composition of India's Exports
    – Direction of Exports
    – Export Diversification
   • Imports
    – Composition of Imports
 – Direction of Trade
 – World Merchandise Trade: Global Recession
   • Services Trade
 – Special Economic Zones (SEZs)
 – Challenges and Outlook
 – Appendix: Balance of Trade
 – Trade Policy: An Overview
   • Import Substitution based Strategy
    – Towards Efficient Import Substitution
   • Trade Policy since 1991
    – Outward Orientation Focusing on Export Promotion
   • Recent Trade Policy Measures
 – Annual Supplement 2012-13 to the Foreign Trade Policy
   2009-2014 (June 5, 2012)

 21. Balance of Payments.
 – Concepts
 – India’s Balance of Payment Trends: 1950-51 to 2011-12
   • First and Second Oil Shocks of 1973 and 1980
   • External Payment Crisis of 1991
    – The Crisis: 1990-1992
   • India’s BoP during 2011-12
   • Current Account during H1 of 2012-13
 – Sustainability of Current Account
 – Capital Account
 – External Debt
   • International Comparison
 – Foreign Exchange Reserves
   • Approach
   • Developments
   • Issues
    – Foreign Exchange Rate Policy
     ¡ Exchange Rate of Other Emerging Economies
     ¡ Nominal Effective Exchange Rate (NEER) and Real
      Effective Exchange Rate (REER)
 – Exchange Rate Management
 – Concluding Remarks

 22. India and the WTO
 – World Trade Organization 13-18, 2005)
 – India and the WTO
 – India's Participation in WTO Meetings, 2005)
 – WTO Negotiations and India 2005)

 
 23. India and the Global Economy
 – State of the Global Economy
 – Locating India in the New Global Economy
 – Engaging the World
 – Challenges and Outlook

  Questions

  Glossary

  Select Bibliography