A REVIEW OF SYLABUS

ECONOMICS-II

TOPIC-1

ECONOMIC SYSTEMS

Bovine Economic Philosophies

Socialism: You have 2 cows. Give one to a neighbor. Communism: you have 2 cows. Give both cows to government and they may give you some milk. Nazism: You have 2 cows. The government shoots you and takes both cows Anarchism: You have 2 cows. Shoot the government agent and steal another cow. Capitalism: You have 2 cows. Sell 1 cow and buy a bull.

What are Economic Systems?

Nations use economic systems to determine how to use their limited resources effectively. Primary goal of an economic system is to provide people with a minimum standard of living or quality of life. Different types of Economic Systems
Traditional Economy Market Economy (free enterprise) Command Economy(Centrally Planned Mixed Economy

1.Traditional Economy
Found in rural, underdeveloped countries
Vanuatu islands near Australia Pygmies of Congo Eskimos & Indian tribes Belarus in central Europe

Customs govern the economic decisions that are made Farming, hunting and gathering are done the same way as the generation before

Economic activities are centered around the family or ethnic unit Men and women are given different economic roles and tasks Advantages: people have specific roles; security in the way things are done Disadvantages: Technology is not used; difficult to improve

2.Market Economy (Free Enterprise)

Supply of and demand for Also called a Free Market goods and services Economy or Free Enterprise determine what is to be Economy produced and the price that Businesses and consumers will be charged. decide what they will produce and purchase and Advantagecompetition to have the best products and in what quantities services Decisions are made according to law of supply & Disadvantagehuge rift between wealthy and poor demand Note: a true market economy does not exist.

3.Command Economy
The government (or central Advantages authority) determines what, Guarantees equal standard how, and for whom goods of living for everyone and services are produced. Less crime and poverty Two types: Needs are provided for
Strong Command where government makes all decisions (communism China, Cuba) Moderate Command where some form of private enterprise exists but the state owns major resources (socialism France and Sweden) through the government

Disadvantages
Minimal choices Fewer choices of items No incentive to produce better product or engage in entrepreneurship

Also known as a Planned or Managed Economy

4.Mixed Economy
Most nations have a Combination of a mixed economy: India, market and a United States, England, command economy Australia Government takes Advantagebalance of care of peoples needs and wants met by government and in needs marketplace Marketplace takes Disadvantage citizens care of peoples have to pay taxes wants.

INDIA AS A MIXED ECONOMY

Jawaharlal Nehru, our first Prime Minister, felt that mixed economy is ideal for developing economies. The concept of mixed economy implies that the decision making process covering economic activities (and more particularly those relating to allocation of productive resources ) are shared between private and public sectors. As a matter of fact every modern economy is a mixed economy. Resource allocation through market forces is supplemented by nonmarket ones and in practice the state economic activities tend to be all pervading in the economies of both MDCs and LDCs.

TOPIC-2:ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT

PARADYGM SHIFT IN DEVELOPMENT

EFFICIENCY

SOCIAL DEV.

SUSTAINABLE DEV.

ECONOMIC GROWTH ECONOMIC DEV. H.R.D.

HUMAN DEV.

EQUITY

DIFFERENCE BETWEEN ECONOMIC GROWTH AND DEVELOPMENT

Economic Growth: The increase in the real output of goods and services(GNP) is called economic growth. Economic Development: the overall progress of the country with institutional and technical changes is known as economic development. Economic development implies progressive changes in socio-economic structure of the country.

ECONOMISTS VIEWS ON DEVELOPMENT

Meir and Baldwin Economic development is a process where by an economys real income increase over a long period of time. Kindle Berger--- Economic Growth refers to a rise in output, but Economic Development implies changes in technological and institutional organization of production as well as distributive pattern of income.

H.R.D &H.D.
Human Resource Development includes training an individual after he/she is first hired, providing opportunities to learn new skills, distributing resources that are beneficial for the employee's tasks, and any other developmental activities. Human Development: development is focused on expanding the choices human beings have to have the life they value. In this sense, it is essential to work on building capacities for human development that is sustainable over time. These core capacities for human development are: 1.Enjoying a long and healthy life, 2.Being educated 3.Access to resources that enable people to live in dignity 4.Being able to participate in decisions that affect their community

SUSTAINABLE & SOCIAL DEVELOPMENT

SUSTAINABLE DEVELOPMENT is development that meets the needs of the present without compromising the ability of future to meet their own needs. (Brundtland)
SOCIAL DEVELOPMENT is a process of social change through increasing awareness about their rights and improving organisation in physical, social, mental, and psychological aspects. (world bank)

INDICATORS OF ECONOMIC DEVELOPMENT

At the initial stage, the concept of economic development was confined only to increase in the per capita income. But today, economic development is treated as multi-dimensional concept in terms of increase in real national income, real per capita income, economic welfare, human development index, etc. In brief, economic development brings about qualitative change which includes institutional and technical changes.

DEVELOPMENT ASPECTS
1. 2. 3. 4. 5. Increase in real income and per capita income. It is a long term process Changes in social and economic institutions Improving Standard of living Welfare of the people should increase through the increase of employment opportunities, reduction in income inequalities and eradication of poverty.

DETERMINANTS OF ECONOMIC DEVELOPMENT

1. Natural resources 2. Human resources 3. Institutional factors (democracy, freedom and human rights) 4. Capital and technological progress 5. Managerial skills 6. Foreign Trade and Investment

COMMON CHARACTERISTICS OF DEVELOPING COUNTRIES

1. Low Standards of Living, characterized by low incomes, inequality, poor health and inadequate education 2. Low Levels of Productivity 3. High Rates of Population Growth & Dependency Burdens 4. High & Rising Levels of Unemployment & Underemployment 5. Substantial Dependence on Agricultural Production & Primary Product Exports 6. Prevalence of imperfect markets & limited information. 7. Dominance, Dependence and Vulnerability in International Relations.

TOPIC-3:Population theories
1. MALTHUSIAN THEORY OF POPULATION

Thomas Malthus
1766-1834. Born near Guildford! Wrote An essay in the First Principle of population first published in 1798 Debatable whether the principles of Malthus two hundred years ago (that were very revolutionary and controversial) have any relevance to the modern world. The world population in 1798 was at nine million people. We have now passed the six billion mark.

The Core Principles of Malthus:

Food is necessary for human existence Human population tends to grow faster than the power in the earth to produce subsistence The effects of these two unequal powers must be kept equal Since humans tend not to limit their population size voluntarily - preventive checks in Malthus terminology.

 Malthus recognised that population if unchecked, grows at a geometric rate:

1

2 4 8

16

32

However, food only increases at an arithmetic rate, as land is finite.

1 2 3 4 5 6

and therefore he said.

War, famine, disease.

CHECKS
Malthus suggested that once this ceiling (catastrophe) had been reached, further growth in population would be prevented by negative and positive checks. He saw the checks as a natural method of population control. They can be split up into 2 groups.

Negative checks (decreased birth rate).

Negative Checks were used to limit the population growth. It included abstinence/ postponement of marriage which lowered the fertility rate. Malthus favoured moral restraint (including late marriage and sexual abstinence) as a check on population growth. However, it is worth noting that Malthus proposed this only for the working and poor classes!

Positive checks (increased death rate)

Positive Checks were ways to reduce population size by events such as famine, disease, war increasing the mortality rate and reducing life expectancy.

'J' Curve - Population Crash Model

Was Malthus right?

There has been a population explosion Africa repeated famines, wars, food crisis, environmental degradation, soil erosion, crop failure and disastrous floods so was he right?

But..
Technological improvements which he could not have foreseen The increased amount of cropland due to irrigation Reduced population growth as countries move through the DTM

 Dalton and Robbins vehemently criticized the Malthusian theory for its pessimism They assumed that population growth is advantageous in the initial period and after achieving optimum population, it will be disadvantageous Optimum population(O) is defined as that population where there is the highest per capita income They gave the formula for calculating surplus or deficit population M= (A-O)/O where M=maladjustment, A=actual population, O= optimum population

2.OPTIMUM THEORY OF POPULATION

DIAGRAM FOR THE OPTIMUM THEORY

PER CAPITA INCOME

AP2

AP1

OP1

OP2

POPULATION SIZE

CRITICISM OF OPTIMUM THEORY

OPT is part of the economics theory of population. According to economics, there are five factors of production: land, labor, capital, organization and enterprise. One single factor produces nothing. Initially the cost of production falls with increasing use of a factor but it starts increasing thereafter.

CRITICISM OF OPTIMUM THEORY

Up to the optimum size there are conditions of increasing returns as economics of large scale production is enjoyed by any increase in output. However, beyond the optimum size the diseconomies of large scale production or decreasing returns begin to set in. Perfect substitution is impossible. At the optimum level the ratio of marginal productivity of a factor to price of that factor is same for all the factors. Optimum point is not fixed. It depends on other factors.

CRITICISM OF OPTIMUM THEORY

OPT gives an objective ideal according to

which changes in population should be controlled. The limitation of the OPT is that it ignores the distributional aspects of increase in national income. Moreover, it takes a very narrow and materialistic view of social objectives; maximizing per capita income is not always the goal.

WHAT DRIVES POPULATION GROWTH: DEMOGRAPHIC TRANSITION

TOPIC-4:PROBLEMS OF INDIAN AGRICULTURE AND LAND REFORMS POLICY

PROBLEMS OF INDIAN AGRICULTURE

India is an agrarian economy. Agriculture plays a crucial role in our economy. It provides livelihood to the majority of the people in the country. It provides food security to the people It supplies raw material to industries. Allied activities like dairying, poultry and fisheries are the part of agriculture

CAUSES OF EXCESSIVE DEPENDENCE ON AGRICULTURE

1. 2. Since there is no encouragement for handicrafts during the British regime, the rural artisans started depending on agriculture for their livelihoods. The small scale and cottage industries could not compete with the products of large scale industries, with the result that they shift to agriculture. Since secondary and tertiary sectors could not provide employment to the growing population, dependence on farm sector considerably increased. The regional and sectoral mobility of labor is low due to illiteracy and social barriers and hence rural labor stay in farm sector. Employment avenues are not increasing commensurate with the rapid population growth causes growth of unskilled labor who depend on agriculture itself.

3.
4.

5.

IMPORTANCE OF AGRICULTURE IN INDIAN ECONOMY

1. Share of Agriculture in national income is high but decreasing
YEAR % share of agriculture in national income 55.4

1950-51

1970-71
1990-91 2000-01 2010-11

44.5
30.9 24.7 16.2

In the developed countries, the share of agriculture is very low. In UK it is 2%, USA 3%, and Canada 5%

IMPORTANCE OF AGRICULTURE IN INDIAN ECONOMY

2. Sources of livelihood: Majority of the workers in our country depends on agricultural sector for their livelihoods, though non-farm sectors have been developed well.
YEAR 1951 1971 1991 2001 2011 % OF WORKERS IN AGRICULTURAL SECTOR 72.7 72.6 67.4 57.3 52.5(estimate)

In developed countries, the proportion of workers in agriculture is very low. In UK it is 2%, USA 3%, and France 7%

IMPORTANCE OF AGRICULTURE IN INDIAN ECONOMY

3. Role of agriculture in Industrial development: Agriculture is the main source of supplying raw materials to all agro- based industries like textiles, jute, sugar, and edible oils etc. 4. Contribution of Agriculture sector in foreign trade: The agricultural sector is playing a pivotal role in our foreign trade activities. This is particularly clear in case of exports like Tea, Coffee, Sugar, Oil seeds, Spices, Basumathi rice etc. 5. Supply of food: Agricultural sector provides food security to the teeming millions at an affordable price. Total food grains production in the country increased from 51 million tones in 1951 to 209 in 2001. 6. Other factors: Transport and Banking sectors are the main beneficiaries of agriculture recently. Governments are allocating more funds to this sector. It gains international importance since we are the first in the production of ground nut, second in Paddy and third in Tobacco.

PRODUCTIVITY OF AGRICULTURE-2001 (PER HECTARE IN QUINTALS)

Particulars A. Food crops Paddy Wheat Maize B. Commercial crops Sugar Cane Ground nut Cotton Jute Yield in India Worlds highest yield 88.8 80.5 96.5 1190 30.4 12.7 25.2 Name of the country

19.13 27.43 18.40 680 9.20 2.00 20.00

Egypt Britain Italy Egypt USA Australia China

One of the major problems of Indian agriculture is the level of production and productivity are low when compared to other countries.

TOPIC-5:LAND REFORMS

WHAT IS LAND CEILING?

A ceiling on agricultural land holding means statutory absolute limit on the amount of land which an individual may hold The imposition of a ceiling has two aspects: 1. Ceiling on existing holdings 2. Ceiling on future acquisitin

II FIVE YEAR PLAN QUESTIONS

1. 2. 3. 4. To what land ceilings should apply? At what levels ceiling should be fixed? What exemptions should be made? What steps should be taken to prevent mala fide transfers? 5. What compensation should be paid for land acquired? And 6. How the acquired land should be distributed?

HIGHLIGHTS OF LAND CEILING POLICY

1. Land ceiling is fixed at 18 acres of wet land and 54 acres of un irrigated land 2. From the individual as a unit to family holding 3. Lowered ceiling for a family of five members 4. Fewer exemptions from ceiling 5. Retrospective application of the law for declaring benami transactions null and void 6. In order to insulate the measure from challenge in the courts of law, jurisdiction of civil courts has been barred 7. Most of these laws have been included in the Ninth Schedule of the Constitution, which places them beyond any challenge in courts of law on ground of infringement of Fundamental Rights

IMPLEMENTATION OF LAND CEILING

1. Success has been limited due to poor enforcement 2. Till September 2001, 2.98 million hectares of land had been declared surplus of which 2.18 million hectares was distributed to 5.58 million beneficiaries. 3. This shows that only less than 2 per cent land has been declared surplus while only 1 per cent of the total cultivated area has been actually distributed. 4. In the wake of Globalisation the industry and large farmers are being given exemption from ceiling laws.

THE CASE FOR CEILING

1. The social rationale: it is socially unjust to allow small number of people to hold large part of land and exploit the poor masses. 2. Improving the position of the poor: the income of the poor who receive land as a result of land redistribution. According to FAO, redistribution of only 5% of farm land in India, coupled with improved access to water, could reduce rural poverty by 30%. 3. The efficiency argument: the small farms can be more efficiently managed than large farms. 4. Inculcating the spirit of cooperation: the beneficiaries can be motivated for cooperative farming, social management, and joint cultivation

CASE AGAINST CEILING

1. The break up of large holdings into small ones will adversely affect productivity and production may decline. 2. The growth of output and employment may also slow down in the long run owing to the reduction in savings and investment, because the small farmers consume away the large proportion of their income than big farmers.

SUCCESS OR FAILURE?
Land ceiling legislation is not very successful in India because of the defects and exemptions in land ceiling laws. The interference of judiciary, opposition from the land lords, lack of proper land records are some of the reasons for failure. Even those who received land could not do efficient farm management because of lack of irrigation, credit and poor quality of land distributed. Lack of political will

TENANCY REFORMS
THREE ISSUES ARE DISCUSSED 1. Regulation of rent: 30 to 50% of gross produce is being implemented in different states. 2. System of tenure: owner can take back the land only for personal cultivation 3. Ownership rights on tenants: Kerala, Karnataka, and West Bengal have done better to confer right of ownership right to the tenants.

TOPIC-6:INDUSTRIAL POLICIES,SERVICE SECTOR AND LABOUR POLICIES

INDUSTRIAL POLICIES
1. Industrial development can provide a secure basis for the rapid growth of income. 2. Generation of Productive employment. 3. Strengthening the Economy: capital goods, farm mechanization, infrastructure development 4. Achievement of self reliance 5. Improvement of foreign trade 6. Broadening the social outlookmodern outlook without superstition and ignorance

THE ROLE OF INDUSTRIALISATION

1. Industrial development can provide a secure basis for the rapid growth of income. 2. Generation of Productive employment. 3. Strengthening the Economy: capital goods, farm mechanization, infrastructure development 4. Achievement of self reliance 5. Improvement of foreign trade 6. Broadening the social outlookmodern outlook without superstition and ignorance

SECTOR-WISE STRUCTURAL CHANGES(% ofGDP)

SECTOR

1950-51 55.9

1990-91 33.2

2006-07 20.5

1.Primary sector

2.Secondary sector 3.Tertiary Sector

14.9

25.2

24.7

29.2

41.6

54.8

OBJECTIVES OF INDUSTRIAL POLCY1948

1. To promote a socialist economy basing on equality in opportunity and justice. 2. To enhance the standard of living of the people 3. To provide employment opportunities to all 4. To reduce the disparities in income and wealth

OBJECTIVES OF INDUSTRIAL POLCY-1956

1. To accelerate the rate of growth and to speed up industrialization. 2. To expand Public sector 3. To reduce disparities in income and wealth. 4. To develop heave industries and machine making industries. 5. To develop large and growing co-operative sector. 6. To prevent Monopolies and Restrictive Trade Practices. 7. To achieve balanced regional development 8. To enhance employment opportunities. 9. To encourage cottage, village and small scale industries. 10. To fulfill economic and social opportunities

OBJECTIVES OF INDUSTRIAL POLCY1991

1. To correct the distortions or weaknesses and to attain international competitiveness. 2. To provide gainful employment in the private sector. 3. To increase the productive capacity of industries. 4. To reduce the economic inequalities and to achieve economic development.

CRITICAL APPRAISSAL OF INDUSTRIAL POLCY-1991

1. The main aim of 1991 policy is to remove the bottlenecks which acted as obstacles for industrial production. But the general Index of Industrial Production has come down from 7.8% in 1981-91 to 7.2% in 1994-2001. 2. But the Central PSUs performed better in 1994-2001. 3. The overall growth rate of employment was only to the order of 1% from 1991-1997-98. it is 1.1% in the unorganized sector. 4. The proportion of casual labor to total employment has increased. This is a negative factor in view of labor welfare and employment security.

TOPIC-7:SERVICE SECTOR

OVERVIEW OF SERVICE SECTOR

India stands out for the size and dynamism of its services sector. The contribution of the services sector to the Indian economy has been manifold: a 55.2 per cent share in gross domestic product (GDP) growing by 10 per cent annually, contributing to about a quarter of total employment accounting for a high share in foreign direct investment (FDI) inflows and over one-third of total exports, and recording very fast (27.4 per cent) export growth through the first half of 201011.

Growth of Service Sector (%)

SECTOR 2004-05 2005-06 2006-07

Trade, Hotel, Transport & Communication

10.6

11.5

13.0

Financing, Insurance, Real Estate

9.2

9.7

10.6

Community, Social & Personal Services

9.2

7.8

7.8

Total Services

9.9

10.0

11.0

GDP at Factor Cost

7.5

8.4

9.4

Source: Central Statistical Organization

Growth of Services Sector GDP (Constant Prices)

Services: Before and after Liberalization

Before liberalization Services was the residual sector drawing refugees from agriculture Between 1996 and 2005- the triple impact of Indias external liberalization, domestic economic reforms and the rise of a global market for skilled services facilitated by information technology makes itself felt, share of services in Indias GDP grew from just over 40% to about 54%. Rapid growth of services in the economy, esp. in the external sector- also facilitated by the fact services enterprises required lesser capital for start-up - less dependent on the Indias relatively poor infrastructure than manufacturing. China, which has a far higher proportion of its economy in manufacturing, and has emerged as the global hub for labor intensive manufacturing, has much better infrastructure than India. Chinas better infrastructure facilitated entrepreneurship in the manufacturing sector.

Growth of Services
An important feature of Indias growth skewed towards services -described as jobless growth Share of agriculture in the Indian economy declined rapidly Share of employment in agriculture has remained the same- increasing share of services in the GDP has not been accompanied by services claiming a larger share of employment in the decade of the 1990s

Growth in Services
growth in output in services in India in recent times has mostly come from the rapid development of skill intensive services in the IT and professional services segments- oriented towards the external market

large proportion of services in India are a part of the informal economy and the official employment figures might understate the actual size of the services workforce there is a lot of cross-over between services and agriculture sector laborers, i.e. many workers spend part of the year as agricultural workers and the rest of the year working in some service job such as informal retail and construction work There has been some debate on the repercussions of this skill biased development of service sector jobs

TOPIC-8: LABOUR POLICY AND SOCIAL SECURITY LEGISLATIONS

Labor laws in India

Workmens Compensation Act of 1923[15] The Workmens Compensation Act compensates a workman for any injury suffered during the course of his employment or to his dependents in the case of his death. The Act provides for the rate at which compensation shall be paid to an employee. This is one of many social security laws in India.[16] Trade Unions Act of 1926[17] This Act enacted the rules and protections granted to Trade Unions in India. This law was amended in 2001. Payment of Wages Act of 1936[18] The Payment of Wages Act regulates by when wages shall be distributed to employees by the employers. The law also provides the tax withholdings the employer must deduct and pay to the central or state government before distributing the wages. Industrial Employment (Standing orders) Act of 1946[19] This Act requires employers in industrial establishments to define and post the conditions of employment by issuing so-called standing orders. These standing orders must be approved by the government and duly certified. These orders aim to remove flexibility from the employer in terms of job, hours, timing, leave grant, productivity measures and other matters. The standing orders mandate that the employer classify its employees, state the shifts, payment of wages, rules for vacation, rules for sick leave, holidays, rules for termination amongst others.

Industrial Disputes Act of 1947[20] The Industrial Disputes act 1947 regulates how employers may address industrial disputes such as lockouts, layoffs, retrenchment etc. It controls the lawful processes for reconciliation, adjudication of labour disputes. The Act also regulates what rules and conditions employers must comply before the termination or layoff of a workman who has been in continuous service for more than one year with the employer. The employer is required to give notice of termination to the employee with a copy of the notice to appropriate government office seeking government's permission, explain valid reasons for termination, and wait for one month before the employment can be lawfully terminated. The employer may pay full compensation for one month in lieu of the notice. Furthermore, employer must pay an equivalent to 15 days average pay for each completed year of employees continuous service. Thus, an employee who has worked for 4 years in addition to various notices and due process, must be paid a minimum of the employee's wage equivalent to 60 days before retrenchment, if the government grants the employer a permission to layoff. Minimum Wages Act of 1948[21] The Minimum Wages Act prescribes minimum wages in all enterprises, and in some cases those working at home per the schedule of the Act. Central and State Governments can and do revise minimum wages at their discretion. The minimum wage is further classified by nature of work, location and numerous other factors at the discretion of the government. The minimum wage ranges between 143 to 1120 per day for work in the so-called central sphere. State governments have their own minimum wage schedules.[22] Industries (Regulation and Development) Act of 1951[23] This law declared numerous key manufacturing industries under its so-called First Schedule. It placed many industries under common central government regulations in addition to whatever laws state government enact. It also reserved over 600 products that can only be manufactured in small scale enterprises, thereby regulating who can enter in these businesses, and above all placing a limit on the number of employees per company for the listed products. The list included all key technology and industrial products in early 1950s, including products ranging from certain iron and steel products, fuel derivatives, motors, certain machinery, machine tools, to ceramics and scientific equipment.

Labor laws in India

Labor laws in India

Employees Provident Fund and Miscellaneous Provisions Act of 1952 This Act seeks to ensure the financial security of the employees in an establishment by providing for a system of compulsory savings. The Act provides for establishments of a contributory Provident Fund in which employees contribution shall be at least equal to the contribution payable by the employer. Minimum contribution by the employees shall be 10-12% of the wages. This amount is payable to the employee after retirement and could also be withdrawn partly for certain specified purposes. Maternity Benefit Act of 1961 The Maternity Benefit Act regulates the employment of the women and maternity benefits mandated by law. Any woman employee who worked in any establishment for a period of at least 80 days during the 12 months immediately preceding the date of her expected delivery, is entitled to receive maternity benefits under the Act. The employer is required to pay maternity benefits, medical allowance, maternity leave and nursing breaks. Payment of Bonus Act of 1965 This Act, applies to an enterprise employing 20 or more persons. The Act requires employer to pay a bonus to persons on the basis of profits or on the basis of production or productivity. The Act was modified to require companies to pay a minimum bonus, even if the employer suffers losses during the accounting year. This minimum is currently 8.33 percent of the salary. Payment of Gratuity Act of 1972 This law applies to all establishments employing 10 or more workers. Gratuity is payable to the employee if he or she resigns or retires. The Indian government mandates that this payment be at the rate of 15 days salary of the employee for each completed year of service subject to a maximum of 1000000.

Labor structure in India

India's Ministry of Labor, in its 2008 report, classified the unorganized labor in India into four groups.[30] This classification categorized India's unorganized labour force by occupation, nature of employment, specially distressed categories and service categories. The unorganized occupational groups include small and marginal farmers, landless agricultural labourers, share croppers, fishermen, those engaged in animal husbandry, beedi rolling, labeling and packing, building and construction workers, leather workers, weavers, artisans, salt workers, workers in brick kilns and stone quarries, workers in saw mills, and workers in oil mills. A separate category based on nature of employment includes attached agricultural labourers, bonded labourers, migrant workers, contract and casual laborers. Another separate category dedicated to distressed unorganized sector includes toddy tappers, scavengers, carriers of head loads, drivers of animal driven vehicles, loaders and unloaders. The last unorganized labor category includes service workers such as midwives, domestic workers, barbers, vegetable and fruit vendors, newspaper vendors, pavement vendors, hand cart operators, and the unorganized retail

 The unorganized sector has low productivity and offers lower wages. Even though it accounted for over 94 percent of workers, India's unorganized sector created just 57 percent of India's national domestic product in 2006, or about 9 fold less per worker than the organized sector.[33] According to Bhalla, the productivity gap sharply worsens when rural unorganized sector is compared to urban unorganized sector, with gross value added productivity gap spiking an additional 2 to 4 fold depending on occupation. Some of lowest income jobs are in the rural unorganized sectors. Poverty rates are reported to be significantly higher in families where all working age members have only worked the unorganized sector throughout their lives.[34][35] Agriculture, dairy, horticulture and related occupations alone employ 52 percent of labor in India. About 30 million workers are migrant workers, most in agriculture, and local stable employment is unavailable for them. India's National Sample Survey Office in its 67th report found that unorganized manufacturing, unorganized trading/retail and unorganized services employed about 10 percent each of all workers nationwide, as of 2010. It also reported that India had about 58 million unincorporated nonAgriculture enterprises in 2010.

UNORGANISED SECTOR

Relative Regulations and Rigidity in Labor Laws

Practice Required by Law Standard work per day INDIA 9 hours CHINA 8 hours U.S.A. 8 hours

Severance pay for redundancy dismissal of employee with 5 year tenure

Severance pay for redundancy dismissal of employee with 1 year tenure Premium pay for overtime Minimum wage (US$/month) Minimum rest while at work Maximum overtime limit Government approval required for 9 person dismissal Government approval required for 1 person dismissal Government approval for redundancy dismissal granted Dismissal priority rules regulated Dismissal due to redundancy allowed?

10.7 week salary

21.7 week salary

None

2.1 week salary

4.3 week salary

None

100% 90 (INR 5000) 30 minutes per 5 hour 200 hours per year Yes Yes Rarely[42][43] Yes Yes, if approved by government

50% 182.5 None 1 hour per day No No Not applicable Yes Yes, without approval of government

50% 1242.6 None None No No Not applicable No Yes, without approval of government

TRADE UNIONS
About 7 per cent of the 400 million-strong workforce were employed in the formal sector (comprising government and corporates) in 2000[54] contributing a whopping 60 per cent of the nominal GDP of the nation. The Trade Unions Act of 1926 provided recognition and protection for a nascent Indian labour union movement. The number of unions grew considerably after independence, but most unions are small and usually active in only one firm. In 1997, India had about 59,000 trade unions registered with the government of India.[55] Of these only 9,900 unions filed income and expenditure reports and claimed to represent 7.4 million workers. The state of Kerala at 9,800 trade unions had the highest number of registered unions, but only few filed income and expenditure reports with the government of India. The state of Karnataka had the fastest growth in number of unions between 1950s to 1990s. In 1995, India had 10 central federations of trade unions, namely (arranged by number of member unions in 1980): INTUC, CITU, BMS, AITUC, HMS, NLO, UTUC, UTUC-LS, NFITU and TUCC. Each federation had numerous local trade union affiliates, with the smallest TUCC with 65 and INTUC with 1604 affiliated unions. By 1989, BMS had become India's largest federation of unions with 3,117 affiliated unions, while INTUC remained the largest federation by combined number of members at 2.2 million.[55] The largest federation of trade unions, INTUC, represents about 0.5% of India's labour force in organized sector and unorganized sector. In 2010, over 98% of Indian workers did not belong to any trade unions and were not covered by any collective bargaining agreements.

Labor relations during 1950-1990

Besley and Burgess have studied the industrial relations climate in Indian states over the 19581992 period. They report that states which amended India's Industrial Disputes Act in a pro-worker, greater labour inflexibility manner saw more labour relations problems, more lost man-days and experienced lowered output, employment, investment, and productivity in organized sector or formal manufacturing. In these states, India's economic output grew primarily in unregistered or informal manufacturing where the worker has little to no protections at all. Besley and Burgess also find that states that passed labour union friendly regulations witnessed greater increases in urban poverty over the 34 year period, than states that did not enact additional pro-worker, greater labour inflexibility laws.[ Between 1950 and 1970, labour disputes nearly tripled in India, from an average of 1000 labour disputes per year, to an average of 3000 labour disputes per year. The number of labour relations issues within a year peaked in 1973 at 3,370 labour disputes. The number of workers who joined labour disputes within the same year, and stopped work, peaked in 1979, at 2.9 million workers. The number of lost man-days from labour relation issues peaked in 1982 at 74.6 million lost man-days, or about 2.7% of total man-days in organized sector.[While the 1970s experienced a spike in labour unions and disputes, an sudden reduction in labour disputes was observed during 1975-1977, when Indira Gandhi, then prime minister, declared an emergency and amongst other things suspended many civil rights including the worker's right to strike.[

 Between 2004 and 2011, India has experienced a decline in unionized labour. The number of labour disputes has dropped to 400 annually over the same period, compared with over 1,000 in the 1990s. The annual number of man-days lost to labour disputes in early 1990s averaged around 27 million; by 2010, while Indian economy has grown significantly and Indian labour force has expanded, the average number of man-days lost has dropped by about 30%. The downward trend continues both in terms of number of disputes and lost man-days per dispute. For example, India experienced 249 disputes in the first 5 months of 2010, and 101 disputes in 2012 over the same period.

 According to 2001 Census, India had 12.6 million children, aged 514, who work either part-time or full-time. Of these over 60 percent work in unorganized agriculture sector, and the rest in other unorganized labor markets. Poverty, lack of schools, poor education infrastructure and growth of unorganized economy are considered as the most important causes of child labour in India. Article 24 of India's constitution prohibits child labour. Additionally, various laws and the Indian Penal Code, such as the Juvenile Justice (care and protection) of Children Act-2000, and the Child Labour (Prohibition and Abolition) Act-1986 provide a basis in law to identify, prosecute and stop child labour in India.[Nevertheless, child labour is observed in almost all unorganized, small scale, informal sectors of the Indian economy. Scholars suggest inflexibility and structure of India's labor market, size of informal economy, legal hurdles preventing industries from scaling up and lack of modern manufacturing technologies are major macroeconomic factors encouraging demand for and acceptability of child labor.

Child labour in India

SOCIAL SECURITY ISSUES

1. Social security, employment and development It examines the role of unemployment insurance schemes, particularly in middle-income countries. It then discusses the potential benefits of limited employment guarantee schemes that could provide temporary employment for underemployed workers, mainly in poorer Social security, employment and development It takes stock of the various arguments about the social and economic effects of social security. It examines the role of unemployment insurance schemes, particularly in middle-income countries. It then discusses the potential benefits of limited employment guarantee schemes that could provide temporary employment for underemployed workers, mainly in poorer developing countries. Contributing to gender equality It reviews various ways in which social security can contribute to the attainment of gender equality. Most social security systems were originally structured to cater for families with a male breadwinner. As a result of changing lifestyles, expectations and family structures, a large proportion of the population do not live in such families, which has added to the demand for gender equality. Sustainable financing for social protection It suggests that the extension of social protection will require improved national financing as well as new forms of financing at the local and global levels. At the national level, financing could be enhanced through better collection of existing social security contributions and taxes. Expanding social dialogue The prospects of decent social protection for all can be improved by broadening the underlying social protection partnership and galvanizing the social actors. Continuous social dialogue is needed for improving the coverage of social security measures for not only the employees but also the general public.

2.

3.

4.

5.

TOPIC-9

STRATEGIES OF PLANNING
1. Jawaharlal Nehru strategy(1951): Agricultural Development and poverty eradication. 2. Mahalanobis Strategy(1956): Long term growth Industrialization and production of Capital goods. 3. Garibi Hatao Strategy(1969) Smt. Indira Gandhi: Reduction of poverty and Inequality, Growth with Social Justice. 4. Agricultural Development Led Growth (1985):Vakil and Bramhananda: Production of wage goods and Creation of jobs. 5. The New Development Strategy(1990-91): (Dr.Manmohan Singh):Export-led Growth 6. Redefining the role of the Government(10th. Plan):(2002-07) Social sector and infrastructure development. 7. Faster and more Inclusive Growth Strategy(11th. Plan,2007-12) Growth with Equality of Opportunity. 8. Faster, Sustainable and more Inclusive Growth(12th. Plan) (2012-17): More Employment and improving livelihoods.

12 TH. PLAN(2012-17)
Targets:The Planning Commission has explored two alternative targets for economic growth in the Twelfth Plan. The first is a restatement of the Eleventh Plan target of 9.0 per cent growth, which has yet to be achieved. The second is an even higher target of 9.5 per cent average growth for the Twelfth Five Year Plan. Growth Vs Inflation: The emergence of inflationary pressure in the closing years of the Eleventh Plan has drawn attention to the possibility of a growth-inflation trade-off, raising concern whether aiming for a higher rate of growth at this stage may further fuel inflation. This issue is best addressed by distinguishing between short term and medium term policy Development of a Dynamic Private Sector. Implementation, Accountability and Governance. Natural Resource Management Water, Land and Forests. The Energy Challenge Infrastructure Development

REDEFINING THE ROLE OF THE GOVT. Govt. as a Facilitator: It should indicate the directions in which an Investor can pump his investments. It should provide safeguards to the investor as well as to the consumer. Govt. as a Regulator: It should act firmly as a controller of trade and business. India passed an Act against Competition irregularities(Competition Act-2007) Govt. as a Promoter and Partner: India has designed policies for PPP and promoting by giving concessions to private Investors.

TOPIC-10: IMPACT OF GLOBALISATION ON INDIAN ECONOMY

INDIAN ECONOMY AND GLOBALISATION

What is Globalization?
Global industrialism or globalization is a
process of forging international political, economic, religious, and socio-cultural interconnections 7-11 Beijing

KFC Kuwait

Growing Indian Economy

2010

GDP USD 1.36 trillion GDP growth rate 9%

Services contribution 60-65%

Balance of Trade Negative balance should increase with surging imports versus exports Investment goal USD 370 billion

2008

GDP USD 1.16 trillion GDP growth rate 9.5% Services contribution 60% Balance of Trade Negative balance should increase with surging imports versus exports Investment goal USD 305 billion 2006 GDP USD 590 billion GDP growth rate 9% Services contribution 54% Balance of Trade USD (-)46.2 billion Investment goal USD 250 billion

*: Projected
Source: Economic Times & India Brand Equity Foundation (IBEF)

Growing GDP
1,200 1,000
Contribution of Services increased from 48% to 62% and is estimated to contribute 60% by 2010

USD Billion

800 600 400 191 200 0 103 105 453

682

398 237 125 105 204 135 2005-06 Industry

231 145 2006-07 Services

287 167 2010*

1999-00 2002-03 Agriculture

*: Projected Source: India Brand Equity Foundation (IBEF)

Growing Exports

210 170 126.3 103.1 83.5 90 50 2004-05 2005-06 2006-07 2007-08* 130 155

200

USD Billion

2008-09*

*: Projected Source: Ministry of Commerce & IBEF

Growing Imports
250

210.8 185.7

200

USD Billion

149.1
150

111.5

100

50 2004-05 2005-06 2006-07 2007-08 (AprFeb)

Source: Ministry of Commerce & IBEF

Increasing Forex Reserves

India's Forex Reserves: 2001-08 (Till 14 March 2008) 350 300 306

USD Billion

250 200 150 100 50 0 2001-02 2002-03 2003-04 2004-05 2005-06 54 75 141 112 152

199

2006-07

2007-08 (Till 14 March 08)

Steadily increasing Forex reserves offer adequate security against any possible currency crisis or monetary instability

Source: Reserve Bank of India & India Brand Equity Foundation (IBEF)

Growing FDI Inflows

35 30 25
USD Billion

30 22

20 15 10 5 0 2003-04 2004-05 2005-06

8.9 4.3 6
2006-07* 2007-08*

India is ranked second in AT Kearneys FDI confidence index (2007)

Electronic equipment, manufacturing and telecom have witnessed significant FDI inflow

* Provisional Source: Department of Commerce

Increasing Per Capita Income

4000 4000 3500 3000 2500
USD

2000

2000 1500 1000 500 0 2000-01 2006-07 2007-08 2016-17 2025 797 460 1021

Source: India Brand Equity Foundation (IBEF) & Economic Survey 2007-08

Major M&A and Investments Announcements in India

POSCO to invest in building steel manufacturing plants and facilities in India by 2016

USD 12 billion

Plans to establish three manufacturing plants to produce photo-voltaic units

USD 2 billion

Plans to spend on its development operations in India over the next four years

USD 1.7 billion

Source: India Brand Equity Foundation (IBEF)

India Inc. Investing Overseas

Main sectors:
Auto Components Beverages Cosmetics IT Metals Mobile Communications

Energy
Financial Services Industrial Goods

Pharmaceuticals
Software

Main Destinations:
China, UAE, UK North America is emerging as a destination.

Additional economic indicators:

India has a consumer base of 1.14 billion people India is the 4th largest economy in the world when measured by PPP Indias has a growing middle class of over 300 million people - 30% of Indias population and larger than the population of the US India is the 3rd largest global telecom market. The mobile subscriber base has grown from 0.3 Million in 1996 to over 250 million currently. India is likely to add over 200 shopping malls by 2010 and 715 malls by 2015 The number of billionaires in the country were 3 in 1999; 23 in 2006; and are 48 currently.

Indias Trade with USA

20.0 13.7 11.4 9.4 10.0 5 5.0 7 11.7 18.8 17.3

15.0

USD Billion

0.0 2003 - 04 2004 - 05 2005 - 06 2006 - 07

Exports to US

Imports from US

Source: Department of Commerce, Govt of India

Major Items Exported to USA (2006)

Organic Chemicals 6% Engineering Goods & Machinery 15%

Iron & Steel 5%

Cut and polished diamond & jew ellery 38%

Textiles 36%

Source: US Department of Commerce

 TOPIC-11:FOREIGN TRADE POLICY-2009

INDIAS FOREIGN TRADE POLICY 2009-14

What is Foreign Trade Policy?

The Union Commerce Ministry, Government of India announces the integrated Foreign Trade Policy FTP in every five year. This is also called EXIM policy. This policy is updated every year with some modifications and new schemes. New schemes come into effect on the first day of financial year i.e. April 1, every year. The Foreign trade Policy which was announced on August 28, 2009 is an integrated policy for the period 2009-14.

Objectives of Foreign Trade Policy 2009-14

1. To arrest and reverse declining trend of exports is the main aim of the policy. This aim will be reviewed after two years. 2. To Double India's exports of goods and services by 2014. 3. To double India's share in global merchandise trade by 2020 as a long term aim of this policy.India's share in Global merchandise exports was 1.45% in 2008.

Objectives of Foreign Trade Policy 2009-14

4. Simplification of the application procedure for availing various benefits 5. To set in motion the strategies and policy measures which catalyse the growth of exports To encourage exports through a "mix of measures including fiscal incentives, institutional changes, procedural rationalisation and efforts for enhance market access across the world and diversification of export markets.

Aim in General
The policy aims at developing export potential, improving export performance, boosting foreign trade and earning valuable foreign exchange. FTP assumes great significance this year as India's exports have been battered by the global recession. A fall in exports has led to the closure of several small- and medium-scale export-oriented units, resulting in large-scale unemployment.

Targets

Export Target : $ 200 Billion for 2010-11 Export Growth Target: 15 % for next two year and 25 % thereafter.
Indias exports in 2010-11 are 251B$, and in 2011-12304B$ Indias Imports in 2010-11 are 370B$, and in 2011-12---489B$

EXPORT DEVELOPMENT INITIATIVES

Announcements for EDI Initiatives Export Promotion Councils & Commodity Boards have been advised to issue RCMC through a web based online system. It is expected that issuance of RCMC would become EDI enabled before the end of 2009. Set up of Directorate of Trade Remedy Measures Announced A Directorate of Trade Remedy Measures shall be set up, which will enable support to Indian industry and exporters, especially the Micro Small & medium Enterprises MSMEs in availing their rights through trade remedy instruments

IMPORT POLICY
Duty Credit Scrips Earlier the payment of customs duty for Export Obligation (EO) shortfall under Advance Authorisation , DFIA or EPCG Authorisation was allowed in cash only. Now this payment can be done in the way of debit of Duty Credit scrips. Import of Restricted Items Restricted Items can be imported now (as replenishment) against transferred DFIAs (Duty Free Import Authorisations) as the present DFRC (Duty Free Replenishment Card) scheme. Dollar Credits There is a provision for state-run banks to provide dollar credits

TOPIC-12:FOREIGN DIRECT INVESTMENT IN INDIA

INTRODUCTION
Foreign Direct Investment, or FDI, is a type of investment that involves the injection of foreign funds into an enterprise that operates in a different country of origin from the investor. It usually involves participation in management, venture, transfer of technology and expertise. FDI can be classified: Inward FDI and Outward FDI joint

FDI in india
A recent UNCTAD survey projected India as the second most important FDI destination (after China) for transnational corporations during 20102012. The sectors which attracted higher inflows were services, telecommunication, construction activities and computer software and hardware.

Mauritius, Singapore, the US and the UK were among the leading sources of FDI.

 In 2008-09, FDI stood at $27.3 billion.

FDI in 2009-10 was $24.2 billion In 2010-11, FDI into India declined to $19.43 billion, a significant decrease from both 2008 and 2009

Foreign direct investment (FDI) in India may cross $35 billion in 2011-2012 as against $19.4 billion in the last financial year

Fdi benefits
Economic Growth

Linkages and spillover to domestic firms

Trade

Technology diffusion and knowledge transfer

Employment and skill levels

Objectives of the PRESENTATION

The objectives of this Presentation are:

To study the trends and patterns of flow of FDI. To explore the sector wise distribution of FDI inflows in order to point out the dominating sector which has attracted the major share To assess the determinants of FDI inflows. To evaluate the impact of FDI on the Indian Economy.

SOURCES OF DATA
The required data have been collected from various sources i.e. Asian Development Banks Reports, various Bulletins of Reserve Bank of India, publications from Ministry of Commerce, Govt. of India, Economic and Social Survey of Asia and from websites of World Bank, IMF, WTO, RBI, UNCTAD etc.

AMOUNT (in US $ bn)

30

FDI INFLOWS IN INDIA

25
20 15 10 5

0
2005-06 2006-07 2007-08 2008-09

2009-10

YEARS

Top investing countries

2% 5% 7% 4% 4% 3%

2%

Mauritius Singapore USA UK

9%

Netherlands Japan

11% 53%

Cyprus
Germany UAE France

Sector wise distribution

Services Sector 6% 6% 10% Construction Activities 31% 11% Power Automobile Industry Metallurgical Industries 12% 13% Petroleum & Natural Gas Chemicals 4% 4% 3% Computer Software & hardware Telecommunications

Housing & real Estate

conclusions
The increased flow of FDI in a country has given a major boost to the country's economy. FDI has provided better access to technologies for the local economy. FDI has lead to indirect productivity gains through spillovers.

Multinational firms have increased the degree of competition in host-country markets which will force existing inefficient firms to invest more in physical or human capital.

 Service sector has been the most sought after sector in India for Foreign Direct Investments.

India, with its skilled labor and manpower has the potential to overtake China as the most preferred destination for Foreign Investments. Hence measures must be taken in order to ensure that the flow of FDI in our country continues to grow.

TOPIC-13:ENVIRONMENT AND POLLUTION CONTROL POLICY

Environmental Policy In India

The Role of Judiciary in Imparting Environmental Justice

122

The Underlying Causes of Environmental Degradation in India

Social Factors Economic Factors Institutional Factors

123

Social Factors
Population Poverty Urbanization
124

Economic Factors
Non-existent or poorly functioning markets for environmental goods and services Market distortions controls and subsidies created by price

The manufacturing technology adopted by most of the industries which generally is based on intensive resource and energy use. Expansion of chemical based industry Growing transport activities Expansion of port and harbour activities.
125

Institutional Factors
Lack of awareness and infrastructure makes implementation of most of the laws relating to environment, ineffective.
126

extremely

difficult

and

Environmental Policy In India

Ancient India
The Arthashastra by Kautilya, written as
early as between 321 and 300 BC,

contained provisions meant to regulate a

number of aspects related to the

environment. The fifth pillar edict of Emperor Ashoka also contains such regulations
127

Environmental Policy In India

During the British Reign in India:
Shore Nuisance (Bombay and Kolaba) Act, 1853 The Indian Penal Code, 1860 The Indian Easements Act, 1882 The Fisheries Act, 1897 The Factories Act, 1897 The Bengal Smoke Nuisance Act, 1905 The Bombay Smoke Nuisance Act, 1912 The Elephants Preservation Act, 1879 Wild Birds and Animals Protection Act, 1912
128

Environmental Policy In India

Modern India
National Council for Environmental Policy and

Planning was set up in 1972 which was later

evolved into Ministry of Environment and Forests (MoEF) in 1985. MoEF and the pollution control boards (CPCB i.e. Central Pollution Control Board and SPCBs

i.e. State Pollution Control Boards) together form

the regulatory and administrative core of the sector.
129

Environmental Policy In India

The Policy Statement for Abatement of Pollution and the National Conservation Strategy and Policy Statement on Environment and Development were brought out by the MoEF in 1992. The EAP (Environmental Action Programme) was

formulated in 1993 with the objective of improving

environmental services and integrating environmental

considerations into development programmes.
130

Environmental Policy In India

National Environment Policy, 2006
It the first initiative in strategy-formulation for environmental protection in a comprehensive

manner.
It undertakes a diagnosis of the causative factors of land degradation with a view to

flagging the remedial measures required in this

direction. It recognizes that the relevant fiscal, tariffs and sectoral policies need to take explicit account of their unintentional impacts on land degradation. 131

Environmental Policy In India

National Environment Policy, 2006 (contd.)
The solutions offered to tackle the problem
comprise adoption of both, science-based and traditional land-use large practices, scale pilot-scale

demonstrations, adoption of

dissemination, partnerships,

Multi-stakeholder

promotion of agro-forestry, organic farming,

environmentally sustainable cropping patterns and adoption of efficient irrigation techniques.
132

Constitutional Framework
Article 21 Article 48A - Fundamental Rights - Directive Principles of State Policy

Article 51A(g) - Fundamental Duties

133

Legislative Framework
Water (Prevention and Control of Pollution) Act, 1974 Water (Prevention and Control of Pollution) Cess Act, 1977

Air (Prevention and Control of Pollution) Act, 1981

Atomic Energy Act of 1982 Motor Vehicles Act ,1988 The Wildlife (Protection) Act, 1972 The Forest (Conservation) Act, 1980 Environment (Protection) Act, 1986 (EPA) The National Environment Appellate Authority Act, 1997 Public Liability Insurance Act (PLIA), 1991 National Environment Tribunal Act, 1995
134

Environment Impact Assessment (EIA)

There are two types of EIA models- the statutory model

which makes the assessment of impact compulsory under

an enacted law, or a delegated legislation, and the administrative model under which an administration exercises its discretion to find out whether an impact study is necessary. Till 1992, India was following the
135

administrative model of EIA.

Environment Impact Assessment (EIA) (contd.)

On 27th January, 1994 a notification was issued dealing with

mandatory EIA. The notification requires project proponent to

submit an EIA report, and environment management plan, details of the public hearing and a project report to the impact assessment agency for clearance, further review by a committee of experts in certain cases. By the amendment in the year 1997,

public hearing was made compulsory before impact assessment

was finalized.
136

Role of Judiciary in Imparting Environmental Justice

The

Judiciary has come up with the judge-

driven

implementation

of

environmental

administration in India. It has isolated specific environmental law principles upon interpretation of Indian

Statutes and Constitution. Public Interest Litigations (PILs) which is the result of the relaxation of the locus standi rules by the judiciary, is the characteristic feature of

the environmental litigation in India.

137

Role of Judiciary in Imparting Environmental Justice

Disputes relating to environment are treated as cases related to violation of fundamental rights, rather than claims under law of torts.

It has been held that the Supreme Court and

the High Courts can be directly approached under Article 32 and Article 226 of the

Constitution of India in case of matters relating

to environment.
138

Role of Judiciary in Imparting Environmental Justice (Contd.)

The orders of the Supreme Court and the High Courts cover a
wide range of areas including air, water, solid waste, hazardous wastes, forests, mining activities, and architectural treasures. Policy Statements of the government, which otherwise are not enforceable in Courts, have been used as aids by the Judges for

interpreting environmental statutes and for spelling out

obligations of the Government.
139

Doctrines Evolved by Courts

1. 2. 3. 4. Public Trust Doctrine Precautionary Principle Polluter Pays Principle Absolute Liability Principle 5. Sustainable Development
140

Doctrines Evolved by Courts:

Public Trust Doctrine:
M.C.Mehta v. Kamal Nath, (1996) 1 SCC 38: In a case where an attempt was made to divert flow of a river for augmenting facilities at a motel, it was held that State and its instrumentalities as trustees have a duty to protect and preserve natural resources. MI Builders Pvt. Ltd. v. Radhey Shyam Sahu, AIR 1996 SC 2468: a city development authority was asked to dismantle an underground market built beneath a garden of historical importance.
141

Doctrines Evolved by Courts:

Precautionary Principle:
Vellore Citizens Welfare Forum v. UOI, AIR 1996 SC 2718: The principle was adopted to check pollution of underground water caused by tanneries in Tamil Nadu. Narmada Bachao Andolan v. UOI, AIR 2000 SC 375: The Supreme Court held that the precautionary principle could not be applied to the decision for building a dam whose gains and losses were predictable and certain.
142

Doctrines Evolved by Courts:

Polluter Pays Principle:
The object of this principle is to make the polluter liable for the compensation to the victims as also for the cost of restoring of environmental degradation. Vellore Citizens Welfare Forum v. UOI, AIR 1996 SC 2718: It was held that the precautionary

principle and the polluter pays principle are part

of environmental law of the country.
143

Doctrines Evolved by Courts:

Absolute Liability Principle:
M. C. Mehta v. UOI, AIR 1987 SC 1086 (Oleum Gas Leak Case): The principle was adopted to compensate victims of pollution caused by inherently dangerous industries. Narmada Bacho Andolan v. UOI, AIR 2000 SC 375: The Supreme Court held that the precautionary principle could not be applied to the decision for building a dam whose gains and losses were predictable and certain.
144

Doctrines Evolved by Courts:

Sustainable Development:
M.C. Mehta v. UOI, AIR 1997 SC 734 (Taj Trapezium Case): while taking note of the disastrous effects that the emissions from the Mathura Oil Refinery had on the Taj Mahal, the Supreme Court applied the principle of sustainable development to the case, and apart from passing various directions, stepped in to execute and supervise the resultant actions.

State of Himachal Pradesh v. Ganesh Wood Products, AIR 1996 SC 149, the Supreme Court invalidated forest based industry, recognizing the principle of inter-generational equity and 145 sustainable development.

Contribution of the Delhi High Court

In a PIL pending before the Delhi High Court challenging the development of the common wealth games site on the riverbed and floodplain of the Yamuna, a Bench of two Judges hearing the matter, personally visited the site recently to see as to how much of the riverbed and floodplain had been acquired to build the Games Village, so that an appropriate order could be passed in the case and the infrastructural needs could be balanced with the

environmental concerns.

146

Contribution of the Delhi High Court

Directions have been passed by the High Court in various PILs for clearing the river Yamuna of all encroachments and for demolition of the slums on its banks. In Enkay Plastics Pvt. Ltd. Vs. Union of India (UOI) and Ors., 2000(56)DRJ828, the High Court upheld the order of the Delhi Pollution Control Committee for closure of certain polluting industries, and held that the direction of close down the industry

which is creating air pollution in residential areas.

147

Contribution of the Delhi High Court

In the case of Vimal Bhai v. UOI & Ors., (W.P.(C) 17682/2005, W.P.(C) 17683/2005, W.P.(C) 17684/2005 decided on 29.5.2005), the Union of India and all its concerned functionaries were

directed to take requisite steps for clearing the

proposals related to the appointment of the Chairman of the Appellate Authority and other Technical Members and reconstitute the

Authority within 45 days, under the National Environment Appellate Authority Act, 1997.
148

TOPIC-14
POVERTY ESTIMATION

1. Head-Count Ratio (HCR)

Head-Count Ratio is the proportion of households (or) population deriving less than the poverty line income. It is frequently expressed as a percentage of total households. HCR = (q/n) X 100 Where, q = the no. of persons below the poverty line n = the total population including non-poor For Ex: There are four persons with incomes:100,200,300,400 and poverty line=300 HCR = 2/4 X 100 = 50%

2. The Poverty Gap Ratio(PGR)

The poverty gap represents the average distance between the poverty line and the actual income of the poor, using total population in calculating the average and expressing the average as a percentage of the poverty line. PG = (1/n) [(Z-Yi)/Z] x100 Where, PG = the Poverty Gap Z = the poverty Line Yi = the income of the poor person n = the total population including non-poor For the above example, the estimate of poverty gap comes to 25%. PG = 1/4 [((300 100)/300 + (300 200)) / 300] x 100 = 1/4 x (1/3+2/3) x 100 = 25%

3. Square Poverty Gap (SPG)

A given short fall in income from the poverty line gives grater suffering for a person further away from the poverty line than to a person who is closer to the poverty line. Hence, a rupee short fall of a poorer person should receive a higher weight than that of a better off person. This measure achieves it by squaring the gap of each persons income from the poverty line and averaging these squared gaps. SPG = (1/n) [(Z-Yi) / Z]2 x 100 Where, SPG = Squared Poverty Gap Z = the poverty line Yi = the income of the poor person N = the total population including the non-poor For the above example, squared poverty gap is estimated as follows:

Square Poverty Gap (SPG)

Person 1 2 3 4

Per Capita Monthly Income

100 200 300 400

[(Z-Y)/Z]2 (Z-Yi)/Z 2/3 1/3 (Z-Yt)2 = 5/9 4/9 1/9

PGR=1/4(2/3+1/3)*100=1/4(1)*100=25% SPG = (1/4 x 5/9) x 100=(5/36)*100 = 13.88 = 13.9%

THANK YOU
By

PROF.G.RAMACHANDRUDU