Chapter 5

(a)Indian economy: Brief overview of post-independence

period

Economics Development: Overview of post-independence

The defining feature of the economic programme of independent India‟s first

government was to accelerate the transition to a modern economy dominated by
industry. Agriculture and related activities at that time accounted for around half of
GDP and modern industry in the form of factory establishments for just above 6 per
cent. Thus, colonial rule had made India the victim of the barriers to productivity
increase typical of predominantly agrarian economies.
These circumstances influenced the Nehruvian vision that made rapid diversification in
favour of manufacturing the principal economic objective. The „big planners‟ of that
time did recognize that this will not deliver the jobs needed to absorb the country‟s
large underemployed and unemployed labour force and address the extreme poverty
and deprivation that colonialism had left behind. But those challenges it was argued
could be addressed separately, so long as growth got going.
At first it appeared that success was at hand. The years after 1951, and especially after
1956, did see large and rapidly rising investments in industry and infrastructure. But, it
is clear, with hindsight, that the process lost momentum rather early. The share of
manufacturing in GDP did rise from around 9 per cent in 1950-51 to 16 per cent in 1961.
But it did not cross the 18 per cent mark for a little more than a decade after that, and
touched 20 per cent at its peak in 1996. This was well short of what had been achieved
in many other comparable economies. In 1971, manufacturing‟s share in GDP stood at
29 per cent in Brazil and 35 per cent in China. In 1996, the figure was 27 per cent in
Korea, 28 per cent in Malaysia and 26 per cent in Thailand. The contribution of
manufacturing to employment in India was, as expected, was even more dismal.
There were two principal and proximate factors responsible for this shortfall relative to
targets in a country that showed much promise as a candidate for successful
industrialisation. One was the failure to grow the mass market for manufactures,
through appropriate measures, and especially through the implementation of land
reforms that helped raise the incomes of the majority among the agriculture-dependent
population. The other was the inability of the state to mobilize the resources to finance
the expenditures needed to drive and facilitate the process of industrialization.
Agrarian reform was needed to break down land monopoly, which by facilitating rack-
renting by absentee landlords, who also earned surpluses from usury and control over
poorly-paid, bonded labour, dis-incentivised productive investment in land on the part
of semi-feudal and feudal land owners. It also, on the other hand, deprived the tenants
who cultivated the land of the means and the incentive to invest. Productivity
enhancing investments were thus limited. Further, land concentration meant that
whatever increases in agricultural income did accrue, were not distributed in a manner
that encouraged the expansion of demand for manufactured mass consumption goods.
In the event, the expansion of domestic demand for the still nascent factory sector came
to depend on government expenditures, which by financing direct purchases by the
state, increasing demand mediated through employment in the state sector, and the
multiplier effects of these, drove manufacturing growth. But the inability of the state to
raise through taxation the resources needed to finance these expenditures, and the
limits to other forms of potentially inflationary financing like indirect taxation and
borrowing, meant that growth remained at the disappointing pace at which it occurred.
Both these features of the development path—the failure of land reform and the fiscal
crunch affecting the State—were in turn the result of an uneasy compromise between
the landlords in the rural areas and the business elite in the urban areas that had as its
counterpart a compromise between the conservatives in the Congress, on the one hand,
and Nehru and his supporters in Congress governments at the Centre and the states, on
the other. Land reforms, though flagged in many policy documents and in government
statements of intent remained largely unimplemented, and direct tax revenues were
woefully inadequate to support the programme of State-led economic modernisation.
Structurally the economy remained the same, not merely in terms of the degree of
diversification, but also in terms of the structures of economic dominance, with
traditional landlords and business groups concentrating economic power in their
hands.
The dominance of a small industrial elite also meant that the government could not
push them to produce for export to international markets, that would have helped earn
scarce and precious foreign exchange, as well as find an alternative source of demand to
supplement that deriving from the domestic market. Indian capital preferred the
comfort of the protected home market, which though trapped in slow growth, was quite
lucrative for those at the top of the wealth pyramid. In the event the picture was one
characterised by slow growth, a neglect of agriculture and balance of payments
vulnerability reflected in periodic crises.
One reason why this vulnerability did not result in multiple crises that were not as
intense as the inflation-cum-balance of payments crisis that affected India in the mid-
1960s, which lead to the devaluation of the rupee and forced reliance on the Bretton
Woods institutions for recovery, was the ability to use temporary measures of crisis
prevention and even growth management. The most striking example of the latter was
the adoption of the Green Revolution strategy in the late 1960s, riding on the
productivity improvements that new high-yielding varieties promised if appropriately
exploited. Combining delivery of HYV seeds, the fertilisers and pesticides that needed
to accompany them, and credit (including for investments that helped ensure more
stable access to water), the government did manage to raise yields in foodgrain
production. This partly made up for the absence of land reforms, since it encouraged
resumption of land by large landholders for direct cultivation given the promise of
higher profits from investment. It also reached the benefits of the technology to farmers
with medium-sized holdings. The gradual spread of Green Revolution “practices”
across the country did help stave off the worst food crises. Combined with a public
procurement and distribution system that was partly aimed at stabilising prices
received by farmers, this also kept at bay the kind of famines that historically plagued
the country.
What went unnoticed was that the Green Revolution helped shift land reform and the
embarrassment of having left it unimplemented out of day to day policy discourse. The
“success” also helped conceal the damaging effects of the way the Green revolution
strategy was implemented on the soil, on the water table and on the quality of water.
Those effects of the misuse of the Green Revolution are now being felt in the form of
various threats to the sustainability and viability of farming.
A second temporary reprieve came in the 1980s in the form of access to borrowing from
abroad. By the 1970s the international financial system had changed hugely. Surpluses
from oil exporters benefiting from the oil shocks and capital accumulated from the
pension funds servicing the post-war baby-boom generation were finding their way
into financial markets in search of returns. Developing countries like India, which
earlier did not have access to private financial capital, were now discovered as
emerging markets and favoured with capital flows. To exploit this opportunity, India
opened its doors to inflows of credit from the international commercial banking system
and non-resident Indian financial investors. Access to this capital allowed the
government to increase its own debt financed expenditures, since the foreign capital
could be used to finance imports that kept domestic inflation in control. Public debt
rose, foreign debt increased, but public expenditure helped accelerate growth, and
imports helped dampen inflation. This was the decade when India was seen to have
escaped from the “Hindu rate of growth” in which it had ostensibly been trapped. But
the cost to be paid was a rising import bill and current account deficit, which soon
generated fears among foreign lenders that India may not have the foreign exchange to
meet its debt service commitments. Soon the credit flow from abroad dried up, reserves
collapsed, and in July 1991 a balance of payments crisis forced India to turn to the IMF
for a loan. To assuage foreign financiers and win the support of the IMF, the
government used the crisis to launch a deep-seated programme of neoliberal reform
involving drastic liberalisation of trade and foreign investment and wide-ranging
deregulation in the domestic sphere.
Since the reform was supposed to enforce fiscal discipline as well, which would have
necessitated curtailing government expenditure, the expectation was it would slow
growth. But that was not to be the case. In fact, growth stayed at the 1980s level through
the 1990s and then accelerated after 2003, taking India to an even higher growth
trajectory. Though growth is off the peaks it touched before the global financial crisis,
official figures suggest that India is keeping pace with and often overtaking China as
the world‟s fastest growing nation.
But this too seems to have been because of rather unusual circumstances. When the
balance of payments crisis struck in 1991, the fact that India had paved the way for
removal of most controls on the inflow of foreign capital, especially financial capital
into India‟s equity and debt markets, provided the basis for a third reprieve. The effects
of this reliance on foreign capital proved even stronger after 2003 because of a capital
inflow surge and its domestic collateral effects.
The 1991 crisis did in the first instance freeze up flows from the international banking
system to India. But flows from foreign institutional investors, who were now
permitted entry into India‟s equity and subsequently debt markets, made up for the
loss. This allowed continuation of the 1980s style growth strategy where the
government pump-primed the system with deficit spending and kept inflation at bay
with the help of foreign exchange. But reliance on foreign finance finally forced the state
to implement fiscal reform, by tying its hands with legislation in the form of Fiscal
Responsibility and Budget Management Acts. The FRBM Act at the central level was
passed in 2003, setting off a process that has brought the fiscal deficit to GDP ratio
down to close to 3 per cent. This forecloses growth based on debt-financed government
spending.
If despite this cutback in government spending growth in India shifted onto a higher
trajectory, it was because of a spike in debt financed private spending. The large
liquidity infused into the system because of the post-2003 capital inflow surge triggered
a boom in bank credit, focussed largely on retail lending (loans for housing, automobile
and durable purchases, and sundry personal expenditures) and on lending to
investments in capital intensive industry and infrastructure. While this spurred growth
in the first instance, it also increased the exposure of banks to areas and projects that
where vulnerable and were soon defaulting. The net result is that a decade after the
boom began non-performing assets in the banking system have risen sharply and bank
profitability and even solvency are under threat. As a result credit growth is shrinking
as bank turns cautious, shaving off a few percentage points from the growth rate.
However, for India‟s majority, the problem is not just sustained growth. It is that the
reliance on fortuitous, unsustainable and volatile stimuli to drive growth has had as its
counterpart a pattern of growth least suited to employment generation, deeply in
equalising and largely incapable of addressing even the worst forms of social
deprivation. Much has indeed changed as India floated across trajectories driven by one
fortuitous factor to another. Yet little has changed when seen from the point of view of
those whom development is supposed to ultimately serve.
List of all Five Year Plans of India
The concept of economic planning in India is derived from the Russia (then USSR).
India has launched 12 five year plans so far. First five year plan was launched in 1951.
Now the present NDA government has stopped the formation of five year plan. So 12th
five year plan would be called the last five year plan of India.

The concept of economic planning in India is derived from the Russia (then USSR).
India has launched 12 five year plans so far. First five year plan was launched in 1951.
Now the present NDA government has stopped the formation of five year plans.
So 12th five year plan would be called the last five year plan of India.

The decades-old Five-Year Plans will make way for a three-year action plan, which
will be part of a seven-year strategy paper and a 15-year vision document. The Niti
Aayog, which has replaced the Planning Commission, is launching a three-year action
plan from April 1, 2017.

1. First Five Year Plan:

I. It was made for the duration of 1951 to 1956.
II. It was based on the Harrod-Domar model.
III. Its main focus was on the agricultural development of the country.
IV. This plan was successful and achieved growth rate of 3.6% (more than its target)

2. Second Five Year Plan:

I. It was made for the duration of 1956 to 1961.
II. It was based on the P.C. Mahalanobis Model.
III. Its main focus was on the industrial development of the country.
IV. This plan was successful and achieved growth rate of 4.1%(P.C. Mahalanobis)

3. Third Five Year Plan:

I. It was made for the duration of 1961 to 1966.

II. This plan is called „Gadgil Yojna‟ also.

III. The main target of this plan was to make the economy independent and to reach self
active position of take off.

IV. Due to china war, this plan could not achieve its growth target of 5.6%
Welfare Programmes by the Government of India
4. Plan Holiday:
I. The duration of plan holiday was from 1966 to 1969.
II. The main reason behind the plan holiday was the Indo-Pakistan war & failure of
third plan.

III. During this plan annual plans were made and equal priority was given to
agriculture its allied sectors and the industry sector.

5. Fourth Five Year Plan:

I. Its duration was from 1969 to 1974.

II. There were two main objective of this plan i.e. growth with stability and progressive
achievement of self reliance.

III. During this plan the slogan of “Garibi Hatao” is given during the 1971 elections by
Indira Gandhi.
IV. This plan failed and could achieve growth rate of 3.3% only against the target of
5.7%.

6. Fifth Five Year Plan:

I. Its duration was 1974 to 1979.

II. In this plan top priority was given to agriculture, next came to industry and mines.
III. Overall this plan was successful which achieved the growth of 4.8% against the
target of 4.4%.

IV. The draft of this plan was prepared and launched by the D.P. Dhar. This plan was
terminated in 1978.
7. Rolling Plan: This plan was started with an annual plan for 1978-79 and as a
continuation of the terminated fifth year plan.
8. Sixth Five Year Plan:
I. Its duration was from 1980 to 1985.

II. The basic objective of this plan was poverty eradication and technological self
reliance.

III. It was based on investment yojna, infrastructural changing and trend to growth
model.

IV. Its growth target was 5.2% but it achieved 5.7%.

9. Seventh Five Year Plan:

I. Its duration was from 1985 to 1990.
II. Objectives of this plan include the establishment of the self sufficient economy,
opportunities for productive employment.

III. For the first time the private sector got the priority over public sector.
IV. Its growth target was 5.0% but it achieved 6.0%.

Annual Plans: Eighth five Plan could not take place due to volatile political situation at
the centre. So two annual programmes are formed in 1990-91& 1991-92.

10. Eighth Five Year Plan:

I. Its duration was from 1992 to 1997.

II. In this plan the top priority was given to development of the human resources i.e.
employment, education, and public health.

III. Duing this plan Narasimha Rao Govt. launched New Economic Policy of India.

IV. This plan was successful and got annual growth rate of 6.8% against the target of
5.6%.

11. Ninth Five Year Plan:

I. Its duration was from 1997 to 2002.

II. The main focus of this plan was “growth with justice and equity”.
III. It was launched in the 50th year of independence of India.

IV. This plan failed to achieve the growth target of 7% and grow only at the rate of 5.6%.

12. Tenth Five Year Plan:

I. Its duration was from 2002 to 2007.

II. This plan aims to double the per capita income of India in the next 10 years.

III. It aims to reduce the poverty ratio 15% by 2012.

IV. Its growth target was 8.0% but it achieved only 7.2%.

13. Eleventh Five Year Plan:

I. Its duration was from 2007 to 2012.

II. It was prepared by the C. Rangarajan.

III. Its main theme was “faster and more inclusive growth”
IV. Its growth rate target was 8.1% but it achieved only 7.9%

14. Twelfth Five Year Plan:

I. Its duration is from 2012 to 2017.

II. Its main theme is “Faster, More Inclusive and Sustainable Growth”.
III. Its growth rate target is 8%.

IV. It is the current five year plan of India.

Three-year action plan is document only provides a broad roadmap to the government.
The document does not detail any schemes or allocations as it has no financial powers.
Since it need not be approved by the Union Cabinet, its recommendations are not
binding on the government. The documents of the Niti Ayog have no financial role.
They are only policy guide maps for the government.

Industrial policy in India

Industrial policy is a document that sets the tone in implementing, promoting the regulatory roles
of the government. It was an effort to expand the industrialization and uplift the economy to its
deserved heights. It signified the involvement of the Indian government in the development of
the industrial sector.

Industrial Growth during Plan Periods | India

Positive Features of Industrial Growth during the Plan Period:

The trend in industrial growth over about 60 years appears to be impressive.

During this period, both the pattern and the structure of Indian industries have
undergone a significant change.

1. Significant Growth Rate:

The trend in industrial production in India shows a compound growth rate of 6 p.c. The
growth rate for the period 1951-55 was 5.7 p.c., 7.2 p.c. in 1955-56 and 9 p.c. in 1960-65.
Thus, from the 50s to the mid- 60s, there was a significant acceleration in the industrial
growth. It declined to a very low level around 3.7 p.c. in 1966-70. This period was
marked by recession in Indian industries.

However, industrial production started picking up after the mid-70s. Still then, the
recovery was not high enough. The growth rate of industrial production was around 5-
2 p.c. during 1975-83. The decade of 1980s, however, showed a remarkable growth of
 the industrial sector following liberalisation measures introduced in the mid-1980s, But
the decade of 1990s did not augur well.

The early years of reform yielded unsatisfactory dividends as far as growth of the
industrial sector was concerned. After responding to economic reforms with vigour and
registering a robust growth rate of 12.8 p.c. in 1995-96, there had been a slowdown in
industrial expansion since 1996-97 when growth rate decelerated to 5.6 p.c. against a
growth rate of 13 p.c. in 1995-96.

Declining trend continued in 1998-99 with overall industrial production registering 4.1
p.c. growth during 1998-99.

Minor recovery took place in 1999-2000 when overall growth rate increased to 6.7 p.c.
The position deteriorated again in the next year when trends in industrial growth and
by sectors also suggested an all-round slowdown in industrial activity in 2000-01 (2.7
p.c.) and 2001- 02 (2.8 p.c.).

Industrial growth rate, however, picked up in the Tenth Plan when the growth rate rose
to 8 p.c. against the target industrial growth rate of 10 p.c.

Recent trends in Indian industrial growth

India has seen a rapid rise in industrialisation in the past few decades, due its expansion in
markets such as pharmaceuticals, bio-engineering, nuclear technology, informatics and
technology-oriented higher education.

current industry trends

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Modernisation:
India has now a large variety of industries producing goods of varied nature which
shows the degree of modernisation. Some modern industries have really come up and
they are competing effectively with the outside world. Modernisation is also evident in
the field of technological and managerial skills.
This has reduced our dependence greatly on foreign experts and technologists. On the
contrary, India is exporting trained personnel in relatively less developed countries.

Self-Reliance:
Another positive aspect of industrial growth is the attainment of the goal of self-
reliance. We have achieved self-reliance in machinery, plant and other equipment.
Today, the bulk of the equipment required for industrial and infrastructural
development is produced within the country.

Negative Aspects of Industrial Growth:

Industrial growth in India has been exposed to certain undesired lines. These suggest
the failure of industrial planning.

The most significant failure of industrial planning of India are:

(i) The structural retrogression in the industrial structure;

(ii) Expansion of large industrial houses and concentration of economic power;

(iii) Miserable performance of the public sector;

(iv) Under-utilisation of capacity; and

(v) Industrial sickness.

These negative aspects of India‟s industrial growth are presented below one by one.

1. Structural Retrogression in the Industrial Sector:

By industrial structure we mean interrelationship among different industry groups like
consumer goods, intermediate goods and capital goods industries. At the initial stages
of industrialisation, consumer goods industries predominated in the Indian economy.

As the pace of industrialisation quickened, consumer goods industries lost importance

and capital and intermediate goods industries got prominence. This sort of structural
change reflects industrialisation of a country.

India was on the road to industrialisation at the early stages of planning till 1965 when
there was a remarkable expansion of basic and capital goods industries as compared to
consumer goods industries. And the period after 1965 witnessed deceleration in
industrial output for all types of industries, excepting consumer goods industries.

Within the consumer goods industries, durable consumer goods industries registered a
high growth. Thus, Indian industries after 1965 showed not only poor growth but also
reflected phenomenon of structural retrogression.
The situation continues to be almost similar in the 1990s and 2000s. Basic industries
fared badly in 2005-06 when it struck a growth rate of 6.7 p.c. as against 10.8 p.c. in
1995-96. However, the year 2006-07 showed more than 10 p.c. growth of basic goods
industries. Intermediate goods industries showed a remarkable decline. However,
growth of capital goods industries in 2005-06 was remarkable.

And, this upbeat continued in 2006-07 when capital goods industries recorded a growth
rate of 18.2 p.c. Along with this pattern of industrial development, one finds an increase
in import-intensity of domestic manufacturing industry as a consequence of
liberalisation. Hence, a process of liberalisation-induced import substitution in the
manufacturing sector has emerged.

2. Expansion of Large Industrial Houses and Concentration of Economic Power:

It is the large industrial houses which have flourished over the planning period. There
were two monopoly houses worth the name in 1953-54. They were Tata and Birla. Over
time, these two houses have not only grown in size enormously, but also 18 other
industrial houses have come up very much with a menacing speed, despite legislative
measures (say, the MRTP Act).

Growth of these industrial houses is definitely an impediment towards the

establishment of a socialistic pattern of society. Another allied evil of the growth of
large industrial houses in India is the concentration of economic and political power in
their hands.

However, the objective of establishing a socialist pattern of society in India has been
buried underground in the 1990s. No longer private monopolists are required to be
controlled and regulated. They are given enough latitude to produce any commodity
even with multinational corporations (MNCs).

Reduction of-concentration of economic power in the hands of a few private

industrialists is no longer the objective of Indian Five Year Plans since destatisation
policy has assumed a great proportion after 1991. The MRTP Act has been replaced by
the Competition Act, 2002.

3. Miserable Performance of the Public Sector:

It is the public sector that must flourish to fulfil the avowed objective of the government
being purshed since the launching of the First Plan. Its growth is phenomenal over the
years. Still, then, its performance has come in for sharp criticisms.

It has failed to generate adequate resources for development. Following the

introduction of New Economic Policy in 1991, the importance of the public sector in
India‟s industrial planning has been pushed behind. On the contrary, what one finds is
the privatisation of the public sector enterprises through a policy of disinvestment.
However in recent years the performance of the public enterprises is not altogether bad.

4. Under-utilisation of Capacity:
A large number of Indian industries suffer from under-utilisation of capacity. However,
the degree of utilisation of capacity differs from industry to industry and from year to
year.

5. Industrial Sickness:
Along with under-utilisation of capacity, another phenomenon that marked the
industrial scene in recent years is the growing sickness of Indian industries. In 1990, the
number of sick industrial units was 2,21,097 The number rose to 2.50 lakhs in March
2001. Of these, slightly less than 2.50 lakh units were in the small-scale sector.

The growing sickness of industrial units is a major growth constraint. Since then, this
trend has been arrested. In March 2003 the number of total sick units declined to 1.71
lakhs. It declined further to 1.31 lakh in March 2006. Of these, the number of small units
stood at 1.26 lakh in 2006 and it declined further to 1.14 lakh in March 2007.

To sum up, India‟s industrial expansion over the plan period presents a mixed picture.
Compared to the pre-independence level, industrial growth in the planning period is
phenomenal. But, in the process, some undesirable elements have come out in recent
years which have vitiated the industrial climate. Policy implication is, thus, equally
apparent.

MNCS AND TRANSFER OF TECHNOLOGY

Throughout the history technological changes and transfer leading to mechanization

and industrialization have led to economical change, innovation, increasing in the
knowledge and skills as well as, from the industrial point of view. Also the transfer of
technology by multinational corporations (MNCs) would help developing countries to
have sustainable development as well as both preserve the environment and improve
the quality of life for present and future generations It has played an important role in
shaping the society and the development of the countries . Technological transfer
involves a two-way relationship of sending and receiving technology between and
among firms, industries and governments. However, the transfer of technology to a
developing country depends on many factors including government, its economy,
market, research and development as well as infrastructure of the The transfer of
technologies by the MNCs to the developing countries brings in economic changes as
well as fosters productivity growth. Though invention and creation processes remains
the province of the developed countries. However productive knowledge as well as
follow-on innovation occurs in developing countries. These processes effectively are the
drivers for sustainable growth and change in developing countries Technology is at the
core of competition and development The transfer of technology by multinationals
enhances a country‟s technological capabilities by providing product or process
innovations or both. With manufacturing of new products and services as well as
improving the quality of the existing ones it could lead to industrial up gradation of a
developing country technical ability. Innovation could also lead to the establishment of
more competitive industries that could in turn generate revenues for the host
(developing) countries For example, country like China attracts foreign direct
investment (FDI) due to cheap mass production which was gradually established due to
its innovation capabilities. Being fully aware of the threats, China took steps towards
innovation. Innovation is considered the focal instrument of economic growth in both
developed and developing countries. Developing countries can maintain its economic
growth through its own innovation capabilities .

Constant growth could be there with the creation of new products that expands the
knowledge of the technology and products and in turn lowers cost of innovation. The
transfer of knowledge and skills is considered necessary for the adoption of new
technologies in a developing country. For an MNC there is a growing dependence on
the knowledge and skills for a profitable utilization of the product. Therefore a firm
may invest in the dispersion of productive knowledge and skills to its employees, to the
local suppliers of the inputs needed in its production process and to the local customers
who may have to be taught the new technology of using the firm‟s products effectively.
The direct, in particular, impact is on the labour in the host country. The transfer of the
knowledge and skills to local suppliers and labours make up a base for technology
spillovers. This spillover in turn upgrades the existing knowledge and skills so as to
ensure that the host country enjoys the true potential of the transferred technology A
highly skilled and knowledge based economy is a dominant feature in the 21st century
so as to increase a developing country‟s growth and competitiveness

ECONOMIC REFORMS: New Economic Policy (NEP) (1991)

Liberalization

Liberalization is a method through which a nation lifts limitations on some separate

individual ventures. This process of liberalization occurs when anything which used to
be prevented is no longer banned, or when state laws are relaxed.

Merits

1. It can create jobs for many people.

2. It results in an increase in the competition and thus consumers get a good quality
product at a lower cost.

Demerits
1. It affects the local shops.

2. It is a profit-oriented approach and not socially favorable.

Privatization

Privatization in general term refers to the transfer of a business, enterprise, or service

from the public to private dominion and authority.

Merits:

1. The main motif of the privatized industries is to make more profit tus these
companies are more efficient.

2. The efficiency of a firm in privatization is caused by the shareholders.

Demerits:

1. A natural monopoly befalls when the various effective numbers of firms in an

enterprise is one.

2. Privatization produces private pools, such as water corporations and rail

corporations. These need monitoring to check abuse of pool control of the corporations.

Migration is the demographic process that links rural to urban areas, generating or
spurring the growth of cities. The resultant urbanization is linked to a variety of policy
issues, spanning demographic, economic, and environmental concerns. Growing cities
are often seen as the agents of environmental degradation. Urbanization can place stress
on the land through sprawl; coincident industrial development may threaten air and
water quality. In the eyes of many observers, rapid urbanization is also linked to
problems of unemployment and the social adaptation of migrants in their new urban
setting. Cities advertise society's inequalities in income, housing, and other social
resources, whether these problems are new or just newly manifest in urban settings.

Most of the migration conventionally liked to these urban issues was seen as following
a conventional pattern. In this policy brief I raise some issues about the nature of
contemporary, migratory behavior, both for our understanding of processes of
population redistribution directly, and for understanding some of the implications of
that redistribution. Contemporary research is sketching the contours of this migratory
behavior and the social adjustment that accompanies it. New research is beginning to
shed light on the rate of migrant adaptation, on the connection between origin and
destination communities through remittances, and the demographic structure and
dynamic of refugee movements.
Regional industrial growth in India
The aim of the regional industrialisation programme is to contribute to the promotion
of economic growth and development. ... The focus on industrialization is aimed at
ensuring economic development across all Member States and creating a conducive environment
for investment and industrial development policy. In addition, Member States have identified a
number of key priority sectors that will form the basis for cross-border collaboration, among
them agro-processing sector.

The focus on industrialization is aimed at ensuring economic development across all Member
States and creating a conducive environment for investment and industrial development.
Regional Industrialisation is expected to lead to growth of the region's industrial base, creation of
employment opportunities for the people of the region, and establishment of sectoral
complementarities in production, as well as backward and forward linkages that promote further
industrial development.

The value of a regional industrial policy resides in its potential to further integrate regional
markets and advance economic development. A regional industrial policy can further strengthen
regional partnerships and cooperation. Cooperation in industrial development at a regional level
will stimulate investments in new industries and strengthening of existing ones into competitive
industries, in order to increase their participation in global trade, by developing both production
(high value-added activities) and trade-related capacities. Key areas for possible cooperation
could include inter alia, mineral beneficiation, support to infant industries, agro-processing, and
cross-border value chains development.

Post reform Growth

Economic reforms placed India on a higher growth trajectory; annual growth rate in the post-
reform period (1992–2013) increased to 6.95 per cent from 4.36 per cent during 1970–90. ...
However, this was to be a short period of high growth which could not be sustained in the
subsequent years.

Economic Reforms refer to the fundamental changes that were launched in 1991 with the plan
of liberalising the economy and to quicken its rate of economic growth. ... The essential features
of the economic reforms are – Liberalisation, Privatisation and Globalisation, commonly known
as LPG.

b) Employment, Migration and Urbanization

Migration and Urbanization:

Migration is the demographic process that links rural to urban areas, generating or spurring the
growth of cities. The resultant urbanization is linked to a variety of policy issues, spanning
demographic, economic, and environmental concerns. Growing cities are often seen as the agents
of environmental degradation.

The process of urbanization can be identified as over urbanization as long as (1) rural-
urban migration leads to a misallocation of labour between rural and urban sectors in the sense
that it rises urban employment, under employment and poverty.

Migration can have a considerable impact on the labour market. Migrants tend to be of working
age, and while the general effect is to increase the supply of labour at all wage rates, migration
especially affects supply at lower wage rates.

People’s preferences for work

If people prefer more work, the supply of labour increases. Preferences can be influenced by a
range of factors including changes in the ‘cost’ of working, such a subsidised childcare, and non-
wage benefits (advantages) of working.

Net advantages of work

As well as the wage rate, decisions to increase or decrease labour supply are influenced by non-
monetary (non-pecuniary) advantages, such as changes in working conditions, job security,
holiday entitlement, promotion prospects, and other pyschological benefits of work.
Improvements in these benefits will shift the labour supply curve to the right.

Work and leisure

For many, part-time work is an increasingly attractive option given the advantages of increased
leisure. Early retirement is also a factor affecting labour supply.

An individual’s decision to supply labour is greatly affected by the choice between work and
leisure. Given that time is fixed, work and leisure are substitutes for each other.

The choice between work and leisure can be affected by a number of factors, including:

 Age – older workers often gain more utility from leisure.

 Direct taxes – higher income tax rates may increase the utility of leisure and reduce the
labour supply.
 Dependents – having children may increase the utility of work, and increase the labour
supply.
 Non-work income – some individuals can retire from the labour market because they
have company pensions which may be received before state pensions, which are available
for men at 65 and women at 60. Non-work income can come in the form of cash benefits,
such as the Job Seeker's Allowance, and benefits-in-kind, such as subsidised travel cards.
Individual labour supply
The supply curve for an individual cannot continue to slope upwards indefinitely. Labour market
theory suggests the labour supply curve will initially slope upwards, and then bend backwards.
Up to a wage rate of W1 in the diagram, the relative price of leisure for an individual increases
and workers will look to switch from leisure to work.

Labour Market and Employment–Informal, Organized, Unorganized, Public, Private.

The labor market, also known as the job market, refers to the supply and demand for labor in
which employees provide the supply and employers the demand. It is a major component of any
economy and is intricately tied in with markets for capital, goods and services.

The different Characteristics of labour markets are as follows:

A commodity market refers to a physical place where buyers and sellers of a particular
commodity gather for engaging in transactions while a labour market is viewed as a process by
which supplies of a particular type of labour and demands for that type of labour are balanced, is
an abstraction.

Secondly, unlike a commodity market, the relationship between a seller and a buyer in a labour
market is not temporary and as such personal factors, which can be ignored in a commodity
market, become important in a labour market.

Thirdly, unlike a commodity market, in a labour market there is a lack of perfect mobility which
gives rise to a diversity of wage rates for the same type of work and we do not find a normal
wage rate to which the market rate naturally tends. In other words, labour market is essentially an
imperfect market.

Fourthly, wage fixing is an essential characteristic of the labour market, where (in the absence of
unions) the buyer of labour normally sets the price but in the commodity market, it is normally
the seller who sets the price. In labour market the price that is set tends to be fixed for some
length of time. Employers do not want wage rates to fluctuate with every change in demand and
supply conditions.

Fifthly, the labour market is far more complex than the commodity market. It makes little
difference whether a potato is sold in Calcutta or in Bombay to the seller.

Employment–Informal

An informal economy is the part of any economy that is neither taxed nor monitored by any form
of government. Although the informal sector makes up a significant portion of the economies in
developing countries, it is sometimes stigmatized as troublesome and unmanageable.
The informal economy is the diversified set of economic activities, enterprises, jobs, and workers
that are not regulated or protected by the state. The concept originally applied to self-
employment in small unregistered enterprises. It has been expanded to include
wage employment in unprotected jobs.

Employment–, Organized, Unorganized, Public, Private

(Can be given as Assignment)