Economy Study Material for UPSC

The approach to study Indian Economics remains crucial as it is a very relevant subject for the preparation of Prelims as well as Mains exam. Aspirants are expected to be well versed with the basic concepts and fundamentals of Indian Economics. As an administrator, they are expected to study, analyse and resolve the issues pertaining to economical kind to suit the nation’s interest.

To begin with, let us look into the approach to study the Indian Economy. First of all, one should learn the basic terminologies to understand Economics. Once you build the fundamentals, it will be easy to analyze and apply those concepts for your next stage preparation i.e. while you read daily current affairs or frame your answers for Mains Exam.

Basic Economic Concepts 

Economics is derived from the Greek word “Oikos Nomos”. Oikos means family, household, estate and Nomos means law, customs etc. Adam Smith is known as the father of Economics. The essence of Economics is to apply logic scientifically to manage limited resources. It is about making choices in the present of scarcity.

Growth and Development 

Economic Growth is the positive change in the real output of the country in a particular span of time. Economic Development involves rise in the level of production in an economy along with the advancement of technology, improvement in living standards and so on. Economic Growth results in quantitative changes, but economic development brings both quantitative and qualitative changes.



Evolution of Indian Economy


India’s emergence into independence in 1947 came with a host of problems. The most fundamental ones were widespread poverty and a chronic lack of resources. In addressing this dual developmental challenge, policymakers at the time had two ideological pathways to choose from.

Planning in India

Every country has its own pecu­liarities of economic planning, and India is no exception to this. Indian history of planning can be divided into three periods: pre-independent, 1951- 1991 and 1991 onwards. Independence came to India with the parti­tion of the country on 15 August 1947. It suggested the setting up of a National Planning Commission and framing the policy of a mixed economic system. 

Inflation

Inflation is “a rise in the general level of prices”. inflation affects every citizen of the country, however rich or poor, it is a crucial determinant of a country’s economic and social progress. In India, inflation is measured on two price indices, viz, wholesale price index (WPI) and consumer price index (CPI).

Agriculture

Agricultural sector plays a strategic role in the process of economic development of a country. It has already made a significant contribution to the economicprosperity of advanced countries and its role in the economic development of less developed countries is of vital importance. Agriculture is the most important sector of Indian Economy. Indian agriculture sector accounts for 18 per cent of India’s gross domestic product (GDP) and provides employment of around 50% of the countries workforce.

Industry and Infrastructure

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers of the world over the next 10-15 years, backed by its strong democracy and partnerships. Infrastructure is a key driver of the overall development of Indian economy. Infrastructure is generally understood as the basic building blocks required for an economy to function efficiently.

Topics covered under Industry and Infrastructure

New Industrial Policy Industrial Policy Resolution from 1948 to 1991
Disinvestment and its types, Disinvestment Policy of Government FDI Policy in Industrial Sector
Make in India PPP Models


Transport and Communication

India has one of the largest road networks in the world, largest railway system in Asia and second largest in the world. It includes Rail transport, Road transport, Air transport, water transport and portal connectivity.Communication system in modern line was started with Indian National Satellite System. It is one of the largest communication systems in Asia-Pacific Region. It is joint venture of Department of Space, Department of Telecommunication, AIR, IMD and Doordarshan. 

Topics covered under in Transport and Communication

Civil Aviation

Roads

Railways

UDAN

Sagarmala Project

Service Sector

The services sector is not only the dominant sector in India’s GDP, but has also attracted significant foreign investment flows, contributed significantly to exports as well as provided large-scale employment. India’s services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction.

Topics covered under Service Sector


Global negotaitaions on Services  WTO,Multilateral, Bilateral Agreements

Indian Finance Market

The financial market in India at present is more advanced than many other sectors as it became organized as early as the 19th century with the securities exchanges in Mumbai, Ahmedabad and Kolkata. In the early 1960s, the number of securities exchanges in India became eight - including Mumbai, Ahmedabad and Kolkata. Today there are 23 regional securities exchanges in India. 

Topics covered under Indian Finance Market

Money Market and Capital Market

Banking in India

The banking sector is the section of the economy devoted to the holding of financial assets for others, investing those financial assets as leverage to create more wealth and the regulation of those activities by government agencies.India has an extensive banking network, in both urban and rural areas. The Reserve Bank of India (RBI) is the central banking institution. It is the sole authority for issuing bank notes and the supervisory body for banking operations in India. 

Insurance in India

Insurance sector in India plays a dynamic role in the wellbeing of its economy. It substantially increases the opportunities for savings amongst the individuals, safeguards their future and helps the insurance sector form a massive pool of funds. The Indian Insurance Sector is basically divided into two categories – Life Insurance and Non-life Insurance. The Non-life Insurance sector is also termed as General Insurance. Both the Life Insurance and the Non-life Insurance is governed by the IRDAI (Insurance Regulatory and Development Authority of India).

Topics covered under Insurance in India

Insurance Industry LIC,GIC,AICIL

Insurance Reforms

IRDA

Security Market in India

The securities market has two interdependent and inseparable segments, the new issues (primary) market and the stock (secondary) market. The primary market provides the channel for creation and sale of new securities, while the secondary market deals in securities previously issued. The responsibility for regulating the securities market is shared by Department of Economic Affairs (DEA), Ministry of Company Affairs (MCA), Reserve Bank of India (RBI) and SEBI.

External Sector in India

The external sector of a country's economy interacts with the economies of other countries. In the goods market, the external sector involves exports and imports. In the financial market it involves capital flows. India is presently known as one of the most important players in the global economic landscape. Its trade policies, government reforms and inherent economic strengths have attributed to its standing as one of the most sought after destinations for foreign investments in the world.

International Economic Organisations and India

International organizations uphold international agreements and support programs intended to help the global economy. Almost every country exports and imports products to benefit from the growing international trade.The growth of international trade can be increased, if the countries follow a common set of rules, regulations, and standards related to import and export. These common rules and regulations are set by various international economic institutions.

Topics covered under International Economic Organisations and India

ADB,BRICS BANK and AIIB
World Bank,IMF and WTO

Tax Structure in India

The tax structure in India is divided into direct and indirect taxes. Over the last few years, the Central and many State Governments have undertaken various policy reforms and process simplification towards great predictability, fairness and automation. This has consequently lead to India’s meteoric rise to the top 100 in the World Bank’s Ease of Doing Business (EoDB) ranking in 2017. The Goods & Services Tax (GST) reform is one such reform to ease the complex multiple indirect tax regime in India.

Topics covered under Tax Structure in India 

Direct and Indirect tax

Progressive and Regressive Taxation 

GST

15th Finance Commission 

Public Finance in India

Public Finance in India also comes under the purview of a branch of economics which determines and assesses the policies of the Indian government stipulated in the annual finance budget. Public finance identifies that types and consequences of tax measures and expenditure on citizens, institutions, and the entire economy. Public finance is also concerned with improving and upgrading economic procedures that support governmental policies. 

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