Economics

•   Adam Smith is generally regarded as the Father of Economics, 
•  He is the author of ‘An Inquiry into the Nature’ and Causes of the Wealth of Nations  also known as generally The Wealth of Nations 
•   According to him, economics is “The science of wealth.” 
•  He also defined it as, “The Science relating to the laws of production, distribution, and  exchange.”

There are two main branches of economics-

Microeconomics	Macroeconomics
examines the economic behavior of individual actors	studies the economy as a whole
E.g-consumers, businesses, households	national income, employment , poverty, the balance of payments and inflation

INFLATION:-

Ø Increase in the price of goods and service.

Ø Fall in the value of money due to the increase of purchasing power.

Stages of inflation:-

Ø Creeping inflation –---2 to 4% increase.

Ø Trotting inflation(walking and running inflation) ---5-10% increase.

Ø Galloping inflation ----10-20% increase.

Ø Hyperinflation ---20% increase

Note:

Zimbabwe and Germany safar hyper inflation.

Disinflation:- 

Bringing down the price.

Stagflation:- 

Recession + inflation side by side.

Reflection:-

The moderate degree of controlled inflation.

• Types of inflation:

Ø Wage inflation: -Demand is more and supply is less.

Ø Pricing power inflation: -Administared price inflation.

Ø Cost-push inflation: -When an increase of price occurs in regard to the product or maintenance of a service or product.

Ø Sectoral Inflation: - This occurs when the price of one product directly affects the price of another product Or service.

• National Income:-

1. flow of services and good in the economic system.

2. It is the measurement of national income and national wealth.

3. first time calculated by J.M Keyness.

4. first time in India by Dada Bhai Naoraji.

5. A first-time scientific attempt by V.K.R.V. Rao.

6. now it calculated by CSO(central statistical organization

• Planning Commission

1. Set up on 15 March 1950.

2. new name is NITI aayog (National Institution for Transforming India Aayog)

3. Central body making plans in India is the planning commission.

4. No provision for planning commission in the Constitution of India.

5. It constituted by union cabinet proposal in parliament.

6. No, fix term or tenure of the deputy chairman and member if Niti Aayog.

7. Chairman enjoy the rank of as cabinet rank minister.

8. Prime Minister is the ex-office chairman of this commission.

9. Ist chairman was PT. Nehru.

• Economy Planning

planned economy is referred to as-

command economy or centrally planned

economy or command and control economy.

• Main Goals of Indian Planning

After Independence in 1947, India launched the five-year plans for rapid growth.

Planning has the following long term goals

• Growth

• Modernization

• Self-reliance and

• Social justice

First Plan (1951-56)

· emphasis were power and transport. 

· The annual average growth rate during the First Plan was estimated as 3.61% as against a target of 2.1%.

· Second Plan (1956-61)

· establishment of heavy industries. 

· Rate of investment was targeted to increase from 7% to 11%. The Plan achieved a more than targeted growth rate of 4.32%

· This Plan envisaged to give a big push to the economy so that it enters the take off stage It was based on Nehru-Mahalanobis model self-reliance and basic-industry driven growth.

Third Plan (1961-66)

· The aim of Third Plan was to establish a self-sustaining economy

· India’s conflict with Pakistan and repeated droughts also contributed to the failure of this Plan.

Annual Plans

· There were three annual plans till 1969. This period is called plan holiday that is when five year plans are not implemented.

· The Annual Plans were: 1966-67, 1967-68 and 1968-69.

Fourth Plan (1969-74)

· The main objective of this Plan was growth with stability. 

· The Plan laid special emphasis on improving the condition of the underprivileged and weaker sections through provision of education and employment

Fifth Plan (1974-79)

· The main objective of the Plan was Growth for Social Justice. The targeted growth rate was 4.4% and we achieved 4.8%.

· It was cut short by the Janata Party that came to power in 1977.

Sixth Plan (1980-1985)

· Removal of poverty was the foremost objective of Sixth Plan.

Ninth Five Year Plan (1997-2002)

· The salient features of the Ninth Five Year Plan are a target annual average growth rate of 6.5 percent for the economy as a whole, and a growth rate of 3.9 per cent for agriculture sector

Eighth Plan (1992-1997)

· This Plan was formulated keeping in view the process of economic reforms and restructuring of the economy. 

· The main emphasis of this Plan were to stabilize the adverse balance of payment scenario sustainably improvement in trade and current account deficit

· human development 

NDC(National Development Council)

1. 6th august 1952.

2. P.M is the ex-office chairman.

3. C.M of state and the member of Niti Aayog are the members of N.D.C

4. Extra-constitutional body.

5. Give final shape of the plan.

6. Aim is Economic Planning