Economic Environment in India Practice Flashcards

A comprehensive set of practice flashcards covering Unit I and Unit II of the BCom 2nd Semester course 'Economic Environment in India', focusing on definitions, historical contexts, policies, and key development indices.

What is the definition of 'Economic Environment' in a business context?

Economic Environment refers to all those economic factors, forces, and conditions which surround and influence a business enterprise or an economy, including the overall economic system, government policies, available resources, and the stage of development.

What are five key features of the Economic Environment?

(1) Dynamic Nature, (2) Complex in Nature, (3) Broader Scope (covering micro and macro factors), (4) Interdependent with other environments (political, social, legal), and (5) Significant Influence on Business Decisions.

What are the two broad categories of factors affecting the Economic Environment?

Internal Factors (within the country) and External Factors (outside the country).

Who proposed the 'Vicious Cycle of Poverty' and what is its basic logic?

Ragnar Nurkse; it posits that: Low income $\rightarrow$ Low savings $\rightarrow$ Low investment $\rightarrow$ Low productivity $\rightarrow$ Low income.

Distinguish between Economic Growth and Economic Development.

Economic Growth is a quantitative increase in GDP or national income (narrow scope), while Economic Development is both quantitative growth and a qualitative improvement in well-being, structural changes, and social welfare (broader scope).

What are the three dimensions of the Human Development Index (HDI)?

(1) Health: measured by life expectancy at birth; (2) Education: measured by mean and expected years of schooling; (3) Standard of Living: measured by Gross National Income (GNI) per capita (PPP \text{ } \textdollar).

What is the formula for calculating the Human Development Index (HDI)?

$$\text{HDI} = (\text{Health Index} \times \text{Education Index} \times \text{Income Index})^{\frac{1}{3}}$$

Who were the pioneers of the Human Development concept for the UNDP?

Mahbub ul Haq and Amartya Sen.

What were the three key land tenure systems under British rule?

(1) Zamindari System (Lord Cornwallis, 1793), (2) Mahalwari System (village community responsibility), and (3) Ryotwari System (direct payment by individual farmers).

What was the 'Drain of Wealth' and who described it first?

The systematic transfer of India's wealth and resources to Britain through trade, taxation, and salaries; described by Dadabhai Naoroji in 'Poverty and Un-British Rule in India'.

What is 'Disguised Unemployment' in the agricultural sector?

A situation where more people are working than needed, such that individual marginal productivity is virtually zero, and their removal would not reduce total output.

What are the four essential components of the Human Development framework?

Equity, Sustainability, Productivity, and Empowerment.

What is the 'Gini Coefficient'?

A measure of income inequality ranging from 0 (perfect equality) to 1 (perfect inequality).

Which industrial policy is known as the 'Economic Constitution of India'?

The Industrial Policy Resolution 1956 (IPR 1956).

What were the three schedules defined in IPR 1956?

Schedule A (17 industries - Exclusively Public Sector), Schedule B (12 industries - Mixed/State leadership), and Schedule C (All other industries - Private Sector).

What was the focus of the Fifth Five Year Plan (1974-79)?

Poverty removal ('Garibi Hatao') and self-reliance.

When was NITI Aayog established and whom did it replace?

Established on 1st January 2015; replaced the Planning Commission.

What is the 'Aspirational Districts Programme'?

A program launched in 2018 focusing on transforming the 117 most underdeveloped districts in India across 49 indicators.

What is the difference between Absolute Poverty and Relative Poverty?

Absolute Poverty occurs when a person cannot afford basic survival needs (based on caloric norms), whereas Relative Poverty describes income inequality compared to others in the same society.

According to the Tendulkar Committee (2009), what was the poverty ratio in 2011-12?

21.9 \text{ %} (approximately $27$ crore people).

Define the 'Physical Quality of Life Index (PQLI)' and its indicators.

Developed by Morris D. Morris in 1979; it combines (1) Infant Mortality Rate (IMR), (2) Life Expectancy at age 1, and (3) Basic Literacy Rate.

What does the FRBM Act of 2003 signify?

The Fiscal Responsibility and Budget Management Act aims to bring fiscal discipline by setting a fiscal deficit target of 3 \text{ %} of GDP and eliminating the revenue deficit.

What are the four rate slabs of the Goods and Services Tax (GST) introduced in 2017?

5 \text{ %}, 12 \text{ %}, 18 \text{ %}, and 28 \text{ %}.

Who is considered the scientific architect of the Green Revolution in India?

M.S. Swaminathan.

What does 'NABARD' stand for and when was it established?

National Bank for Agriculture and Rural Development; established in 1982.

Explain the 'Harrod-Domar Model' of planning.

A growth model where the growth rate of an economy is determined by the savings rate and capital-output ratio: $\text{Growth Rate} = \frac{\text{Savings Rate}}{\text{Capital-Output Ratio}}$.

What is the guarantee provided by MGNREGS?

It guarantees $100$ days of wage employment per year to every rural household.

What was the major shift introduced by the New Industrial Policy of 1991?

The introduction of LPG (Liberalization, Privatization, Globalization), which abolished industrial licensing for most sectors and opened the economy to foreign investment (FDI).