Economics Test - 13

The correct answer is Dadabhai Naroji.

Key Points

• Dadabhai Naoroji prepared the first estimates of National income in 1876.
  • Dadabhai Naoroji fondly called the Grand Old Man of India, was the pioneer in this field
  • He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage of non-agricultural production.
  • The first person to adopt a scientific procedure for estimating the national income was Dr V K R V Rao in 1931. He divided the Indian Economy into two parts :
  • Agricultural Sector included agriculture, forests, fishing, and hunting.
  • The corporate Sector included industries, construction, business, transport, and public services.
  • The product method was used for estimating income in the agricultural sector and the income method was used for estimating income in the corporate sector.

Additional Information

• The Government of India appointed National Income Committee in 1949.
• Since 1955 the national income estimates are being prepared by Central Statistical Organisation.
• The Central Statistical Organisation has divided the Indian economy into three basic sectors:
  • The primary sector comprises agriculture, forestry, fishing, mining, and quarrying.
  • The secondary sector comprises manufacturing, power generation, gas, and water supply.
  • The tertiary sector comprises transport, communication and trade, banking insurance, computer software, public administration, defence, and external trade.
• National Income does not include data :
  • Income from illegal activities like smuggling, gambling, etc.
  • Income from work done without remuneration like domestic work by housewives.
  • Black money

The correct answer is V.K.R.V. Rao.

Key Points

• National Income in India:
  • The per-capita net national income during 2019-20 is estimated to be Rs 1,35,050 showing a rise of 6.8 per cent as compared to Rs 1,26,406 during 2018-19 with a growth rate of 10.0 per cent.
  • According to the annual national income and GDP 2019-20 data released by the Ministry of Statistics and Programme Implementation (MoSPI).
  • In 2018-19, the monthly per-capita income had stood at Rs 10,534.
  • The country’s per-capita monthly income is estimated to have risen by 6.8 per cent to Rs 11,254 during 2019-20, government data on national income.
  • India ranks third when GDP is compared in terms of purchasing power parity at 33 trillion.
  • When it comes to calculating GDP per capita, India’s high population drags its nominal GDP per capita down to,170.
  • India is the fifth-largest overall, with a nominal GDP.
• V.K.R.V. Rao:
  • Prof. Vijayendra Kasturi Ranga Varadaraja Rao was a multifaceted personality - Economist, Educationist, Administrator and Institution builder.
  • VKRV Rao held various prestigious academic and administrative positions such as Vice-Chancellor, Delhi University, Planning Commission Member, Union Cabinet Minister first for Shipping and Transport and then Education and Youth Services,
  • He was awarded Padma Vibhushan in 1974.
  • He was the founder of the Delhi School of Economics, Institute of Economic Growth and Institute for Social and Economic Change.

Additional Information

• D.R. Gadgil:
  • Prof. Gadgil’s ideas about industrial labour can be understood in his publications of Regulation of Wages and other problems of Industrial Labour in India in which topics related to wages, employment, the standard of living of workers, industrial relations effects of rationalisation of industries are covered.
  • Gadgil points out the great evils in the existing wage rate system:
    • (i) Low level of wage of industrial workers, and
    • (ii) Disparities between the wages paid for similar work.
• Manmohan Singh:
  • Manmohan Singh, an Indian economist and politician, served as prime minister of India from 2004 to 2014.
  • In the 1970s he was named to a series of economic advisory posts with the Indian government and became a frequent consultant to prime ministers.
  • Singh also worked at the Reserve Bank of India, serving as director (1976–80) and governor (1982–85).
• Y.V.Alagh:
  • An eminent economist, educationist and Government Policy Advisor, Prof Yoginder K Alagh went on to serve as a  Member of the Rajya Sabha and was appointed  Minister of State (Independent Charge) for Planning and Programme Implementation, Science and Technology and Power.
  • He headed various institutions and Commissions and acted as expert with a number of UN organisations.
  • He was also a Member of the Planning Commission, Govt. of India.
  • He is Chancellor of the Central University of Gujarat.
  • He was the seventh Vice-Chancellor of JNU.

The correct answer is Amartya Sen

Key Points

• ​The book 'Poverty and Famines' : An Essay on Entitlement and Deprivation' was written by Amartya Sen.
• The main focus of this book is on the causation of starvation in general and of famines in particular. 
• The author develops the alternative method of analysis ie the 'entitlement approach' concentrating on ownership and exchange, not on food supply. 
• The book also provides a general analysis of the characterization and measurement of poverty. 
• Various approaches used in economics, sociology, and political theory are critically examined in this book. 

• The predominance of distributional issues, including distribution between different occupation groups, links up the problem of conceptualizing poverty with that of analyzing starvation.

Hence, the correct answer is - Amartya Sen

Additional Information

• Amartya Sen is an Indian economist who was awarded the 1998 Nobel Prize in Economic Sciences for his work in welfare economics and social choice. 
• Sen is best known for his work on the causes of famine, and his research led to the development of solutions for limiting the effects of food shortages.
• His Poverty and Famines: An Essay on Entitlement and Deprivation (1981) showed that declining wages, unemployment, rising food prices, and inefficient food distribution could lead to starvation. 
• His views encouraged policy makers to maintain stable prices for food.

The correct answer is 1955.

Key Points

• We st Bengal
  • The West Bengal Estates Acquisition Act was passed in the year 1953.
    • The main purpose of this Act was to eliminate intermediaries between the State and its raiyats.
  • West Bengal Land Reforms Act was introduced in the year 1955.
  • Under its provisions, a landowner was entitled to get possession of his land back from tenants for the purpose of cultivation but this provision was not applicable in the case where the tenant was in possession of land less than one hectare.
• ​Hence o ption 2 is correct. ​

The correct answer is Bombay and Thane.

Key Points

• On 16th April 1853, the first passenger train ran between Bori Bunder (Bombay) and Thane, a distance of 34 km with 14 coaches and 400 passengers.

Additional Information

• Dalhousie was the "Father of Indian Railways".
  • He introduced a new system of internal communication in India in 1853.
• Currently, the total length of railways in India is around 123,542 km (76,765 mi).
  • It has over 7,349 stations.
• Indian Railways is the fourth-largest national railway network in the world.
• The first steam loco was built in 1895 by the Ajmer workshop of the Rajputana Malwa Railway.
• Kolkata became the first Indian city to get a metro rail system in 1984, followed by the Delhi Metro in 2002.

The correct answer is Mixed economy

Key Points
Industrial Policy Resolution 1948

• This was aimed at laying the foundation of a mixed economy where both the private and public enterprises were to be given importance and work together to develop the economy to accelerate the pace of industrial development.
• Features: Industries were divided into four broad categories
• Strategic or Public Sector- It included in its ambit the manufacture of arms and ammunition, production and control of atomic energy and the ownership and management of railway transport. These industries became the exclusive monopoly of the Central government of India. 
• Key Industries- This included coal, iron and steel, aircraft manufacture, shipbuilding, manufacture of telephone, telegraphs and wireless apparatus and mineral oils. New undertakings in this category could be started only by the state government.
• Important Industries (Controlled by Private sectors)- This included industries of basic importance like machine tools, chemicals, fertilizers, non-ferrous metals, rubber manufacturers, cement, paper, newsprint, automobiles, electric engineering etc. for which the Central Government would feel necessary to plan and regulate.
• Other Industries (Private and Cooperative)- It included those industries which were left open to the private sector, individual as well as cooperative.

The correct answer is 1991.

Key Points

• Liberalization, Privatization, and Globalization Policy:
  • LPG stands for Liberalization, Privatization, and Globalization.
  • India under its New Economic Policy approached International Banks for the development of the country.
  • The policy of liberalization, privatization, and globalization was announced as New Economic Policy by Prime Minister Narsimha Rao in 1991. Hence, Option 1 is correct.
  • These agencies asked the Indian Government to open its restrictions on trade done by the private sector and between India and other countries.
  • Indian Government agreed to the conditions of lending agencies and announced New Economic Policy (NEP) which consisted wide range of reforms.
  • Broadly we can classify the measures into two groups:
    • Structural Reforms
    • Stabilization Measures (LPG)

Important Points

• Liberalization:
  • The basic aim of liberalization was to put an end to those restrictions which became hindrances in the development and growth of the nation.
  • The loosening of government control in a country and when private sector companies start working without or with fewer restrictions and the government allow private players to expand for the growth of the country depicts liberalization in a country.
• Privatization:
  • It is the increment of the dominating role of private sector companies and the reduced role of public sector companies.
  • In other words, it is the reduction of ownership of the management of a government-owned enterprise.
  • Government companies can be converted into private companies in two ways:
    • By disinvestment
    • By withdrawal of governmental ownership and management of public sector companies.
• Globalization:
  • It means integrating the economy of one country with the global economy.
  • During Globalization the main focus is on foreign trade & private and institutional foreign investment. 
  • The main aim of Globalization is to transform the world towards independence and integration of the world as a whole by setting various strategic policies.
  • Globalization is attempting to create a borderless world, wherein the need of one country can be driven from across the globe and turn into one large economy.

The correct answer is Tertiary Sector

• India has seen the highest growth in the tertiary or services sector after economic reforms compared to other services.
• Economic reform is a process that involves fundamental changes in the basic features of the economy. This is the change from control to liberalization. The role of the states here will not be to control and prevent, but as  facilitators, collaborators, promoters and observers.
• While Rajiv Gandhi launched a new economic policy in 1985, the task of accelerating this liberal policy was undertaken by the then Prime Minister Narasimha Rao and Finance Minister Dr. Manmohan Singh introduced new economic reforms in 1991.
• Sectors are classified as private sector, government sector and joint sector on the basis of ownership and management.

According to the nature of enterprises, various productive enterprises are classified into three sectors of the economy. Mainly:

1. Primary Sector - also called agricultural sector. Businesses based mainly on natural resources are included in the primary sector. E.g. Activities like agriculture and animal husbandry, poultry, fisheries, jungle business, mining. In a developing economy like India, more than half of the population is engaged in the primary sector.
2. Secondary Sector - is also called the industrial area. These include industries related to manufacturing, construction, electricity, natural gas, water supply, etc.
3. Tertiary Sector - is also called the service area. These include services such as transportation, transportation, banking, insurance business, trade, finance 6., finance, health, education, restaurants, entertainment.

The correct answer is 1999.

Key Points

• Foreign Exchange Management Act (FEMA)
  • It is a set of regulations that empowers the Reserve Bank of India to pass regulations and enables the Government of India to pass rules relating to foreign exchange with respect to the foreign trade policy of India.
  • The Foreign Exchange Management Act (FEMA) was introduced by the Indian Government in 1999, replacing the previous Foreign Exchange Regulation Act (FERA) of 1973.
  • It was passed on 29 December 1999.
  • FEMA became an act on the 1st day of June 2000.
  • FEMA replaced an act called Foreign Exchange Regulation Act (FERA).FERA (Foreign Exchange Regulation Act) legislation was passed in 1973.
  • The main objective for which FEMA was introduced was to facilitate external trade and payments.
  • It gives powers to the Central Government to regulate the flow of payments to and from a person situated outside the country.
  • This act is in line with the WTO( World Trade Organization) framework.
  • No financial transactions concerning foreign securities or exchange can be carried out without the approval of the Foreign Exchange Management Act. 
  • FEMA was also formulated to assist the orderly development and maintenance of the Indian forex market.
  • Under the FEMA Act, the balance of payment is the record of dealings between the citizen of different countries in goods, services, and assets.
  • It is mainly divided into two categories, i.e. Capital Account and Current Account.