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Public Distribution System (PDS) is the most important step taken by the Government of India (Go I) towards ensuring food security. In the beginning the coverage of PDS was universal with no discrimination between the poor and non-poor. Over the years, the policy related to PDS has been revised to make it more efficient and targeted. In 1992, Revamped Public Distribution System (RPDS) was introducted in 1,700 blocks in the country. The target was to provide the benefits of PDS to remote and backward areas. From June 1997, in a renewed attempt, Targeted Public Distribution System (TPDS) was introducted to adopt the principle of targeting the ‘poor in all areas’. It was for the first time that a differential price policy was adopted for poor and non-poor. Further, in 2000, two special schemes were launched viz ., Antyodaya Anna Yojana** * (AAY) and the Annapurna Scheme (APS) with special target groups of ‘poorest of the poor’ and ‘indigent senior citizens’, respectively. The functioning...

The cooperatives are also playing an important role in food security in India especially in the southern and western parts of the country. The cooperative societies set up shops to sell low priced goods to poor people. For example, out of all fair price shops running in Tamil Nadu, around 94 per cent are being run by the cooperatives. In Delhi, Mother Dairy is making strides in provision of milk and vegetables to the consumers at controlled rate decided by Government of Delhi. Amul is another success story of cooperatives in milk and milk products from Gujarat. It has brought about the White Revolution in the country. These are a few examples of many more cooperatives running in different parts of the country ensuring food security of different sections of society. Similarly, in Maharashtra, Academy of Development Science (ADS) has facilitated a network of NGOs for setting up grain banks in different regions. ADS organises training and capacity building programmes on food security for ...

Food is as essential for living as air is for breathing. But food security means something more than getting two square meals. Food security has following dimensions. (a)A vailability of food means food production within the country, food imports and the previous years stock stored in government granaries. (b)A ccessibility means food is within reach of every person. (c)A ffordability implies that an individual has enough money to buy sufficient, safe and nutritious food to meet one's dietary needs. Thus, food security is ensured in a country only if (1) enough food is available for all the persons (2) all persons have the capacity to buy food of acceptable quality and (3) there is no barrier on access to food. Why food security The poorest section of the society might be food insecure most of the times while persons above the poverty line might also be food insecure when the country faces a national disaster/calamity like earthquake, drought, flood, tsunami, widespread failure of...

Urban  Case: Thirty-three year old Ram Saran works as a daily-wage labourer in a wheat flour mill near Ranchi in Jharkhand. He manages to earn around Rs 1,500 a month when he finds employment, which is not often. The money is not enough to sustain his family of six— that includes his wife and four children aged between 12 years to six months. He has to send money home to his old parents who live in a village near Ramgarh. His father a landless labourer, depends on Ram Saran and his brother who lives in Hazaribagh, for sustenance. Ram Saran lives in a one-room rented house in a crowded basti in the outskirts of the city. It’s a temporary shack built of bricks and clay tiles. His wife Santa Devi, works as a part  time  maid in a few houses and manages to earn another Rs 800. They manage a meagre meal of dal and rice twice a day, but there’s never enough for all of them. His elder son works as a helper in a tea shop to supplement the family income and earns another Rs 300, while his 10-ye...

Removal of poverty has been one of the major objectives of Indian developmental strategy. The current anti-poverty strategy of the government is based broadly on two planks:- (1) promotion of economic growth (2) targeted anti-poverty programmes. Over a period of thirty years lasting up to the early eighties, there were little per capita income growth and not much reduction in poverty. Official poverty estimates which were about 45 per cent in the early 1950s remained the same even in the early eighties. Since the eighties, India’s economic growth has been one of the fastest in the world. The growth rate jumped from the average of about 3.5 per cent a year in the 1970s to about 6 per cent during the 1980s and 1990s. The higher growth rates have helped significantly in the reduction of poverty. Therefore, it is becoming clear that there is a strong link between economic growth and poverty reduction. Economic growth widens opportunities and provides the resources needed to invest in huma...

Unemployment is said to exist when people who are willing to work at the going wages cannot find jobs. Sheela is not interested in working outside her domestic domain. Jeetu and Seetu are too small to be counted in the work force population. Neither Jeetu, Seetu or Sheela can be counted as unemployed. The workforce population includes people from 15 years to 59 years. Sakal’s brother and sister do not fall within this age group so they cannot be called unemployed. Sakal’s mother Sheela works for the family. She is not willing to work outside her domestic domain for payment. She too cannot be called unemployed. Sakal’s grandparents (although not mentioned in the story) cannot be called unemployed. In case of India we have unemployment in rural and urban areas. However, the nature of unemployment differs in rural and urban areas. In case of rural areas, there is seasonal and disguised unemployment. Urban areas have mostly educated unemployment Seasonal unemployment happens when people ar...

The quality of population depends upon the literacy rate, health of a person indicated by life expectancy and skill formation acquired by the people of the country. The quality of the poulation ultimately decides the growth rate of the country. Illiterate and unhealthy population are a liability for the economy. Literate and healthy population are an asset. Education Sakal’s education in the initial years of his life bore him the fruits in the later years in terms of a good job and salary. We saw education was an important input for the growth of Sakal. It opened new horizon for him, provided new aspiration and developed values of life. Not only for Sakal, education contributes towards the growth of society also. It enhances the national income, cultural richness and increases the efficiency of governance. There is a provision made for providing universal access, retention and quality in elementary education with a special emphasis on girls. There is also an establishment of pace setti...

Farming as the main production activity in Village. But at some of the non-farm production activities. Only 25 per cent of the people working in Village are engaged in activities other than agriculture. Dairy — the other common activity Dairy is a common activity in many families of Village. People feed their buffalos on various kinds of grass and the jowar and bajra that grows during the rainy season. The milk is sold in Raiganj, the nearby large village. Two traders from Shahpur town have set up collection cum chilling centres at Raiganj from where the milk is transported to far away towns and cities. Small-scale manufacturing in Village At present, less than fifty people are engaged in manufacturing in Village. Unlike the manufacturing that takes place in the big factories in the towns and cities, manufacturing in Village involves very simple production methods and are done on a small scale. They are carried out mostly at home or in the fields with the help of family labour. Rarely...

  Another way of classifying economic activities into sectors could be on the basis of who owns assets and is responsible for the delivery of services. In the public sector, the government owns most of the assets and provides all the services. In the private sector, ownership of assets and delivery of services is in the hands of private individuals or companies. Railways or post office is an example of the public sector whereas companies like Tata Iron and Steel Company Limited (TISCO) or Reliance Industries Limited (RIL) are privately owned. Activities in the private sector are guided by the motive to earn profits. To get such services we have to pay money to these individuals and companies. The purpose of the public sector is not just to earn profits. Governments raise money through taxes and other ways to meet expenses on the services rendered by it. Modern day governments spend on a whole range of activities. the private sector will not provide at a reasonable cost Some of these...

Let us examine another way of classifying activities in the economy. This looks at the way people are employed. Kanta works in the organised sector. Organised sector covers those enterprises or places of work where the terms of employment are regular and therefore, people have assured work. They are registered by the government and have to follow its rules and regulations which are given in various laws such as the Factories Act, Minimum Wages Act, Payment of Gratuity Act, Shops and Establishments Act etc. It is called organised because it has some formal processes and procedures. Some of these people may not be employed by anyone but may work on their own but they too have to register themselves with the government and follow the rules and regulations Workers in the organised sector enjoy security of employment. They are expected to work only a fixed number of hours. If they work more, they have to be paid overtime by the employer. They also get several other benefits from the employ...

From the above discussion, we can see that there continues to be considerable underemployment in agriculture. There are also people who are not employed at all. In what ways can one increase employment for people. Let us look at some of them. In the case of Farmer with her two-hectare plot of un-irrigated land. The government can spend some money or banks can provide a loan, to construct a well for her family to irrigate the land. Farmer will then be able to irrigate her land and take a second crop, wheat, during the rabi season. Let us suppose that one hectare of wheat can provide employment to two people for 50 days (including sowing, watering, fertilizer application and harvesting). So, two more members of the family can be employed in her own field. Now suppose a new dam is constructed and canals are dug to irrigate many such farms. This could lead to a lot of employment generation within the agricultural sector itself reducing the problem of underemployment. Now, suppose Farmer a...

Rising Importance of the Tertiary Sector in Production: Over the thirty years between 1973 and 2003, while production in all the three sectors has increased, it has increased the most in the tertiary sector. As a result, in the year 2003, the tertiary sector has emerged as the largest producing sector in India replacing the primary sector The tertiary sector becoming so important in India beacause there could be several reasons. First, in any country several services such as hospitals, educational institutions, post and telegraph services, police stations, courts, village administrative offices, municipal corporations, defence, transport, banks, insurance companies, etc. are required. These can be considered as basic services . In a developing country the government has to take responsibility for the provision of these services Second, the development of agriculture and industry leads to the development of services such as transport, trade, storage and the like, as we have already seen...

Generally, it has been noted from the histories of many, now developed, countries that at initial stages of development, primary sector was the most important sector of economic activity As the methods of farming changed and agriculture sector began to prosper, it produced much more food than before. Many people could now take up other activities. There were increasing number of craft-persons and traders. Buying and selling activities increased many times. Besides, there were also transporters, administrators, army etc. However, at this stage, most of the goods produced were natural products from the primary sector and most people were also employed in this sector. Over a long time (more than hundred years), and especially because new methods of manufacturing were introduced, factories came up and started expanding. Those people who had earlier worked on farms now began to work in factories in large numbers. People began to use many more goods that were produced in factories at cheap r...

The various production activities in the primary, secondary and tertiary sectors produce a very large number of goods and services. Also, the three sectors have a large number of people working in them to produce these goods and services. The next step, therefore, is to see how much goods and services are produced and how many people work in each sector. In an economy there could be one or more sectors which are dominant in terms of total production and employment, while other sectors are relatively small in size. How do we count the various goods and services and know the total production in each sector? With so many thousands of goods and services produced, you might think this is an impossible task! Not only would the task be enormous, you might also wonder how we can add up cars and computers and nails and furniture. It won’t make sense!!! You are right in thinking so. To get around this problem, economists suggest that the values of goods and services should be used rather than ad...

The people are engaged in various economic activities. Some of these are activities producing goods. Some others are producing services. These activities are happening around us every minute even as we speak. One way of doing this is to group them (classify them) using some important criterion. These groups are also called sectors There are many activities that are undertaken by directly using natural resources . Take, for example, the cultivation of cotton. It takes place within a crop season. For the growth of the cotton plant, we depend mainly, but not entirely, on natural factors like rainfall, sunshine and climate. The product of this activity, cotton, is a natural product. Similarly, in the case of an activity like dairy, we are dependent on the biological process of the animals and availability of fodder etc. The product here, milk, also is a natural product. Similarly, minerals and ores are also natural products. When we produce a good by exploiting natural resources, it is an ...

Compare this with the rich urban households. Only 10 per cent of their loans are from informal sources, while 90 per cent are from formal sources. A similar pattern is also found in rural areas. The rich households are availing cheap credit from formal lenders whereas the poor households have to pay a large amount for borrowing. First, the formal sector still meets only about half of the total credit needs of the rural people. The remaining credit needs are met from informal sources Most loans from informal lenders carry a very high interest rate and do little to increase the income of the borrowers. Thus, it is necessary banks and cooperatives increase their lending particularly in the rural areas, so that the dependence on informal sources of credit reduces. Secondly, while formal sector loans need to expand, it is also necessary that everyone receives these loans. At present, it is the richer households who receive formal credit whereas the poor have to depend on the informal source...

Every loan agreement specifies an interest rate which the borrower must pay to the lender along with the repayment of the principal. In addition, lenders may demand collateral (security) against loans. Collateral is an asset that the borrower owns (such as land, building, vehicle, live stocks, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid. If the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to obtain payment. Property such as land titles, deposits with banks, livestock are some common examples of collateral used for borrowing Interest rate, collateral and documentation requirement, and the mode of repayment together comprise what is called the terms of credit. The terms of credit vary substantially from one credit arrangement to another. They may vary depending on the nature of the lender and the borrower. The next section will provide examples of the varying terms of credit in different credit arran...

There is an interesting mechanism at work here. Banks keep only a small proportion of their deposits as cash with themselves. For example, banks in India these days hold about 15 per cent of their deposits as cash. This is kept as provision to pay the depositors who might come to withdraw money from the bank on any given day. Since, on any particular day, only some of its many depositors come to withdraw cash, the bank is able to manage with this cash. Banks use the major portion of the deposits to extend loans. There is a huge demand for loans for various economic activities. We shall read more about this in the following sections. Banks make use of the deposits to meet the loan requirements of the people. In this way, banks mediate between those who have surplus funds (the depositors) and those who are in need of these funds (the borrowers). Banks charge a higher interest rate on loans than what they offer on deposits. The difference between what is charged from borrowers and what is...

We have seen that money is something that can act as a medium of exchange in transactions. Before the introduction of coins, a variety of objects was used as money. For example, since the very early ages, Indians used grains and cattle as money. Thereafter came the use of metallic coins — gold, silver, copper coins — a phase which continued well into the last century. Currency Modern forms of money include currency — paper notes and coins. Unlike the things that were used as money earlier, modern currency is not made of precious metal such as gold, silver and copper. And unlike grain and cattle, they are neither of everyday use. The modern currency is without any use of its own. Then,It is accepted as a medium of exchange because the currency is authorised by the government of the country In India, the Reserve Bank of India issues currency notes on behalf of the central government. As per Indian law, no other individual or organisation is allowed to issue currency. Moreover, the law le...

MONEY AS A MEDIUM OF EXCHANGE The use of money spans a very large part of our everyday life. Look around you and you would easily be able to identify several transactions involving money in any single day. In many of these transactions, goods are being bought and sold with the use of money. In some of these transactions, services are being exchanged with money. For some, there might not be any actual transfer of money taking place now but a promise to pay money later. transactions are made in money The reason is simple A person holding money can easily exchange it for any commodity or service that he or she might want. Thus everyone prefers to receive payments in money and then exchange the money for things that they want. Take the case of a shoe manufacturer. He wants to sell shoes in the market and buy wheat. The shoe manufacturer will first exchange shoes that he has produced for money, and then exchange the money for wheat. Imagine how much more difficult it would be if the shoe ma...

The above evidence indicates that not everyone has benefited from globalisation. People with education, skill and wealth have made the best use of the new opportunities. On the other hand, there are many people who have not shared the benefits. Since globalisation is now a reality, the question is how to make globalisation more ‘fair’. Fair globalisation would create opportunities for all, and also ensure that the benefits of globalisation are shared better. The government can play a major role in making this possible. Its policies must protect the interests, not only of the rich and the powerful, but all the people in the country. You have read about some of the possible steps that the government can take. For instance, the government can ensure that labour laws are properly implemented and the workers get their rights. It can support small producers to improve their performance till the time they become strong enough to compete. If necessary, the government can use trade and investme...

We have seen that the liberalisation of foreign trade and investment in India was supported by some very powerful international organisations. These organisations say that all barriers to foreign trade and investment are harmful. There should be no barriers. Trade between countries should be ‘free’. All countries in the world should liberalise their policies. World Trade Organisation (WTO) is one such organisation whose aim is to liberalise international trade. Started at the initiative of the developed countries, WTO establishes rules regarding international trade, and sees that these rules are obeyed. Nearly 160 countries of the world are currently members of the WTO (as on June 2014). Though WTO is supposed to allow free trade for all, in practice, it is seen that the developed countries have unfairly retained trade barriers. On the other hand, WTO rules have forced the developing countries to remove trade barriers. An example of this is the current debate on trade in agricultural p...

Let us return to the example of imports of Chinese toys in India. Suppose the Indian  government  puts a tax  on import of toys. Those who wish to import these toys would have to pay  tax  on  this. Because of the tax, buyers will have to pay a higher price on imported toys. Chinese  toys  will  no  longer  be  as cheap in the Indian markets and imports from China will automatically reduce. Indian toy-makers will prosper. Tax on imports is an example of trade barrier . It is called a barrier because some restriction has been set up. Governments  can  use  trade barriers  to  increase  or  decrease (regulate) foreign trade and to decide what kinds of goods and how much of each, should come into the country. The  Indian  government,  after Independence, had put barriers to foreign trade and foreign investment. This  was  considered  necessary  to protect  the  producers  within  the country from foreign competition. Industries were just coming up in the 1950s and 1960s, and competition f...

In the past two to three decades, more and more MNCs have been looking for locations around the world which would be cheap for their production. Foreign investment by MNCs in these countries has been rising. At the same time, foreign trade between countries has been rising rapidly. A large part of the foreign trade is also controlled by MNCs. For instance, the car manufacturing plant of Ford Motors in India not only produces cars for the Indian markets, it also exports cars to other developing countries and exports car components for its many factories around the world. Likewise, activities of most MNCs involve substantial trade in goods and also services The result of greater foreign investment and greater foreign trade has been greater integration of production and markets across countries. Globalization is this process of rapid integration or interconnection between countries. MNCs are playing a major role in the globalisation process. More and more goods and services, investments a...

In general, MNCs set up production where it is close to the markets; where there is skilled and unskilled labour available at low costs; and where the availability of other factors of production is assured. In addition, MNCs might look for government policies that look after their interests. Having assured themselves of these conditions, MNCs set up factories and offices for production. The money that is spent to buy assets such as land, building, machines and other equipment is called investment. Investment made by MNCs is called foreign investment. Any investment is made with the hope that these assets will earn profits. At times, MNCs set up production jointly with some of the local companies of these countries. The benefit to the local company of such joint production is two-fold. First, MNCs can provide money for additional investments, like buying new machines for faster production. Second, MNCs might bring with them the latest technology for production But the most common route ...