ECONOMY CRUX COLOR CODED NOTES FOR UPSC PRELIMS| IAS MAIN

• Mixed economy and socialist pattern
• Protection→ cottage and small-scale industries
• Industrial classification- four categories–

• • • Industries with exclusive central govt monopoly
    • Mixed sector
    • Controlled private sector
    • Industries under private sector

• The advent of ‘license raj’
• Three major controls– Licensing, allocation of raw materials to undertakings based on sanctioned output and control over the prices

• Based on the Mahalanobis model; emphasis→ heavy industries; focus on the backward region
• Establishment of ITIs; recognized→ significance→ foreign capital
• 3-fold classification–

• • • Schedule A (strictly under Centre)
    • Schedule B (both public & private sector)
    • Schedule C (open to private sector with licensing)

• Identified six core industries– iron & steel industry, cement, coal, crude oil, oil refinery and electricity; emphasis on joint sector
• Foreign Exchange Regulation Act (FERA), 1973 enacted; allowed limited investment by MNCs

• Focused → small-scale and tiny industries
• Interaction between the industrial and agricultural sector
• Emphasis→ village industries, the resurrection of khadi etc.

• Public sector→ entrusted→ task to raise pillar of economic infrastructure→ reasons→ greater reliability, the requirement of large investments and longer gestation period of projects
• Many industries→ relaxation from licensing
• Focus shift→ competition in the domestic market, technological upgradation
• Foundation for export-based industry

• Protection to local industries
• Promotion of import substitution policy
• Control over industries through licensing and regulations
• Restrictions on foreign capital
• Encouragement to cottage and small-scale industries
• More emphasis on public sector industries and control

• Emphasis shifts from regulation to development
• Industrial De-licensing; industries reserved for public sector reduced
• Foreign investment promoted; Foreign Technology Agreements
• Amendment in MRTP Act; Dilution of protections of small-scale industries
• Closure of sick public sector enterprises
• Reforms through LPG- Liberalisation, Privatisation and Globalisation

• Distillation & brewing of alcoholic drinks
• Cigars & cigarettes of tobacco and manufactured tobacco substitutes
• Electronics & aerospace and defense equipment
• Industrial explosives including matchboxes
• Specific hazardous chemicals such as Hydrocyanic acid, Phosgene, Isocyanates etc.

• Atomic energy
• Railway operations

• An important instrument of National Manufacturing Policy, 2011
• Large areas of developed land with the requisite ecosystem for promoting world-class manufacturing activity; Integrated Industrial Township; different from SEZs
• Land- 5000 Ha; at least 30% area of land→ manufacturing units
• Special Purpose Vehicles; Centre’s support→ max. 20%
• External infrastructural linkages by Central govt like roads etc.
• 3 NIMZ finally approved– Prakasam (Andhra Pradesh), Sangareddy (Telangana) and Kalinganagar (Odisha).

• Launched in 2014
• Four pillars to boost entrepreneurship- New process, New infrastructure (industrial corridors, smart cities etc.), New sectors (identified 25 sectors), and New mindset.
• Measures taken so far-

• • • India Aspiration Fund– under SIDBI for Venture Capital Financing
    • SIDBI Make in India Loan for Small Enterprises (SMILE)
    • Micro Units Development and Refinance Agency (MUDRA) 

1. (1800 onwards)-

• Powered by coal, iron machines and factories, railways steamships and telegraph

1. (1900 onwards)-

• Powered by electricity, oil, motor vehicles, planes, telephone, TV, Cinema and Radio

1. (1980 onwards)-

• Electric and hydrogen-powered vehicles, drones, flexible robots, 3D printers and nanotechnology

1. (from 2016 WEF’s- Davos Summit onwards)-

• Computerization of Industrial revolution 3.0 using AI, IoT, cloud computing; automation of manufacturing processes

Tools to measure the performance of Industries-

• Published by NSO every month; base year– 2011-12
• Statistical measure of industrial performance
• Measures short-term changes in the volume of production of a basket of industrial products;
• IIP General– Mining (14.2%), Manufacturing (75.5%) and Electricity (10.3%)
• IIP Use-based– Primary Goods (34.1%), Intermediate Goods (17.2%), Capital Goods (8.2%), Infrastructure Goods (12.3%), Consumer Goods (12.8%), Consumer non-durables (15.3%)

• By Office of Economic Advisor; base year– 2011-12; eight core industries have combined weight of 40.3% in IIP
• Sectors– Coal (10.3%), Crude Oil (8.9%), Natural Gas (6.8%), Refinery Products (28%), Fertilizers (2.6%), Steel (17.9%), Cement (5.4%), Electricity (19.9%) 

• Related to organised manufacturing sector; published by CSO; data collected as per Collection of Statistics Act, 2008
• ASI covers– All the factories registered under Section 2(m)(i) and 2(m)(ii) of Factories Act 1948, Units with 100+ employees, Registered Bidi and Cigar manufacturing units and all electricity undertakings
• Does not cover– defence establishment, oil storage & distribution depots, departmental units (railway workshops, government mints, sanitary, water supply etc.)
• Important indicators generated on ASI are- number of factories, production, employment, wages, invested capital, capital formation, input/ output and value added on annual basis

• Published by Japanese firm Nikkei but compiled and constructed by Market Economics, HSBC
• Indicator of economic health, business momentum and investor sentiments
• A reading above 50 points indicate expansion while below 50 points indicate contraction of economic activities
• 5 major indicators used– new orders, inventory levels, production, supplier deliveries and the employment environment

Current Account– transactions are single time and one way transactions

Capital account– transactions are two way and multiple transactions. 

Errors and Omission– the difference between debit and credit entries of all transactions.

Balance of Payment = Current Account Balance + Capital Account Balance + Errors and Omission. 

Reserves– It means foreign exchange reserve. It consists of Foreign Currency Assets, Gold Stock of RBI, SDR (Special Drawing Rights), Reserve Trance

Accommodative Transactions– transactions that take place to cover deficit (or surplus) arising from autonomous transactions. 

Autonomous Transactions–transactions that take place for economic motives like earning income and profit maximization. 

Import cover–  reserves is a traditional trade-based indicator of reserve adequacy. 

Depreciation–fall in the external value of domestic currency because of additional demand for foreign currency or excess supply of domestic currency

Appreciation–increase in the external value of domestic currency because of additional demand for home currency or excess supply of foreign currency 

Devaluation–Reduction in the external value of home currency. 

Revaluation–Increase in the external value of home currency.

Liberalized Remittance Scheme– facility provided by the RBI for all resident individuals to freely remit up to a certain amount in terms of US Dollar for current and capital account purposes or a combination of both.

Non-Tariff Barriers–instruments and executive operations that obstruct free flow of trade other than tariff. Various forms are Quota, Production Subsidies, Export Subsidies, Health, Sanitary and Safety Regulations, Packaging Requirements

Channel to receive cross-border remittances from overseas jurisdictions.
Way of transferring personal remittances from abroad to beneficiaries in India.