RUVNUL General Knowledge and Everyday Science : Economics

Overview of Indian Economy:

Indian Economy is the third fastest growing economy in the world after China and the United States of India. The GDP of India is 9.4Trillion US$ after China which has a GDP of 23 Trillion US$ and the USA which has a GDP of 19.3 Trillion US$.

India has a population of around 125 crore people and around 55% of the population of the country and around 45% of the land area of India is engaged in agriculture and agriculture-related activities however the share of agriculture in the GDP of India is only 17%.

Poverty in India is widespread and according to the latest report by Mr. C Ranjarajan around 22% of the population of India lives below the poverty line and according to the International Poverty Line by the World Bank around 24 % of the population of India lives below the poverty line.

The rank of India in the Per Capita Income is 140th and it is 1852US$ per person per year The labor force of India is around 52 crores which is the second-largest workforce in the world after China. The rate of Unemployment in India is around 5%.

Socialist Economy:

Socialist means the system under which the economic system is controlled and regulated by the government so as to ensure welfare and equal opportunity to the people in a society.

Capitalist Economy:

It is one of the oldest economic systems and its origin is in the time of mid-eighteenth century in England in the wake of the Industrial Revolution. It is that system, where means of production are owned by private individuals, profit is the main motive and there is no interference by the government in the economic activities of the economy. Hence, it is known as a free-market economy.

There are three major sectors of the Indian Economy

1. Primary Sector- It consists of agriculture and agriculture-related activities it consists of 55% of the population and it contributes 17% of the total GDP of India
2. Secondary Sector- It consists of manufacturing and industries it consists of 25% of the population and it contributes 28% of the total GDP of India
3. Tertiary Sector/ Service Sector- It consists of business, transport, service, banking, IT, Insurance etc. it consists of 20% of the population and it contributes 55% of the total GDP of India.

Budget & Taxation:

The term Budget was used for the first time by the British Economist James Wilson in the year 1860

The Budget is the annual financial statement of any country for one financial year in India it is between 1st April to 31st March

The Budget is mentioned under article 112 of the Constitution of India.

Expenditures

It is the money which the government spends in one financial year from the revenues earns by the government in one financial year

The government of India spends money in two ways

1. Planned Expenditure
2. Non-Planned Expenditure

Types of Budget:

Balance Budget:

It is the type of Budget in which the revenues and the expenditure are both the same. It is the type of budget which is most common in the developed countries.

Surplus Budget:

It is the type of Budget in which the revenues are greater than the expenditures. This type of budget is most common in underdeveloped countries.

Deficit Budget:

It is the type of Budget in which the expenditure is more than the revenues. This type of Budget is most common in developing countries.

Fiscal Deficit:

Fiscal Deficit= Revenue Deficit + Borrowings +Interest Payments.

Primary Deficit

Primary Deficit= Fiscal Deficit- Interest Payments.