Introduction to Economics

National Income

Economic Growth and Development

Economic Planning in India

Money and Banking

Inflation

Public Finance

India’s Balance of Payments

India’s Foreign Trade

Demographic Profile of India

Agriculture

Indian Industry

Services Sector

Infrastructure

Poverty and Unemployment

Government Schemes and Programmes

International Financial and Economic Organisation

Infrastructure is the set of basic facilities that help an economy to function & grow such
as energy, irrigation, roads, railway & telecommunication.

• Infrastructure is the ‘lifeline’ of an economy as protein is the lifeline of the human

body. Whichever sector be the prime moving force of an economy, i.e., primary,
secondary or tertiary, suitable level of infrastructure presence is a pre- requisite for
growth and development.
• This is why the Government in India has always given priority to the developmental
aspects of the sector. But the level of preparedness and performance had been
always less than required by the economy.
• Infrastructure provides supporting services in the main areas of industrial and
agricultural production, domestic and foreign trade and commerce. These services
include roads, railways, ports, airports, dams, power stations, oil and gas pipelines,
telecommunication facilities, the country’s educational system including schools and
colleges, health system including hospitals, sanitary system including clean drinking
water facilities and the monetary system including banks, insurance and other
financial institutions. Some of these facilities have a direct impact on production of
goods and services while others give indirect support by building the social sector of
the economy.
• Basically, the goods and services usually requiring higher investment, considered
essential for the proper functioning of an economy is called the infrastructure of an
economy. Such sector might be as many as required by a particular economy such as
power, transportation, communication, water supply, sewerage, housing, urban
amenities, etc.
• Since, infrastructure benefits the whole economy, it has been often argued by the
economists that the sector should be funded by the government by means of
taxation, partly not wholly.
• Indian infrastructure sector is clearly overstrained and has suffered from
underinvestment in the post-reforms period.
• Infrastructure bottlenecks are always constraint in achieving a higher growth for the
economy. India needs massive investment, both from the public and private sectors, to
overcome infrastructure bottlenecks.
• Investments by the public and private sectors are not alternatives, but complimentary
to each other as the required investment is very high.
• Public investment in the sector depends upon the ability to raise resources (capital) in
the public sector and this in turn depends upon the ability to collect the user
charges from the consumers.
Infrastructure sector has following characteristics:

• Sometimes a natural monopoly g. Railways (and once upon a time even

aviation and telecom sector in India).
• Sunk costs are high. It’s the investment that cannot be recovered even
when the firm go out of business. e.g. If airport closed down, airstrip’s
asphalt will have little or no resale value because very bulky to dig-off and
transport.
• ‘Output’ is often Non-Tradable. e.g. A road / bridge / airport constructed at
one place cannot be ‘transferred’ to another place unlike a box of carrots.
• Sometimes in tangible in nature g.we can’t touch spect rumor electricity.
• Consumption is often ‘Non-Rival’ in nature e.g. One person using a road or
street light it doesn’t make that product ‘unavailable’ for others.
• Price Exclusion is often difficult. A rural road or street light can’t be ‘denied’
to a person who is not paying taxes or user-fees. (whereas if a person
cannot afford iPhone then he is excluded from buying it.)
• Usually creates positive externality: e.g. new railway station / airport →
that much more business for taxis & hotel owners in the surrounding area.
Benefits of getting “Infrastructure Status” to any sector:

• Govt could give them tax benefits, lease public land at a token price, faster
environment clearance, automatic FDI approval
• RBI could help them by relaxing the External Commercial Borrowing (ECB) norms,
Debt restructuring (e.g. RBI’s 5/25 rule), Changing PSL norms etc.
• SEBI could relax norms for REITS/InvITs funds to help them mobilize capital easily
for the infrastructure sector.
• IRDAI & PFRDA could oblige insurance and pension companies to invest minimum % in
infrastructure companies etc.
• They could get easier funding from World bank & other multilateral banks.

Relation Between Infrastructure & Economic Development:

• Increase in investment: The development of agriculture to a considerable extent

depends on development of irrigation, power credit, transportation, marketing,
education and training, research and development and other facilities.
• Industrial development: It also depends on a sound infrastructure base to a large
extent.
• Employment generation: Infrastructure improves mobility, productivity and efficiency
of labour.
• Trade & commerce: Infrastructure facilities play a vital role in the development of
trade and commerce. In fact they act as a platform for the expansion of trade and
other commercial activities at a rapid speed.
• Thus, infrastructure development can have a significant impact on economic growth.
For low income countries, basic infrastructure such as water, irrigation and to lesser
extent transport are important. As the economies mature into middle-income category,
the share of power and transport and telecommunications in infrastructure and
investment increases.
• Also, infrastructure not only contributes towards the development of backward
regions and removal of regional imbalance but also acts as an instrument of social
change. Extensive studies undertaken by the World Bank show that 1% increase in
investment in the stock of infrastructure leads to a corresponding 1% increase in the
GDP of a nation.

Basic industries are industries which supply their products to

manufacture other goods. Examples: Iron and steel, copper, aluminium,
chemical etc.

Goods that are used in producing other

Capital goods industries goods e.g. textile machinery, conveyor belts,
mining equipment etc.
Producing large and heavy products e.g. Ship
Heavy industries building, bulldozers, industrial machinery,
electric transformers etc.
PM Gati Shakti– National Master Plan for Multi Modal connectivity to various Economic Zones

PM GatiShakti National Master Plan (PMGS-NMP) was launched on 13th October 2021 for providing
multimodal connectivity infrastructure to various economic zones. Cabinet Committee on Economic
Affairs (CCEA) accorded approval for the implementation of PM GatiShakti National Master Plan on 21st
October 2021.

PM GatiShakti is a transformative approach for economic growth and sustainable development. The
approach is driven by 7 engines, namely:

1 Railways
2 Roads
3 Ports
4 Waterways
5 Airports
6 Mass Transport
7 Logistics Infrastructure
All 7 engines will pull forward the economy in unison. These engines are supported by the
complementary roles of Energy Transmission, IT Communication, Bulk Water & Sewerage, and Social
Infrastructure. The approach is powered by Clean Energy and Sabka Prayas – the efforts of the
Central Government, the state governments, and the private sector together – leading to huge job and
entrepreneurial opportunities for all, especially the youth.

The scope of PM GatiShakti National Master Plan will encompass the 7 engines for economic
transformation, seamless multimodal connectivity and logistics efficiency. It will also include the
infrastructure developed by the State Governments, as per the GatiShakti Master Plan. The focus will
be on planning, financing including through innovative ways, use of technology and speedier
implementation.

The projects pertaining to these 7 engines in the “National Infrastructure Pipeline” will be aligned with
PM GatiShakti framework. The touchstone of the Master Plan will be world-class modern
infrastructure and logistics synergy among different modes of movement – both of people and goods –
and location of projects. This will help raise productivity and accelerate economic growth and
development.

The plan has been developed as a Digital Master Planning tool by BISAG-N (Bhaskaracharya National
Institute for Space Applications and Geoinformatics) and has been prepared in dynamic Geographic
Information System (GIS) platform wherein data on specific action plan of all the Ministries/
Departments have been incorporated within a comprehensive database. Dynamic mapping of all
infrastructure projects with real- time updation will be provided by way of a map developed by
BISAG-N. The map will be built on open-source technologies and hosted securely on MEGHRAJ i.e.
cloud of Govt. of India. It will use satellite imagery available from ISRO and base maps from Survey of
India. The comprehensive database of the ongoing & future projects of various Ministries has been
integrated with 200+ GIS layers thereby facilitating planning, designing and execution of the
infrastructure projects with a common vision.

The digital system is a software where individual Ministries will be given separate user identification
(login ids) to update their data on a periodic basis. The data of all the individual Ministries will be
integrated in one platform which will be available for planning, review and monitoring. The Logistics
Division, Ministry of Commerce & Industry (MOCI) will further assist all the stakeholders through
BISAG-N for creating and updating their required layers in the system and update their database
through Application Programming Interface (APIs).
 There has been a persistent deficit budget year after year. Which of the
following actions can be taken by the government to reduce the deficit?
1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalising subsidies
4. Expanding industries

Select the correct answer using the codes given below:

(a) 1 and 3 (b) 2 and 3 (c) Only 1 (d) 1, 2, 3 and 4
Ans d

Oil shale is obtained from

(a) coal bed methane
(b) metamorphic rocks containing clathrate hydrates
(c) sedimentary rocks containing kerogen
(d) coastal regions
Ans c

Component(s) of the National Urban Housing Mission is/are

(a) Affordable Housing through Credit Linked Susidy Scheme
(b) Redevelopment plan of slums
(c) Affordable housing in partnership with private and public sector
(d) All of the above
Ans d

Poverty in less developed countries is largely due to

(a) lack of cultural activities
(b) voluntary idleness
(c) income Inequality
(d) lack of the intelligence of the people
Ans c

Which of the following is used for the measurement of distribution of income?

(a) Laffer Curve (b) Engel’s Law (c) Gini-Lorenz Curve (d) Philip Curve
Ans c