Ramesh Singh : Miscellaneous - 4 - UPSC MCQ

• Interest on External Loans: the net outcome on the front of the interest payments, i.e., the balance of inflow (on the money lent out by the economy) and outflow (on the money borrowed by the economy) of external interests. In India's case, it has always been negative as the economy has been a 'net borrower' from the world economies.

• External Grants: the net outcome of the external grants i.e., the balance of such grants which flow to and from India. Today, India offers more such grants than it receives.

• When we divide NNP (Net National Product) by the total population of a nation we get the 'per capita income' (PCI) of that nation, i.e., ‘income per head per year'.

• A very basic point should be noted here that this is the point where the rates of depreciation followed by different nations make a difference.

• Higher the rates of depreciation lower the PCI of the nation (whatever be the reason for it logical or artificial as in the case of depreciation being used as a tool of policy making).

• However, if the national income is being derived at ‘market cost, the indirect taxes do not need to be deducted from it.

• In this case, the government does not have to add their income accruing from indirect taxes to the national income.

• It means that the confusion in the case of national income accounting at factor cost is only related to indirect taxes.

• Affective happiness captures the day-to-day joy of friendship, time with family and sex, or the downsides of long work commutes and sessions with one's boss.

• Evaluative happiness measures very different dimensions of life, those that lead to overall satisfaction or frustration with one's place in society.

• The thinking of becoming happier by becoming richer is challenged by the law of diminishing marginal utility of income")—after a certain point, the gains are very small.

• This means that poor people benefit far more than rich people from an added dollar of income. This is a good reason why tax-and-transfer systems among high-income OECD countries.

• Looking at the resources available, agriculture would have been the obvious choice as the prime moving force (PMF) of the economy (i.e., cultivable land and human power).

• But as Indian Agriculture was using traditional tools and technology its modernisation, as well as future mechanisation (later to some extent), would have been blocked due to the lack of indigenous industrial support.

• By choosing industry as the prime moving force, India opted to industrialise the economy as well as modernise the traditional mode of farming.

• The industrialisation of India was also neglected by the colonisers—the infrastructure was not built to industrialise India but to exploit its raw materials.

• Indian capitalists who did emerge were highly dependent on British commercial capital and many sectors of the industry were dominated by British firms, e.g., shipping, banking, insurance, coal, plantation crops and jute.

(i) Economy will be able to achieve food security with an increase in agricultural production. Besides, the agricultural surplus will generate exports in the globalising world economy benefiting out of the WTO regime.

(ii) The challenge of poverty alleviation will be solved to a great extent as the emphasis will make agriculture a higher income-generating occupation and induce growth in the rural economy by generating more gainful employment.

(iii) The situation of India as an example of ‘market failure' will cease.