Economic Infrastructure --Imp topic in II PU Economics

Economic Infrastructure And Trade

It refers to activities, facilities & the services which support operators & development of other sector in the economy.

Types of Infrastructure:

a)    Social Infrastructure: It is concerned with supply of such services to meet the basic needs of society such as education, training, health, sanitation, etc.

b)    Physical Infrastructure: Are directly concerned with the needs of production sectors, such as agriculture, industry, etc.

Importance of Infrastructure:

1.    Infrastructure facilities the smooth functioning of an economy. Without which the economy cannot function smoothly.

2.    The development of agriculture to a greater extent, adequate expansion & development of irrigation, power, marketing, training, research & development & other facilities.

3.    Industrial production requires not only machinery & equipment, but also social & economic infrastructures. Like energy, skilled man power, banking, marketing, insurance, management, etc.

4.    Infrastructure development is a precondition for increasing investment with a sound infrastructural base capital investment can be attracted.

5.    It generates employment opportunities. They improve mobility, productivity & efficiency of labour.

6.    Infrastructure development plays a significant role in the generation of employment opportunities. They improve mobility, productivity & efficiency of labour, large investment, development of industry, agriculture, etc.

7.    Development of backward regions & imbalances is another significance of infrastructural facilities. In the absence of infrastructural facilities In the backward region, may likely to act as a severe constraint on the economic development of these region.

8.    It may also act as an instrument of social change. Development of industry , transport facilities, education, service & technology, growth of towns & cities, etc. may change the outlook of people.

9.    A close link b/w infrastructure spending & GDP growth has been established. Studies have revealed that 1% growth in the infrastructure stock is associated with 1% growth in per capita GDP.

Importance of Transport in India Economy:

1.    Development of Market: Transport is a most for the development & expansion of market. In India transport helps & facilitates the development of regional, national & international markets for goods & services.

2.    Large – Scale Production: Development of transport enables large-scale production with the development & expansion of market, demand is created for various produced goods. This helps to solve the problem of demand for goods.

3.    Territorial Division of Labour: Transport results in territorial division of labour. Transport helps the region to gain specialization in those goods & services in which conditions are favourable for production.

4.    Price Stability: Price fluctuations are common in a big country like India. Transport helps in stabilization of prices.

5.    Mobility of Labour & Capital: The movement of labour & capital from one use to another is possible by means of transport. This helps effective & efficient use of labour & capital.

6.    Growth of town & Cities: Transport helps faster growth of town & cities. It also removes ignorance of people, makes them move civilised & reduces dependence on agriculture.

7.    Employment Generation: Transport enables employment opportunities. It provides employment to lakhs of people both directly & indirectly.

8.    National Defence: Transport plays a major role in national defence. It helps in the transportation of soldiers & war equipments, medicine & food during ware & emergency.

9.    Unity: India is a country with people of different religious, caste, language helps to bring together people through efficient communication. It helps protect unity of the country.

10. Development of Agriculture & Industry: Transport provides help to the development of agriculture & industry. It helps transport of raw materials & equipments to industries, inputs to agriculture & also assist expansion of market for industrial & agricultural goods.

11. Social Change: Transport brings about social change. It established communication among people of various regions & makes them to live in a co-ordination manner. It also brings about changes in the attitude of the people by helping the growth of towns & cities.

12. Breaking the Isolation: In a country like India transport links b/w the different regions & the people of different regions, which has actually removed isolation. In short, transport has reduced the vastness of the country.

13. Revenue to Govt.

14. Place & Time Utility.

15. Development of Trade.

16. Solution to Population Problems.

17. Efficient use of resources.

18. Balance Regional Development.

19. Meeting Emergencies.

20. Efficient Administration.

Merits & Demerits of Road Transportation------

Classification of Roads.

In 1943, Nagpur plan has classified roads into four, they are:

1.    National Highways: They connect the national capital with state capital & important cities. The construction & maintainence of these roads is the responsibility of central Govt. At present India the total length of national highways is 65,569 km.

2.    State Highways: They connect important state, cities, district & national highways. The construction & maintainence of these roads is the responsibility of the state govt. It covers about 1, 31,899 km.

3.    District Roads: Connect Taluk Centers, important place, state highways & national highways. The construction & maintainence of those roads is left to the local bodies. It covers a total length of about 4, 67,763 km. (March 2004).

4.    Village Roads: They are the roads that connect Taluk centers with different villages, they are namely Kutcha roads. It covers a total length of 26, 50,000 km.

Development of Road Transport:

1.    Nagpur Plan: In 1943 the chief engineers of all the states met in Nagpur & prepared a 10 year development plan for road transport. This is popularly known as Nagpur plan. This plan divided the roads into four, they are:

a)    National highways

b)    State highways

c)    District roads and

d)    Village roads.

2.    ----------------------------------------------------------------------------------------------------------------------------------------------------.

20 year plan for the development of rural transport.

3.    Bombay Plan: In 1961-81, the engineers of all central & state govt. met in Bombay in 1957 & prepared a plan for a 20 year road development plan.

4.    Lucknow Plan: This plan was made by the central Govt. for 20 yrs. For the long term development of roads in India.

Development of Railway Transport:

The development & expansion of railway transport has brought about revolution in transport systems throughout the world, the construction of railways in India was started in 1844. The 1^st railway train in India has covered a distance of 34 km. b/w Bombay to Thane in 1853.

Importance of Railways in India:

1.    Development of Agriculture: The railways helps the movement of food crops from the producing centers to cities & towns & as well supports agriculture by transporting the required inputs for agriculture.

2.    Development of Train: Railway transport helps to expand trade by means of establishing markets & the distribution of goods & services to all the regions of a country.

3.    Development of Industries: Industries depend largely on railway transport, as it requires heavy & bulky goods & machinery, which have to be transported from a long distance to the industries.

4.    Revenue to the Govt.: Railways brings a large volume of revenue to the Govt. of India.

5.    National Defence: Railways help in the transportation of weapons, soldiers, food & medicine to the soldiers during emergency.

6.    Large scale transport of goods.

7.    Development of tourisms: Railways promoters’ tourism by providing more no. of traffic to the tourism dept.

8.    Railways helps to establish price stability through transportation of various goods & commodities required for the distribution & consumption.

Railway Zones in India

1.    Northern Railways.

2.    North Eastern Railways.

3.    North Eastern Frontier Railways.

4.    Eastern Railway.

5.    South Eastern Railways.

6.    Central Railway.

7.    Western Railway.

8.    Southern Railway.

9.    South Central Railways.

10. East Central Railways.

11. South Western Railways.

12. North Western Railways.

13. North Central Railways.

14. East Cost Railways (Konkan).

15. West Central Railways.

16. \South East Central Railways.

Refer to business notes for water transport merits & demerits & types of ships, and, merits & demerits of Air transport.

Air Transport:

Development of Air Transport in India:

The capacity of air transport in India was tested in 1911 & the real beginning of air transport started in 1929. In 1927 civil aviation department was established. In 1932 the air transport service was extended further to Kanchi, Lahore & Madras. In 1946 air transport licensing board was established to give licenses to private companies. In 1950 air transport enquiry commission was constituted. This commission recommended re-organisation plans for air-transport. In 1953 the Govt. of India nationalized the air transport in India.

Recent Development:

In 1995 the Govt. established the National Airport authority & international airport authority of India. The Govt. has decided to give on private lease of major international airports, namely, Mumbai, Kolkata, Madras & Bangalore & other 24 regional airports are also being upgraded.

International Airports:

1.    Indira Gandhi International Airport / formerly known as Palam International airport in New Delhi.

2.    Jawaharlal Nehru International Airport in Bombay (Formerly known as Santacruz).

3.    Shubash Chandra Bose international airport in Kolkata (Formerlyknown as Dum Dum).

4.    Menambakkam in Chennai.

5.    Trivandrum International Airport in Cochin (kerala).

6.    Bangalore International Airport.

TRADE

Meaning:

The process of buying & selling of goods & services is called trade

Types of Trade:

1.    Internal Trade: It is one which takes place within a motion. It is the trade within the political boundaries of country.

2.    International Trade: It is a trade b/w different nations of the world.

Foreign Trade of India:

Precisely India’s imports & exports constitute its foreign trade. It has an important role in the development of a country. As a developing Nation India has to depend much on foreign trade & thereby avail all the advantages provided by foreign trade. India is importing all the goods required for development & other necessaries. It exports a large varieties of goods as well.

Features of India’s Foreign Trade:

1)    Increase in Volume: The most important feature of India’s foreign trade is the increase in the volume of trade over the years. In 1950-51 the total value of our foreign trade was only Rs.1251 crores. This has increased to Rs. 664869 crores by 2003-04.

2)    Change in Direction of Trade: was a significant change in the direction of India’s foreign trade. Before 1960 UK was the main trading partners & recently India has developed trade links with America, Germany, France, Belgium, Russia, Iraq, Saudi, Kuwait, etc. & others developing Nations of Asia & Africa.

3)    Change in Composition of Trade: Before independence we were exporting primary goods & importing finished goods but after independence we witnessed a considerable change in the composition of our foreign trade. Now we are exporting finished goods & importing capital goods.

4)    Divorsed Exports: Before independence we use to export primary goods. The traditional goods like jute products, cotton & other raw materials. But after independence owing to economic changes & rapid economic development. We started reporting finished goods. These include engineering goods, motor vehicles, ready-made garments, handicraft goods, etc.

5)    Government Intervention: The Govt. involvement is more in international trade & is committed 40 make the best use of the foreign exchange & implemented. The policy of export promotion, import substitution & state trading.

6)    Trade Agreement: The Govt. has entered into bilateral & multi-lateral agreement with various countries or various nations. This agreement we can increase export & imports of essential goods & services & such trades are usually beneficial.

7)    Export Promotion: The Govt. gives encouragement to exports in the form of tax concessions, subsidies, market system, providing resources, publicity, etc.

8)    WTO: India was liberalized its economic system. The foreign trade sector is also liberalized. Globalisation has given much emphasis in 1995 & India joined. The WTO which has come into existence as replacement to GATT.

9)    Deteoriation in Terms of Trade: The most alarming development of India’s foreign trade is the deteoriation in terms of trade. Since 1950-51 to the present day the terms of trade have been subjected to great fluctuations.

Exports and Imports of India:

During Pre-British period (16^th century), Indian merchants were exporting various types of manufactured articles especially of textiles, handicrafts which had world-wide reputation. But after the British role, Indian handicrafts particularly textiles handicrafts could not face competition from British. Machine made textiles & hence India’s export trade was confined only to exportation of raw material.

During the post independence period, India has experienced a change in the composition & -- ------ commodities are also increased in the export list of the country.

Since 1950-51 we see the upward trend in the exports of India, it was Rs.606 crores & it went up to Rs.2, 93,367 crores during 2003-04. The growth of exports has not been uniform over the years. During 1950-51 the exports was 6.8% & it fell to 3.9% in 1965-66. After 1966 it slowly achieved the progress & there after the growth was impressive (2004-05) the exports registered an increase of 25.6% as against 20.3% during 2003-04.

Composition of Exports:

1)    Increase in Manufactured Items: The very important development in the composition of our exports is that the dependence on conventional goods is gradually declining & that of manufactured goods is increasing. The export of Non-conventional goods, chemicals, machines, transport equipment, etc. is on the increase. So the share of manufactured items in our total exports which was 43% in 1960-61 increased to 50% in 1970-71. It further went upto 56% in 1980-81 & during 2003 – 04 it went upto 76%.

2)    Board Based Expansion: There is a great increase in exports of engineering goods, iron & steel, chemicals, sugar, etc. There is also a considerable increase in the exports of cotton textiles leather goods, tobacco, coffee, etc. Today more than 30000 items have been included in the list of exports.

Main Items of Export:

a)    Primary Commodities: Consist of agricultural products, minerals.

b)    Manufactured Goods: The manufactured goods have become very important items of India’s exports in recent years, like readymade garments, leather & leather goods, cotton yarn, jute, handicraft, etc.

c)    Service: With the growth in Info. Tech. & Business process outsourcing (BPO), India has emerged as one of the important service exporters in the recent years. There was an upward shift in the growth of service experts from 7.9% during the first half 1990 (15.3%) during 2001-03 & 04. The contribution of travel, transportation & miscellaneous is also significant. The services experts increased by 20.2% in 2003-04 of which travel, transportation, software & miscellaneous services accounted for 16.5%, 13.4%, 48.9% & 18.7% respectively.

Chief Export of India.

1.    Textile Factories & Manufactures: There is a great demand for India’s cotton factories & garments in the foreign country. These items have an important place in our exports. In 1960-61, it fetched a foreign exchange of Rs.65 crore. This had increased to 44,234 crores in 2003-04.

2.    Engineering Goods: After independence there was an enormous progress in the exports of engineering goods. During 1960-61 the total value of exports of these goods was 22 crores. By 2003-04 it went upto Rs.48,853 crores.

3.    Handicrafts: This also occupies an important place in oue exports during 1970-71. The total value of exports of these items was Rs.73 crores. It increased to Rs.4867 crores during 2003-04. Exports of gems & jewelleries was Rs.48,586 crores during 2003-04.

4.    Jute Items: The exports of these items have decreased in recent years due to various seasons. It was Rs.135 crores. During 1960-61 & it went upto Rs.1113 during 2003-04.