A Presantation

On indian economy system

Std ::MAM(Sem-III)

Prepared by:: Bhingradiya parul h. Radadiya mital n. Dhorajiya janvi h.

Ghadiya hemanshi j.Submitted to:: Mr. Bharat Savaliya

(Ass.professor in Smt.Shantaben Haribhai Gajera MBA Mahila college, Amreli)1

Introduction

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The economic history of India can be divided into three periods ranging from the pre-colonial period lasting up to the 17th century, colonial period from the 17th century till independence in 1947 and post independence. 

The Indian economy is the world's twelfth largest according to market exchange rates. It is also the fourth largest economy by purchasing power parity (PPP) basis. From 1947 to 1991, the India Economic System was based on social democratic-based policies.

Definition

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An economic system refers to the way in which the resources of a country are used to produce goods and services, and the manner in which these goods and services are distributed for consumption.

Resources

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• Also called factors of production, are all the things used in producing goods and services. They fall into four categories:LandLaborCapitalEntrepreneurship

Con…

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• Land refers to everything on Earth that is in its natural state, or Earth's natural resources.

• Labor refers to all the people who work in the economy.

• Capital includes money needed to start and operate a business. At a national level, capital includes infrastructure , such as roads, ports, sanitation facilities, and utilities.

• Entrepreneurship refers to the skills of people who are willing to risk their time and money to run a business.

Types of Economic Systems

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• These questions are answered by the type of economic system a nation has.

Pure Market EconomyPure Command EconomyTraditional EconomyMixed Economy

1.Pure Market Economy

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• NO government involvement in economic decisions. Private firms account for all production.

• Consumers decide WHAT should be produced. They do this through the purchases they make.

• Businesses determine HOW the products will be produced. They must be competitive.

• WHO buys the products? The people with the most money are able to buy more goods and services.

2.Pure Command Economy

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• All resources are government-owned.

• One person (dictator) or a group of officials decide WHAT products are needed.

• The government runs all businesses, controls all employment, and decides HOW goods and services will be produced.

• The government decides WHO receives the products that are produced.

3.Traditional Economy

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• Economy is shaped largely by custom or religion.

• Customs and religion determine the WHO, WHAT, and HOW.

• Example: India has a caste system which restricts occupational choice. (A social class separated from others by distinctions of hereditary rank, profession, or wealth.)

4.Mixed System

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• Individuals own most resources and determine what and how to produce.

• Government regulates certain industries Has features of both market and command economies.

• Example: China, most nations

• The US has a market economy but the government still has control over wages, social security and some policies.

An Economic System

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An Economic System is a system that involves production, distribution and consumption of goods and services between the entities in a particular society.

It can either be completely owned and operated either by Manufacturers & Industrialists or by Government or by both with combining their efforts.

1.Capitalist Economy System:

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Businesses are managed and owned by corporate & entrepreneurs.

Limited role of Government.

There are free private enterprises.

Price of goods & services are decided by market mechanism on the basis of demand & supply.

Although Profit motive is there but supremacy of consumers also exists.

Con…

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Merits of Capitalism:

Gives encouragement to business.

Higher rate of Capital formation.

Optimum utilization of resources.

It is a justified system as competent entrepreneurs are rewarded.

Demerits of Capitalism: Inequality in income.

This income inequality gives rise to class conflicts.

Problem of unemployment.

Lack of welfare.

Emergence of monopoly.

Features of capitalist economy

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Right to private property.

Profit motive

Freedom of choice

Market forces

Minimal role of govt.

2. Socialist Economy System:

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Socialist Economy is also referred as Centrally Governed Economy.

Institutions are owned by Government on behalf of public.

Govt. decides about establishment, location, production, distribution and prices of goods & services.

All activities are carried out for welfare of the society.

Freedom to choose any occupation is restricted.

Con…

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Merits of Socialism:

There is Social justice for all segments of society.

No class conflicts because of equitable distribution.

Problem of unemployment is solved.

Better utilization of resources can be done by putting them to appropriate use.

Demerits of Socialism:

Biggest problem of Redtapism (corruption).

No encouragement to private owners for their own venture.

Concentration of economic power remains in hands of politicians & govt. officials.

Social welfare is only a myth as deserving candidates are not benefited.

Features of socialist eco..

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Social welfare motive

Limited right to private motives

Central planning

3.Mixed Economy System:

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Compromise between Capitalist & socialist Economic Systems.

Co-existence of public & private enterprises. Works on platform of PPP.

For establishing a private enterprise , entrepreneurs are required to obtain certain licenses or No Objection Certificate(NOC) form govt. authorities

Both the Profit motive and Social Welfare Motive are fulfilled.

Con…

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Merits of Mixed Economic System:

Concept of social justice works.

Competition between Public sectors & Private sectors which ultimately leads to benefit to society.

Proper Employment opportunities are provided to the population.

Equitable distribution of income is there.

Demerits of Mixed Economic System:

However equal income distribution is emphasized still some big parties enjoy economic power.

Political parties have a big influence over bureaucrats & govt. officials.

Sometimes the non deserving people enjoys the benefits in the name of nationalism.

Features of mixed eco..

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Resources are owned both by the govt. as well as private individuals.

Private and public sector exist side by side.

All basic and heavy industries and other strategic sector of an economy e.g. banking, transport, energy etc. are controlled by the govt.

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