Polity, Economics Vi-xii Book
Polity, Economics Vi-xii Book
POLITY
1. CLASS- IX 1-23
DEMOCRATIC POLITICS-I
2. CLASS- X 1-23
DEMOCRATIC POLITICS-II
3. CLASS- XI 1-43
UNDERSTANDING ECONOMICS
DEVELOPMENT
5. CLASS- XI 1-31
INDIAN ECONOMIC
DEVELOPMENT
6. CLASS- XII 1-33
INTRODUCTORY
MICROECONOMICS
INTERNATIONAL
ORGANISATIONS
7. CLASS- XII 1-17
CONTEMPORARY WORLD
POLITICS
There was a law that limited the right to Democracy provides the only peaceful
criticise the President. solution to this problem.
Television and radio were controlled by the Democracy enhances the dignity of citizens.
government and gave only the ruling party’s Finally, democracy is better than other forms
version. of government because it allows us to correct
There were independent newspapers but the its own mistakes.
government harassed those journalists who It offers better chances of a good decision; it is
went against it. likely to respect people’s own wishes and
The government ignored some court allows different kinds of people to live
judgments that went against it and together.
pressurised judges. He was forced out of office Even when it fails to do some of these things,
in 2017. it allows a way of correcting its mistakes and
offers more dignity to all citizens.
Why democracy should lead to better decisions
That is why democracy is considered the best
than any non-democratic government?
form of government.
Democracy is based on consultation and
discussion.
A democratic decision always involves many
persons, discussions and meetings.
When a number of people put their heads
together, they are able to point out possible
mistakes in any decision. This takes time.
It reduces the chances of rash or irresponsible
decisions.
Thus democracy improves the quality of
decision-making.
Democracy provides a method to deal with
differences and conflicts.
In any society people are bound to have
differences of opinions and interests.
These differences are particularly sharp in a
country like ours which has an amazing social
diversity.
People belong to different regions, speak
different languages, practise different
religions and have different castes.
They look at the world very differently and
have different preferences.
The preferences of one group can clash with
those of other groups. The conflict can be
solved by brutal power.
Whichever group is more powerful will dictate
its terms and others will have to accept that.
But that would lead to resentment and
unhappiness.
Different groups may not be able to live
together for long in such a way.
After two years of discussion and debate they These rules also determine what the elected
came out with one of the finest constitutions governments are empowered to do and what
the world has ever had. they cannot do.
This constitution gave to its citizens the most Finally these rules decide the rights of the
extensive rights available in any country. citizen.
Together, they decided that in the search for a These rules will work only if the winner
solution to the problems, nobody should be cannot change them very easily.
excluded; no one should be treated as a This is what the South Africans did. They
demon. agreed on some basic rules.
They agreed that everybody should become They also agreed that these rules will be
part of the solution, whatever they might have supreme, that no government will be able to
done or represented in the past. ignore these.
The preamble to the South African This set of basic rules is called a constitution.
Constitution sums up this spirit. Every country has diverse groups of people.
The South African constitution inspires All over the world people have differences of
democrats all over the world. opinion and interests.
Whether democratic or not, most countries in
Why we need a Constitution?
the world need to have these basic rules.
The South African example is a good way to This applies not just to governments.
understand why we need a constitution and Any association needs to have its constitution.
what do constitutions do. Constitution of a country is a set of written
The oppressor and the oppressed in this new rules that are accepted by all people living
democracy were planning to live together as together in a country.
equals. Constitution is the supreme law that
The black majority was keen to ensure that the determines the relationship among people
democratic principle of majority rule was not living in a territory (called citizens) and also
compromised. ‘ the relationship between the people and
They wanted substantial social and economic government.
rights.
A constitution does many things:
The white minority was keen to protect its
privileges and property. 1) First, it generates a degree of trust and
After long negotiations both parties agreed to coordination that is necessary for different
a compromise. kind of people to live together;
The whites agreed to the principle of majority 2) Second, it specifies how the government will
rule and that of one person one vote. be constituted, who will have power to take
They also agreed to accept some basic rights which decisions;
for the poor and the workers. 3) Third, it lays down limits on the powers of the
The blacks agreed that majority rule would government and tells us what the rights of the
not be absolute. citizens are; and
They agreed that the majority would not take 4) Fourth, it expresses the aspirations of the
away the property of the white minority. people about creating a good society
The only way to build and maintain trust in 5) All countries that have constitutions are not
such a situation is to write down some rules of necessarily democratic.
the game that everyone would abide by. 6) But all countries that are democratic will
These rules lay down how the rulers are to be have constitutions.
chosen in future.
Mahatma Gandhi.
Dr. Ambedkar
No external power can dictate the government The government should ensure equal
of India. opportunity for all.
SOCIALIST FRATERNITY
Wealth is generated socially and should be All of us should behave as if we are members
shared equally by society. of the same family.
Government should regulate the ownership of No one should treat a fellow citizen as inferior
land and industry to reduce socio-economic
inequalities Institutional design
JUSTICE
LIBERTY
EQUALITY
HOW IS A MAJOR POLICY DECISION Parliament is the final authority for making
TAKEN? laws in any country.
Parliaments all over the world can make new
A Government Order On August 13, 1990, the laws, change existing laws, or abolish existing
Government of India issued an Order. It was laws and make new ones in their place.
called an Office Memorandum.
Parliaments all over the world exercise some
The Joint Secretary, an officer in the
control over those who run the government.
Department of Personnel and Training in the
Parliaments control all the money that
Ministry ofPersonnel, Public Grievances and
governments have.
Pensions, signed the Order.
Parliament is the highest forum of discussion
The order said that 27 per cent of the
and debate on public issues and national
vacancies in civil posts and services under the
policy in any country.
Government of India are reserved for the
President+ two Houses (Lok Sabha and Rajya
Socially and Educationally Backward Classes
Sabha)
(SEBC).
The Prime Minister must have the support of
SEBC is another name for all those people
who belong to castes that are considered
backward by the government.
The benefit of job reservation was till then
available only to Scheduled Castes and
Scheduled Tribes.
Now a new third category called SEBC was
introduced.
Only a person who enjoys the support of the The Prime Minister is free to choose
majority of the members in the Lok Sabha is ministers, as long as they are members of
appointed the Prime Minister. Parliament.
If the majority of the Lok Sabha members say Sometimes, a person who is not a Member of
they have ‘no confidence’ in the Council of Parliament can also become a minister.
Ministers, all ministers including the Prime But such a person has to get elected to one of
Minister, have to quit. The Rajya Sabha does the Houses of the Parliament within six
not have this power months of appointment as minister.
In a democratic country, two categories make Council of Ministers is the official name for
up the executive. the body that includes all the Ministers.
One that is elected by the people for a specific It usually has 60 to 80 Ministers of different
period is called the political executive. ranks.
Political leaders who take the big decisions fall Cabinet Ministers are usually top-level leaders
in this category. of the ruling party or parties who are in charge
In the second category, people are appointed of the major ministries.
on a long-term basis. This is called the Usually the Cabinet Ministers meet to take
permanent executive or civil services. decisions in the name of the Council of
Persons working in civil services are called Ministers.
civil servants. They remain in office even Cabinet is thus the inner ring of the Council of
when the ruling party changes. Ministers.
These officers work under political executive It comprises about 20 ministers.
and assist them in carrying out the day-to-day Ministers of State with independent charge
administration. are usually in-charge of smaller Ministries.
They participate in the Cabinet meetings only
Prime Minister and Council of Ministers when specially invited.
The President appoints the Prime Minister. Ministers of State are attached to and required
to assist Cabinet Ministers.
But the President cannot appoint anyone she
likes. Every ministry has secretaries, who are civil
servants.
The President appoints the leader of the
majority party or the coalition of parties that The secretaries provide the necessary
commands a majority in the Lok Sabha, as background information to the ministers to
Prime Minister. take decisions.
In case no single party or alliance gets a The Cabinet as a team is assisted by the
majority, the President appoints the person Cabinet Secretariat.
most likely to secure a majority support. This includes many senior civil servants who
The Prime Minister does not have a fixed try to coordinate the working of different
tenure. ministries.
He continues in power so long as he remains Powers of the Prime Minister
the leader of the majority party or coalition.
After the appointment of the Prime Minister, He chairs Cabinet meetings.
the President appoints other ministers on the He coordinates the work of different
advice of the Prime Minister. Departments.
The Ministers are usually from the party or His decisions are final in case disagreements
the coalition that has the majority in the Lok arise between Departments.
Sabha.
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He exercises general supervision of different The President is the supreme commander of
ministries. the defence forces of India.
All ministers work under his leadership. President exercises all these powers only on
The Prime Minister distributes and the advice of the Council of Ministers.
redistributes work to the ministers. The President can ask the Council of Ministers
He also has the power to dismiss ministers. to reconsider its advice.
When the Prime Minister quits, the entire But if the same advice is given again, she is
ministry quits. bound to act according to it.
In recent years the rise of coalition politics has Similarly, a bill passed by the Parliament
imposed certain constraints on the power of becomes a law only after the President gives
the Prime Minister. assent to it.
The Prime Minister of a coalition government
If the President wants, she can delay this for
cannot take decisions as he likes.
some time and send the bill back to the
He has to accommodate different groups and
Parliament for reconsideration.
factions in his party as well as among alliance
But if the Parliament passes the bill again, she
partners.
has to sign it.
He also has to heed to the views and positions
of the coalition partners and other parties, on The Presidential System
whose support the survival of the government
depends. Presidents all over the world are not always
nominal executives like the President of India. In
The President many countries of the world, the President is both
the head of the state and the head of the
While the Prime Minister is the head of the government.
government, the President is the head of the The President of the United States of America is the
State. most well-known example of this kind of President.
The President supervises the overall The US President is directly elected by the people.
He personally chooses and appoints all Ministers.
functioning of all the political institutions in
The law making is still done by the legislature
the country so that they operate in harmony to
(called the Congress in the US), but the president
achieve the objectives of the State.
can veto any law.
The President is not elected directly by the Most importantly, the president does not need the
people. support of the majority of members in the Congress
The elected Members of Parliament (MPs) and neither is he answerable to them.
and the elected Members of the Legislative He has a fixed tenure of four years and completes it
Assemblies (MLAs) elect her. even if his party does not have a majority in the
All governmental activities take place in the Congress.
name of the President. This model is followed in most of the countries of
Latin America and many of the ex-Soviet Union
All laws and major policy decisions of the
countries.
government are issued in her name.
Given the centrality of the President, this system of
All major appointments are made in the name government is called the Presidential form of
of the President. government.
These include the appointment of the Chief In countries like ours that follow the British model,
Justice of India, the Judges of the Supreme the parliament is supreme.
Court and the High Courts of the states, the Therefore our system is called the parliamentary
Governors of the states, the Election system of government.
Commissioners, ambassadors to other
countries, etc.
All international treaties and agreements are
made in the name of the President.
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CHAPTER 6
DEMOCRATIC RIGHTS RIGHTS IN THE INDIAN CONSTITUTION
Our ideas and personality develop only when Right against Exploitation
we are able to freely communicate with others.
The Constitution mentions three specific evils
You may think differently from others.
and declares these illegal.
Even if a hundred people think in one way,
First, the Constitution prohibits ‘traffic in
you should have the freedom to think
human beings’.
differently and express your views
Traffic here means selling and buying of
accordingly.
human beings, usually women, for immoral
You may disagree with a policy of government purposes.
or activities of an association.
Class- X
Democratic Politics- II
Chapter 1
Power-sharing
Chapter- 2
Usually, a federation has two levels of
Federalism government.
Both these levels of governments enjoy their power independent of the other.
Key features of federalism Such changes require the consent of both the
levels of government
2 or more levels (or tiers) of government. Courts have the power to interpret the
Different tiers of government govern the same constitution and the powers of different levels
citizens, but each tier has its own of government.
JURISDICTION in specific matters of The highest court acts as an umpire if disputes
legislation, taxation and administration. arise between different levels of government
The jurisdictions of the respective levels or in the exercise of their respective powers.
tiers of government are specified in the Sources of revenue for each level of
constitution. So the existence and authority of government are clearly specified to ensure its
each tier of government is constitutionally financial autonomy.
guaranteed.
The fundamental provisions of the The federal system thus has dual objectives:
constitution cannot be unilaterally changed by
one level of government. To safeguard and promote unity of the
country,
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While at the same time accommodate Later, a third tier of federalism was added in
regional diversity. the form of Panchayats and Municipalities.
An independent institution called the State Most members of the Zila Parishad are
Election Commission has been created in each elected.
State to conduct Panchayat and municipal Members of the Lok Sabha and MLAs of that
elections. district and some other officials of other
The State governments are required to share district level bodies are also its members.
some powers and revenue with local Zila Parishad chairperson is the political head
government bodies. of the Zila Parishad.
The nature of sharing varies from State to
State. Municipalities
Purpose- Similarly, local government bodies exist for
urban areas as well.
There are a large number of problems and
Municipalities are set up in towns.
issues which are best settled at the local level.
Big cities are constituted into municipal
Local government is the best way to realise corporations.
one important principle of democracy, namely Both municipalities and municipal
local self-government. corporations are controlled by elected bodies
consisting of people’s representatives.
PRI Municipal chairperson is the political head of
the municipality.
Rural local government is popularly known by
In a municipal corporation such an officer is
the name Panchayati raj.
called the mayor.
Each village, or a group of villages in some
States, has a gram panchayat.
This is a council consisting of several ward
members, often called panch, and a president
or Sarpanch.
They are directly elected by all the adult
population living in that ward or village.
Works under the overall supervision of the
gram sabha.
All the voters in the village are its members.
It has to meet at least twice or thrice in a year
to approve the annual budget of the gram
panchayat and to review the performance of
the gram panchayat.
The local government structure goes right up
to the district level.
A few gram Panchayats are grouped together
to form what is usually called a
Panchayatsamitis or block or Mandal.
The members of this representative body are
elected by all the Panchayat members in that
area.
All the Panchayat samitis or mandals in a
district together constitute the Zila (district)
Parishad.
Chapter- 3 Chapter- 4
Democracy and Diversity Gender, Religion and Caste
Origins of social differences Gender and politics
Communalism
Communalism was one of the major The Constitution of India prohibited any
challenges to democracy in our country. caste-based discrimination and laid the
The makers of our Constitution were aware of foundations of policies to reverse the
this challenge. injustices of the caste system.
That is why they chose the model of a secular
state.
Politics in caste
The story of Poland and that of Nepal apply to Seven Party Alliance in Nepalhad included
the struggle for establishing or restoring some big parties that had some members in
democracy. the Parliament.
But the role of popular struggles does not But the SPA was not the only organisation
come to an end with the establishment of behind this mass upsurge.
democracy. The protest was joined by the Nepalese
People’s successful struggle against Communist Party (Maoist) which did not
privatisation of water in Bolivia reminds us believe in parliamentary democracy.
that popular struggles are integral to the This party was involved in an armed struggle
working of democracy. against the Nepali government and had
Bolivia is a poor country in Latin America. established its control over large parts of
The World Bank pressurised the government Nepal.
to give up its control of municipal water The struggle involved many organisations
supply. other than political parties.
All the major labour unions and their
The government sold these rights for the city
federations joined this movement.
of Cochabamba to a multi-national company
Many other organisations like the
(MNC).
organisation of the indigenous people,
The company immediately increased the price
teachers, lawyers and human rights groups
of water by four times.
extended support to the movement.
Many people received monthly water bill of Rs
The protest against water privatisation in
1000 in a country where average income is
Bolivia was not led by any political party.
around Rs 5000 a month.
It was led by an organisation called
This led to a spontaneous popular protest.
FEDECOR.
In January 2000, a new alliance of labour, This organisation comprised local
human rights and community leaders professionals, including engineers and
organised a successful four-day general strike environmentalists.
in the city. They were supported by a federation of
The government agreed to negotiate and the farmers who relied on irrigation, the
strike was called off. Yet nothing happened. confederation of factory workers’ unions,
The police resorted to brutal repression when middle class students from the University of
the agitation was started again in February. Cochabamba and the city’s growing
Another strike followed in April and the population of homeless street children.
government imposed martial law. The movement was supported by the Socialist
But the power of the people forced the officials Party.
of the MNC to flee the city and made the In 2006, this party came to power in Bolivia.
government concede to all the demands of the From both these examples, we can see that in
protesters. a democracy several different kinds of
The contract with the MNC was cancelled and organisations work behind any big struggle.
water supply was restored to the municipality These organisations play their role in two
at old rates. This came to be known as ways.
Bolivia’s water war. One obvious way of influencing the decisions
in a democracy is direct participation in
competitive politics.
This is done by creating parties, contesting
elections and forming governments.
4) The fourth challenge is that very often parties o Founded in 1980 by reviving the erstwhile
do not seem to offer a meaningful choice to the Bharatiya Jana Sangh, formed by Syama
voters Prasad Mukherjee in 1951.
o Wants to build a strong and modern India
by drawing inspiration from India’s ancient
All India Trinamool Congress (AITC): culture and values; and Deendayal
Upadhyaya’s ideas of integral humanism
o Launched on 1 January 1998 under the
and Antyodaya.
leadership of Mamata Banerjee.
o Cultural nationalism (or ‘Hindutva’) is an
o Recognised as a national party in 2016.
important element in its conception of
o The party’s symbol is flowers and grass.
Indian nationhood and politics.
o Committed to secularism and federalism.
o Wants full territorial and political
o Has been in power in West Bengal since 2011.
integration of Jammu and Kashmir with
o Also has a presence in Arunachal Pradesh,
Manipur and Tripura. India, a uniform civil code for all people
o In the General Elections held in 2014, it got living in the country irrespective of
religion, and ban on religious conversions.
3.84% votes and won 34 seats, making it the
fourth largest party in the Lok Sabha. o Its support base increased substantially in
the 1990s.
o Earlier limited to north and west and to
urban areas, the party expanded its
support in the south, east, the north-east
Bahujan Samaj Party (BSP): and to rural areas
o Came to power in 1998 as the leader of the
o Formed in 1984 under the leadership of Kanshi
Ram.
National Democratic Alliance (NDA)
o Seeks to represent and secure power for the including several regional parties.
Bahujan Samaj which includes the Dalits, o Emerged as the largest party with 282
adivasis, OBCs and religious minorities. members in the 2014 Lok Sabha elections.
o Draws inspiration from the ideas and teachings of o Currently leads the ruling NDA
Sahu Maharaj, Mahatma Phule, Periyar government at the Centre.
Ramaswami Naicker and Babasaheb Ambedkar.
o Stands for the cause of securing the interests and
welfare of the Dalits and oppressed people.
o It has its main base in the state of Uttar Pradesh
and substantial presence in neighbouring states
like Madhya Pradesh, Chhattisgarh, Uttarakhand,
Delhi and Punjab.
o Formed government in Uttar Pradesh several
times by taking the support of different parties at
different times.
o In the Lok Sabha elections held in 2014, it polled
about 4 per cent votes but did not secure seat in
the Lok Sabha.
o Founded in 1964.
o Believes in Marxism- Leninism.
o Supports socialism, secularism and Nationalist Congress Party (NCP):
democracy and opposes imperialism and
communalism. o Formed in 1999 following a split in the
o Accepts democratic elections as a useful and Congress party.
helpful means for securing the objective of o Espouses democracy, Gandhian secularism,
socioeconomic justice in India. equity, social justice and federalism.
o Enjoys strong support in West Bengal, Kerala o Wants that high offices in government be
and Tripura, especially among the poor, confined to natural born citizens of the
factory workers, farmers, agricultural country.
labourers and the intelligentsia. o A major party in Maharashtra and has a
o Critical of the new economic policies that significant presence in Meghalaya, Manipur
allow free flow of foreign capital and goods and Assam.
into the country. o A coalition partner in the state of
o Was in power in West Bengal without a break Maharashtra in alliance with the Congress.
for 34 years. o Since 2004, a member of the United
o In the 2014 Lok Sabha elections, it won about Progressive Alliance.
3 per cent of votes and 9 seats.
Redefining democracy
RIGHT TO EQUALITY The same right also provides that the state shall
confer no title on a person except those who
There cannot be any discrimination in this excel themselves in military or academic field.
access on the basis of caste, creed, colour, sex,
religion, or place of birth. Thus right to equality strives to make India a true
It also prohibits any discrimination in public democracy by ensuring a sense of equality of
employment on any of the above mentioned dignity and status among all its citizens.
basis.
Article 21: Protection of life and personal
The practice of untouchability is one of the
liberty—No person shall be deprived of his life or
crudest manifestations of inequality. This has
personal liberty except according to procedure
been abolished under the right to equality.
established by law
Historically, there were rulers and emperors in A fundamental right is the right of the
different parts of the world who did not allow minorities to maintain their culture. This
residents of their countries to enjoy the right to minority status is not dependent only upon
freedom of religion. religion.
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Linguistic and cultural minorities are also RIGHT TO CONSTITUTIONAL REMEDIES
included in this provision.
Dr. Ambedkar considered the right to
Minorities are groups that have common constitutional remedies as ‘heart and soul of the
language or religion and in a particular part constitution’.
of the country or in the country as a whole, Reason- This right gives a citizen the right to
they are outnumbered by some other social approach a High Court or the Supreme Court to
section. get any of the fundamental rights restored in
case of their violation.
All minorities, religious or linguistic, can set
The Supreme Court and the High Courts can
up their own educational institutions. The
issue orders and give directives to the
government will not, while granting aid to
government for the enforcement of rights.
educational institutions, discriminate
against any educational institution on the
basis that it is under the management of
minority community.
The courts can issue various special orders known as writs-
Writs
Habeas corpus:
A writ of habeas Certiorari:
Quo Warranto:
corpus means that the Mandamus: Prohibition: Under this writ,
court orders that the If the court finds that
the court orders
arrested person This writ is issued This writ is issued by a person is holding
a lower court or
should be presented when the court finds a higher court (High office but is not another
before it. that a particular office Court or Supreme entitled to hold that
authority to
holder is not doing Court) when a lower office, it issues the
It can also order to set legal duty and thereby court has considered transfer a matter
writ of quo Warranto
free an arrested pending before it
is infringing on the a case going beyond and restricts that
person if the manner right of an individual. to the higher
its jurisdiction. person from acting as
or grounds of arrest authority or
an office holder.
are not lawful or court.
satisfactory.
How does PR work in Rajya Sabha For example if 4 Rajya Sabha members have to
elections? be elected by the 200 MLAs in Rajasthan, the
winner would require (200/4+1= 40+1) 41
Every State has a specific quota of seats votes.
in the Rajya Sabha. When the votes are counted it is done on the
The members are elected by the basis of first preference votes secured by each
respective State legislative assemblies. candidate, of which the candidate has secured
The voters are the MLAs in that State. the first preference votes.
Every voter is required to rank If after the counting of all first preference votes,
candidates according to her or his required number of candidates fails to fulfill the
preference. quota, the candidate who secured the lowest
votes of first preference is eliminated and
To be declared the winner, a candidate must
his/her votes are transferred to those who are
secure a minimum quota of votes, which is
mentioned as second preference on those ballot
determined by a formula-
papers.
This process continues till the required number
of candidates is declared elected.
Functions-
ELECTORAL REFORMS
With the acceptance of adult suffrage, freedom to contest
elections, and the establishment of an independent Election
Commission, India has tried to make its election process free and
fair.
However, the experience of the last fifty five years has given rise
to many suggestions for reforming our election system.
Some suggestions-
Our system of elections should be changed from the FPTP to
some variant of the PR system. This would ensure that parties
get seats, as far as possible, in proportion to the votes they get.
There should be a special provision to ensure that at least one
third women are elected to the parliament and assemblies.
There should be stricter provisions to control the role of money
in electoral politics. The elections expenses should be paid by the
government out of a special fund.
Candidates with any criminal case should be barred from
contesting elections, even if their appeal is pending before a
court.
There should be complete ban on the use of caste and religious
appeals in the campaign.
There should be a law to regulate the functioning of political
parties and to ensure that they function in a transparent and
democratic manner.
Apart from legal reforms, there are two other ways of ensuring
that elections reflect the expectations and democratic
aspirations of the people.
One is, of course, that people themselves have to be more
vigilant, more actively involved in political activities.
But there are limits to the extent to which ordinary people can
engage in politics on a regular basis.
Therefore, it is necessary that various political institutions and
voluntary organizations are developed and are active in
functioning as watchdog for ensuring free and fair elections.
Article 109
Before 91st Amendment Act (2003), the size of The Executive organ of the government includes
the Council of Ministers was determined the Prime Minister, the ministers and a large
according to exigencies of time and organisation called the bureaucracy or the
requirements of the situation. administrative machinery
But this led to very large size of the Council of
Ministers.
Any matter that affects the States must be referred The Rajya Sabha cannot initiate, reject or amend
to it for its consent and approval money bills.
Thus, if the Union Parliament wishes to remove a The Council of Ministers is responsible to the Lok
matter from the State list (over which only the Sabha and not Rajya Sabha.
State Legislature can make law) to either the Therefore, Rajya Sabha can criticise the
Union List or Concurrent List in the interest of the government but cannot remove it.
nation, the approval of the Rajya Sabha is
necessary.
HOW DOES THE PARLIAMENT CONTROL Power and freedom of the legislators as people’s
THE EXECUTIVE? representatives to work effectively and
fearlessly
During the law makingprocess, members of the legislature get an opportunity todeliberate on the policy direction
of the executive and theways in which policies are implemented.
Apart fromdeliberating on bills, control may also be exercised duringthe general discussions in the House.
The Question Hour,which is held every day during the sessions of Parliament,where Ministers have to respond to
searching questionsraised by the members; Zero Hour where members arefree to raise any matter that they think
is important(though the ministers are not bound to reply), half-an –hour discussion on matters of public
importance,adjournment motion etc. are some instruments ofexercising control.
3) Financial control:
Financialresources to implement the programmes of thegovernment are granted through the budget.
Preparationand presentation of budget for the approval of thelegislature is constitutional obligation of the
government.
This obligation allows the legislature to exercise control over the purse strings of the government. The legislature
may refuseto grant resources to the government.
This seldom happens becausethe government ordinarily enjoys support of the majority in theparliamentary system.
Nevertheless, before granting money the LokSabha can discuss the reasons for which the government
requiresmoney.
It can enquire into cases of misuse of funds on the basis ofthe report of the Comptroller and Auditor General and
PublicAccounts committees.
But the legislative control is not only aimed atfinancial propriety.
The legislature is concerned about the policies ofthe government that are reflected in the budget.
Through financialcontrol, the legislature controls the policy of the government.
4) No Confidence Motion:
The most powerful weapon that enablesthe Parliament to ensure executive accountability is the no-
confidencemotion.
As long as the government has the support of its party orcoalition of parties that have a majority in the Lok Sabha,
the powerof the House to dismiss the government is fictional rather than real.
However, after 1989, several governments have been forced to resigndue to lack of confidence of the house.
Each of these governmentslost the confidence of the Lok Sabha because they failed to retain thesupport of their
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coalition partners.
MALUKA IAS
Anti-defection law-
What is defection?
Appellate Jurisdiction
Chapter 7
FEDERALISM Article 1:
The most important feature of the federal system (1) India, that is Bharat, shall be a Union of States.
adopted by the Indian Constitution is the principle
that relations between the States and the centre (2) The States and the territories thereof shall be
would be based on cooperation. as specified in the First Schedule.
FEDERALISM WITH A STRONG CENTRAL Even during normal circumstances, the central
GOVERNMET government has very effective financial powers
and responsibilities.
The very existence of a State including its Governor has certain powers to recommend
territorial integrity is in the hands of Parliament dismissal of the State government and the
The Constitution has certain very powerful dissolution of the Assembly.
emergency provisions, which can turn our There may be occasions when the situation may
federal polity into a highly centralised system
demand that the central government needs to
once emergency is declared
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MALUKA IAS
legislate on matters from the State list (if the Article 257 (1)
move is ratified by the Rajya Sabha)
An integrated administrative system The executive power of every State shall be so
exercised as not to impede or prejudice the exercise
The all-India services are common to the entire
of the executive power of the Union, and the
territory of India and officers chosen for these
executive power of the Union shall extend to the
services serve in the administration of the
giving of such directions to a State as may appear to
States.
the Government of India to be necessary for that
Articles 33 and 34 authorise the Parliament to
purpose.
protect persons in the service of the union or a
state in respect of any action taken by them Role of Governors and President’s Rule
during martial law to maintain or restore order.
Governor is appointed by the central government
CONFLICTS IN INDIA’S FEDERAL SYSTEM and therefore, actions of the Governor are often
viewed as interference by the Central government
From time to time, States have demanded that
in the functioning of the State government.
they should be given more powers and more
autonomy. President’s rule (Article 356)
This leads to tensions and conflicts in the
relations between the centre and the States. This provision is to be applied, when ‘a situation
While the legal disputes between the centre and has arisen in which the Government of the State
the States (or between States) can be resolved cannot be carried on in accordance with the
by the judiciary, demands for autonomy are of provisions of this Constitution.’
political nature and need to be resolved through The President’s proclamation has to be ratified
negotiations. by Parliament.
President’s rule can be extended till three years.
Centre-State Relations The Governor has the power to recommend the
dismissal of the State government and
Sometimes, demands expect that the division of
suspension or dissolution of State assembly.
powers should be changed in favour of the
Some cases went to the Supreme Court and the
States and more powers and important powers
Court has ruled that constitutional validity of
be assigned to the States.
the decision to impose President’s rule can be
Another demand is that States should have
examined by the judiciary.
independent sources of revenue and greater
control over the resources. (Financial Demands for New States
autonomy)
Autonomy demands relates to administrative In the course of the national movement itself, it
powers of the States. was decided that as far as possible, States would
Autonomy demands may also be related to be created on the basis of common cultural and
cultural and linguistic issues. linguistic identity.
The Sarkaria Commission that was appointed 1954- States Reorganisation Commission was
by the central government (1983; it submitted set up and it recommended the creation of
its report in 1988) to examine the issues linguistic States, at least for the major linguistic
relating to centre-State relations, recommended groups.
that appointments of Governors should be 1960- Gujarat and Maharashtra
strictly non-partisan. 1966- Punjab and Haryana were separated
According to Article 370, the concurrence of the State is required for making any laws in matters mentioned in the
Union and Concurrent lists
In the case of Jammu and Kashmir, the central government has only limited powers and other powers listed in the
Union List and Concurrent List can be used only with the consent of the State government.
President, with the concurrence of the State government, to specify which parts of the Union List shall apply to the
State.
The President has issued two Constitutional orders in concurrence with the Government of J&K making large parts
of the Constitution applicable to the State.
As a result, though J&K has a separate constitution and a flag, the Parliament’s power to make laws on subjects in
the Union List now is fully accepted.
No emergency due to internal disturbances can be declared in J&K without the concurrence of the State
The union government cannot impose a financial emergency in the State and the Directive Principles do not apply
in J&K.
Finally, amendments to the Indian Constitution (under Art. 368) can only apply in concurrence with the
government of J&K.
LOCAL GOVERNMENTS
The 73rd Amendment is about rural local Community Development Programme (1952)-
governments (which are also known as to promote people’s participation in local
Panchayati Raj Institutions or PRIs) and the development in a range of activities
74th amendment made the provisions relating In 1989 the P.K.Thungon Committee
to urban local government (Nagarpalikas). recommended constitutional recognition for the
The 73rd and 74th Amendments came into force local government bodies.
in 1993. A constitutional amendment to provide for
local government is a ‘State subject’ periodic elections to local government
institutions, and enlistment of appropriate
functions to them, along with funds, was
GROWTH OF LOCAL GOVERNMENT IN INDIA
recommended.
Elected local government bodies were created after 73rd Amendment
1882.
Lord Rippon, who was the Viceroy of India at that Three Tier Structure-
time, took the initiative in creating these bodies.
They were called the local boards. Base- Gram Panchayat (covers a village or
However, due to slow progress in this regard, the group of villages)
Indian National Congress urged the government to The intermediary level is the Mandal (also
take necessary steps to make all local bodies more referred to as Block or Taluka)- called Mandal
effective. or Taluka Panchayats
Following the Government of India Act 1919, At the apex is the Zila Panchayat covering the
village Panchayats were established in a number of entire rural area of the District.
provinces.
Gram Sabha-
This trend continued after the Government of India
Act of 1935. The Gram Sabha would comprise of all the adult
During India’s freedom movement, Mahatma members registered as voters in the Panchayat
Gandhi had strongly pleaded for decentralisation of area.
economic and political power. Its role and functions are decided by State
When the Constitution was prepared, the subject of legislation.
local government was assigned to the States.
Mentioned in the Directive Principles Elections
So, non-justiciable and primarily advisory in its All the three levels of Panchayati Raj
nature. institutions are elected directly by the people.
The term of each Panchayat body is five years.
If the State government dissolves the Panchayat
before the end of its 5 year term, fresh elections
Reservations
1/3rd- women
Reservations for SC and ST are also provided
for at all 3 levels, in proportion to their
population.
If the States find it necessary, they can also
provide for reservations for the backward castes
(OBCs).
Also applies to the positions of Chairpersons or
‘Adhyakshas’ at all the three levels.
Reservation of one-third of the seats for women
is not merely in the general category of seats but
also within the seats reserved for SC, ST and
backward castes.
Transfer of Subjects
29 subjects
Listed in 11th schedule
Each State decides how many of these
twenty-nine subjects would be
transferred to the local bodies.
Provisions of the 73rd amendment were not State Election Commissioners
made applicable to the areas inhabited by the State government appoints
Adivasi populations in many States of India.
To conduct elections to the Panchayati
In 1996, a separate act was passed extending
Raj institutions.
the provisions of the Panchayat system to these
Earlier, this task was performed by the
areas.
State administration which was under
Many Adivasi communities have their
the control of the State government.
traditional customs of managing common
resourcessuch as forests and small water However, the State Election Commissioner is an
reservoirs, etc. independent officer and is not linked to nor is this
More powers are given to the Gram Sabhas of officer under the control of the Election
these areas and elected village Panchayats have Commission of India
to getthe consent of the Gram Sabha in many
respects.
74th Amendment
When an amendment aims to modify an During the controversy between the Judiciary
article related to distribution of powers and the Parliament, the Parliament thought
between the States and the central that it had the power and responsibility to make
government, or articles related to laws (and amendments) for furthering the
representation interests of the poor, backward and the needy.
The Judiciary insisted that all this has to take
15th amendment- place within the framework provided by the
Constitution and pro-people measures should
Increased the age of retirement of High Court not bypass legal procedures
judges from 60 to 62 years
The Court came to the conclusion that in
55th amendment- reading a text or document, we must respect the
intent behind that document.
Salaries of judges of High Courts and the Supreme
Court were increased Review of the Constitution
Secularism
Class X
Understanding Economic Development
school and higher education beyond secondary
CHAPTER I school.
DEVELOPMENT Per Capita Income is calculated in dollars for all
countries so that it can be compared so that
For comparing countries, their income is every dollar would buy the same amount of
considered to be one of the most important goods and services in any country.
attributes Groundwater overuse is particularly found in
Average income- the total income of the country the agriculturally prosperous regions of Punjab
divided by its total population. and Western U.P., hard rock plateau areas of
The average income is also called per capita central and south India, some coastal areas and
income the rapidly growing urban settlements.”
World Development Report- by the World
Bank,
Infant Mortality Rate (or IMR) - indicates the
number of children that die before the age of
one year as a proportion of 1000 live children
born in that particular year.
Literacy Rate measures the proportion of
literate population in the 7 and above age
group.
Net Attendance Ratio is the total number of
children of age group 6-10 attending school as a
percentage of total number of children in the
same age group.
Money may also not be able to protect you from
infectious diseases, unless the whole of your
community takes preventive steps.
Human Development Report published by
UNDP compares countries based on the
educational levels of the people, their health
status and per capita income.
Life Expectancy at birth denotes, as the name
suggests, average expected length of life of a
person at the time of birth.
Gross Enrolment Ratio for three levels means
enrolment ratio for primary school, secondary
Started at the initiative of the developed Industrial zones, called Special Economic Zones
countries, WTO establishes rules regarding (SEZs), are being set up.
international trade, and sees that these rules are SEZs are to have world class facilities:
obeyed. electricity, water, roads, transport, storage,
Steps to Attract Foreign Investment In recent recreational and educational facilities.
years, the central and state governments in Companies who set up production units in the
India are taking special steps to attract foreign SEZs do not have to pay taxes for an initial
companies to invest in India. period of five years.
The sole purpose of the British colonial rule in India was INDUSTRIAL SECTOR
to reduce the country to being a feeder economy for
Great Britain’s own rapidly expanding modern industrial Motive of the colonial government-
base.
1) To reduce India to the status of a mere exporter of
LOW LEVEL OF ECONOMIC DEVELOPMENT important raw materials for the upcoming modern
UNDER THE COLONIAL RULE industries in Britain
2) To turn India into a sprawling market for the
Before the advent of the British rule- India had an finished products of those industries
independent economy
Second half of 19th century- setting up of cotton and jute
India was particularly well known for its handicraft
mills
industries in the fields of cotton and silk textiles,
metal and precious stone works etc.
Cotton mills- Maharashtra and Gujarat
Textile Industry in Bengal
Jute mills- dominated by the foreigners were mainly
The economic policies pursued by the colonial concentrated in Bengal
government in India concerned more with the
1907- Tata Iron and Steel Company (TISCO)
protection and promotion of the economic interests
Rare capital goods industry
of their home country
limited area of operation of the public sector
Colonial government never made any sincere
attempt to estimate India’s national and per capita FOREIGN TRADE-
income
Country’s growth of aggregate real output during the India exporter of primary products such as raw silk,
first half of 20th century was less than 2% cotton, wool, sugar, indigo, jute etc. and
An importer of finished consumer goods like cotton,
AGRICULTURAL SECTOR silk and woollen clothes and capital goods like light
machinery produced in the factories of Britain.
Approx. 85% population--- Villages--- Agriculture
Important characteristic of India’s foreign trade-
Agricultural productivity- low
generation of a large export surplus
Stagnation- because of the various systems of land
settlement that were introduced by the colonial
government
DEMOGRAPHIC CONDITION-
OCCUPATIONAL STRUCTURE-
INFRASTRUCTURE
THE GOALS OF FIVE YEAR PLANS- Increase the disparities between small and big
farmers
The goals of the five year plans are: growth, HYV crops were also more prone to attack by pests
modernisation, self-reliance and equity
Green revolution would have favoured the rich farmers
Mahalanobis: the Architect of Indian Planning only if the state did not play an extensive role in ensuring
that the small farmer also gains from the new
Mahalanobis established the Indian Statistical Institute
technology.
(ISI) in Calcutta and started a journal, Sankhya, which
still serves as a respected forum for statisticians to INDUSTRY AND TRADE
discuss their ideas
5 year plans place a lot of emphasis on industrial
AGRICULTURE development
The policy makers of independent India had to Public and Private Sectors in Indian Industrial
address these issues which they did through land Development-
reforms and promoting the use of ‘High Yielding
Variety’ (HYV) seeds which ushered in a revolution At the time of independence, Indian industrialists
in Indian agriculture. did not have the capital to undertake investment in
The low productivity of the agricultural sector forced industrial ventures required for the development of
India to import food from the United States of our economy;
America (U.S.A.). Nor was the market big enough to encourage
Equity in agriculture called for land reforms which industrialists to undertake major projects even if
primarily refer to change in the ownership of they had the capital to do so.
landholdings.
Land ceiling was another policy to promote equity in Industrial Policy Resolution 1956
the agricultural sector. (IPR 1956)
This means fixing the maximum size of land which
could be owned by an individual. Formed the basis of the2 FYP
The purpose of land ceiling was to reduce the This resolution classified industries into three
concentration of land ownership in a few hands. categories.
1) 1st category- industries which would be
The Green Revolution exclusively owned by the state;
2) 2nd category consisted of industries in which
Productivity in the agricultural sector was very low the private sector could supplement the
because of the use of old technology and the absence efforts of the state sector, with the state
of required infrastructure for the vast majority of taking the sole responsibility for starting
farmers. new units;
Increase in production of food grains resulting from 3) 3rd category consisted of the remaining
the use of high yielding variety (HYV) seeds industries which were to be in the private
especially for wheat and rice. sector
Foreign Exchange Reforms- (i) By withdrawal of the government from ownership and
management of public sector companies and or
1991- to resolve the balance of payments crisis, the rupee
was devalued against foreign currencies (ii) By outright sale of public sector companies.
Trade and Investment Policy Reforms- Privatisation of the public sector enterprises by selling
off part of the equity of PSEs to the public is known as
Liberalisation of trade and investment regime was disinvestment.
initiated to increase international competitiveness of
industrial production and also foreign investments GLOBALISATION
and technology into the economy.
The aim was also to promote the efficiency of the It involves creation of networks and activities
local industries and the adoption of modern transcending economic, social and geographical
technologies. boundaries
With the help of modern telecommunication links
The trade policy reforms aimed at including the Internet, the text, voice and visual data
in respect of these services is digitised and
(i) Dismantling of quantitative restrictions on transmitted in real time over continents and national
imports and exports boundaries.
The low wage rates and availability of skilled
(ii) Reduction of tariff rates and
manpower in India have made it a destination for
(iii) Removal of licensing procedures for imports global outsourcing in the post-reform period.
Import licensing was abolished except in case of World Trade Organisation (WTO)
hazardous and environmentally sensitive industries.
1995
Export duties have been removed to increase the
successor organisation to the General Agreement on
competitive position of Indian goods in the
Trade and Tariff (GATT)
international markets.
The WTO agreements cover trade in goods as well as
PRIVATISATION services to facilitate international trade (bilateral
and multilateral) through removal of tariff as well as
Government companies are converted into private non-tariff barriers and providing greater market
companies in two ways access to all member countries.
Reforms in Agriculture
Results-
Reforms in Industry
Chapter- 4
Poverty
Categorising Poverty-
The Poverty Line Amartya Sen, noted Nobel Laureate, has developed
an index known as Sen Index.
Based on this, in 2009-10, the poverty line was
defined for rural areas as consumption worth Rs 673 THE NUMBER OF POOR IN INDIA
per person a month and for urban areas it was Rs
860 o When the number of poor is estimated as the
Though the government uses Monthly Per Capita proportion of people below the poverty line, it is
Expenditure (MPCE) as proxy for income of known as ‘Head Count Ratio’.
households to identify the poor o The official data on poverty is made available to the
The existing mechanism for determining the Poverty public by the Planning Commission.
Line also does not take into consideration social o It is estimated on the basis of consumption
factors that trigger and perpetuate poverty such as expenditure data collected by the National Sample
illiteracy, ill health, lack of access to resources, Survey Organisation (NSSO).
discrimination or lack of civil and political freedoms.
o August 2005
o Development of human resources including – o Tamil Nadu to train women I latest agricultural
literacy, more specifically, female literacy, education techniques.
and skill development – health, addressing both o It induces women to actively participate in raising
sanitation and public health agricultural productivity and family income.
o Land reforms
o Development of the productive resources of each Animal Husbandry
locality
o Infrastructure development like electricity,
irrigation, credit, marketing, transport facilities
including construction of village roads and feeder
roads to nearby highways, facilities for agriculture
research and extension, and information
dissemination
o Special measures for alleviation of poverty and
bringing about significant improvement in the living
conditions of the weaker sections of the population
emphasising access to productive employment
opportunities
Chapter- 8
INFRASTRUCTURE
Some Challenges in the Power Sector Thermal power plants which are the mainstay of
India’s power sector are facing shortage of raw
India’s installed capacity to generate electricity is not material and coal supplies.
sufficient to feed an annual economic growth of 7-8
per cent. HEALTH
State Electricity Boards (SEBs), which distribute
electricity, incur losses which exceed Rs 500 billion. o Health infrastructure includes hospitals, doctors,
This is due to transmission and distribution losses, nurses and other para-medical professionals, beds,
wrong pricing of electricity and other inefficiencies equipment required in hospitals and a well-
Private sector power generators are yet to play their developed pharmaceutical industry.
role in a major way; same is the case with foreign o The Union Government evolves broad policies and
investors plans through the Central Council of Health and
Family Welfare.
There is general public unrest due to high power
o It collects information and renders financial and
tariffs and prolonged power cuts in different parts of
technical assistance to state governments, union
the country
territories and other bodies for implementation of
important health programmes in the country.
Women’s Health
STATE OF INDIA’S ENVIRONMENT The Indo-Gangetic plains — spread from the Arabian
Sea to the Bay of Bengal — are one of the most
The black soil of the Deccan Plateau is particularly fertile, intensively cultivated and densely populated
suitable for cultivation of cotton, leading to regions in the world.
concentration of textile industries in this region.
Some of the factors responsible for land (vii) Improper crop rotation
degradation are (viii) Indiscriminate use of agro-chemicals such as
fertilisers and pesticides
(i) Loss of vegetation occurring due to deforestation (ix) Improper planning and management of irrigation
(ii) Unsustainable fuel wood and fodder extraction systems
(iii) Shifting cultivation (x) Extraction of ground water in the competing uses of
(iv) Encroachment into forest lands land for forestry, agriculture, pastures, human
(v) Forest fires and over grazing settlements and industries exert an enormous
(vi) Non-adoption of adequate soil conservation pressure on the country’s finite land resources.
measures
SUSTAINABLE DEVELOPMENT
Introduction
PRODUCTION FUNCTION
Market Equilibrium
In a perfectly competitive market, equilibrium
occurs where market demand equals market
supply.
The equilibrium price and quantity are
determined at the intersection of the market
demand and market supply curves when there
are fixed number of firms.
Imposition of price ceiling below the
equilibrium price leads to an excess demand.
Imposition of price floor above the equilibrium
price leads to an excess supply
Class XII
Introductory Macroeconomics
Chapter 1
Introduction This school of thought is known as the classical
tradition.
Macroeconomics tries to address situations facing
the economy as a whole.
Great Depression- 1929
Adam Smith-
Output and employment levels in the countries
The founding father of modern economics, had of Europe and North America fall by huge
suggested that if the buyers and sellers in each amounts.
market take their decisions following only their Demand for goods in the market was low, many
own self-interest, economists will not need to factories were lying idle, workers were thrown
think of the wealth and welfare of the country as out of jobs.
a whole separately. In USA, from 1929 to 1933, unemployment rate
But economists gradually discovered that they rose from 3 per cent to 25 per cent
had to look further. (unemployment rate may be defined as the
Economists found that first, in some cases, the number of people who are not working and are
markets did not or could not exist. looking for jobs divided by the total number of
Secondly, in some other cases, the markets people who are working or looking for jobs).
existed but failed to produce equilibrium of Over the same period aggregate output in USA
demand and supply. fell by about 33 per cent.
Thirdly, and most importantly, in a large The domestic country may sell goods to the rest
number of situations society (or the State, or of the world. These are called exports.
the people as a whole) had decided to pursue The economy may also buy goods from the rest
certain important social goals unselfishly (in of the world. These are called imports.
areas like employment, administration, defence, Besides exports and imports, the rest of the
education and health) for which some of the world affects the domestic economy in other
aggregate effects of the microeconomic ways as well.
decisions made by the individual economic
agents needed to be modified.
John Maynard Keynes-
GVA at factor costs + Net production taxes = GVA In India, the most highlighted measure of
at basic prices national income has been the GDP at factor
cost.
GVA at basic prices + Net product taxes = GVA at The Central Statistics Office (CSO) of the
market prices Government of India has been reporting the
GDP at factor cost and at market prices.
Factor Cost, Basic Prices and Market Prices In its revision in January 2015 the CSO replaced
GDP at factor cost with the GVA at basic prices,
Commercial Banks • Liabilities for any firm are its debts or what
it owes to others. For a bank, the main
They accept deposits from the public and lend liability is the deposits which people keep
out part of these funds to those who want to with it.
borrow.
The interest rate paid by the banks to depositors Liabilities = Deposits
is lower than the rate charged from the
borrowers. • The accounting rule states that both sides of
This difference between these two types of the account must balance. Hence if assets
interest rates, called the ‘spread’ is the profit
are greater than liabilities, they are recorded
appropriated by the bank.
Commercial banks mediate between individuals on the right hand side as Net Worth.
or firms with excess funds and lend to those
Net Worth = Assets – Liabilities
who need funds.
POLICY TOOLS TO CONTROL MONEY
MONEY CREATION BY BANKING SYSTEM SUPPLY
Assets are things a firm owns or what a firm can Reserve Bank is the only institution which can
claim from others. issue currency
In case of a bank, apart from buildings, Central bank- lender of last resort
furniture, etc., its assets are loans given to The RBI controls the money supply in the
public. economy in various ways.
Commercial banks like State Bank of India The tools used by the Central bank to control
(SBI) keep their deposits with RBI and these are money supply can be quantitative or qualitative.
called Reserves. The quantitative or general measures influence
the total volume of the credit while the
Assets = Reserves + Loans qualitative measures influence the selective or
particular use of credit.
Narrow and Broad Money Where, CU is currency (notes plus coins) held by
the public and DD is net demand deposits held by
RBI publishes figures for four alternative commercial banks.
measures of money supply, viz. M1, M2, M3 and
M4. They are defined as follows M1 and M2 are known as narrow money. M3
M1 = CU + DD and M4 are known as broad money.
M2 = M1 + Savings deposits with Post Office These measures are in decreasing order of
savings banks liquidity.
M3 = M1 + Net time deposits of commercial M1 is most liquid and easiest for transactions
banks whereas M4 is least liquid of all.
M4 = M3 + Total deposits with Post Office M3 is the most commonly used measure of
savings organisations (excluding National money supply. It is also known as aggregate
Savings Certificates) monetary resources
Investment
THE BALANCE OF PAYMENTS Current Account is the record of trade in goods and
services and transfer payments.
The balance of payments (BoP) records the
transactions in goods, services and assets Capital Account
between residents of a country with the rest of
the world for a specified time period typically a Capital Account records all international
year. transactions of assets. An asset is any one of the
There are two main accounts in the BoP — the forms in which wealth can be held, for example:
current account and the capital account. money, stocks, bonds, Government debt, etc.
Current Account Purchase of assets is a debit item on the capital
account.
People demand foreign exchange because: they Foreign currency flows into the home country
want to purchase goods and services from other due to the following reasons: exports by a
countries; they want to send gifts abroad; and, country lead to the purchase of its domestic
they want to purchase financial assets of a goods and services by the foreigners; foreigners
certain country. send gifts or make transfers; and, the assets of a
A rise in price of foreign exchange will increase home country are bought by the foreigners.
the cost (in terms of rupees) of purchasing a A rise in price of foreign exchange will reduce
foreign good. the foreigner’s cost (in terms of USD) while
This reduces demand for imports and hence purchasing products from India, other things
demand for foreign exchange also decreases, remaining constant.
other things remaining constant.
Depreciation
Increase in exchange rate implies that the price of foreign currency (dollar) in terms of domestic
currency (rupees) has increased.
This is called Depreciation of domestic currency (rupees) in terms of foreign currency (dollars).
Appreciation
• When the price of domestic currency (rupees) in terms of foreign currency (dollars) increases, it is called
Appreciation of the domestic currency (rupees) in terms of foreign currency (dollars).
Income and the Exchange Rate When imports increase, the demand curve for
foreign exchange shifts to the right.
When income increases, consumer spending There is a depreciation of the domestic
increases. currency.
Spending on imported goods is also likely to On balance, the domestic currency may or may
increase. not depreciate.
Devaluation-
• In a fixed exchange rate system, when some government action increases the exchange rate (thereby,
making domestic currency cheaper) is called Devaluation.
Revaluation-
• When the Government decreases the exchange rate (thereby, making domestic currency costlier) in a
fixed exchange rate system.
It was established at the conference of 44 nations held at Bretton Woods, New Hampshire, USA, in July 1944.
It was established to prevent unstable exchange rates and competitive devaluation among economies.
AIMS OF IMF:
FUNCTIONS OF IMF
IMF set standards for global economy and monitors financial communications between countries.
It helps its member countries by lending money to make their economies and financial structure stable.
World Bank
World Bank was formed on July 1944 at the Bretton Woods Conference.
Headquarter of World Bank is located at Washington D.C. (U.S.A.)
The main purpose of the World Bank is ''Reduction of Poverty''.
World Bank is comprises of two institutions - International Bank for Reconstruction and Development
(IBRD) and the International Development Association (IDA).
World Bank is member of the United Nations Development Group as well as World Bank Group.
World Bank Group includes - International Bank for Reconstruction and Development (IBRD),
International Development Association, International Finance Corporation, Multilateral Investment
Guarantee Agency, International Center for Settlement of Investment Disputes.
The president of the World Bank comes from the largest shareholder. Members are represented by a
Board of Governors.
Breakdown of the Bretton Woods system flight from dollars to gold in 1968 leading to the
creation of a two-tiered gold market (with the
The breakdown of the Bretton Woods system was official rate at $35 per ounce and the private
preceded by many events, such as the rate market determined), and
Finally in August 1971, the British demand that
devaluation of the pound in 1967, US guarantee the gold value of its dollar
holdings.
The second round started in November 1972. Treaty signed by the Russian President Boris
The US President Jimmy Carter and the Yeltsin and the US President George Bush
Soviet leader Leonid Brezhnev signed the (Senior) on the reduction and limitation of
Treaty on the limitation of strategic offensive strategic offensive arms in Moscow on 3
arms in Vienna on 18 June 1979. January 1993.
1947 American President Harry Truman’s Doctrine about the containment of communism
1947 - 52 Marshall Plan: US aid for the reconstruction of the Western Europe
1948 - 49 Berlin blockade by the Soviet Union and the airlift of supplies to the citizens of West
Berlin by the US and its allies
1950 - 53 Korean War
1954 Defeat of the French by the Vietnamese at Dien Bien Phu Signing of the Geneva Accords;
Division of Vietnam along the 17th Parallel; Formation of SEATO
1954 – 75- American intervention in Vietnam
1955 Signing of the Baghdad Pact, later CENTO
1956 Soviet intervention in Hungary
1961 US-sponsored Bay of Pigs invasion of Cuba; Construction of the Berlin Wall
1962 Cuban Missile Crisis
1965 American intervention in the Dominican Republic
1968 Soviet intervention in Czechoslovakia
1972 US President Richard Nixon’s visit to China
1978 - 89 Vietnamese intervention in Cambodia
1979 - 89 Soviet intervention in Afghanistan
1985 Gorbachev becomes the President of the USSR; begins the reform process
1989 Fall of the Berlin Wall; mass protests against governments in eastern Europe
1990 Unification of Germany
1991 Disintegration of the Soviet Union; End of the Cold War era
1985 March: Mikhail Gorbachev elected as the General Secretary of the Communist Party of the
Soviet Union; appoints Boris Yeltsin as the head of the Communist Party in Moscow; initiates a
series of reforms in the Soviet Union
1988: Independence movement begins in Lithuania; later spreads to Estonia and Latvia
1989 October: Soviet Union declares that the Warsaw Pact members are free to decide their own
futures; Berlin Wall falls in November
1990 February: Gorbachev strips the Soviet Communist Party of its 72-year-long monopoly on
power by calling on the Soviet parliament (Duma) to permit multiparty politics
1990 March: Lithuania becomes the first of the 15 Soviet republics to declare its independence
1990 June: Russian parliament declares its independence from the Soviet Union
1991 June: Yeltsin, no longer in the Communist Party, becomes the President of Russia
1991 August: The Communist Party hardliners stage an abortive coup against Gorbachev
1991 September: Three Baltic republics of Estonia, Latvia and Lithuania become UN members
(later join NATO in March 2004)
1991 December: Russia, Belarus and Ukraine decide to annul the 1922 Treaty on the Creation of the
USSR and establish the Commonwealth of Independent States (CIS); Armenia, Azerbaijan,
Moldova, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan join the CIS (Georgia
joins later in 1993); Russia takes over the USSR seat in the United Nations
1991 December 25: Gorbachev resigns as the President of the Soviet Union; the end of the Soviet
Union
1951 April: Six west European countries, France, West Germany, Italy, Belgium, the Netherlands and
Luxembourg sign the Treaty of Paris establishing the European Coal and Steel Community (ECSC).
1957 March 25: These six countries sign the Treaties of Rome establishing the European Economic
Community (EEC) and the European Atomic Energy Community (Euratom).
1973 January: Denmark, Ireland and the United Kingdom join the European Community (EC).
1979 June: First direct elections to the European Parliament
1981 January: Greece joins the EC.
1985 June: The Schengen Agreement abolishes border controls among the EC members.
1986 January: Spain and Portugal join the EC.
1990 October: Unification of Germany.
1992 February 7: The Treaty of Maastricht was signed establishing the European Union (EU).
1993 January: The single market was created.
1995 January: Austria, Finland and Sweden join the EU.
2002 January: Euro, the new currency, was introduced in the 12 EU members.
2004 May: Ten new members, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania,
Malta, Poland, Slovakia and Slovenia join the EU.
2007 January: Bulgaria and Romania join the EU. Slovenia adopts the Euro.
2009 December: The Lisbon Treaty came into force.
2012 : The EU is awarded the Nobel Peace Prize.
2013: Croatia becomes the 28th member of the EU.
2016: Referendum in Britain, 51.9 per cent voters decide that Britain exit (Brexit) from the EU.
Chapter 5
Contemporary South Asia
South Asian Association for Regional It launched the South Asian Free Trade Area
Cooperation (SAARC) in 2006.
SAARC maintains permanent diplomatic
Founded: 8 December 1985, Dhaka, relations at the United Nations as an observer
Bangladesh and has developed links with multilateral
Headquarters: Kathmandu, Nepal entities, including the European Union.
The South Asian Association for Regional SAARC members signed the South Asian Free
Cooperation (SAARC) is the regional Trade (SAFTA) agreement which promised
intergovernmental organization and the formation of a free trade zone for the
geopolitical union of nations in South Asia. whole of South Asia.
Its member states include Afghanistan, The Agreement was signed in 2004 and came
Bangladesh, Bhutan, India, Nepal, the into effect on 1 January 2006. SAFTA aims at
Maldives, Pakistan and Sri Lanka. lowering trade tariffs. But some of our
SAARC comprises 3% of the world's area, 21% neighbours fear that SAFTA is a way for India
of the world's population and 3.8% (US$2.9 to ‘invade’ their markets and to influence their
trillion) of the global economy, as of 2015. societies and politics through commercial
SAARC was founded in Dhaka on 8 December ventures and a commercial presence in their
1985. countries.
Its secretariat is based in Kathmandu, Nepal.
The organization promotes development of
economic and regional integration.
1947: India and Pakistan emerge as independent nations after the end of British rule
1948: Sri Lanka (then Ceylon) gains independence; Indo- Pak conflict over Kashmir
1954-55: Pakistan joins the Cold War military blocs, SEATO and CENTO
1960: India and Pakistan sign the Indus Waters Treaty
1962: Border conflict between India and China
1965: Indo-Pak War; UN India-Pakistan Observation Mission
1966: India and Pakistan sign the Tashkent Agreement; Six-point proposal of Sheikh Mujib-ur
Rahman for greater autonomy to East Pakistan
1971 March: Proclamation of Independence by leaders of Bangladesh
August : Indo-Soviet Treaty of Friendship signed for 20 years
December : Indo-Pak War, Liberation of Bangladesh
1972 July: India and Pakistan sign the Shimla Agreement
1974 May: India conducts nuclear test
1976: Pakistan and Bangladesh establish diplomatic ties
1985 December: South Asian leaders sign the SAARC Charter at the first summit in Dhaka
1987: Indo-Sri Lanka Accord; Indian Peace Keeping Force (IPKF) operation in Sri Lanka (1987-90)
1988: India sends troops to the Maldives to foil a coup attempt by mercenaries India and Pakistan
sign the agreement not to attack nuclear installations and facilities of each other
1988-91: Democracy restoration in Pakistan, Bangladesh and Nepal
1996 December: India and Bangladesh sign the Farakka Treaty for sharing of the Ganga Waters
1998 May: India and Pakistan conduct nuclear tests December: India and Sri Lanka sign the Free
Trade Agreement (FTA)
1999 February: Indian PM Vajpayee undertakes bus journey to Lahore to sign a Peace Declaration
June-July: Kargil conflict between India and Pakistan
2001 July: Vajpayee - Musharraf Agra Summit unsuccessful
2004 January: SAFTA signed at the 12th SAARC Summit in Islamabad
2007: Afghanistan joins SAARC
2014 November: The 18th SAARC Summit in Kathmandu, Nepal
1941August: Signing of the Atlantic Charter by the US President Franklin D. Roosevelt and British
PM Winston S. Churchill
1942 January: 26 Allied nations fighting against the Axis Powers meet in Washington, D.C., to
support the Atlantic Charter and sign the ‘Declaration by United Nations’
1943 December: Tehran Conference Declaration of the Three Powers (US, Britain and Soviet Union)
1945 February: Yalta Conference of the ‘Big Three’ (Roosevelt, Churchill and Stalin) decides to
organise a United Nations conference on the proposed world organisation
April-May: The 2-month long United Nations Conference on International Organisation at San
Francisco
1945 June 26: Signing of the UN Charter by 50 nations (Poland signed on October 15; so the UN has
51 original founding members)
1945 October 24: the UN was founded (hence October 24 is celebrated as UN Day)
1945 October 30: India joins the UN
World Bank
The World Bank was created during the International Atomic Energy Agency
Second World War in 1944. (IAEA)
Its activities are focused on the developing
countries. The International Atomic Energy Agency
(IAEA) was established in 1957.
It works for human development (education,
health), agriculture and rural development It came into being to implement US President
(irrigation, rural services), environmental Dwight Eisenhower’s “Atoms for Peace”
protection (pollution reduction, establishing proposal.
and enforcing regulations), infrastructure It seeks to promote the peaceful use of nuclear
(roads, urban regeneration, and electricity) energy and to prevent its use for military
and governance (anti-corruption, purposes.
development of legal institutions). IAEA teams regularly inspect nuclear facilities
It provides loans and grants to the member- all over the world to ensure that civilian
countries. In this way, it exercises enormous reactors are not being used for military
influence on the economic policies of purposes.
developing countries.
Amnesty International
It is often criticised for setting the economic
agenda of the poorer nations, attaching Amnesty International is an NGO that
stringent conditions to its loans and forcing campaigns for the protection of human rights
free market reforms. all over the world.
It promotes respect for all the human rights in
the Universal Declaration of Human Rights.
Chapter 7
Security in the Contemporary World
Biological Weapons Convention (BWC) The Chemical Weapons Convention prohibits
the large-scale use, development, production,
The Convention on the Prohibition of the stockpiling and transfer of chemical weapons.
Development, Production and Stockpiling of
Bacteriological (Biological) and Toxin Anti-ballistic Missile (ABM) Treaty
Weapons and on their Destruction was the
first multilateral disarmament treaty banning The Anti-Ballistic Missile Treaty (1972—2002)
the production of an entire category of was an arms control treaty between the
weapons. United States and the Soviet Union on the
The Convention was the result of prolonged limitation of the anti-ballistic missile (ABM)
efforts by the international community to systems used in defending areas against
establish a new instrument that would ballistic missile-delivered nuclear weapons.
supplement the 1925 Geneva Protocol. Under the terms of the treaty, each party was
The Geneva Protocol prohibits use but not limited to two ABM complexes, each of which
possession or development of chemical and was to be limited to 100 anti-ballistic missiles.
biological weapons. Signed- 26 May 1972
Signed 10 April 1972 Location- Moscow, Russian SFSR, USSR
Location London, Moscow, and Washington, In June 2002 the United States withdrew
D.C. from the treaty, leading to its termination.
Effective 26 March 1975
Strategic Arms Reduction Treaty (START)
Chemical Weapons Convention (CWC)
START (Strategic Arms Reduction Treaty) was
Drafted: 3 September 1992 a bilateral treaty between the United States of
Effective: 29 April 1997 America and the Union of Soviet Socialist
Republics (USSR) on the reduction and
Location: Paris and New York
limitation of strategic offensive arms.
The Chemical Weapons Convention (CWC) is
The treaty was signed on 31 July 1991 and
an arms control treaty that outlaws the
entered into force on 5 December 1994
production, stockpiling, and use of chemical
weapons and their precursors. The START I treaty expired 5 December 2009.
On 8 April 2010, the replacement New START
The full name of the treaty is the Convention
treaty was signed in Prague by United States
on the Prohibition of the Development,
President Barack Obama and Russian
Production, Stockpiling and Use of Chemical
President Dmitry Medvedev.
Weapons and on their Destruction and it is
administered by the Organisation for the Following ratification by the U.S. Senate and
Prohibition of Chemical Weapons (OPCW), an the Federal Assembly of Russia, it went into
intergovernmental organization based in The force on 26 January 2011.
Hague, The Netherlands. This Treaty was the first to provide
tremendous reductions of American and
Soviet/Russian strategic nuclear weapons.
1) End poverty in all its forms everywhere 4) Ensure inclusive and equitable quality
2) End hunger, achieve food security and education and promote lifelong learning
improved nutrition and promote opportunities for all
sustainable agriculture 5) Achieve gender equality and empower all
3) Ensure healthy lives and promote well- women and girls
being for all at all ages 6) Ensure availability and sustainable
management of water and sanitation for
all
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MALUKA IAS
7) Ensure access to affordable, reliable,
sustainable and modern energy for all
8) Promote sustained, inclusive and
sustainable economic growth, full and
productive employment and decent work
for all
9) Build resilient infrastructure, promote
inclusive and sustainable industrialization
and foster innovation
10) Reduce inequality within and among
countries
11) Make cities and human settlements
inclusive, safe, resilient and sustainable
12) Ensure sustainable consumption and
production patterns
13) Take urgent action to combat climate
change and its impacts
14) Conserve and sustainably use the oceans,
seas and marine resources for sustainable
development
15) Protect, restore and promote sustainable
use of terrestrial ecosystems, sustainably
manage forests, combat desertification,
and halt and reverse land degradation and
halt biodiversity loss
16) Promote peaceful and inclusive societies
for sustainable development, provide
access to justice for all and build effective,
accountable and inclusive institutions at
all levels
17) Strengthen the means of implementation
and revitalize the global partnership for
sustainable development