Economics: Introduction

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Economics: Introduction
This post briefly introduces the topic "Economics" for various upcoming PSC exams such as degree level preliminary exams, KAS, and other competitive exams. 
  • Study of Wealth – Aphnology.
  • Father of Economics – Adam Smith.
    • Laissez-Faire Policy.
    • Coined the term "Invisible Hands" (The Wealth of Nations).
    • Books -
      • The Wealth of Nations (An Inquiry into the Nature and Causes of the Wealth of Nations; 1776),
      • The Theory of Moral Sentiments (1759).
  • Wealth definition was propounded by – Adam Smith.
  • Father of Welfare Economics – A. C. Pigou.
  • The concept of functional finance was first stated by – John Maynard Keynes.
  • The Labor Theory of value was developed by – David Ricardo.
    • Book – Principles of Political Economy And Taxation.
  • Developer of Human Development Index – Mahbub ul Haq (Pakistan, 1990).
  • First Industrial Revolution was in – England.
  • First country to introduce a carbon tax – New Zealand.
  • First country to introduce VAT (Value Added Tax) – France.
  • First country that introduced fat taxes – Denmark.
  • The country in which the salt tax was imposed for the first time – China.
  • The first central bank in the world – Central bank of Sweden.
  • "Essay on Population" Is the famous work of – Thomas Malthus.
  • "Communist Manifesto & Das Capital" the famous work of – Karl Marx.
  • "The Organizer" is the work of – Saint Simon
  • "Inflation is always and everywhere a monetary phenomenon" are the famous words of – Milton Friedman.
  • "Economics is what Economist do" are the famous words of – Jacob Viner.

Indian Economics

  • Financial Capital of India – Mumbai.
  • Financial Year / Fiscal Year in India – 1st April to 31st March.
  • India is considered as a – Developing economy.
  • The backbone of the Indian economy – Agriculture.
    • provides employment for 50% of the country's workforce.
    • accounts for 18% of India's GDP (Gross Domestic Product).
  • Father of Indian Economics – Chanakya, Dadabhai Naoroji (for the drain of wealth theory), Mahadev Govind Ranade ***
  • Father of Indian Budget – James Wilson.
    • Introduced the First Budget of India (1860).
    • The man behind the income tax act.
    • Founder of Standard Chartered Bank.
    • Founder of the famous business magazine "The Economist."
    • Finance member of Viceroy Lord Canning's council (1859).
  • Father of Indian Statistics – Prof. Prasanta Chandra Mahalanobis.
    • Founder of Indian Statistical Institute (ISI; 1931; Kolkata).
    • Publication started by PC Mahalanobis – Sankhya (1933).
      • Official publication of Indian Statistical Institute – Sankhya, the Indian Journal of Statistics.
    • The man behind the Union Budget concept.
    • Architect of India’s Second Five Year Plan (Mahalanobis model / Feldman-Mahalanobis Model).
    • Mahalanobis Distance – a measure of comparison between two different data sets.
  • National Statistics Day – June 29 (Birthday of PC Mahalanobis; named by then PM Manmohan Singh in 2006).
  • Father of Indian Economic Planning – M. Vishweswaraiah.
    • Book – Planned Economy in India.
  • A group of rich and influential businessmen in Bombay drew up a plan for the economic development of India – Bombay Plan (January 1944; J. R. D. Tata, G. D. Birla, Dr. John Matthai, Sir Shri Ram, P. Thakurdas, Ardeshir Dalal,A. D. Shroff & Kasturbhai Lalbhai).
    • Leader – Ardeshir Dalal.
    • Malayali industrialist involved in the Bombay Plan – Dr. John Matthai.
  • Father of Indian Economic Reforms – P.V. Narasimha Rao.
  • Father of Indian Five Year Plan – Pandit Jawaharlal Lal Nehru.
  • First Prime Minister to present the budget – Pandit Jawaharlal Lal Nehru (1958).
  • Father of National income accounting in India – V. K. R. V. Rao.
  • First person to calculate the national income in India – Dadabhai Naoroji.
    • Drain of wealth theory.
    • Book – Poverty and un-British rule in India.
  • First person to calculate the national income in independent India – PC Mahalanobis.
  • First person to scientifically calculate the national income in India – V. K. R. V. Rao.
  • The first National Income calculation on a scientific basis was done in India in the year – 1931-32.
  • The national income committee was appointed in 1949 under the chairmanship of – PC Mahalanobis.
  • The body which compiles the national income of India – Central Statistics Office (CSO)
    • Formed on – May 2, 1951.
    • Headquarters – New Delhi.
  • First country to introduce an official family planning programme – India.
  • The term Gandhian economics coined by – J. C. Kumarappa.
  • The Planning Commission was set up in – 1950 (March 15).
    • Dissolved in – August 17, 2014.
    • Headquarters – Yojana Bhavan, New Delhi.
  • Chairman of the Post-War Reconstruction Committee of Indian Trade Union – M.N. Roy.
  • The People’s Plan was authored by – M.N. Roy (1945).
    • to meet the immediate basic needs of the Indian people within a period of 10 years.
  • Sarvodaya Plan (1950) was drafted by – Jaiprakash Narayan.
    • to give emphasis on the importance of agriculture, small-scale village, and cottage industries.
  • The Wage Good Model was put forward by – P. R. Brahmananda & C. N. Vakil.
    • Based on - Planning for an Expanding Economy (authored by P. R. Brahmananda & C. N. Vakil, 1956).
    • In contradiction to Mahalanobis Model.
  • The Gandhian plan was formulated by – Shriman Narayan Agarwal (1944).
Order of Incorporation ➡ Bombay Plan > Gandhian Plan > People’s Plan > Sarvodaya Plan
  • Committee constituted by Planning commission to estimate poverty in India – Y. K. Alagh Committee (1979).
  • The state-specific (urban & rural) poverty lines were recommended by – Lakdawala Committee (1993).
  • The First Industrial Policy of Independent India was announced on – April 6, 1948.
    • Presented by – Dr. Shyama Prasad Mukherjee.
  • Who appoints the Finance Commission – President of India.
  • The final approval to the five-year plans of India was given by – National Development Council (NDC).
  • National Development Council was set up in the year – 1952.

Basics of Economics

  • Three basic sectors of the Economy –
    • Primary sector – extraction of raw materials (Agriculture, Farming, Fishing, Forest & Mining).
    • Secondary sector – manufacturing sector (Energy & Cloth production, Construction).
    • Tertiary sector – service industry – offering services to consumers (Banking & Insurance, IT, Entertainment, Storage, Trade, Transportation, Tourism & Retail).
  • The largest share of India's national income comes from which sector – Service Sector.
  • Economics is mainly divided into – Macro Economics & Micro Economics.
  • The terms microeconomics and macroeconomics were coined by – Ragnar Frisch.

Macro Economics

  • Also known as – Aggregate economics.
  • Founding Father of Macroeconomics – John Maynard Keynes.
  • Based on – The General Theory of Employment, Interest and Money (by John Maynard Keynes, 1936).
  • Macroeconomics – the study of the factors affecting the economy ie, performance, structure, behavior, and decision-making, as a whole rather than the individual factors.
  • National income & output.

Micro Economics

  • Also known as – Price Theory.
  • Microeconomics – the study of the individual units such as individuals, households, etc within the economy.

*** There is an ongoing debate about who is the true father of Indian Economics, all of them given above are the leading contenders. Wikipedia says it is PV Narasimha Rao, 11th class text points out Dababhai Naoroji, the Newspapers like Hindu are leaning towards M.G. Ranade while the rest says it is Chanakya.

Other strong contenders are Dr. Manmohan Singh & Dr. Amatya Sen.

For Further Reading:

    1. Reserve Bank of India.
    2. First of Banks: Banking History
    3. Nationalized Banks in India 2020

📝SideNotes:

  • Engineer's Day – September 15 (Birthday of M. Visvesvaraya)