Economics 4 Marks Question

Health and expenditure on information are a source of human capital formation in the following way:
1. Expenditure on Information as a Source of Human Capital: Formation People spend to acquire information relating to the labour market, education and health institutions, etc. Information relating to job opportunities and educational institutes enables people to increase their earning potential. Therefore, it is also a determinant of human capital formation.
2. Health as a Source of Human Capital Formation: Health is an important source of human capital formation because only a healthy worker can contribute towards increasing the capital stock of the country. A sick worker, without access to medical facilities is compelled to abstain from work, and there is a loss of productivity.

i. Yes. Basic infrastructure such as railways, posts and telegraphs developed under the colonial regime. However, the real motive behind this development was not to provide basic amenities to the people of India but to serve various colonial interests. The roads and railways were built primarily to mobilise the army within India, drawing out raw materials from the countryside to the nearest railway station/port to export. In addition to this, communication tools like telephone and telegraph were introduced to serve the purpose of maintaining law and order.
ii. In the post-reform period, Government of India devised Navratna Policy for Public Sector Undertakings (PSUs) with an objective to improve efficiency, infuse professionalism and enable them to compete more effectively in the liberalised global environment. Under this policy, the government partly disinvested some PSUs. However, some PSUs were granted greater managerial and operational autonomy and allowed PSUs to raise resources by themselves from financial markets.

The changing role of state is reflected in the eighth five year plan which mentioned that the planning in India will be indicative increasingly. In order to give some correctness to the changing role of state the eighth five year plan has identified the principles governing public sector. These are :
1. The public sector must withdraw from the areas where no public sector is served by its presence.
2. State should make investments only in those areas where investment is of main infrastructural nature where private sector is not likely to come forth to an adequate extent within a reasonable time perspective.
After that we saw a major shift in the Indian economy and the role of state has been changing from a controller, regulator and participator to that of a facilitator, observer and guide. The changes that took place in the role of state since 1991 are as under:
a. Before economic reforms, government had its share in all sectors of the economy. It was producing bread, butter, biscuits, milk, running hotels and many of these were actually not required to be in public sector. Government withdrew herself from these sectors through delicensing, deregulation and disinvestment.
b. As a regulator, during 1947-1990, Government regulated all activities with the laws and acts. But after 1991, except some basic and strategic goods and services, decisions were made to be market driven. For this purpose, regulatory authorities were set up for different sectors.
c. Since 1991, Government has focused its attention on development of social sector like education, health, defence, law and order.
Overall, we can say that the role of state has changed from producer to production facilitator.

The common goals of five year plans in India are: growth, modernisation, self-reliance and equity. Description of these goals are as follows:
i. Growth: It refers to increase in the country’s capacity to produce the output of goods and services within the country. It implies either a larger stock of productive capital, or a larger size of supporting services (like transport, banking, etc.), or an increase in the efficiency of productive capital and services.
ii. Modernisation: Modernisation refers to adoption o f new technology to increase the output of goods and services. It also refers to changes in social outlook such as the recognition that women should have the same rights as men.
iii. Self-reliance: Self reliance means avoiding import of those goods which could be produced in India itself. The first seven five year plans gave importance to self reliance.
iv. Equity: In addition to growth, modernisation and self-reliance, equity is important. The benefits of economic prosperity should reach the poor sections as well instead of being enjoyed by the rich. Every Indian should be able to meet his/her basic needs such as food, house, education and health care; and inequality in the distribution of wealth should be reduced.