Ancient Indian Economy and Modern Indian Economy
The science which studies human behaviour as a relationship between ends and scarce means which have alternative uses”. According to Ancient people Economy has different class like –
According to Chanakya, a conducive atmosphere is necessary for the state’s economy to thrive. This requires that a state’s law and order be maintained. Arthashastra specifies fines and punishments to support strict enforcement of laws.
The Arthaśāstra also focuses on issues of welfare (for instance, redistribution of wealth during a famine) and the collective ethics that hold a society together.
Plato support the exercise of temperance in respect to the pursuit of material wealth such that by strengthening moderation a person there-by preserves the order of their psyche. In The Republic he gives an account of the manner by which a state is to be formed with the skills of individuals supporting economic sustainability.
According to Mahavira there are two core political-economic system of the society recognised by the Mahavira. One is Communism and the other, Capitalism. The former is meant to be more socialistic and the latter capitalistic. However the Mahavira found no difference in both these systems because both were driven by materialism.
Modern Indian Economy
- MICRO ECONOMICS: It is a study of behaviour of individual units of an economy such as individual consumer, producer etc.
- ECONOMY: An economy is a system by which people get their living.
- PRODUCTION POSSIBILITY CURVE (PPC): PP curve shows all the possible combination of two goods that can be produced with the help of available resources and technology.
- MARGINAL OPPORTUNITY COST: MOC of a particular good along PPC is the amount of other good which is sacrificed for production of additional unit of another good.
- MARGINAL RATE OF TRANSFORMATION: MRT is the ratio of units of one good sacrificed to produce one more unit of other good.
Basically Ancient Indian Economy depend on agriculture. Agriculture was the chief occupation of the ancient Indian people.
Important concepts of National Income
- Gross Domestic Product at Market Price.
- Gross National Product at Market Price.
- Net Domestic Product at Market Price.
- Net National Product at Market Price.
- Net Domestic Product at Factor Cost.
- Net National Product at Factor Cost.
- Gross Domestic Product at Factor Cost.
- Gross National Product at Factor Cost.
- Private Income.
- Personal Income
- Disposable Income.
Gross Domestic Product at Market Price (GDP at MP):- Gross domestic product at market price is the aggregate money value of the final goods and services produced within the country’s own territory. So as to calculate GDP at MP all goods and services produced in the domestic territory are multiplied by their respective prices. Symbolically GDP at MP = PXQ. Where P is market price and Q is final goods and services.
Gross National Product of Market Price (GNP at MP):- Gross national product at market price is broad and comprehensive concept. GNP at MP measures the money value of all the final products produced annually in a counter plus net factor income from abroad. In short GNP is GDP plus net factor incomes earned from abroad. Net factor incomes is derived by reducing the factor incomes earned by foreigners from the country, in question from the factor incomes earned by the residents of that country from abroad.
Net Domestic Product at Market Price (NDP at MP):- Net domestic product- at market price is the difference between Net National Product at market price and net factor income from abroad. Net domestic product at market price is the difference been GNP at market price minus depreciation and net factor incomes from abroad.
Net National Product at Market Price (NNP at MP):- Net National product measures the net money value of final goods and services at current prices produced in a year in a country. It is the gross national product at market price less depreciation. In production of output capital assets are constantly used up. This fixed capital consumption is called depreciation. Depreciation constitutes loss of value of fixed capital. Thus net national product is the net money value of final goods and services produced in the course of a year. Net money value can be arrived at by excluding depreciation allowance from total output.
Net Domestic Product at Factor Cost (NDP at FC):- Net Domestic product of factor cost or domestic income is the income earned by all the factors of production within the domestic territory of a country during a year in the form of wages, interest, profit and rent etc. Thus NDP at FC is a territorial concept. In other words NDP at factor cost is equal to NNP at FC less net factor income from abroad.
Net National Product at Factor Cost (NNP at FC):- Net national product at factor cost is the aggregate payments made to the factors of production. NNP at FC is the total incomes earned by all the factors of production in the form of wages, profits, rent, interest etc. plus net factor income from abroad. NNP at FC is the NDP at FC plus net factor income from abroad. NNP at FC can also be derived by excluding depreciation from GNP at FC.
Gross Domestic Product at Factor Cost (GDP at FC):- Gross Domestic Product at factor cost refers to the value of all the final goods and services produced within the domestic territory of a country. If depreciation or consumption of fixed capital is added to the net domestic product at factor cost, it is called Gross domestic Product at Factor cost.
Gross National Product at Factor Cost (GNP at FC):- Gross national product at factor cost is obtained by deducting the indirect tax and adding subsidies to GNP at market price or Gross national Product at factor cost is obtained by adding net factor incomes from abroad to the GDP at factor cost.
Private Income:- Private income means the income earned by private individuals from any source whether productive or unproductive. It can be arrived at from NNP at factor cost by making certain additions and deduction. The additions include (a) transfer earnings from Govt, (b) interest on national debt (c) current transfers from rest of the world. The deductions include (a) Income from property and entrepreneurship (b) savings of the non- departmental undertakings (e) social security contributions. In order to arrive at private income the above additions and subtraction are to be made to and from NNP at factor Cost.
Personal Income:- Personal Income is the total income received by the individuals of Country from all sources before direct taxes. Personal income is not the same as National Income, because personal income includes the transfer payments where as they are not included in national income. Personal income includes the wages, salaries, interest and rent received by the individuals. Personal income is derived by excluding undistributed corporate profit taxes etc. from National Income.