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Positive Economics:

1. The positive economics is the study of ‘what was’ and ‘what is’ under the given set of circumstances. It is concerned with how the economy performs the basic functions of what to produce, how to produce and for whom to produce. It explains how the economy takes decisions about consumption, production and exchange of goods. 

2. It deals with the scientific explanation of the working of the economy. It analyses every issue of economics from a positive perspective without passing any value judgments. It deals with the cause and effect relationship of economic variables. 

Normative Economics:

1.The Normative economics studies ‘what ought to be’. It explains about ‘what should be and should not be done’. Here we try to understand that whether the mechanisms are desirable ornot. The normative economic statements are sometime called matters of op.nion or statements of value. 

2. The advice given by various economists are mostly as per normative economics. In India, Economic Advisers who are appointed by the Government are responsible for advising the Prime Minister as to which of the policies are good and beneficial to the country’s economy and which are bad and detrimental on the whole. 

Economics is both Positive and Normative: 

1. But, Economics is both a positive and normative science. The study of economics involves both scientific investigation and policy analysis. Economists first use science to explain the world and understand how the economy works, later policies are explored for the economic development.

An economic system or economy is a mechanism where the scarce resources are channelized . on priority to produce goods and services. These goods and services produced by all the sectors of the economy determine the national income.

Generally, human wants are unlimited and resources to satisfy them are limited. If there was a perfect match between human wants and availability of resources there would have been no scarcity, no problem of choice and no economic problems at all.

So, one has to select the most essential want to be satisfied with limited resources. In economics, this problem is called ’Problem of Choice’.

The problem of choice arising out of limited resources and unlimited wants is called economic problem. In every economy whether developed or underdeveloped, Capitalistic, Socialistic or Mixed economy, there will be three basic economic problems viz., What to produce, How to produce and For whom to produce. Let us discuss them in detail.

(a)What to Produce: Every country has to decide which goods are to be produced and in what quantities. Whether more guns should be produced or more foodgrains should be grown or whether more capital goods like machines, tools, etc., should be produced or more consumer goods (electrical goods, daily usable products etc.) will be produced. What goods to be produced and in what quantity depends on the economic system of.the country. In Socialistic economy, the Government decides and in Capitalistic economy market forces decide and in Mixed economy, both the Government and market forces provide solutions to this problem.

(b) How to Produce: There are various alternative techniques of producing a product. For example, cotton cloth can be produced with either handloom or power looms. Production of cloth with handloom requires more labour and production with power loom use of more machines and capital. It involves selection of technology to produce goods and services.

There are two types of techniques of production viz., (a) Labour intensive technology and (b) Capital intensive technology. The society has to decide whether production be based on labour intensive or capital intensive techniques. Obviously, the choice of technology would depend on the availability of different factors of production (land, labour, capital) and their relative prices (rent, wages, interest).

(c) For whom to produce: Another important decision with economy has to take is for whom to produce. The economy cannot satisfy all wants of an the people. Therefore, it has to decide who should get how much of the total output of goods and services. The society has to decide about the shares of different groups of people- poor, middle class and the rich, in the national output.

Apart from above, an economy also faces other problems: they are as follows:

(a) The problem of economic efficiency: The efficient utilisation of existing resources of an economy has also become a major problem. The Optimum use of both natural and human resources is needed to prevent the wastage of these resources.

(b) The problem of full employment: Full employment means utilisation of resources to the fullest extent. Under utilisation of human resources leads to unemployment, disguised unemployment etc. If the natural resources are not used to the maximum, there is a wastage of potentiality of an economy.

(c) The problem of economic growth: Every nation wants to increase its Gross Domestic Product to achieve economic growth. This in turn improves the standard of living and reduces poverty and unemployment. Every economy has to increase its ability to produce more goods and services with the help of existing resources in order to achieve economic growth. But many developing countries are facing this problem of economic growth. So, the above are the basic problems of an economy common to all the economic systems of the world.

A centrally planned economy also called as socialistic economy is that economy where the economic activities are controlled by the central Government. Here, the Government takes decisions about the allocation of resources in accordance with objectives to attain economic . and social welfare. Example, Russia, China, North Korea etc.

Here, the basic economic problems are solved as follows: The Government takes decisions about the allocation of resources in accordance with the predetermined goals and objectives to attain maximum social welfare. Government decides what to produce, how to produce and what prices are to be fixed

• Regarding what to produce, the Government may produce those goods and services which are most useful for its society. 
• Regarding how to produce, the most suitable technique in production is adopted whether labour intensive or capital intensive in accordance with the situation in the economy. 
• Regarding for whom to produce, the goods and services are produced to help those people who are suffering from hunger or shortage though there is a loss. 
• It gives importance to the quality of life rather than quantity of production. 
• It focuses the resources on rapid economic development.

Current series negative feedback.

A mixed economy is that economy in which we can see coexistence of both private and public sector enterprises. It is a combination of both Socialistic and Capitalistic features.

Positive feedback.

The Normative Economics studies ‘what ought to be’. It explains about ‘what should be and should not be done’.

The Positive Economics is the study of ‘what was’ and ‘what is’ under the given set of circumstances. It deals with the scientific explanation of the working of the economy.

The basic problems of an economy are What to produce, How to produce and for Whom to produce.

Voltage series negative feedback.

V_i = V_s + V_F

The types of economies are 

1. Socialistic or Centrally planned Economy 

2. Capitalistic or Market Economy and 

3. Mixed Economy.

V_i = V_s - V_F

रेडॉन अत्यन्त कम अर्द्धआयुकाल का रेडियोऐक्टिव तत्व है, इस कारण रेडॉन के रसायन का अध्ययन करना कठिन था।

Correct Answer is: (d) Hg (NH₂) Cl

 heavy white amorphous powder (NH₂HgCl) obtained by adding ammonia to a solution of mercuric chloride or corrosive sublimate; - formerly called also infusible white precipitate, and now amido-mercuric chloride.

Census is conducted in India after an interval of every 10 years.

India was under the British rule for almost 200 years.

The first governmental census was done in the year 1881.

The literacy rate during the British rule was 16 per cent, in which female literacy rate was only 7 per cent.

Agricultural system during British Era : Indian agriculture remained completely traditional and primitive during the British rule. Agricultural technology followed during those days was simple and no transformation was made in it. Oxens were used as the means of transportation and wooden ploughs were used as the major tool. No commercialization had taken place during this time. This had resulted the problem of uneconomic holdings and unproductive agriculture in the country. Thus, agriculture remained merely a means of subsistence for most of the farmers. In the second half of 19th century, famines deteriorated the condition of agriculture further.

The British ruled over India for 200 years but took no sufficient steps to develop irrigation facilities. However, some canals were built in the 20th century. Although, this provided some benefit to agriculture, but no significant change took place in agriculture. On the contrary, due to elimination of agriculture-based industries, the condition of Indian farmers became more miserable and the Indian economy came under the grip of poverty and unemployment.

Industrial system during the British era : Before the Britishers ruled over India, Indian economy was at its peak. It was the centre point for every business activity. Indian spices, handicraft items, clothes etc.

had made their identity in the entire world. But when the Britishers started ruling upon India, the handicraft industry of India started declining due to their exploitative and oppressive policies, because clothes and other items made in England were started to be sold in the Indian markets. The consequence o ‘this was that the cotton textile industry of India declined in a big way due to which all the weavers deployed in the industry became unemployed.

Along with this, the occupation of melting iron also faced slump and the problem of unemployment emerged in both metal industry as well as cotton textile industry. Due to unemployment, people left the towns and migrated to the villages. After many years, in the 10th century, cotton textile and jute industries developed, but the process of industrialisation could not take place in a significant way along with this. Even after India gained independence in 1947, the economy of the country remained agrarian.

Observing the production-related process in an economy carefully, it is clear that the productivity of labour is higher in manufacturing and service sectors as compared to agricultural sector. Due to this, the economic development of the country can be estimated by population distribution on the basis of occupation. In India also, almost 85% people were directly or indirectly engaged in agriculture. Countries, in which agriculture is the main occupation, are considered underdeveloped. According to economists, most of the Indian population was dependant upon agriculture during 1881 to 1951.

At the time of attaining independence, agricultural productivity was at a low level in India. Disinterest of the farmers in agricultural works, lack of modes of irrigation, negligence by the government and lack of latest technology were some reasons which were not allowing increase in per hectare produce.

(a) British colonial era

There were three land-holding systems which existed at the time of independence: 

1. Zamindari System, also known as Permanent System. 

2. Ryotwari System. 

3. Mahalwari System.

Governor General Cornwallis.

During the British rule, the infant mortality rate was very high at almost 218 infants per thousand.

The economic infrastructure includes physical resources, irrigation, transportation, energy, communication, banking, technological know-how etc. of a country. The British rulers developed roads, railways, airports, water transport and post-telegraph etc. resources. Main objective of the British government behind starting of railways was not the favour of India, but to make it easier to transport the raw materials from various parts of the country to the nearest railway stations or ports so that the Indian raw material could be easily sent to England from there and the items manufactured in England could be sent into the Indian markets. But the roads in rural regions were not developed, due to which the lives of rural people used to become miserable in times of natural disasters such as famine.

The starting of railways was done by the British Government in 1850. Although, this is considered as a significant contribution of the Britishers to the Indian economy, yet a huge amount of land revenue was raised from the farmers for its development, and as a result, farmers were attacked by the loan sharks and they were badly exploited. There were two benefits of development of Railways Indian Economy-First, It made easier for the people to move from one part of the country to another and travel long distances. And secondly, it encouraged the commercialization of agriculture.

Water transport was also developed along with railways and roadways, but these efforts did not prove to be reasonably beneficial. Post and telegraph services were also developed. Before the First World War, the pace of development of banking sector in India was very slow. Till 1870, there were only 2 joint stock banks in India which had increased to 9 in number by the beginning of the 20th century, but several bankers became bankrupt due to the banking crisis of 1913. On 1st April 1935, the Reserve Bank of India was established under the RBI Act, 1934.

Dadabhai Naoroji was the first to perform the estimates of data of national income.

Those industries that manufacture machines, tools and intermediate goods.

Dadabhai Naoroji.

Due to less production of food crops, the farmers were forced to grow cash crops during the British Period. They were used as raw material for the industries of England.

India exported cotton and silk textiles, rice, jute, sugar, spices etc. and received gold in return whose profit was earned by the Britishers and they made India the exporter of raw materials, and products made from these raw materials were sold in England at a higher price. India was made the importer of the goods, by which industries started declining gradually.

Economic infrastructure includes country’s physical resources, irrigation, transportation, energy, communication, banking, technological know-how etc.

After colonial exploitation of the Indian economy, India became a major exporter of primary goods of raw material (such as raw silk, cotton, wool, jute, indigo, sugar, etc.) and a major importer of goods produced by British industries (such as cotton, silk and woolen clothes). Most of the capital goods produced in England were included in items of our import. This condition of exports and imports during the British rules tells the saga of the backwardness of the Indian economy.

1. Drainage of wealth from India due to faulty trade policies. 

2. Indian wealth was drained out from India by the British Companies in the form of interest, dividend and profit.

The prohibitionary policies of commodity production, trade and customs of the British government had an adverse affect on the condition and situation of foreign trade of India, and as a result of this, India became the exporter of silk, cotton, wool, sugar, indigo, jute, etc. and the importer of goods made in England.

This includes human resources, under which, the study of population, education, health, housing etc. is done.

After the partition, India received 72 per cent land and 82 per cent population.

The British imposed “free trade policy” in India forcibly while imposing a protectionist policy in England. There was a dual objective behind de-centralization of India. One, they wanted India to become a supplier of raw materials for modem industries developing in England, and two, they wanted India to become an extensive market for their finished products. Capital formation was very low due to low levels of income and saving. Due to low levels of saving and capital formation, productivity was also very low, and thereby, low .level of income.

In the year 1876, Dadabhai Naoroji presented the national income estimates for the year 1867-68 for the British Indian economy.

Social infrastructure can be broadly defined as the construction and maintenance of facilities that support social services. For example – healthcare (hospitals), education (schools and universities), public facilities (community housing and prisons) and transportation (railways and roads). The first census in India was done in 1881, according to which India’s population was 25.4 crore. Therefore, the size of population of India was limited and its growth rate was low.

The literacy rate was also less than 16 per cent. Before 1921, India was in the first stage of demographic transition in which the birth rate and death rate both were high, and after 1921, India entered the second stage (death rate decreases and birth rate remains high). At that time, there was extreme lack of health care services, so people used to be affered by infections diseases. Life expectancy rate level was 32 years only. The problems of poverty and unemployment were acute, and the Britishers did not take steps for the resolution of these problems.

(a) Prosperous

Before the British era, 85 per cent of the population was dependent upon agriculture only. There were three classes in village- farmers, artisans and servants. Among these, the status of farmers was the highest. Farmers used to allot their portion of work to other people and gave them wheat in return. India exported cotton and silk textiles, rice, jute, sugar, spices etc. and received gold in return. Before British era, every Indian village was prosperous and self-reliant in political, social and economic aspect. Agriculture was the main source for income for the government and livelihood of the people.

Indian agriculture was sufficiently developed and farmers were mostly skilled in agricultural activities and productivity of land was high, and the land produced gold in the form of food grains. That is why the Indian Economy was called “The Golden Bird” and this was the reason that foreign traders kept coming to India for trade. British East India Company also came for trading but soon formed India its colony by interfering politically. The Britishers’ main objective was to make India an exporter of raw materials for the rapidly growing industries of England. As a result, the economy of India declined rapidly.

During the British rule, basic infrastructure like railways, ports, water transport, posts and telegraph were developed. However, this development was to serve various colonial self-interests and not to improve the basic living of Indians. Two important contributions were the starting of Railways in 1850 and The Reserve Bank of India on April 1, 1935 under the RBI Act of 1934.

Results of Colonial Exploitation in India : 

1. India was prevented from modernising its industrial structure. Its arts of craftsmanship were destroyed and India was transformed merely into an importer of finished goods. 

2. The Britishers made direct investment in capital goods industries such as tea, coffee and rubber plantations, while no concrete efforts were made for the glorious future of heavy and basic infrastructure industries.

3. Even after being an agricultural country, India was made the exporter of raw materials and a region of commercial agriculture for the self interest of Great Britain.

Around 72 per cent.

Around 61 per cent.

The objective behind economic policy of colonial rule in India was not to develop the country, but its main objective was to make India an exporter of raw materials for the rapidly growing industries of England. As a result, India was badly exploited and the traditional industries of India were destroyed in no time, and the remaining ones also couldn’t sustain and their growth rate remained extremely low.

Zamindars molested the farmers badly. Due to this situation, farmers became their slaves and their condition became miserable.