TyroCity: Economics 11 Notes

Features of agriculture

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Sustenance farming

Nepal carries out sustenance farming rather than commercial. In the Nepali Market, demand of food is equal to its supply. In last 3-4 decades Nepal use to export wheat to Bangladesh but now its vice versa. The production of agro-products makes just equal to its demand.

2. Monsoon based agriculture

Due to lack of irrigation facilities, almost all the farmers depend upon monsoon rain. Nepal’s government has not made any irrigation plant till today. Only few places are reaching to irrigation facilities. Only 69.48% of land has irrigation facilities where only 50% of land or cultivable lands have year round facilities.

3. Predominance of food crops

Food crops are the type of crops that are basically used as primary source of food. Such as paddy, maize, etc. From centuries back in Nepal has been continuously growing more amounts of food crops and today also it shares around 48.9% of total food which is nearly half.

4. Traditional technology
Nepal is practicing traditional method of farming since past. To plough the field, we never use improved seed and pesticides. GON also does not have any attention towards it.

5. Low productivity

It’s obvious to have low productivity because farmers entirely depend upon monsoon rain which is uncertain. No proper irrigation facilities and traditional method of farming causes low production.

Role of Medium and Large Scale Industries

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Development of medium and large scale industries help to remove the problem of unemployment by creating wide range of unemployment by creating wide range of employment opportunities to unskilled, semi-skilled and skilled human resource.

2. Proper utilization of resources

Medium and large scale industries are necessary for the scientific utilization of available natural resources such as forest resources, mineral resources, human resources and water resources.

3. Sources of Government Revenue

These industries produce huge amount of goods, generally expensive one. They are exported to foreign land and Government earns tax, VAT, Sales tax, etc. which increases Government Revenue.

4. Development of basic infrastructure

Medium and large scale industries cannot be operated without proper infrastructure. So, along with the development of industries, infrastructure of development also increases simultaneously.

5. Development in agricultural sector

Modem tools and equipment are produced by medium and large scale industries. Implementation of modern tools in agricultural sector can be done. Finally, there will be development in the sector of agriculture.

Remedial Measures of poverty reduction

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Population Control

Population is the total number of people living in a certain place for specific period of time. The more population, the more requirements of different aspects. To fulfill the need of huge population is not a simple task. But if the population is small then, fulfillment can be done. All can get job and other requirement. Finally, the number of poor decreases.

2. Industrialization

Industries are the main source of income and employment. Many people can be employment opportunities if the industries are established. Thus, the number of poor decreases with the increase in the number of industries.

3. Education

Educated people are aware about family planning measures, (birth spacing) and helps to reduce population growth. So, poor people should be provided education free of cost, and they should be aware about family planning measures.

4. Use of modern technology

People in Nepal use traditional method of farming. So, the productivity is low which includes about 49% of food crops. In order to increase productivity and standard of farmer, modern technology should be used.

5. Reduce in-equality

Vast inequality between rich and poor should be banished “Education for all”, should be implemented and maintained properly. Poor should also have equal right to go to school. So that all can know about negative impact of large population.

Problem of cottage and small scale industry

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Lack of rural infrastructure
Nepal’s rural area is sympathies and have no infrastructure life is extremely difficult and hard to earn livelihood. To run an industry, infrastructure is essential but Nepal lacks infrastructure.

2. Lack of skilled manpower

Nepal does not have sufficient manpower basically skilled one Brain drain is the main problem of Nepal. All skilled manpower move abroad which is the major problem.

3. Lack of modern technology

Farmers in our country use traditional method of farming. They do not know about modern technology. They totally depend upon tradition. They depend upon monsoon rain and use low quality seed.

4. Lack of credit facilities

Farmers are poor and there is no proper banking facility in Nepal which lends money in low interest. So, farmers depend upon money- lender, traders etc and charge very high rate interest.

5. Limited market

Due to lack of infrastructure (communication and transportation) farmers do not get opportunity to sell their product in reasonable price.

6. Intermediary Exploitation

Intermediary or middlemen are the price maker of Nepalese economy. They exploit the entire economy. They charge very amount to farmers and sell/supply to market in very huge amount. They are the profit maker and exploiter.

Human Development Indicator

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Better Economic
Human development is development of overall situation of human being such as health, education, income, life expectancy etc. The variables such as human development index (HDI) per capita income (PCI), literacy rate, life expectancy at birth etc are regarded as indicators of Human Development. Some major indicators of Human Development have been discussed below.

2. Education

Educational Indicators include total literacy rate, male/female literacy rates, adult literacy rate, school enrollment rate and average years of schooling. It helps to increase the efficiency of human being.

3. Demographic

It indicates the number of year new born children would live subject to the prevailing risks of mortality. It depends upon the infant mortality rate and as of death.

4. Health

Basic needs include food, shelter, clothing, education and health service. Higher the fulfillment of basic needs, higher will be the level of human development and vice-versa.

Public Expenditures

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

Government revenue collected from different sources is allocated for different purposes. Generally public expenditure is classified into development expenditure and administrative expenditure. The government allocates resources through its ministries, departments and local authorities. These types of expenditures are made either for their own maintenance or for the promotion of social welfare of the people. In the government expenditure we include development expenditure, administrative expenditures, diplomatic expenditure, difference expenditure, payments of public debts and interest and miscellaneous expenditure.

Role or importance of public expenditure

To maintain law and order’
To maintain national security
To provide administrative services
To invest in social overheads like transportation, communication, irrigation, energy, education, health, security, law and justice
To ensure economic equity in the society.
For development and promotion of basic and strategic industries

Classification of public expenditure

1. Development expenditures:
Expenditures on the construction of infrastructures of transportation, communication, sanitation, irrigation, education, health, power, energy etc is called development expenditure

2. Expenditure on public utilities:
After the construction of infrastructures the government spends the money to provide facilities of education, sanitation, drinking water, communication, transportation etc. these expenditures are expenditure on public utilities.

3. Defense expenditure:
The expenditure on arms and armaments to protect the country and the people from foreign aggression is called defense expenditure

4. Expenditure on general administration:
For the good governance, to keep peace, security and justice in the country, the government makes the expenditures through different ministries, departments and constitutional bodies etc. These expenditures are called general administration expenditure

5. Conservation of resources:
To avoid depletion in the quantities and qualities of the resources and for their sustainability the government makes expenditures on their conservation. It includes expenditure on forestry, soil fertility management, irrigation, flora fauna management

6. Preservation and renovation of monuments:
For the preservation of culture, traditions, arts, skills of the people of the country the government makes the expenditure. The government spends the money also to renovate the historical, archaeological, religious monuments.

Economics XI

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

General

Human Resources

Agriculture

Poverty

General Industry

Tourism Industry

Types of Poverty

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

Poverty is a situation in which people cannot fulfill their basic needs.

Types of poverty

Absolute Poverty
Relative Poverty

1. Absolute Poverty:
Absolute poverty refers to a situation which individuals are unable to attendant necessities of life such as food, cloth, shelter, safe drinking water, health facilities, primary education etc.

In other word, it is a situation in which the level of income of the people is so low that they cannot afford must of their basic needs.

2. Relative poverty:
Relative poverty is the situation in which a person has enough income to sustain the life but the income and living standard is lower compared to rest of the community. It is also the condition of less income in a country compare to the worldwide income average income.

Public Enterprise

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

Public Enterprise is an enterprise under government control. More than half of the total share of a public enterprise is owned by the government and effectively managed by the government.

Objective of public enterprises

To improve economic activities.
To provide goods and services to the public at fair prices.
To generate the employment opportunities.
For utilizing foreign aids.
To develop the economic and social infrastructure.
To correct the unfavorable balance of payment.
To earn foreign exchange.
To obtain economic, political and social objectives of the nation by mobilizing available capital and labor resources.

State the present situation of public enterprises in Nepal.

Public enterprises are operating under six broad sectors in Nepal. They are industrial, commercial, service, social, public utility and finance.

There are 36 public enterprises, 7 in industrial sector, 6 in commercial sector, 7 in commercial sector, 5 in social sector, 3 in public utility and 8 in financial sector.

S .N.	Sectors	Total	Capital investment	Gross profit (million)
1.	Industrial	7	23884	-784.3
2.	Commercial	6	54698	3033.1
3.	Service	7	11733.5	1358.0
4.	Social	5	1590.5	-292.5
5.	Public Utility	3	121539.4	5032.4
6.	Finance	8	79930.4	1056.6
	Total	36	222,652.0	10003.3

Source: Ministry of Finance, 2010

The above table shows that only 4 sectors (commercial, service, public utility and finance) have earned profit and rest two (industrial and social) has faced loss during the fiscal year 2008/09, rest of the sector incurred losses. Thus, overall financial status of the public enterprises is very unsatisfactory.

Difference Between Private And Public Finance

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

Private finance (individual)	Public finance ( government)
An individual adjusts his or her expenditure according to his or her income.	The public authority adjusts its income to its expenditure.
A private individual tries to have a surplus of income over expenditure i.e. surplus budget.	A public authority will spend all that it gets
An individual can borrow money from other individual only and externally	A public authority esp a state can raised loans from both internally
Finances of individuals are limited	Finances of government are flexible
Private individuals cannot use force to get their income; they cannot compel others to get income	The government can use coercive method to realize revenues
Not a single individual can print notes	A state can print currency notes in order to meet its expenditure in difficult times

Scarcity and choice

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

Chapter 3

Scarcity and choice

Basic economic issues:

The major causes of economic problems are basic economic issues.

1. Scarcity of resources
The common meaning of scarcity refers to unavailability in the market of a certain commodity. A commodity is scarce, in economic view, not due to its rarity in market but due to its means is limited. Scarcity explains this relationship between limited resources and unlimited wants and the problem therein. Scarcity raises national economic problems. There is poverty and human misery due to scarcity. Scarcity tells us about importance of commodity. The resources are not only scarce, but they also have alternative uses.
The resources mean all the national resources, artificial resource and human resource itself. However, the main economic problems are abused by scarcity of natural resource. The resources differ from place to place in their types, quantities and the qualities. They are usable for the production of varieties of goods and services to satisfy different human wants. But they are very in sufficient to satisfy all of human wants. Their supply is very limited and changeable with the flight of time. Their quantities and qualities may decrease if we don’t utilize them properly.

2. Choice of the best alternatives:-

Choice is involved in economic activities at both consumption and production levels. The problem of choice begins with an individual’s liking of how much time he would allot for work and how much for leisure. On the income earned, the choice is between how much to consume now and how much to save for the future. The chain of choice goes on deeper and deeper referring to the profitable use of resources at the hand of economic actors.

The choice of the best alternative is the selection of the best combination of goods producible with the use of all the resources available that gives maximum social benefits to the nation. The problem of choice is accused by limited resources and unlimited human wants. Since, each resource can be put for the production of varieties of goods; there is the possibility of large number of combination of goods producible in the country. However, they give more or less social benefit or utility to the nation. As per the requirements, importance or preference of human needs/ human requirements or importance of the goods the choice of the best alternative is met.

3. Allocation of resources:-
The allocation of resources means use of the resources dividing them for the production of the combination of goods that gives the maximum social benefit or utility to the nation. It is called appropriation of the resources to satisfy most important wants out of their unlimited types. The allocation of the resources is necessary because of insufficiency of limited resources for the fulfillment of unlimited human wants. Allocation is usually made to the basis of market demand or people’s preference on the goods. For it the concepts of demand and supply or the concepts of production possibility curve and preference curve of people are used.

The resources have alternative uses. One use can be chosen and all others have to be satisfied. Allocation is related to the choice of how much of resource to be allocated in what sector. The whole body of planning, programming and even budgeting is nothing, but the statement of allocation of resources. Resource allocation occupies central position in economics. Economics is the principle governing the allocation of scarce means among competing ends.

Production possibility curve (PPC):-

A production possibilities curve is the graphical illustration of all the combinations of goods and services that can be produced in a given economy at a given time, if all the available resources in the economy in the economy are fully and efficiently employed. All points on PPC are points of maximum production efficiency or minimum production inefficiency; resources are allotted in such a way that it is impossible to increase the output of one commodity without reducing the output of other.

The PPC has following assumptions and features:-

a. It is based upon two commodities or two goods model

b. There is no change in technology and production technique

c. All the resources are utilized

d. PPC is downward sloped concave curve.

e. PPC shifts upward if the new resources are explored or technology is advanced

To explain the concept of production possibility curve lat assume the country can produce one of the following combinations of goods utilizing all the resources available as shown in the table below.

Table:

combinations	butter	guns
A	15	0
B	14	4
C	12	7
D	9	9
E	5	11
F	0	12

In the above table there are six different possible combinations of butter and guns. If we represent them we obtain the PPC as shown in the graph.

In the above figure, if production of butter is decreased from 15 units to 14 units, then the production of guns increase from 0 units to 4 units which signifies 1 pound of butter production decrement causes to increase guns production to 4. If production of butter is decreased from 14 units to 12 units, then the production of guns increase from 4 units to 7 units, which signifies 2 pound of butter production decrement causes to increase guns production to 3 and so on.

Shifting of the curve:-The rightward shift in PPC indicates increase in production capacity of economy due to improvement in technology or new resources or both.

Limitations:-

PPC says nothing about which goods people want and which to provide the most satisfaction but only indicates about available options.
PPC are not related to preferences of consumer or producers so there is no economic efficiency.
It does not show if there is efficient use of resources.

Conclusion:-

Opportunity cost is shown by negative slope of PPC.
Full employment is shown by maximum production obtained with existing technology, given that all available resources are engaged in production
There is indication of unemployment, economic growth and investment.

Problems of agriculture in Nepal

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Lack of irrigation

Irrigation is the basic infrastructure for agriculture development. But only 69.48% of total irrigable land has irrigation facility and only 50% of land year round facility. So, farmers entirely depend upon monsoon rain.

2. Lack of technology

Nepal herself is poor. Moreover, her people are also poor. About 205% of total populations live under poverty line. So, neither they can afford for new technology, nor they have proper knowledge about it. So, our agricultural sector is lacking behind.