F1: The diversity of sectors in the sensex steadily increased over time following market reforms. It shoes less concentration of wealth in few firms and diversification of firms post liberalisation.
F2: Benefit of liberalisation can be gauged from the democratisation of the firms. Now the ratio of size of Biggest/ smallest firm is just 12. In 1991 it was just 100.
C1: Creative destruction create wealth in an economy. It is a process of Industrial mutation that incessantly( continuously) revolutionises the economic structure from within, continuously destroying the old one and creating a new one.
C2: Difference between Pro business vs Pro Crony
| Pro Business | Pro crony |
| Firms compete on a level playing field | Some incumbent firms may receive preferential treatment |
| Efficient resource allocation in an economy | Resource allocation may not be an efficient one |
| Maximisation of citizen welfare | Citizen welfare may not be maximised. |
C3: Dutch Disease: Firms that got free resources diverted efforts towards the tunnelling of the windfall gain instead of towards productive business activity.
C4: Block diagram: Dutch disease and wilful defaulter
F3: Wilful defaulter have an obligation of about 1.4 lakh crore. Most of them are from manufacturing sector.
F4: Had the money siphoned away by wilful defaulter stayed in the economy, the amount would be equivalent to :
- 2 X ( Health sector expenditure, Rural development expenditure)
- 3 X ( MGNREGA expenditure)
C5: Characteristics of wilful defaulter(WD):
- WD tends to be more opaque.
- 60% of the non defaulter and distress defaulter practice non party disclosure.
- WD make large loan to related parties whereas such practice is not common with distress defaulter. Later are net receiver of loans.
C6: WD leads to:
- Transmission of wealth from poor to rich.
- It increased cost of 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z"/> Subscribe on YouTube