India and South Asia

Southeast Asia is comprised of ten countries namely Burma, Brunei, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam. All these countries are members of Association of South East Asian Nations (ASEAN). Burma (Myanmar) shares a contiguous land and sea frontier with India while Thailand, Indonesia and other countries in the region share
common maritime frontiers. Needless to say, that they are India’s close neighbors, with whom its relations date back to time immemorial. The history of the ancient Southeast Asian Kingdoms, i.e. Funan, Champa, Cambodge, Pagan, Dwarabati, Srivijaya and Majapahit indicate India’s intimate cultural ties. The art, architecture, epic and language have had similarities and their origin and growth cannot be understood in proper perspective without understanding their Indian counterparts. Ashoka the Great, had sent his emissaries, Sona and Uttara to spread the gospel of Buddhism in the region of Burma, Thailand, Laos and Cambodia. These nations declared Buddhism as their state religion. The impact of Hinduism still remains as part of their indigenous culture and religion. The ethnic Malays accepted Islam as their religion but the Muslims in Java have not yet disowned their Hindu traditions. Some of them still believe in animism and worship many spirits in different names. Bali remains a Hindu dominated society, and adherents of Buddhism
can be found in all parts of the Southeast Asia.


Malacca, Sunda and Lombok are the important sea-lanes linking East Asia with the rest of the world. Singapore, Malaysia and Thailand are industrially advanced. Singapore has an effective service sector in the field of finance, airlines, computers and shipping. Mainland Southeast Asia has diverse mountain ranges and rivers running from North to South, and most of them originate in Tibet. The main rivers are Mekong passing through Laos, Thailand, Cambodia and Vietnam. Other rivers are Irrawadi, Chindawin and Salween in Burma, Menam Chao Phraya in Thailand,
Song Koi (Red River) and Song Bo (Black Rivers) in Vietnam. These rivers bring rich alluvial deposits regularly to make the land fertile. Most fertile areas created by these rivers are lower Burma, Central Thailand, Tongking and Mekong deltas. Thailand and Vietnam are the largest rice exporting countries in the world. This unit examines various aspects of socio-economic-political features of South-East Asian countries. India’s relations with ASEAN countries are analysed in this Unit. India attaches great importance towards pursuing good neighbourly relations with the countries in Southeast Asia. The policy of “Look East” is the strategy of the Indian diplomacy ever since 1991 and its major thrust has been to improve India’s existing ties with the ASEAN region, and promote trade, investment, tourism, science and technology relations. Indian policies are endeavored to resurrect close historical and cultural ties, which were marred during the colonial period. The Cold War paradigm in the past prevented India to attend various issues in its bilateral relations but the situation changed only after the end of the Cold War. Various initiatives have been taken to rejuvenate our economic, cultural and strategic connections. Total bilateral trade with ASEAN countries has shown increasing trends from 5.98 billion in 1998-99 to 7.98 billion in 2002-03.


ASEAN investments which were dismal during the Cold War period, started coming and confidence was displayed on both sides. Various packages for the promotion of tourism were mooted and now it is not limited only to visit Buddhist sites in Bodh Gaya. India is willing to attract investments from the ASEAN region and they have been advocating liberalisation and free trade. ASEAN is trying to reciprocate the Indian gestures. They recognise the importance of
India as a great market where they find the existence of middle class people in millions. Besides, they have common historical, religious and security interests. Both of them support the policy of democratisation, liberalisation and free trade. Both are opposed to the rise of fundamentalism and terrorism and both are supporting human rights to be universally respected.

Importance of Atmanirbhar Bharat

A nation’s strength ultimately consists in what it can do on its own, and not in what it can borrow from others.” – Indira Gandhi.

Self-Reliance, one thing which is common in all developed nations and a thing that a developing nation wants to achieve. One of those developing nations which are striving to make themselves self-reliant is India. The battle to become self-reliant is not new but started back from the independence itself. At that time, India was the largest economy in South Asia, the self-reliance in the state heavy industries and strategic sectors in the post-independence decades put India before most of the developing world.

However, in the 1970s and 1980s, India did not modernize these industries to move up the technological ladder. Little was done to modernize light industries. The industrial ecosystem was held hostage to the license-permit-quota system that hampered innovation. As a result, self-reliance gave way to corruption and dependence on imports. A major turn came in 1991 after economic liberalization in India was initiated in 1991 by Prime Minister P. V. Narasimha Rao and his then-Finance Minister Dr. Manmohan Singh.

1) Atmanirbhar Bharat and the idea behind it

At a time when the world was plagued by the deadly pandemic, PM Narendra Modi launched a campaign which was meant to convert this crisis into an opportunity and strengthen India’s fight by becoming Aatmanirbhar or self-reliant.

-> There are five pillars of Atmanirbhar Bharat which focus on:

  • Economy
  • Infrastructure
  • System
  • Vibrant Demography and
  • Demand

-> The Five phases of Atmanirbhar Bharat are:

  • Phase-I: Businesses including MSMEs
  • Phase-II: Poor, including migrants and farmers
  • Phase-III: Agriculture
  • Phase-IV: New Horizons of Growth
  • Phase-V: Government Reforms and Enablers

PM Modi emphasized the fact that it is time to voice our local products and make them global. A special economic package was created as part of this campaign. Established by the government, which will benefit various segments including the craft industry, micro, small and medium-sized enterprises (MSMEs), workers, the middle class and industry. The economic package announced by the Prime Minister, along with various packages launched during the lockdown period, amounts to around 20 lakh crore rupees ($ 283.73 billion), which was roughly 10 percent of India’s GDP. It was expected to support and empower different parts of the country and give new impetus to the development of the country in 2020.

In order to express the determination of an independent India, land, labor, liquidity and laws were included in this package. Minister of Finance & Corporate Affairs, Ms. Nirmala Sitharaman, made all the announcements related to several sectors on different days, divided into five tranches, and provided detailed information on the steps the government is taking.

2) Division of package for different sectors in Atmanirbhar Bharat

  • First tranche – Rs 5,94,550 crore

The first aid installment announced by Nirmala Sitharaman focuses on empowering the backbone of the Indian economy: MSMEs, which employ around 11 billion people and have a GDP share of around 29 percent. This included unsecured loans of Rs.3 billion and a capital injection of Rs. 50,000 billion for MSMEs through the funds

  • Second tranche – Rs 3,10,000 crore

Nirmala Sitharaman’s second installment of measures was targeted at migrant workers and street vendors. The minister introduced ‘one nation one ration card’ card so migrant workers can buy ration from any ration depot in the country. Around 50 lakh street vendors will have access to a special credit facility of Rs 5,000 crore within an initial working capital of Rs 10,000. Around 2 lakh crore rupees will be delivered to farmers via kisan credit cards, while 2.5 crore farmers, including fishermen and animal husbandry farmers will be able to attain institutional loans at a preferential rate.

  • Third tranche – Rs 1,50,000 crore

The third tranche worth Rs 1.5 lakh crore aims at agriculture and related sectors, including dairy, livestock and fisheries, as the government proclaimed measures to toughen the broad agricultural sector.

  • Fourth and fifth tranches – Rs 48,100 crore

The fourth installment of the Rs 20 Lakh Crore package included reforms for sectors such as coal, minerals, defense production, airspace management, airports, MRO, UT distributors, space and nuclear energy.

3) Sectors to benefit from Atmanirbhar bharat.

I. MICRO, SMALL, AND MEDIUM ENTERPRISES

Micro, Small, and Medium Enterprises have played a vital role in Indian economy. It has contributed one third to the GDP of India and also provided employment to large sections of society. The sector is source of livelihood to 110 million people. With the current phase of Atmanirbhar Bharat these MSME’s has become more significant to India’s financial and economic sector. Acknowledging the importance of this sector it would contribute to 50 million jobs and half of India’s GDP in the coming five years.

Benefits of MSME’s under Atmanirbhar Bharat:

  • Collateral free loans- The commencement of collateral free automatic loans will assist the existing borrowers and this will also give the fuel restart to the business operation.

Some of the key highlights of this benefits are-

-> According to bank policies, the current borrowers should have the standard ratings and turnover of rs.100 crore.

-> Four years of loan tenure and 12 months on principle payment.

-> No additional collateral is required.

  • Equity Infusion- Government is going to setup a fund for funds of 10,000 crore to overcome this situation of pandemic. FOF will be operated through a Mother fund and few Daughter fund. Through these funds the MSME’s can expand their size and capabilities. This will also encourage MSME’s to get listed on the board of stock exchange.
  • Debt for stressed MSME’s- To support MSME’s the central government will provide Rs. 20,000crore as subordinate debts. The infusion of fresh capital into the business will reduce the burden on MSME’s and will benefit two lakh MSME’s.

II. Agriculture and Fisheries

Agriculture is the most important sector of Indian economy. It contributes to 18% of GDP and provide employment to 50% of countries workforce. Government towards improving this sector has released two major initiatives Pradhan Mantri Kisan Samman Nidhi Yojana (PM-KISAN) and Agriculture Infrastructure Fund this will help to improve the financial and agriculture status of farmer.

Benefits of agriculture under Atmanirbhar Bharat:

  • Pradhan Mantri Kisan Samman Nidhi Yojana (PM-KISAN)- Under this scheme financial benefit of Rs 6,000/- is provided to beneficiary farmers and is payable in three equals that is 4 monthly installments of Rs 2,000/-. However, under this scheme an amount of more than 17,000 crore has been transferred to 8.5 crore beneficiary farmers.
  • Agriculture Infrastructure Fund- The objective of this scheme is to drive investment across the agricultural chain. This scheme will allow farmers to store their produce till they get better price and affordable post-harvest infrastructure. Farmers and other stakeholders will have access to financing 3% interest and credits from governments and this will help them to enhance their product value.

III. Coal Mining Reforms

India being the fourth- largest producer of coal in the world. In the vision to build Atmanirbhar Bharat a reform to promote commercial coal mining in India has been announced. Opening up of these sectors will expand world class production capacity and provide top product services with global supply chain.

Benefits of Coal mining under Atmanirbhar Bharat:

  • Forty-one coal mines are opened for auction and there are no end restrictions on the coal production for these mining. Bidders will not require any previous experience in coal mining they just have to put up sufficient amount of money. Mining plan approval will be provided in 30 days rather than 90 days. Coal mining will be determined through a National Coal Index for different grades of coal.
  • These 41 mines are likely to produce 225 million tones annually and Rs. 33,000 capital expenditure to get these mining going. Additionally, state government will generate more than 20,000 crore per year in royalties from these mining. This will generate direct and in direct jobs for more than 3 lakh employers and is expected to generate fund of Rs. 112 crores for the District Minerals Foundation Fund.

IV. Non-Banking finance (NBFCs), Housing finance companies (HFCs), Microfinance institutions

For the Non-banking finance companies (NBFCs), Housing finance companies (HFCs), Microfinance institutions (MFIs) Ministry of finance has announced following measures:

  • Special liquidity scheme worth Rs. 30,000 crores
  • Partial credit guarantee scheme worth Rs. 45,000 crores

Benefits of these schemes under Atmanirbhar Bharat:

  •  Main objective of Special liquidity scheme is to provide liquidity support to MSMEs that are impacted due to this pandemic. Under this scheme investments will be made both in primary and secondary transactions in investment papers of NBFCs, HFCs, MFIs. These securities will be fully guaranteed by government. This scheme will ensure operational continuity and promote leading MSME sector.
  • Partial credit guarantee scheme is for NBFCs, HFCs, MFIs, having low credit rating and provide liquidity to leading MSMEs and individual and first 20% loan will be given by the government. This also helps the MSMEs to avoid distress sale of their assets for meeting immediate funds.

Conclusion

This campaign can reach its epitome if supported well by the government. Keeping in mind the increasing incursions by China and India’s dependence on it, the success of the campaign is now more in need than ever. If the government is solemn about instigating this economic philosophy, it must clearly list the areas that need improvement to make Indian manufacturing competitive. Only then will entailed policies get outlined and implemented to bring about the change.

E-Commerce – Benefits and Disadvantages

Long gone are the days when you had to venture through 7-8 shops before buying a desirable mobile or shoes. It didn’t take long to get all of those suitable things you crave to be present on your few clicks which was quite unimaginable back in a decade or so.

The growth of E-Commerce escalated with double or even triple digit annually around mid-1990s and this escalation was a result of the launch of the first web browser, aptly named “World Wide Web”. Also, the sheer development of internet and its usage was a major catalyst in the E-Commerce boom. By the end of 2020, 60-70% of the world has connected to internet. Amazon, eBay emerged as the major dominators in the world of E-Commerce with Amazon still keeping up its level till date.

The development and evolution of e-commerce has made our life easier and less hectic. One can give countless advantages of it like convenience, security etc. but what about the benefits which get cloak under the blanket of the obviously known advantages?

Advantages

1) Economy – The Indian E-commerce market is likely to grow to US$ 200 billion by 2026 from US$ 38.5 billion as of 2017. Much of the progress for the industry has been prompted by an upsurge in internet and smartphone penetration

  • On October 23, 2020, Flipkart acquired a 7.8% stake in Aditya Birla Fashion and Retail, a subsidiary of the Aditya Birla Group, for Rs. 1,500 crore (US$ 203.8 million). (IBEF, 2021)
  • In October 2020, Amazon India collaborated with the Indian Railway Catering and Tourism Corporation (IRCTC) to enable users to book and reserve train tickets on Amazon. (IBEF, 2021)
  • In October 2020, Flipkart acquired a 140-acre land at Rs. 432 crore (US$ 58.87 million) to establish their largest fulfilling center in Asia, in Manesar, Gurgaon, in a bid to scale their fulfilment infrastructure to cater to increased demand post COVID-19. (IBEF, 2021)
  • In October 2020, Amazon India invested over Rs. 700 crore (US$ 95.40 million) into its payment unit, Amazon Pay. (IBEF, 2021)

2) Cost reduction – E-commerce is affordable and requires less investment when compared with a physical store. This is also a good opportunity for an individual and a new seller who wants to earn an income but doesn’t have the required capital to run his business. Sellers also don’t have to spend a lot of money to promote their product. The world of e-commerce has several affordable and quick ways to advertise a product. E-commerce is a virtual channel and sellers can easily show off their products. In e-commerce sellers can compare the products on their own by using different tools. This gives them a good idea of product alternatives available, the standard rates, if a product need is fulfilled. This one is more benefit for the customers too so the people are more confident about the product they are buying. (Amazon, 2020)

3) Boon in the current COVID situation – World wouldn’t have asked a better boon than getting your essentials and suitable needs at home without going out in this deadly pandemic which has been haunting the world now for more than a year. This doesn’t only keep you safe but also keeps the fatal infection from contracting.

By now, we all have at least got an idea that internet has become an amazingly powerful tool to conduct business electronically. Many companies have jumped into e-commerce realm after seeing its potential and profit margin. Now here kicks in the concerns related to e-commerce business. Increasing relevance of this field also increases privacy concerns. The dearth of consumer protection legislations also starts lurking around. Indeed, the dark side of e-commerce is not short listed.

Disadvantages

1) Security – One of the biggest drawbacks to ecommerce can be the lack of reliability and security due to poor implementation. Online transactions are mainly processed via debit card, credit card and internet banking and in very few cases via the “cash on delivery” option. Website owners try to take all available precautions to protect card details. However, what if the website is hacked by cyber criminals? This is a harsh reality with ecommerce websites. It is important to remain vigilant and proactive in protecting the website and, primarily, customer-related information. Security has been an issue from the start and is considered to be one of the main disadvantages of e-commerce.

2) Lack of Privacy – The privacy invasion problem is a serious drawback of e-commerce. A customer must provide their personal information before purchasing. Some websites do not have advanced encryption technology that can protect their personal information from hackers, and this is very important. The leakage of this confidential information can create many problems for a consumer.

3) Huge technological cost – E-commerce requires advanced platforms to improve performance. If you run into issues in the form of software, network, or domain issues, you will not be able to offer smooth transactions. The right technical infrastructure is expensive and requires large investments. It also needs to be updated regularly to accommodate changing times. The cost of running a successful business is a disadvantage of the e-commerce portal.

Conclusion

E-commerce is generally defined as the automation of routine business processes and operations and their transfer into virtual space. This process significantly increases business efficiency and simplifies daily routine work. Recent research has shown that businesses are moving quickly between local businesses. Many companies are using the internet and e-commerce in more convenient ways to market their products in the local market. Most of the online retailers are cheaper than the same products they sell, which is the main reason why today’s online stores are gaining market share. Some online stores have exceptional terms where you don’t have to pay for a certain amount for home delivery. For e-commerce sales as the reports are automated. It is convenient for small businesses to go online as they can easily compete with the larger ones. In addition, online sales save costs, there is no need to rent an in-store point of sale, and storage is not always required. It is much easier to access overseas markets through the internet. The biggest shortcoming of online stores is that they cannot display a product before buying it.

Farm Loan Waiver

Before diving to the details about loan waiver let’s all get an idea about what actually is loan waiver.

Farm loan waiver: To assist the farmers who are in distress, the Government came up with the process called Loan waiver. In accordance with this, the government will pay defaulted loans taken by the farmers. There is a timeline vis-a-vis when this process took it’s birth but acknowledging those details are meant to eat your time. But dont worry I will fill you about the details in gist/crisp manner.

2016-18: States too have followed the footsteps of Union Government and adopted loan waiver. Ex. Madhyapradesh, Jammu and Kashmir, Tamilnadu, Telangana, Andhrapradesh etc.

Budget -2008: Agriculture Debt Waiver and Debt Relief Scheme (ADWDRS) promised to pay loans taken by the small&marginal farmers and other farmers offering waiving percentage 100% and 25% respectively.

2017- Considering the problems faced by farmers during demonetization, the Budget (17) announced 60 days of interest waivers to farmers.

Arguments in favor:

=>Few people opine that the situation of farmers since a decade(2008-18) have became worse with post-subpime crisis (2008), global financial crisis (2008) ,droughts (2017, 18), and demonetization (2016). These have raised issues like dropping down prices and demand for the products example being textile industry in international market and are forced to sell them in domestic market at cheaper rates

=>In addition to this, the government have came up with the plans of restructuring for loans by corporate borrowers which reinforced support-farmer people to demand for same as debt waiver.

=>Violent agrarian agitations in Maharashtra, Uttarpradesh and Madhyapradesh also made it visible the pathetic plight of the farmers.

=>Farmers are being more prone to Debt Overhang (where all the income earned so far was used to repay accumulated debts) and are forced to use savings/income in buying farm inputs(seeds, fertilizers, pesticides)

Challenges associated with loan waiver:

” Loan waivers undermine credit culture. NPA problem will get aggravated ” __ ex-RBI Governor Urjit Patel

“Farm loan waiver should not form part of election poll promises”__ Former RBI Governor Raghuram Rajan

These are only individual opinions but serious measures are yet to be taken and implemented.

=>Impact on behavior: Loan waiver reduces the hard working capacity and chances for developing negligent behavior/lack of discipline in farmers are more likely.

=>Partial Coverage: Out of 100% loans borrowed by farmers only 60% are from formal sector(banks,NBFCs) and rest of the borrowings are from informal sector (Marwadi, Shroff). So even though government announced loan waiver significant percentage of farmers deprived of benefit.

=>Feedback: Comptroller and Audit General (CAG) commented on ADWDRS which implemented in 2008 ,as it is prone to serious exclusion and inclusive errors. Also Economic Survey-2017 pointed out that loan waivers haven’t contributed neither in accentuating GDP contribution nor in development of farmers.

=>Multiplier Effect: WHO recommended 5% of GDP to health sector whereas the actual allocation was less than 2%.The amount allotted for waiving tantamount to 1.5% of GDP. So it would be justifiable for the government to invest money in the schemes which promotes welfare for majority of populace than in the schemes which have serious implications on other developmental expenditure.

=>Fiscal Deficit: It would be burdensome on state governments implementing the waiver process and there are also chances that a particular state would end up in inflation too. Ex: Report in 2017 by RBI quoted that ₹88000 crores used as loan waiver by 7 States ( Uttarpradesh. Maharashtra etc) notified as a states with inflation.

=>No recognition: Loan waiver focussed mainly on cultivators and the truth that agricultural workers are also being impacted was neglected.

Farmers distress is a real and pressing problem.But the government intervention has hurt more than it has helped.Loan waiver is not a magic wand that could solve the long-standing problems, it could only be used as a temporary relief (like a bandage to serious wound).There are certain issues to be considered in this regard to get ushered in right direction. Like proper identification of vulnerable farmers, enhancing non-farm works, improving technology , expansion of irrigation cover ,focussing on long-term solutions etc.

Hope you have enjoyed the article. Happy reading!

How COVID-19 has changed the world economy

The COVID-19 pandemic has reached almost every country in the world.

Enormous changes in financial exchanges, where partakes in organizations are purchased and sold, can influence the worth of benefits or individual investment accounts.

The major Asian and US stock markets have recovered following the announcement of the first vaccine in November, but the FTSE is still in negative territory.

If the economy is developing, that by and large means more abundance and all the more new positions. It’s deliberate by taking a gander at the rate change in GDP, or the worth of labor and products created, normally more than 90 days or a year. The IMF appraises that the worldwide economy contracted by 4.4% in 2020. The association portrayed the decay as the most exceedingly terrible since the Great Depression of the 1930s.

The movement business has been gravely harmed, with aircrafts cutting flights and clients dropping work excursions and occasions. New variations of the infection – found distinctly lately – have constrained numerous nations to present more tight travel limitations. Information from the flight following assistance Flight Radar 24 shows that the quantity of flights worldwide endured a gigantic shot in 2020 and it is as yet far from recuperation.

Retail footfall has seen unprecedented falls as shoppers stayed at home. New variants and surges in cases have made problems worse.

Understanding White Collar Crime.

Necessity is always the main reason behind commission of a crime. But it is not so in every case.

What is White Collar Crime?

When a person of high status and respectability commits crime to fulfill his personal or economic gains is known as White Collar Crime. Such crimes takes place not because of need but greed.

Nature of White Collar Crimes and Criminals

As compared to other crimes for financial gains like robberies, theft, burglaries etc., white collar crimes causes great amount of financial loss. Such crimes can can destroy a company, families by taking away their life savings or cost investors a thick sum of money. White Collar Crimes have been taking place in a large scale for the last few years and are often seen to be committed in famous organizations.

White Collar Crimes are difficult to detect in the initial times because the criminals belonging to the reputable groups of the society does the evil activities quite tactfully with proper planning and execution. Although such crimes does not apply violence or physical force yet it deceives people and shatter their life long hardwork in one go.

A very famous example of White Collar Crime that could be cited is that of the fraud case of Nirav Modi. The Nirav Modi scam created a wave of chaos in the country when the Punjab National Bank (PNB), one of the largest public sector lenders found itself amidst Rs 11,400 crore transaction fraud in Feb 2018. Having received complaints against Nirav Modi by PNB, the CBI started investigating the case. Meanwhile, Modi left the country avoiding arrest.

White Collar Crimes in certain professions

Medical professional : A great amount of white collar crimes can be seen in the medical professional which includes issuance of fake medical certificates, selling of unlicenced drugs, intended prolonged treatments to increase bills, sex determination of unborn child in the womb and such other similar activities.

Engineering profession : In the Engineering profession as well, maintenance of false records of work – charged labours, construction of roads, bridges etc with below standard materials, unethical dealings with contractor and suppliers can be seen.

Legal profession : In the legal profession, violating the expected standards of the legal profession to earn monetary gains, framing false evidences to punish the innocent etc is very common.

Educational institutions : Submission of fake details about an institution to enjoy financial aids from the government, asking for huge sum of money as donation comes under the category of white collar crimes.

The intensity or effect of white collar crimes are not felt immediately or maybe directly to an extent, yet it greatly hamper the economy of the country in the long run.

How to combat White Collar Crimes?

Controlling White Collar Crime is no less than a challenge for the authorities because the criminals belong to the most powerful groups of the society.

Public awareness should be created on a large scale about these crimes through media platforms and other audio-visual aids.

Strict regulatory rules, improvement of criminal law, unbiased and impartial prosecution of the accused should be done along with drastic punishment for such criminals should be made compulsory.

If White Collar Crimes keeps on taking place in the society, very soon the society would faces its worst consequences. We, as responsible citizens of the country should always be alert and raise our voice if we come across any cases of such crimes in our surroundings.

Economic Development of Bangladesh

Economic Development of Bangladesh

Bangladesh on World map

The poverty rate of Bangladesh fell from 38.8 per cent to 14.3 per cent over a span of forty years. And Bangladesh has been performing better than India and Pakistan recently in various social indicators like fertility rate and infant mortality rate. This has been possible with consistent efforts towards development.

Since the year 1975 Bangladesh has been classified as a ‘Least Developed’ country by the United Nations and it will likely graduate from this classification by the year 2024. But it was least expected at the time of Bangladesh’s independence. U. Alexis Johnson, Under Secretary of State of United Nations said Bangladesh was an “international basket case” while New York Times reported the country as a ‘Failure’. On the contrary Bangladesh outperformed many expectations.

Bangladesh gained independence in the year 1971 with the help of Mukti Bahini and support from India. Since the country was established in prevailing conditions of violence, even the basic needs of the citizens could be barely met by the government of Bangladesh. In addition, the country the country faced a severe drought in 1975 which killed approximately 1500000 people. Political instability also contributed to make situations worse. Around 10000000 Bangladeshis immigrated to India because of the violent situations there. Due to several such reasons the country depended majorly on foreign aids.

But the situations improved due to these reasons:

  1. Manufacturing(textile industry): Bangladesh is world’s second largest exporter of textiles. According to garment associations of Bangladesh, the textile industry constitutes almost 10 per cent of the their national GDP. Textile industries of the country employ around 4 million people directly and 10 million indirectly.
  2. Women empowerment: Around 80 per cent of employees of the textile industries of Bangladesh are women. This hasn’t just helped women of the typical conservative society to get financial independence and better lives but has actually changed the future of the nation. An economic research paper showed that in the families where women were employed at garment factories witnessed a decline in fertility rate, the age of marriage increased and there was a rapid increase in girls’ educational attainment. The possible reason behind the improvements may be to take advantage of jobs and due to increased family income. The garment industry helped improve the lives of all women of the nation as World Bank showed a decrease in female-male wage gap due to increased employment of women in garment factories.
  3. NGO’s: Many NGO’s like ‘brac’ played a significant role in national development. These NGO’s fulfilled people’s financial and medical requirements, constructed schools and also conducted several public health campaigns. Arvind Subramanian, India’s ex-Chief Economic advisor says the development of Bangladesh in collaboration with NGO’s is no less than a miracle. As in democratic countries the governments tend to avoid much dependence on non-governmental organizations for public works as this leads to defamation of the governments and the chances of corruption are also lowered. But Bangladesh overcame this to which he explains reasons like the low tax to GDP ratio of the country and the poverty and violence at the time of establishment of democracy. Due to all such reasons NGO’s voluntarily took the responsibilities and have done well.
  4. Foreign relations: Pre-independence of Bangladesh, the geopolitical conditions were complex but still in the challenging situations Bangladesh has managed to have a good foreign policy. For example USA provided Bangladesh a good amount as foreign aid even though it was against Bangladesh’s independence. The second major factor is remittances. These remittances, or the earnings sent home by those working abroad constitute around 6 per cent of the national GDP. And the foreign policies of Bangladesh helped them export garments easily to several developed countries through which they avoided ‘aid curse’, or a situation where a country’s individual economic development is crippled due to excessive dependence on foreign aids.

Challenges ahead:

  1. End of duty free access: As Bangladesh is classified as ‘Least developed country’ by the UN, it enjoys duty free access to exports in several developed countries but as it will graduate from the classification in the coming years export duties would be imposed and specifically garments exports would get badly affected.
  2. Automation: The country’s GDP is largely depended on the textile industry but automation in the textile industry in the years ahead may replace a chunk of the employees leaving a worse impact on the economy as a whole. Thus the industries must be diversified making the economy less depended on the garment industry.
  3. Lack of political freedom: There have been several cases of threatening and even murders of journalists, political activists and media workers. This kind of governmental control and censorship might allow short term development but the long term impacts and overall developments get endangered.
  4. Climate change: This is probably the biggest challenge in the face of Bangladesh. It was the seventh on the list of countries under long term climate change risks. Floods and cyclones are common in the country now and the poor rural people are amongst the worst affected.

But besides everything Bangladesh’s development is worth learning while it outperformed all the expectations.

Income inequality in India

Shared Moral Blindness - Ted's Thoughts

How has the unpriviliged community in India fared within the last few decades? Has their scenario changed?

There square measure actually several changes that one might observe within the last twenty years. Access to food grains from the general public distribution system at a supported rate has improved; several villages are electrified; a lot of youngsters are attending primary colleges in villages and concrete slums; bathrooms are made in many villages; several currently use mobile phones.

But has there been any important modification within the financial gain of little and marginal farmers among Adivasis and Dalits?

This is in all probability a a lot of complicated question to answer. after we started our journey as development practitioners twenty years past, we have a tendency to had to conduct a village study.

The average financial gain of Adivasi households in an exceedingly village of Bihar’s Lohardaga district (now Jharkhand) was around Rs 15,000 in 1996. This matched with the findings of comparable such studies in different areas of the Central Indian Plateau (CIP) conducted by our peers throughout a similar time.

Similar studies by development practitioners show that across the CIP, the common financial gain of little associated marginal households in an Adivasi space was Rs 55,000-60,000 in 2020 — a rise of just about fourfold from 1996.

The financial gain of those individuals failed to modification abundant within the last twenty years, if we have a tendency to take under consideration the rate. The Net present value (NPV) of Rs 15,000 in 1996 was around Rs 67,000 within the year 2019.

Rising inequality

The scenario changing at the national level?

India’s per capita gross domestic product (GDP) multiplied 5 times between 2000 and 2019; to $2014 in 2019 from $443 in 2000.

This doesn’t mean that financial gain of the complete population has multiplied. The highest one per cent in India attained twenty one per cent of total country’s financial gain in 2019. This was eleven per cent in 1990.

The top ten per cent attained fifty six per cent of the country’s total financial gain in 2019; rock bottom ten per cent attained solely 3.5 per cent.

Wealth distribution tells an analogous story. The richest ten per cent Indians closely-held 80.7 per cent of wealth in 2019.

The Gini (inequality in financial gain distribution) constant points to associate increasing difference in Republic of India. The constant in 2014 was 34.4 per cent (100 per cent indicates full difference and zero per cent full equality).

The constant multiplied to 35.7 per cent in 2011 and to 47.9 per cent in 2018. India is just second to Russia within the world in terms of difference.

Agricultural work is one of the most common way to sustenance in villages. A complete of 26.3 crores households are concerned in farming activities in India, per the most recent census knowledge for 2011.

Of this, only 11.9 crore folks are land-owning farmers; 14.4 large integer are landless staff and peasants. A minimum of 86.2 per cent of all farmers in India own simply 47.3 per cent of the crop area, per the agriculture census knowledge 2015-16.

During 2010-11 and 2015-16, the proportion of tiny and marginal farmers grew to 86.2 per cent from 84.9 per cent, whereas the overall range of operational holdings grew to 146 million from 138 million.

There are 126 million tiny and marginal farmers, that points to fragmentation of lands which a lot of medium farmers have become tiny and marginal farmers. These farmers along in hand concerning 74.4 million hectares of land — or a mean holding size of simply 0.6 hectares every.

Between 2010-11 and 2015-16, the amount of tiny and marginal farmers rose by concerning nine million, per agriculture census 2015-16.

Per capita land holding of rock bottom sixty seven per cent marginal farmers reduced to 0.38 hectares from 0.4 hectares within the last 20 years. The world isn’t enough for farmers to grow food for even six months.

Nearly 17 per cent smallholders have a mean land holding of 0.4 angular distance — a discount of 1.42 angular distance in 2000. The typical holding of scheduled tribe marginal farmers is 0.48 ha; for scheduled Caste, it’s solely 0.37 ha.

The country has another 3.76 crore households of landless laborer within the same time.

Pandemic made it worse

French economic expert Thomas Piketty, in his book Capital in the 21st Century, came up with a straightforward plan to elucidate difference in terms of wealth distribution takes place in associate degree economy.

He believes, once the come back on investments (r) is over the speed of economic process (g) of the country, a lot of wealth gets accumulated within the hands of a couple of (who own the suggests that of production) as compared to the busy category.

Piketty showed that the typical rate of come back on investment was 5 per cent throughout history. He finished that any rate below five per cent can cause a lot of difference as a lot of wealth are going to be generated for a couple of investors as compared to people who don’t own any suggests that of production.

Whether Piketty’s findings, largely supported Europe and also the u. s., are applicable for countries like India where economic history and pathways are totally different, is debatable.

However, a thirty five per cent increase within the web value of the billionaires in India throughout the novel coronavirus malady (COVID-19) pandemic, once India’s growth was negative ten per cent, could force US to assume if Piketty was right.

The approach ahead

India’s economic process has caught up considerably. This can be the time once states ought to invest: cash must move into the hands of the marginalized.

States earn cash through taxation. Increasing tax on the rich folks is that the obvious resolution. Piketty additionally projected the same live to cut back difference. The next rate of tax for billionaires are often the simplest way to get a lot of revenue for the state.

In any case, withdrawal of Central Public Sector Undertakings associate and public sector banks can’t be a permanent resolution in an economy where difference is rising sharply.

There is a desire to trace what’s happening within the economic condition pockets of India. A periodic study could facilitate policy manufacturers to believe the problem a lot of seriously and are available up with higher ideas to cut back inequalities.

Understanding Inflationary gap in an Economy

In macroeconomic level, when there is excess of aggregate demand over aggregate supply at a situation of full employment, the gap of difference is called the inflationary gap. The terms might be confusing and thus are explained below.

Aggregate demand is the total demand of all final goods and services produced in an economy. It can also be said defined as the total quantity of money that all sectors of an economy are willing to spend on the purchase of goods and services at a given period. Aggregate demand consists of expenditures relates to consumption, investment by firms, purchase of goods and services by the government and finally the net exports( difference of imports from exports). The aggregate demand curve does not start from origin because it cannot begin from value zero. It is because even at zero level of income, there is some level of consumption, known as autonomous consumption. Just because we do not receive income doesn’t mean we don’t eat. We borrow money and still have some consumption level. Thus there is still expenditure on consumption and aggregate demand curve can never start from origin(0,0).

Aggregate supply is the money value of the total output available in the economy for purchase during a given period. Aggregate supply also represents the national income of a country.

Full employment is a situation where all those able bodied persons who are willing to work at the existing wage rate, are actually employed( meaning no unemployment in an economy).

As we move on to inflation. How does it actually occur?

In layman terms, when there is increased demand for a good or service than the supply, it leads to an increase in the price of the commodity or service as consumers are willing to pay more to obtain it. Thus the increasing prices lead to inflation.

The concept of inflationary gap is explained with a graph:

Aggregate demand curve is synonymous to total or aggregate expenditure or price and is thus taken on the Y-axis. Aggregate supply curve is synonymous to total income or total output which taken in the X-axis.

At the level of full employment, the aggregate supply is a 45 degree line. The aggregate demand curve is represented as AD0. Both these curves intersect at point A which is said to be an equilibrium point.

An equilibrium point in layman terms it is the point at which the the market forces balance or equate. It is a state of rest. It literally means :

Aggregate demand = Aggregate supply, at a given price and quantity.

A note to the reader, the price and quantity at the point of equilibrium is the equilibrium price and equilibrium quantity respectively.

In case of inflation, aggregate demand>aggregate supply.

As I said above, price and aggregate demand are synonyms. When is an increase in price, it implies an increase in aggregate demand. So, excess of aggregate demand pushes the curve upwards. So there is a shift in the position of the demand curve. The demand curve shifts from AD0 TO AD1. We arrive at the new demand curve. The new equilibrium point is at E.

So Aggregate demand = Aggregate supply at the equilibrium point E where the new equilibrium price and quantity are higher than the old ones.

In the graph we can clearly see gap maintained between the two demand curves and the gap is constant throughout. The inflationary gap thus lies between the new and old aggregate demand curves.

Relevant links: https://www.intelligenteconomist.com/inflationary-gap/ https://www.microeconomicsnotes.com/india/inflation/inflationary-gap-concept-criticisms-and-importance/1396

THE SUFFEREING OF INDIAN FARMERS

Thousands of farmers from Haryana and Punjab have surrounded Delhi for the past four months in defiance of the three ordinances passed by the Indian parliament on September 14, 2020. This protest, which has gathered thousands of farmers in the capital and set up camp on three major sites in the city, is being dubbed the single largest protest in human history. Farmers are expressing their dissatisfaction with the bills, fearing that they will simply empower big companies and leave farmers at their mercy.

Farmers- The Core of Our Economy

India’s agricultural sector has shown resilience in the face of COVID-induced lockdowns, according to the Economic Survey 2020-2021. Agriculture and related activities were the only bright spot in an otherwise dismal GDP efficiency, growing at a rate of 3.4 percent at constant prices in 2020-21. The agriculture sector employs more than half of the country’s workforce. We must comprehend our farmers’ plight and the difficulties they have faced. Be it colonial-induced famines, landowner exploitation, debt burdens, recent locust invasions, crop destruction due to severe weather conditions, or alarmingly high suicide rates. It is our responsibility to listen carefully and understand their concerns as well as the reasons for their dissatisfaction.

The Modifications has been Simplified

The three farm bills proposed are as follows –

The Essential Commodities Act (which is based on a colonial-era law governing the quantity of produce that can be stored or sold) only provides for the control of particular food products in the event of natural disasters or war.

This amendment restricts the ability of the federal government and states to enforce stock and price limits. These restrictions should only be enforced in an emergency. As a result, large companies now have complete leverage over resources such as cereals, pulses, edible oil, onions, and potatoes.

The Farmers’ Produce Exchange and Commerce (Promotion and Facilitation) Bill, also known as the APMC Bypass Bill, addresses the mechanism that now allows farmers to trade their produce both intra-state and inter-state. Previously, they could only carry their produce to the APMC (Agricultural Produce Market Committee) Mandis, no matter how far away they were. This bill also provides for electronic produce trading and e-commerce. It prohibits the state government from charging farmers or electronic trading platforms a market fee for selling produce outside of the designated mandi.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, the third bill, allows farmers to participate in “contract farming,” which allows them to enter into a contract with Agri-firms or large buyers for a specific crop at a predetermined price.

What is the aim of Farmer’s Mobilization

The aim of these bills appears to be to benefit and enable farmers to sell at larger markets without being taxed, engage in e-commerce, minimise interactions with middlemen, and incorporate technology into their farming practises. All of this is made possible by the ruling party’s deregulatory reforms, which encourage privatisation. In India, contract farming is not a new phenomenon. Contract farming has already been tried by the governments of Punjab and Gujarat. Their knowledge will aid us in determining the possible consequences of the new legislation in other parts of the world. Let’s take a peek at the state of Punjab. For more than three decades, PepsiCo has been involved in contract farming and has proven to be profitable. Farmers’ incomes increased as a result of the increased jobs. PepsiCo’s arrival ushered in a potato revolt. Small-scale or neglected producers, on the other hand, are said to be dissatisfied. Sunara Singh, a 15-acre farmer, claims that small-scale farmers who try to sell a few kilos of produce (as opposed to the tonnes sold by large-scale farmers) are not even spoken to politely or given gate passes to PepsiCo’s premises, as stated by Basant Kumar in an article for NewsLaundary in October 2020.

Another issue with the proposed laws is that, in the event of a conflict between a large company and a farmer, most small farmers have little resources in terms of time, funding, or legal skills. Farmers are unable to resolve cases ex post facto in either a civil or SDM (Sub-district magistrate) court due to a lack of documentary evidence to support their claims. The farmer will eventually be at the mercy of the corporate buyer. The bill mentions a Minimum Sales Price (MSP) for the crops, but no concrete legislation is in place to enact it. MSP does not have a statutory backup. MSP serves as a benchmark or signal price for all crop trade in the United States.

“The point is that in a country where 86 per cent of farmers have a land of the size of
fewer than two hectares, you can’t expect the farmer to carry his produce to far off
places to sell. What we need is an assured price for the farmers. If the markets are
saying they will provide a higher price to farmers, the question is a higher price to
what? There must be some benchmark.” Says Davindar Sharma, a food and trade policy
analyst at Al Jazeera.

The Agriculture Produce Marketing Committee (APMC) Act, also known as the Mandi system, was repealed by the state government of Bihar in 2006. “The financial situation of 94% of farmers in Bihar — who didn’t go to mandis or weren’t covered under minimum support price (MSP) — should have improved in the past 14 years, but their situation has worsened,” says economist DM Diwakar. This goes on to show that removing and selling agricultural produce outside of the APMC’s jurisdiction has an effect on the MSP that farmers are obligated to earn while trading inside the APMC Market Yard.

Educate, Organize, Agitate and Fact-Check!

Freedom of speech is important in a democracy. It must encourage people to express themselves, whether via social media sites, toolkits, or rallies. Tear gas and water cannons were used on protesters, demonstrators were arrested for standing up for their cause or without overt proof of a foreign plot, and the right to private counsel was denied during remand.

The Indian media has based its attention on the forces that have created instability, losing sight of the true causes of the unrest. Is it fair to ignore or, to put it another way, ridicule the majority of demonstrators who carried out their dissent in accordance with the government’s parameters and routes because a few groups had ulterior motives?

We must educate ourselves from reliable sources and double-check the information we ingest. We appear to equate oppressed people’s rage with their lack of credibility. We must empathise with the agitation and place it in perspective. If we really want to stand in solidarity, we must put an end to the dissemination of misinformation.

The Great Indian Banking Crisis.

For a few years now we have witness number of banks and other financial institution crumbled to dust. Apart from PMC (Punjab and Maharashtra Co-Operative) Bank and Yes Bank crisis there are several small banks crisis that have barely been reported and recently RBI have red flagged as many as 11 bank. So how come most important financial institution of our country are falling apart one by one?

Well the failure of several financial institutions and more importantly banking are mainly due to these reasons. Firstly, Indian banks mainly public sector banks(PSB) are loaded with non performing assets (NPA). This implies that they find it difficult to lend more money to industries and other business out of fear which leads to fall in capital formation which in turn leads to reduction in growth of an economy. Secondly, Public Sector Banks are not professional enough that is government still controls the appointment to their boards and their management are short of talents. Thirdly, Banks are made to do too much and take too much risk. They are made to bear the burden of loan waiver and direct lending. All banks suffer miserably due to lack of well develop financial system that could take some risk.

The banking system in India is overwhelmed by bad loans ( loans which bank fails to recover along with interest). Much of the blame is put on the poor performance of public sector bank but recent crisis in YES BANK shows that problem of poor governance, lack of transparency, government interference is same across all banks in both public and private through direct or indirect channel. And how small solution like privatisation is not a solution to any problems.

Any banking reform should address 2 important areas:

  1. Cleaning up banks
  2. Improve governance and management in Public sector banks

Cleaning up Banks

Under IBFC law, National Company Law Tribunal (NCLT) helps to restructure the loans for the largest firms but it’ll be overwhelmed if every stressed firms files before it. So, we need to find a way for out of court restructuring process so the many cases are restructure out of bankruptcy and NCLT acting as a last resort. Out of case settlement process should be transparent, speedy and it should protect the interest of bankers and harass them using central agency of CBI, CVC, ED on the other hand NCLT should be more transparent and speedy.

Improving Governance

Public sector has still not adequately professionalized since government rather than a independent body appoint boards member which inevitably leads to government interference. Every public sectors bank should independent body which have a power and authority to appoint CEO and hold him responsible for performance. Productivity of employees should also increased through imparting new skills and knowledge as PSBs has a huge talent deficit. Lateral entry should also be promoted at the top most. Banking system should not made to bear risk of the government electoral promises of loan waiver and direct benefit transfer targets because these are often achieved by abandoning appropriate procedure and create environment for future NPA and these measure constraint state and central government budget spending.

Over the there have been many debate and discussion over solution to fix the flaws of about the great Indian Banking crisis. All these debate and discussion often leads two common answers: Privatization of PSBs and Merger of Small and non performing PSBs to good performing and well managed PSBs.

Privatization of Banks

Privatization of Public Sector Banks (PSB) means to process in which government transfer the ownership and control to private entity by selling of its shares. Much of the discussion and debate over privatization are based on the ideology one believes in. Definitely, if the PSBs are given more independence in decision making, policy making and especially in recruitment of high skilled workers it’ll lead to some better result. However believing privatization is the solution to all the problems are short sightedness and foolish. The crisis of YES BANK only brought the biggest vulnerability in Indian banking system, the interference of government across all the bank both private and public is a big reality and lack of proper management and governance across all sector is also a reality which cannot be ignored.

Merger of Banks

Merger of banks often prescribed as solution to address the problem of poor goverance. In this process the poor manage banks are merged with good managed and governed banks. It is uncertain whether this process will result in a good result for collective performance of both banks but it’ll depends on ability of good bank management to impose its policy and will without alienating the employees of poor managed banks. Recently India government merge 10 PSBs and India is left with 12 Public sector banks. Whether this move is a success or not only time will tell.

Bank and other financial institution plays an important role in growth of any economy. It accepts deposit from an individual and lends that any people or business. It gives interest to people who deposit their savings and charges interest on loans, the difference between the two is its profit. Through process of accepting deposit and lending money (loans) leads to capital formation which is very important component of growth of an economy. So the government and all the stakeholder should pay a serious attention on the fragility of Indian banking system.

Lockdown effect: Diesel sales in August 14% lower than in July

Consumption of diesel in the first 26 days of August was 14.2% lower than the levels recorded in the same period in July, signaling that there – imposition of lockdown curbs in many areas has slowed industrial and commercial consumption.

While rural agricultural demand is now mainly driving diesel consumption, floods in Bihar and the northeastern states has moderated the speed of demand recovery. Muted sales of commercial vehicles is also not letting diesel sales rise.

On a year-on-year basis, diesel consumption fell 22.4% to 4 million tonne (mt) in the 26 days of August. Diesel sales alone contribute to around 40% of total consumption of petroleum products in India. The sales data for August is from retail outlets of state-run oil marketing companies, which run about 90% petrol pumps in India.

According to provisional data by the government’s Petroleum Planning and Analysis Cell (PPAC), consumption of petroleum products fell 22.5% y-o-y to 56.4 mt in the April-July period. Sales of LPG was the only major product to register growth in the lockdown period, due to a government scheme of free cylinder refills for poor households. But sources said LPG sales dipped 3% y-o-y during August 1-26.

2000 Rupees Notes Not Printed By RBI In 2019-20, Currency is Still Valid

Rs. 2000 notes were introduced by the Government of India after the announcement of the demonetization of 500 and 1000 rupees notes in November, 2016. Currently, it is the highest denomination currency note of the country. According to the annual report of the RBI, the Rs 2000 denomination note was not printed at all during 2019-2020.

These notes were introduced after the government announced demonetisation of old Rs 500 and Rs 1,000 notes 4 years back. At that time, those two denominations had accounted for 86% of the then total currency in circulation.

The number of Rs 2,000 denomination notes had peaked at 3.36 billion units in 2017-18. This number had dropped to 3.29 billion in the years 2018-19. It has again fallen to 2.73 billion in 2019-20. The currency note presses of the Reserve Bank of India (RBI) did not print even one Rs 2,000 note in the last year. This happened because the presses did not receive any order for printing those. This seems to indicate a conscious decision for starting the trend of decreasing the number of notes which are circulated. The 2000 notes under circulation was 50% in 2016-17 and it has come down to almost 22% in 2019-20. These figures are based on RBI’s Annual Report for 2019-20, which was released on August 25 2020.

It is also known that RBI has also disposed a disproportionate share of Rs 2,000 notes in the soiled category. This has raised many questions on the government’s plan about the 2000 denomination note. In January, 2019 the was an indication that the Rs. 2000 notes were not being printed any further because there was adequate supply.

A total of 176.8 million pieces, which is quite a high number, of Rs 2,000 notes under the category of soiled notes were disposed of in 2019-20 by the RBI. While in 2018-19, just 1 million Rs 2,000 notes were disposed of and in 2016-17 or 2017-18, no Rs 2,000 notes were disposed of. Both the 2000 and 500 denomination notes were introduced after demonetisation. In 2019-20, the share of Rs 2000 notes which were disposed of was 6.5% while that of Rs.500 notes was 0.6%. Out of the 22 billion currency notes printed in 2019-20, more than 50% of those were of the Rs 500 denomination. Due to these changes in currency composition, the Rs 500 notes has reached a very high share in the total currency under circulation.

The Minister of State for Finance Anurag Singh Thakur had told the Lok Sabha on March 16, 2020 that, “Printing of bank notes of particular denomination is decided by the government in consultation with RBI to maintain the desired denomination mix for facilitating transactional demand of public. No indent was placed with the presses for printing of Rs 2,000 denomination notes for 2019-20. However, there is no decision to discontinue the printing of Rs 2,000 bank notes.”

A government official said that, “The Rs 2,000 notes were introduced in 2016 to quickly fill the gap created by demonetisation of Rs 500 and Rs 1,000 notes. It was the need of the hour. Gradually, with increased supply of smaller notes, including new notes of Rs 100 and Rs 200, and with growing popularity of digital transactions, the urgency to issue new Rs 2,000 notes is no longer there. But this does not mean that there is any move to discontinue Rs 2,000 notes. Increasingly, commercial banks are also using more and more smaller notes because their customers often find difficulties in getting change for Rs 2,000 notes.”

Mindtree’s old guard makes a comeback… as VC investors

The founders of IT company Mindtree are returning in a venture capitalist avatar, with their early-stage fund Mela Ventures making its first close of Rs 130 crore. The overall size of the fund is targeted at Rs 200 crore.

Former Mindtree chairman KK Natarajan, NS Parthasarthy are the managing partners of the fund. Former Mindtree CEO Rostow Ravanan will be on the investment committee.

The founders let go of executive responsibilities at Mindtree soon after a hostile takeover by L&T last year.

Six of the ten MindTree founders, including the three mentioned above, along with Subroto Bagchi, Janakiraman Srinivasan and Kalyan Banerjee have invested in the venture fund, while also raising funds from external investors.

“We will look to invest in the B2B and the tech space, since that is where our expertise lies,” said Natarajan.

The fund has already made makes first commitment to a startup in AR-VR space, he said.

Mela Ventures is a SEBI-approved Category-2 AIF fund for early stage companies.

The fund is backed by institutional investors, global technology leaders and startup investors.

“We are on a mission to build next-generation entrepreneurs out of India. Towards this mission, Mela Ventures will support early-stage companies using cutting edge technologies to build B2B solutions targeted at global enterprises,” Krishnakumar Natarajan, Managing Partner, Mela Ventures, said.

“We are extremely excited to get such an overwhelming response from investors even during challenging times. This gives us confidence that we have a right mission and are here with the right strategy,” he added.

Parthasarathy N.S, Managing Partner, Mela Ventures, said: “Many of our investors are technology professionals, who share the same passion as much as we do, for meaningful technology, startup community and building Indian entrepreneurs. We look forward to this new and exciting journey.”

The fund will focus on building a portfolio in areas, such as AI/ML, AR/VR, IoT, cloud migration and deep learning technologies.

Mining company Rio Tinto executives lose bonuses over destruction of ancient caves

 a canyon with a mountain in the background

Mining giant Rio Tinto has decided to cut the bonuses of three executives over the destruction of 46,000-year-old sacred indigenous sites  in Australia.

Rio Tinto’s chief executive Jean-Sebastien Jacques will be losing a total of £2.7 million. Chris Salisbury, chief executive of iron ore, and Simone Niven, group executive of corporate relations, will also lose payouts of more than half a million pounds each.

These executives will remain in their roles.

“It is clear that no single individual or error was responsible for the destruction of the Juukan rockshelters,” said Rio Tinto chairman Simon Thompson.

“But there were numerous missed opportunities over almost a decade and the company failed to uphold one of Rio Tinto’s core values – respect for local communities and for their heritage.”

In May, Mining company Rio Tinto issued an apology after blowing up a 46,000-year-old sacred indigenous site with dynamites to expand Australia’s iron ore mine.

This mining company is one of the largest with vast operations in Australia. The iron ore mines account for more than half of its total revenue, and these ancient sites were above about eight million tonnes of high-grade iron ore, with an estimated value at the time of £75 million.

The site they blew up was situated in Juukan Gorge, in Western Australia state’s resource-rich Pilbara region. It had two cave systems which consisted of artefacts indicating tens of thousands of years of continuous human occupation.

According to CNN, grinding stones, a bone sharpened into a tool and 4,000-year-old braided hair were among almost 7,000 relics that had been discovered at the site. 

The site was demolished despite a seven-year legal battle by the local custodians of the land, the Puutu Kunti Kurama and Pinikura People, to protect the site.

The CEO of Rio Tinto Iron Ore, Chris Salisbury issued a statement on Sunday, which read: “We pay our respects to the Puutu Kunti Kurama and Pinikura People (PKKP).”

“We are sorry for the distress we have caused. Our relationship with the PKKP matters a lot to Rio Tinto, having worked together for many years,” the statement said.

“We will continue to work with the PKKP to learn from what has taken place and strengthen our partnership. As a matter of urgency, we are reviewing the plans of all other sites in the Juukan Gorge area.”

“At Juukan, in partnership with the PKKP, we followed a heritage approval process for more than 10 years. In 2014 we performed a large-scale exercise in the Juukan area to preserve significant cultural heritage artifacts, recovering approximately 7,000 objects,” it added.

Australia’s Federal Indigenous Affairs Minister Ken Wyatt condemned the “destruction” and said that it should not have occurred and ensure that it does not happen again.

He said: “The West Australian State Government needs to ensure that their legislation and approvals processes protect our Indigenous cultural heritage. It seems quite clear, that in this instance, the legislation has failed.”

Global stocks, dollar rise with U.S. economic data

Reuters: A jump in U.S. business activity and home sales helped push global equities and the dollar higher on Friday, counteracting earlier stock declines in Europe. Oil fell about 1%. The Nasdaq and S&P 500 hit record highs and the dollar broke an eight-week losing streak, gaining as weaker economic data in Europe weighed on the single currency. The fresh impetus came from a preliminary purchasing managers’ survey that showed U.S. business activity in August snapped back to the highest level since early 2019, data firm IHS Markit said.

Global stocks, dollar rise with U.S. economic data

Services and manufacturing indices also rose, even though new COVID-19 cases remain high across the United States. U.S. home sales data for July showed deals rising at a record pace for the second straight month, providing another glimmer of growth in the U.S. economy.

Friday’s data counterbalanced a steep rise in U.S. jobless claims on Thursday and Federal Reserve minutes on Wednesday that suggested the economy was beginning to stall, prompting investors to seek safe havens, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.”It’s not surprising to see a pick-up in manufacturing as the economy has started to reopen, even though pockets of the country have pulled back on their reopenings,” said Lindsey Bell, chief investment strategist at Ally Invest.

“It’s an encouraging sign and it supports the upside we have seen in the markets.”The Dow Jones Industrial Average rose 190.6 points, or 0.69%, to 27,930.33. The S&P 500, which broke out of its bear market on Tuesday by recouping pandemic-related losses, powered up 11.65 points, or 0.34%, to 3,397.16. The tech heavy Nasdaq Composite added 46.85 points, or 0.42%, to 11,311.80. Among global shares, MSCI’s benchmark for global equity markets was off its lows for the day, rising 0.27% to 571.17.

Europe’s broad FTSEurofirst 300 index dropped 0.20% to 1,416.57. Meanwhile, the dollar index rose 0.63%.”Investors are exiting some of the more economically sensitive sectors of the market and going back to the old stalwarts of tech, where you get reliable growth,” Arone said of the rise in tech shares.

EUROPE DECOUPLED

Somber economic numbers earlier in the day in Europe, including eurozone data pointing to a faltering recovery, doused stock market gains in Asia overnight and also caused the euro to recoil further from recent peaks.The loss of momentum came after fresh numbers painted a muted economic outlook, with purchasing managers’ index releases from France and Germany as well as the wider euro zone falling short of expectations.

“The survey contains some strong evidence that the recovery has slowed in August, particularly in the services sector,” said Moritz Degler, senior economist at Oxford Economics. The euro fell 0.61% to $1.1787 and also ended down for the week, after seven weeks of gains against the dollar.U.S. Treasury yields declined for the week, showing the preference for safe-havens. The shift short-circuited last week’s rally and resumed the downtrend that has largely prevailed all year.

Analysts pointed to rising coronavirus infection numbers having tempered economic activity. On Thursday, France experienced a post-lockdown record in new infections, while countries across the region imposed fresh travel restrictions.Europe’s troubles weighed more heavily on oil, which lost about 1% on Friday on concerns about the global economic recovery, renewed coronavirus lockdowns and rising crude supplies.

Brent crude futures settled at $44.35 a barrel, down 55 cents, or 1.2%. U.S. West Texas Intermediate (WTI) crude futures settled at $42.34 a barrel, falling 86 cents, or 1.1%. Brent fell about 1% for the week, while WTI saw a weekly rise of nearly 1%.Spot gold dropped 0.3% to $1,937.69 an ounce. U.S. gold futures fell 0.12% to 1,934.60 an ounce.

Economic turmoil : corona courtesy

The corona effect on the economy in a nutshell.

As the country went into lockdown mode by the end of march, there were hopes that the country would beat the virus in a matter of few weeks. Almost 6 months down the line, we’re yet awaiting the silver lining; with the ever limbing economy, crippled.

Indefinitely blurring, the promise of a better tomorrow. Like a picture by an amateur photographer.

It is difficult times we’re living through, our tales would be recited someday, on how the world lived through a pandemic in the first quarter of the twenty first century.

As always, US leading from the front, with the highest toll of covid casualties. A testament that no superpower is indeed that ‘super’ a power. Uncle Sam bowing to a virus with Communist roots.

India on the third spot on the chart, showing little hope on cutting down the numbers whilst reviving from a stringent lockdown.

Following the trend of lockdowns to curb the novel coronavirus by the end of march, slowed down the pandemic by a few months rather than preventing.

Prevention would have been ideal.

As the end of the day, millions hope that the the worst has passed, with reviving the economy being a priority and curbing the pandemic being the top priority.

The lack of health infrastructure ever apparent. ‘Events being the greatest teachers of fools,’ hoping the future game-plan would be proficient in this aspect.

The sudden surge of covid clusters in certain localities, pushes the authorities to impose further lockdowns, affecting such local economies evidently. Throwing the business owners into a frenzy.

I believe it goes without saying that the worse hit by the lockdown was the daily wage earners and the poorer households. About 50,00,000 people have lost their jobs till date.

The loss of jobs would constrain the purchasing power and consumption for good. Further derailing the economy.

Basic economics I learned in grade 11th taught me that, ‘Production’, ‘Consumption’ and ‘Investment’ constitutes the major economic activities in an economy.

With the former two limited, economy revival any time soon seems like a far fetched dream. Investment fell to the lowest in the last two decades during the past year. With the new highly criticised policy reforms promised by the Union with regards to Investments and education; makes one wonder whether covid is really at the heart of all our problems. Strange.

Don’t get me wrong, ‘Recovery does require reforms.’ Provided it addresses all the socioeconomic factors. Equality and freedom requested by popular demand.

The relief package of ₹20,00,000 crores promised by the Central Government fed the hopeless hope. But closer introspection made clear that such a generous financial aid can do nothing to crank up the economy. The relief sought after, delayed for the time being.

The current trends have shown us that the union does redress grievances; Mostly of industrialists and the people of a certain religion.

As the country is heading into the worst recession post independence, with the ones in power tolerating zero accountability and on the verge of striking down ‘the freedom of expression’. A ‘happily ever after’ seems like a far fetched dream than the reality

Now, foreign investors allowed to invest in ‘Alternative Investment Fund’ without PAN

In what has come as a relief to non-residents investing in category I and II alternate investment fund (AIF) located in International Financial Services Center (IFSC), the income tax department has amended rules to exempt such entities from obtaining permanent account number (PAN) on a mandatory basis.

The carve-out for such investors from section 139A of the Income Tax Act is contingent on non-residents not earning income other than from said funds. Additionally, these funds are also required to deduct TDS on such income.

Further, the exempted non-resident investors are also required to furnish declaration containing name, address, country of residence and tax identification number of the country or specified territory of their residence. Among other conditions, to avail the relaxation, the funds are required to furnish quarterly statement for non-resident investors in the newly notified format.

Sunil Gidwani, partner at Nangia Andersen LLP, said, “The demand for exemption has been based on the fact that the fund operating from IFSC would be withholding tax payable by the investors. This would go a long way in making it easy for the fund managers to attract foreign investors in a fund set up in IFSC and would give impetus to IFSC as a fund jurisdiction.”

Under section 139 of the Income Tax Act, any person who has earned taxable income in the previous financial year must apply for PAN.

National Handloom Day to be celebrated on August 7th

National Handloom Day is celebrated on the 7th of August annually in India. It is observed to create awareness about the importance of the textile industry in the economy. It began as an initiative to honour and provide work to handloom weavers and artisans. 7th August was declared as National Handloom Day by the Union Government in 2015 to generate awareness about the industry and its social importance. The day is celebrated through different functions and events across the country. Workshops are conducted to spread information about work opportunities among weavers and their families. Handloom fairs, exhibitions, parades, panels take place during various events.Through the celebrations of this day, handloom products get a wide recognition.

Handlooms have gradually emerged as the largest cottage industry. Almost 95% of the world’s handicrafts are from India. Weavers create from different natural fibres like cotton, silk and wool.While we celebrate the diversity of India’s art and crafts, its also important to address the problems and needs of the artisans. They should be provided with the knowledge of techniques, prices, and modern technology.

Photo by Skitterphoto on Pexels.com

Different schemes like Reservation of Articles for Production Act of 1985 and Handloom Census have been introduced so that artisans can benefit from them. Social media campaigns like #iwearhandloom have popularized the craft in recent times to an extent. These crafts should be included in contemporary industries so that younger generations can know about them and start supporting the cottage industries.

Historical Significance

Photo by Wallace Chuck on Pexels.com

August 7 was declared as the Handloom day in 2015 to revive the roots of handloom and to commemorate the Swadeshi Movement which began on the same day 115 years back. The first National Handloom Day was inaugurated on 7 August 2015 at the Centenary Hall of Madras University in Chennai. The movement was launched in Calcutta Town Hall on August 7, 1905 as a protest against the Bengal Partition by the British Government. The movement was started to facilitate the use of domestic products and production of goods within the country for boycotting British goods. There were also instances of burning British goods. When Lord Curzon announced the partition of Bengal in July 1905, the Indian National Congress started the movement. It led to the spread of revolutionary anti colonial and anti British movements across the country. Further movements like the Non Cooperation movement and the Satyagraha movement developed from the Swadeshi movement.

In recent times, the day is celebrated to spread awareness and develop consciousness of the public regarding textiles and the handloom industry which is extremely important for the socio economic development of the country. Handlooms and crafts empower artisans and represent the diverse cultural identities present in the country. They are eco-friendly and sustainable crafts which also function as the livelihood of so many people.

Celebrations this year

This year is the 6th National Handloom Day and the day will be celebrated through a virtual programme which will be conducted by the Union Ministry of Textiles. The textile minister Smriti Irani will be the chief guest for the event. The event will be observed with all the handloom clusters across India, 16 NIFT (National Institute of Fashion Technology) campuses, 24 Weaver Service Centres of different states and National Handloom Development Corporation.

Help!!

Is the central government again going to demand funds from RBI?
Corona crisis has a profound impact on revenue collection.


Amidst the ongoing Corona crisis in the country, the news is coming that the Central Government can once again demand funds (money) from the Reserve Bank of India (RBI) for its urgent expenses. In fact, the government can also do so because the Corona epidemic has had a profound impact on revenue collection and is facing difficulties in meeting its regular expenses. In such a situation, it can ask the RBI directly to buy government bonds or ask for financial help in the form of a dividend.

According to the news published in the Economic Times, the coronavirus epidemic has had a major impact on the revenue of the government. The government’s budget has increased to 7 per cent of GDP. According to one estimate, this is the highest in two decades. Quoting Sabyasachi Kar, a New Delhi-based professor of public finance and policy (RBI chair), the newspaper has written that taking measures to reduce losses would be the right step. If the government spends, only then demand will arise in the economy.
Sabyasachi Kar said that central banks from America to Japan are helping their governments in combating the corona epidemic. This is also seen in emerging markets. This week, the central bank in Indonesia has agreed to buy billions of dollars of bonds directly from the government. However, countries with emerging economies have their own risks. This can affect inflation, currency and central bank autonomy.

In India, RBI cannot buy bonds directly from the government in primary markets. There is a provision in the Fiscal Responsibility and Budget Management Act, but this law is allowed to do so under special conditions. This can be done in an atmosphere of national emergency or too much economic lethargy. Although the RBI has made some purchases of bonds in the secondary market so far, it has not said yet how it will implement the plan to raise Rs 12 lakh crore of borrowings for the government in this financial year.

RBI works for the central government to raise debt from the market. Right now banks are investing in government bonds with the hope that the central bank will buy these bonds later. Right now, banks have a lot of cash and on the other hand, loan demand is limited. Because of this situation, they have invested their money in government bonds.  Investors of banks in government bonds reached Rs 41.4 lakh crore on June 19. This is 13 per cent additional, compared to the end of March.

It is worth noting that due to the autonomy of the Reserve Bank and the demand of Rs 3.6 lakh crore from RBI’s Reserve Fund by the Government, there was a fierce battle in the month of October-November of 2018. As a result, on 10 December 2018, the then RBI Governor Urjit Patel had to resign his post. After his resignation, the government appointed Shaktikanta Das as the Governor of the Reserve Bank.

Actually, the pull of 2018 was not just between the government and the RBI. It was the same at the level of fiscal policy and monetary policy in the economy. Fiscal policy and monetary policy have different effects on the economy. The Reserve Bank was established under the Reserve Bank of India Act. The central bank runs its monetary system through this act. Under Section 7 of the same Act, the government issues an order to the RBI if it considers it necessary to discuss any important issue.

Inaccessible or Untouchables?

There is more to this existence than meets the eye!

Our economy is being ruined between inefficient government and sluggish opposition, if the situation does not improve then we will become the new ‘Untouchables.’


Untouchability has been a stigma for our country for centuries. Ambedkar, who fought for his whole life, claimed that there is enough evidence to suggest that it has been going on since 400 BC and it has always been the way of Indians to live.
This is the reason why devout Hindus on one hand and committed inclusionist Gandhi, on the other hand, believed that it is good for us to end this deadly practice. And Nehru, who relied on social justice, had said that India will never reach its true height until we end the caste system and ensure equality for all Indians.

This is the motive that our constitution made untouchability illicit and considered it a punishable offence.
But is it over? No.
Untouchability is deeply ingrained in our thinking and is seen openly. Its ugliness has recently increased, which has been promoted by some political parties, who want to keep it alive to achieve ruthless majoritarianism.

Now only the lower castes, Dalits, are not suffering. In some parts of India, indigent people belonging to a particular community have become new untouchables. So in some parts, some tribes are the new untouchables, who have been left marginalized by governments to grab their land, forest and mineral wealth.

And now, after this pandemic in the country, we see a new class of untouchables is emerging. These are sick, migrant labourers, unemployed and extremely impoverished people. Their connection with the cities is broken and their villages do not want to take them back because they are unemployed and miserable and additionally there is a risk of health issues.

Today the suffering/affected people are being boycotted openly. Their wives and children are not allowed to be home quarantined as per the regulations. People are getting them out of the village, throwing them along with their family members from trains, refusing to burn in the crematorium when one dies. Dead bodies are being collected in hospital corridors. Nobody wants to accept them, not even own family. The corpses are placed next to the patients being treated. It is like a return to the fierce plague.

But, today who is the frustrated-indigent?
No, not the farmers who commit suicide every year due to poverty. Now, these dispirited poor are those who were working in our factories, offices and our homes till back in the days. It also includes small traders, food carts, autorickshaw drivers, small restaurant workers, multiplexes and security guards standing outside malls.

Viruses and lockdowns left them unemployed, homeless and nearly devastated. And now about 14 crores middle-class families have also been associated with them. According to research, their savings will end by the end of July. That is, they will be poverty-stricken.

A recent survey shows that 84 per cent of the households have suffered severe loss of income after lockdown. They are living on their savings right now. By the end of this month, with the increase in rains, many middle-class families will fall into the category of destitute.

They will also be unable to spend on treatment or meet basic family needs. They will have to leave the rented house, sell their goods and borrow money at such a rate, which will become impossible for them to repay later. They are also worried pensioners who relied on interest from the bank, as banks have reduced interest rates.

Those who counted on their children working abroad are also trapped because their children have lost their jobs or lost wages. Meanwhile, the prices of petrol and diesel are continuously increasing, while the prices should have been reduced based on the global trend. This is going to make everything expensive.

Overall, the pace of the wave is not stopping and more and more people will continue to drown.  The government is refusing to provide cash in their hands, as some other countries are doing. These are the new untouchables. Nobody has time for these and the government has the least interest in their future or prospect. Instead, govt is making hefty policies of millions for billions, which will never reach out to these people.

An economy that was ready for a better future, is being wrecked.

Covid and the economy

According to the International Monetary Fund, India will be the large economy worst hit by the Covid pandemic. The Fund now says that Indian GDP in the ongoing financial year, which began in March 2020, will contract by 4.5%. Just a few weeks ago, it had been predicting 2% growth for the year.

The IMF’s projection is by and large in line with estimates from investment banks and other international organizations. Indian officials have been reticent about their own estimates. This is not surprising: India’s economy has not contracted since 1979. For the government, this is uncharted territory.

A slowdown of this magnitude will have enormous human consequences. By some estimates, the loss of three months’ income would leave nearly half of the country’s population mired in poverty, reversing all the gains made since the economy was liberalized in the early 1990s.

Worse, the government’s finances are strained. Tax revenues are set to crash and India’s hitherto relatively stable debt-to-GDP ratio may spike up toward 90%. Controlling the spread of the pandemic will bleed state resources, leaving little for the welfare measures that will be essential in coming months.

Such economic pressures help explain why the government lifted India’s stringent lockdown even though the spread of Covid-19 clearly hadn’t been controlled. India now has the world’s fourth-largest number of Covid-19 cases. While the country may be partly protected from a tide of deaths by its favorable age distribution, there is every reason to suppose that more lockdowns to protect its inadequate health infrastructure will be required. If nothing else, this complicates predictions for the medium term and makes the task of reviving the economy that much harder.

But don’t let anyone tell you the pandemic is the main reason India’s growth has gone off a cliff. The economy had already been weakened by years of mismanagement before this crisis struck.

Figures released by national statisticians at the end of May explain what went wrong. Even before the pandemic properly hit India, in the financial year ending in March, GDP only grew at 4.2%. The sequence of quarterly GDP growth numbers leading up to that point tells a clear story: 7% growth shrunk to 6.2%, then to 5.6%, 5.7%, 4.4% and finally 3.1% in the quarter that ended with the lockdown.

What was behind this slowdown? The answer is a lack of investment. Investment shrank by almost 3% over the year. Until then, India hadn’t seen investment shrink for almost two decades, according to World Bank data. (It grew about 10% in 2018-19.) And this shrinkage began well before the pandemic — in April 2019. In India, the virus struck an economy with pre-existing conditions.

The investment crisis and India’s large debt pile have the same cause: a government that thinks its own spending is what will fuel economic growth. According to official statistics, government spending increased by 12% last year, more than twice the growth rate of private consumption. Government spending was similarly higher than the other components of GDP in the previous year as well.

As a consequence, the government last year — again, before the pandemic properly hit — had a fiscal deficit 4.6% higher than the one it inherited six years ago. This is pretty embarrassing, given the government has long claimed that its stewardship had provided macroeconomic stability following the turbulent last years of its predecessor.

This should all be enough to sober any government. Yet, policymakers in New Delhi seem to be oddly sanguine. On Tuesday, they posted a cheerful update praising their “prompt policy measures” and touting an “increase in economic activity.” It’s true that May looked like a better month than April, when the lockdown was at its height. But pretty much every indicator for May 2020 is in the red when compared to May 2019. And most analysts believe any recovery will now take two years or so, rather than a couple of months.

The government’s confidence is inexplicable. It has not done enough to reinvigorate the economy. Its big weapon — spending — has failed and there is little left in its armory. Recovery needs reform. India has postponed competitiveness-enhancing measures long enough. In a crisis of this magnitude, there are no excuses left.

Impact of Covid-19 on Manufacturing & E-commerce

How the Coronavirus Pandemic Impacts Security Service Firms

The novel Coronavirus outbreak has led to complete shut down of many parts of the world in order to limit the spread of the contagion and ensure safety of lives from the pandemic. The nation-wide lockdowns have had a very adverse effect on the production and supply chain and it has many economic implications which will be further discussed in this article.

Manufacturing sector was severely affected due to two main supply problems. Firstly, a ripple of disruption in production originated from the East-Asian manufacturing giant and quickly reached the other industrial hubs like the USA and Germany, because of globalization of trade. Secondly, even the regions that are not as affected by the pandemic cannot produce smoothly because of disturbance in the supply of raw materials and inputs from hard-hit regions. The service sector isn’t untouched either as restaurants and movie theatres go out of business due to lockdown as well.

One of the key elements of the supply chain that is most affected by the pandemic is the human resource. Humans are involved in everything, from logistics to doing actual work in manufacturing units. The social distancing norms limits the gathering of people and even the fear of catching the disease is making the industries lose labourers and workers. The currently operational industries that produce essential goods and e-commerce sites like Amazon and Flipkart are facing difficulty and/or not running as smoothly because they have to take stringent measures to ensure social distancing during their daily activities.

The lockdown may have pushed people towards online shopping but the things that they are buying are mainly the necessities so the other industries have been negatively impacted. Electronics industry has been affected the most as the main supplier of electronic parts and appliances is China. There has been a rise in sales of subscription services, whatsoever, and it is one of the positively impacted industries in the times of pandemic.

Indian economy is severely affected not just because of the lockdown but also because of its dependency on the epicentre of the pandemic itself – China. Many industries, especially the SMEs, heavily depend on China for supply of raw material so even if the lockdown was to be lifted at some time, these units will fail to operate. For India, one way to overcome this hurdle could be becoming more self-reliant.

Logistics can be made more efficient by eliminating the distributors between the supplier and the retailers and from suppliers to manufacturers. Not only does this ensure that less human resources are involved in the procurement and distribution process, but it also reduces the time duration, making the supply of goods and raw materials timelier. The human resource that is still involved needs to be taken care of and necessary precautions should be taken for their safety. 

The e-commerce deliveries can be made more efficient and effective by grouping up the deliveries of one locality together and doing them at once, even if it causes some delay. Inventory could be reduced and goods could be directly supplied to regions that are deficient.

Effect of COVID-19 Pandemic on Indian Economy

To an economy which is already going through high unemployment, the lockdown will add more supply stress, accelerating the slowdown further and jeopardizing the economic well being of millions of people. A complete social and economic lockdown of India for 21 days has severely impacted the supply side of the economy, that is, production and distribution of goods and services, except for the essential items that are allowed. An economy that is already going through rising unemployment, demand depression and lowering of industrial output and profits, all of which is happening together for several quarters now, a supply-side constraint would deliver a big blow, affecting growth prospects and social and economic well being of a large number of people.

While it is not easy to estimate the magnitude of the impact of a complete social and economic shutdown, but it is likely to be far more severe than either the 2016 demonetization or the 2017 GST rollout. Nobody now disputes that those two events gave economic shocks from which the economy had not yet recovered when the coronavirus pandemic struck.

At current, it is a supply-side problem. Both production and distribution of non-essentials have come to a big time halt. This affects at least 55% of the economy. It can even be larger because of previous partial lockdowns by various state governments. It may take a some more months for the final production and the sales to resume.

The impact of lockdown will be felt through several channels, weakening domestic demand, disruption in the financial market, and disruption in the supply chain. All of this would result in declining production and reduction of employees.

Even though the country may not slip into a recession, unlike Europe, the US, or Asia-Pacific that have stronger trade ties to China, analysts believe the impact on India’s GDP growth will be significant. GDP growth in India, is already at a speedy low and any further dent in economy output will bring more pain to workers who have seen unemployment and their wages erode in recent times.

Moody’s Investors Service, sharply slashed its projection for India’s GDP growth in the for year 2020 from 5.3% to 2.5%. Whereas, Crisil warned that there are further risks if the pandemic is not contained by April-June 2020, or if it spreads rapidly in India, affecting domestic consumption, and investment.

Diesel being costlier

Crack in the limping bone!

Prices of petrol and diesel have been increasing continuously for 18 days and it was drawing attention but what alarmed more was diesel’s price.

In Delhi and its nearby areas, diesel is now about 12 paise costlier than petrol. Why did this happen?

The biggest reason for this is the unevenness of the tax. Petrol is still expensive than diesel in the country but due to a higher toll on diesel in Delhi, the price has outpaced petrol. For now, we should endeavour so that the difference between petrol and diesel remains unchanged. We need to think back to the time when the price between diesel and petrol used to have a marginal gap between 20 to 30 rupees. The difference was because the use of diesel usually occurs in heavy vehicles for irrigation, riding or freight. The prices of diesel were handled by the governments because the price of diesel and the upshot of its hike was on the farmers and inflation. It is favourable for the economy to keep the gap between these two fuels.

It should be noted that private passenger vehicles that run on diesel also cost more than petrol vehicles, owing to the same reason the similarity between petrol and diesel’s price is even against our own vehicle policy.
By keeping the prices high in Delhi, customers can turn to states like Uttar Pradesh. In that case, Delhi itself will have to uplift the loss of revenue. Delhi and it’s neighbouring U.P has the difference by rupees 8.

So the effort should be to create a logical difference between the prices of petrol and diesel. It is also to be seen that there should not be much difference in the state-wise prices.
Seeing India as a whole economic unit is needed. In industrial sectors, even the difference between 10 and 20 paise counts. So the difference in state-wise prices should not exceed 50p or 1 rupee.

People do not understand the tax planning of governments but they definitely get upset to see that in Delhi if it is 79.76 rupees, so how is it for rupees 86.54 per litre in Mumbai?

The government should also notice oil companies. After keeping the prices stable for up to 82 days these companies are increasing the prices continuously from June 7, and there is a possibility of a hike in the coming days as well. International oil prices have already begun to rise.

It should be taken into consideration that in just 18 days, increment in the price which is approx rupees 10 is not good for the economy, hoping for improvement. The subsidy which is being given to the industrial world in this crucial time, it may so not happen that a large amount of economic support through petrol and diesel, gets snatched away from people.

At this time revenue is necessary for the government but that should be logical. Oil companies have been given the power to decide the price according to the cost but the increment should not happen in such a manner that everyday budget starts deteriorating.
It is important to take care of that selling oil for profit is not their only job, they will also have to think about the stability and strength of the economy of our country.

Care and COVID…..

I think Robert Frost once said that it doesn’t matter what happens but life goes on, which quite makes a lot of ripples in the recess of our conscious mind if we think about the present scenario so is it just me or everybody thinking that we should take COVID-19 a bit more seriously than the way we are considering it right now as by taking into account the amount of riots happening, people still doing all sort of careless things amidst the massively increasing numbers of corona virus cases with a cure or a vaccine nowhere to be seen. So yes this is a good optimistic mentality that we should live on no matter what but being this callous at a time when a virus is reaching it’s peak is not decisive and wise at all if you are wondering what I’m talking about I’m speaking about the raising number of cases this world is seeing because of covid but still people are not taking it serious enough as by roaming without masks, eating outdoors and also in places where hygienic condition are not even close to the mark which are set by govt for outdoor eateries. Well I’m not saying that to stop the riots which is supposed to eradicate an issue which is like a dark spot on the canvas of humanity but people should take care of themselves amidst the adrenaline and the patriotism in a riot for humanity.

To be frank I think there is not a single soul in this whole wide earth who is feeling good about this lock down even though everybody used to like holidays but this pandemic has shown us something more powerful than anything existent in this universe that’s our humanity and our conscious choices which we used to make, are making and let’s hope we will always make in the future not only for ones own betterment but for all people who we feel as our near and dears. This pandemic taught us that humanity can face anything if we fight it together with unity determination and a sense of patience and the most important thing that we learnt that our beloved mother nature can heal from any atrocities and damage as life will always find a way through any gospel walls of terror if you give it a chance to heal and recover. So after like three to four months of this drama I think we all need a break to restart what we left long ago as it doesn’t matter from where you belong to or who you live with we all have that routine which we used to follow before lock down which I’m pretty sure had some parts of outdoor and nature in it so the only thing which we can do right now is to look after ourselves and to protect ourselves because that is the only way how we can protect others too as in manner avoid public gatherings which are not made by respecting the social distancing norms, use a mask regularly as it helps a lot if you don’t have any then a clean handkerchief will also do the trick, use and carry a sanitizer at all times and when you come hope wash your hands for at least twenty seconds with any kind of soap or hand washes, if gymnasiums are open then take proper care of yourself and make sure the gym owners are following all of the safety norms for the safety of the gym goers as workout is necessary not only for leisure but for a good lifestyle so do go to the gyms, if you are eating outdoors then make sure social distancing is maintained and if delivery is your cue then order from restaurants who are maintaining a proper hygiene and if you wanna support local business then educate them about the govt’s norms and safety standards so that they can help themselves to help you to get really tasty street food and the rest like a place’s tourism industry and other entertainment industries and all have to wait for sometimes as of now every country’s economy is in smithereens so it will take some time to recover but we will get through this together as one big, bold and happy family.

How Globalization affects the World Economy

Globalization is dominating the traditional economy, opening up new prospects for countries around the world. This is seen by some researchers as a catalyst for economic growth. Others blame it for the harm to the world which we face today. One thing is clear: this mechanism enables national economies across the globe to spread across boundaries and establish mutually beneficial ties.

Globalisation and Economic Policies

Undertakings around the world are no longer limited to country borders. They can widen around the globe, diversify their operational efficiency and reduce their costs by moving their manufacturing production to countries with cheap labour resources or better availability of raw materials. Burgeoning trade and rising economic connectivity are helping money to travel more than ever. Corporations can now operate across national boundaries and attract more customers, leading to higher profits and eventually economic growth.

How Does the Global Economy Affect the Meeting Planning Industry ...

With globalisation, a business in one country can now sell their goods halfway around the globe in another country. In addition, it can construct there stores and factories, invest in goods and contribute to the local economy. For example, Ford Motor Company had its call centre agents moved to India. Cisco opened a Bangalore Research and Development Centre.

In 2010, Microsoft developed a strategic 3 year contract to monitor its inbuilt IT operations with Infosys Technologies in India. By subcontracting its services to developing countries, businesses can save money and change the lives of people. Because of this, the rates of poverty have declined in the past decades worldwide.

Global Employment possibility:

Globalization enables people to consider moving and start their own business or find work in wealthier countries. It translates into a higher salary and better life chances. Furthermore, migrant workers can send money back home without paying outrageous fees. The free circulation of information and technology also empowers trade unions worldwide to combat for workers ‘ rights. Labour rights expanded as new laws and legislation were implemented. Furthermore, critical topics such as fair pay and gender equality are gradually becoming less common.

Multinational companies such as Google, IBM and Accenture are continually expanding and recruiting workers in their countries of operation. Others introduce exchange programs to give their workers the opportunity to work outside the country. Boston Consulting Group, L.E.K. Consulting and Edelman are just a few instances. This further speeds up globalisation, and fosters economic growth.

Additional Free Trade

One of globalisation’s primary advantages is free trade in goods and services. A country that specializes in motor vehicles, for example, would manufacture cars and parts at a place that maintains the lowest possible cost and sell them on local and international markets. That means more people living in other countries can buy those vehicles for less. They will have access to a broader array of brands and models at the same time.

Since 1945, after the development of economic globalization, world trade has increased by about 7 per cent. Countries that export goods have a competitive advantage and pay lower shipping fees.

Disadvantages of Globalization:

Globalization has its disadvantages, as does anything else. Free trade in goods, services , and information is placing the global economy in a phase of growth in income and employment. The main drawback is that it has also led to lower cash flows and tight credit across the local and national borders.

In fact, since 2008, more than 1,200 restrictive trade policies have been introduced by G2O countries such as the US, Brazil, Germany , France and Japan, which contribute for over 86 per cent of the global economy. This leads to higher taxes for companies importing and exporting goods, and stricter laws.

Conclusion:

Despite the downsides, there’s globalization here to live. The result is a smaller world, that is more interconnected. Socially, globalization has facilitated the interchange of knowledge and cultures, leading to a perception of the world in which individuals are more accessible and compassionate of one another.

Can India’s economy over take China in coming years?

With the Covid-19 pandemic infecting millions of people around the world, China is facing a global backlash, especially from the United States. It has created a cold-war situation between the two, where India is siding the US. Despite the strong anti-China sentiment, the Indian government can no way stop the Chinese market.

Indian Market cannot afford to keep China out of its markets as Chinese products are fairly cheap and have helped low-income groups to improve their standard of living. The country’s products are not just cheap but also durable and well-aligned to other country’s needs. This formula has helped Chinese production experts take over even Euro-American markets. Although, China is known to be the birthplace for Coronavirus, which is uniting its enemies- India, the US, Japan, and Australia. But, there are very low chances that they can stop its goods and services all over the world, including their own countries, in the post-COVID world.

Focusing on India, it still hasn’t prepared its labor force to challenge the Chinese skilled labor force. Also, the question arises, is India capable enough to produce goods and commodities as inexpensive as China?

China has its rural industry which is that independent that it can produce goods for all sorts of cultures and commercial markets. There is no rural industry in India. While announcing plans for post- corona economy, Narendra Modi talked about establishing cottage industries. But there are no skilled laborers in rural India to produce goods for the global market’s tastes. How will this happen then?

Not to forget, Chinese growth has been driven by some of the world’s largest investment rates. This has made possible high –speed rail lines, infrastructure revolution of new cities, ports, airports, and manufacturing muscle for the country. Now, China has become the world’s factory for more than 20 years. Its ability to quickly and efficiently move what it produces domestically and around the world has played a major role in its growth miracle.

Today, India lags behind China in three dimensions: investment, infrastructure, and manufacturing. India has barely scratched the surface on all these. China invests about 50% of its GDP, while India does only 30%. Manufacturing is about is just 20% in India, while in China it’s about 30%.

India lags behind China a lot in the development. It looks like a poor country in major parts, where China has one of the best infrastructures around the world.

But, if India starts taking things seriously it can be a real opportunity. It is a known fact that by increasing investment, improving infrastructure, and growing economic output, it can be a true path to growth if the nation is patient enough to follow.

The ‘Make in India’ initiative is so promising as it does not rely on the Indian government. Launched to surpass China in direct foreign investment, ‘Make in India’ calls for global firms to increase their financial commitment to India. The innovative firms as diverse as Lenovo, Samsung and Boeing have publically supported this initiative, proving that the private sector is ready to step in.

Only thing is that private firms won’t act until it is more confident about politics and this scheme. Taking this into consideration, the government first has to give confidence to them for further progress to be made.

There is a lot of potential that India has. The raw material that the nation is so rich for any production. The challenge now is to use it effectively by all means.

All to say, to challenge China, it means unlearning many things and re-learning new things for India to take over this nation in terms of economy.

With the Covid-19 pandemic infecting millions of people around the world, China is facing a global backlash, especially from the United States. It has created a cold-war situation between the two, where India is siding the US. Despite the strong anti-China sentiment, the Indian government can no way stop the Chinese market.

Indian Market cannot afford to keep China out of its markets as Chinese products are fairly cheap and have helped low-income groups to improve their standard of living. The country’s products are not just cheap but also durable and well-aligned to other country’s needs. This formula has helped Chinese production experts take over even Euro-American markets. Although, China is known to be the birthplace for Coronavirus, which is uniting its enemies- India, the US, Japan, and Australia. But, there are very low chances that they can stop its goods and services all over the world, including their own countries, in the post-COVID world.

Focusing on India, it still hasn’t prepared its labor force to challenge the Chinese skilled labor force. Also, the question arises, is India capable enough to produce goods and commodities as inexpensive as China?

China has its rural industry which is that independent that it can produce goods for all sorts of cultures and commercial markets. There is no rural industry in India. While announcing plans for post- corona economy, Narendra Modi talked about establishing cottage industries. But there are no skilled laborers in rural India to produce goods for the global market’s tastes. How will this happen then?

Not to forget, Chinese growth has been driven by some of the world’s largest investment rates. This has made possible high –speed rail lines, infrastructure revolution of new cities, ports, airports, and manufacturing muscle for the country. Now, China has become the world’s factory for more than 20 years. Its ability to quickly and efficiently move what it produces domestically and around the world has played a major role in its growth miracle.

Today, India lags behind China in three dimensions: investment, infrastructure, and manufacturing. India has barely scratched the surface on all these. China invests about 50% of its GDP, while India does only 30%. Manufacturing is about is just 20% in India, while in China it’s about 30%.

India lags behind China a lot in the development. It looks like a poor country in major parts, where China has one of the best infrastructures around the world.

But, if India starts taking things seriously it can be a real opportunity. It is a known fact that by increasing investment, improving infrastructure, and growing economic output, it can be a true path to growth if the nation is patient enough to follow.

The ‘Make in India’ initiative is so promising as it does not rely on the Indian government. Launched to surpass China in direct foreign investment, ‘Make in India’ calls for global firms to increase their financial commitment to India. The innovative firms as diverse as Lenovo, Samsung and Boeing have publically supported this initiative, proving that the private sector is ready to step in.

Only thing is that private firms won’t act until it is more confident about politics and this scheme. Taking this into consideration, the government first has to give confidence to them for further progress to be made.

There is a lot of potential that India has. The raw material that the nation is so rich for any production. The challenge now is to use it effectively by all means.

All to say, to challenge China, it means unlearning many things and re-learning new things for India to take over this nation in terms of economy.