Tag: #economics

Gig Economy

What Is the Gig Economy?

In a gig economy, temporary, flexible jobs are commonplace and companies tend to hire independent contractors and freelancers  instead of full-time employees. A gig economy undermines the traditional economy of full-time workers who often focus on their career development.

Understanding the Gig Economy

In a gig economy, large numbers of people work in part-time or temporary positions or as independent contractors. The result of a gig economy is cheaper, more efficient services, such as Uber or Airbnb, for those willing to use them. People who don’t use technological services such as the Internet may be left behind by the benefits of the gig economy. Cities tend to have the most highly developed services and are the most entrenched in the gig economy. A wide variety of positions fall into the category of a gig. The work can range from driving for Lyft or delivering food to writing code or freelance articles. Adjunct and part-time professors, for example, are contracted employees as opposed to tenure-track or tenured professors. Colleges and universities can cut costs and match professors to their academic needs by hiring more adjunct and part-time professors.

The Factors Behind a Gig Economy

America is well on its way to establishing a gig economy, and estimates show as much as a third of the working population is already in some gig capacity. Experts expect this working number to rise, as these types of positions facilitate independent contracting work, with many of them not requiring a freelancer to come into an office. Gig workers are much more likely to be part-time workers and to work from home. Employers also have a wider range of applicants to choose from because they don’t have to hire someone based on their proximity. Additionally, computers have developed to the point that they can either take the place of the jobs people previously had or allow people to work just as efficiently from home as they could in person.

Economic reasons also factor into the development of a gig economy. Employers who cannot afford to hire full-time employees to do all the work that needs to be done will often hire part-time or temporary employees to take care of busier times or specific projects. On the employee’s side of the equation, people often find they need to move or take multiple positions to afford the lifestyle they want. It’s also common to change careers many times throughout a lifetime, so the gig economy can be viewed as a reflection of this occurring on a large scale.

During the coronavirus pandemic of 2020, the gig economy has experienced significant increases as gig workers have delivered necessities to home-bound consumers, and those whose jobs have been eliminated have turned to part-time and contract work for income. Employers will need to plan for changes to the world of work, including the gig economy, when the pandemic has ended.

Criticisms of the Gig Economy

Despite its benefits, there are some downsides to the gig economy. While not all employers are inclined to hire contracted employees, the gig economy trend can make it harder for full-time employees to develop in their careers since temporary employees are often cheaper to hire and more flexible in their availability. Workers who prefer a traditional career path and the stability and security that come with it are being crowded out in some industries.

For some workers, the flexibility of working gigs can actually disrupt the work-life balance, sleep patterns, and activities of daily life. Flexibility in a gig economy often means that workers have to make themselves available any time gigs come up, regardless of their other needs, and must always be on the hunt for the next gig. Competition for gigs has increased during the pandemic, too. And unemployment insurance usually doesn’t cover gig workers who can’t find employment.

In effect, workers in a gig economy are more like entrepreneurs than traditional workers. While this may mean greater freedom of choice for the individual worker, it also means that the security of a steady job with regular pay, benefits—including a retirement account—and a daily routine that has characterized work for generations are rapidly becoming a thing of the past.

Lastly, because of the fluid nature of gig economy transactions and relationships, long-term relationships between workers, employers, clients, and vendors can erode. This can eliminate the benefits that flow from building long-term trust, customary practice, and familiarity with clients and employers. It could also discourage investment in relationship-specific assets that would otherwise be profitable to pursue since no party has an incentive to invest significantly in a relationship that only lasts until the next gig comes along.

Ways to Manage Stress

Stress is part of being human, and it can help motivate you to get things done. Even high stress from serious illness, job loss, a death in the family, or a painful life event can be a natural part of life. You may feel down or anxious, and that’s normal too for a while. Talk to your doctor if you feel down or anxious for more than several weeks or if it starts to interfere with your home or work life. Therapy, medication, and other stategies help. In the meantime, there are things you can learn to manage stress before it gets to be too much. Consider these suggestions:

Exercise

To start with, physical activity can help improve your sleep. And better sleep means better stress management. Doctors don’t yet know exactly why, but people who exercise more tend to get better deep “slow wave” sleep that helps renew the brain and body. Just take care not to exercise too close to bedtime, which disrupts sleep for some people. Exercise also seems to help mood. Part of the reason may be that it stimulates your body to release a number of hormones like endorphins and endocannabinoids that help block pain, improve sleep, and sedate you. Some of them (endocannabinoids) may be responsible for the euphoric feeling, or “runner’s high,” that some people report after long runs.

People who exercise also tend to feel less anxious and more positive about themselves. When your body feels good, your mind often follows. Get a dose of stress relief with these exercises:

Applications

Property Rights

What Are Property Rights?

Property rights define the theoretical and legal ownership of resources and how they can be used. These resources can be both tangible or intangible and can be owned by individuals, businesses, and governments. In many countries, including the United States, individuals generally exercise private property rights or the rights of private persons to accumulate, hold, delegate, rent, or sell their property. In economics property rights form the basis for all market exchange, and the allocation of property rights in a society affects the efficiency of resource use.

Understanding Property Rights

Property is secured by laws that are clearly defined and enforced by the state. These laws define ownership and any associated benefits that come with holding the property. The term property is very expansive, though the legal protection for certain kinds of property varies between jurisdictions.Property is generally owned by individuals or a small group of people. The rights of property ownership can be extended by using patents and copyrights to protect:

  • Scarce physical resources such as houses, cars, books, and cellphones
  • Non-human creatures like dogs, cats, horses or birds
  • Intellectual property such as inventions, ideas, or words

Other types of property, such as communal or government property, are legally owned by well-defined groups. These are typically deemed public property. Ownership is enforced by individuals in positions of political or cultural power. Property rights give the owner or right holder the ability to do with the property what they choose. That includes holding on to it, selling or renting it out for profit, or transferring it to another party.

Acquiring Rights to a Property

Individuals in a private property rights regime acquire and transfer in mutually agreed-upon transfers, or else through homesteading. Mutual transfers include rents, sales, voluntary sharing, inheritances, gambling, and charity. Homesteading is the unique case; an individual may acquire a previously unowned resource by mixing his labor with the resource over a period of time. Examples of homesteading acts include plowing a field, carving stone, and domesticating a wild animal. In areas where property rights don’t exist, the ownership and use of resources are allocated by force, normally by the government. That means these resources are allocated by political ends rather than economic ones. Such governments determine who may interact with, can be excluded from, or may benefit from the use of the property.

Private Property Rights

Private property rights are one of the pillars of capitalist economies, as well as many legal systems, and moral philosophies. Within a private property rights regime, individuals need the ability to exclude others from the uses and benefits of their property. All privately owned resources are rivalrous, meaning only a single user may possess the title and legal claim to the property. Private property owners also have the exclusive right to use and benefit from the services or products. Private property owners may exchange the resource on a voluntary basis.

Private Property Rights and Market Prices

Every market price in a voluntary, capitalist society originates through transfers of private property. Each transaction takes place between one property owner and someone interested in acquiring the property. The value at which the property exchanges depends on how valuable it is to each party. Suppose an investor purchases $1,000 in shares of stock in Apple. In this case, Apple values owning the $1,000 more than the stock. The investor has the opposite preference, and values ownership of Apple stock more than $1,000.

Financial Literacy

What Is Financial Literacy?

Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. Financial literacy is the foundation of your relationship with money, and it is a lifelong journey of learning. The earlier you start, the better off you will be, because education is the key to success when it comes to money.

Read on to discover how you can become financially literate and able to navigate the challenging but critical waters of personal finance. And when you have educated yourself, try to pass your knowledge on to your family and friends. Many people find money matters intimidating, but they don’t have to be, so spread the news by example.

Understanding Financial Literacy

In recent decades financial products and services have become increasingly widespread throughout society. Whereas earlier generations of Americans may have purchased goods primarily in cash, today various credit products are popular, such as credit and debit cards and electronic transfers. Indeed, a 2019 survey from the Federal Reserve Bank of San Francisco showed that consumers preferred cash payments in only 22% of transactions, favoring debit cards for 42% and credit cards for 29%.

Other products, such as mortgages, student loans, health insurance, and self-directed accounts, have also grown in importance. This has made it even more imperative for individuals to understand how to use them responsibly. Although there are many skills that might fall under the umbrella of financial literacy, popular examples include household budgeting, learning how to manage and pay off debts, and evaluating the tradeoffs between different credit and investment products. These skills often require at least a working knowledge of key financial concepts, such as compound interest and the time value of money. Given the importance of finance in modern society, lacking financial literacy can be very damaging to an individual’s long-term financial success.

Being financially illiterate can lead to a number of pitfalls, such as being more likely to accumulate unsustainable debt burdens, either through poor spending decisions or a lack of long-term preparation. This in turn can lead to poor credit, bankruptcy, housing foreclosure, and other negative consequences. Thankfully, there are now more resources than ever for those wishing to educate themselves about the world of finance. One such example is the government-sponsored Financial Literacy and Education Commission, which offers a range of free learning resources.

Strategies to Improve Your Financial Literacy Skills

Developing financial literacy to improve your personal finances involves learning and practicing a variety of skills related to budgeting, managing and paying off debts, and understanding credit and investment products. Here are several practical strategies to consider.

Create a Budget—Track how much money you receive each month against how much you spend in an Excel sheet, on paper, or with a budgeting app. Your budget should include income (paychecks, investments, alimony), fixed expenses (rent/mortgage payments, utilities, loan payments), discretionary spending (nonessentials such as eating out, shopping, and travel), and savings.

Pay Yourself First—To build savings, this reverse budgeting strategy involves choosing a savings goal (say, a down payment for a home), deciding how much you want to contribute toward it each month, and setting that amount aside before you divvy up the rest of your expenses.

Pay Bills Promptly—Stay on top of monthly bills, making sure that payments consistently arrive on time. Consider taking advantage of automatic debits from a checking account or bill-pay apps and sign up for payment reminders (by email, phone, or text).

The utterly butterly delicious story of Amul

Over the years, Amul, one of the most beloved brands of our country, has become the taste of India, just as its tagline claims. Every Indian millennial has grown up listening to the jingles of its many dairy products, and the Amul girl, the brand’s mascot in the polka-dotted dress, has become a nostalgia-evoking symbol. Amul has truly come a long way since its founding in 1946.

The beginning

Amul was formed as a part of a cooperative movement against Polson Dairy in Anand, Gujarat, which procured milk from local farmers of Kaira District at very low rates and sold it to the then Bombay government. Everyone except the farmers benefited from this trade. The farmers took their plea to Sardar Patel, who had advocated farmers’ cooperatives since 1942. The result was the formation of the Kaira District Co-operative Milk Producers’ Union Limited in Anand.

The union started pasteurising milk produced by a handful of farmers for the Bombay Milk Scheme and grew to 432 farmers by the end of 1948. The rapid growth led to problems including excess production that the Bombay Milk Scheme couldn’t accommodate. To solve this issue, a plant was set up to process all that extra milk into products such as milk powder and butter.

Amul is born

The late Dr. Verghese Kurien, rightly called the Milkman of India, was Amul’s true architect. His journey at Amul began in 1949 when he arrived in Anand to manage a dairy as a government employee. He went from helping farmers repair machinery to revolutionising India’s dairy industry with the White Revolution (or Operation Flood), the largest dairy development programme in the world.

The new dairy with the milk processing plant was ready for operation in October 1955, the year that also saw a breakthrough in dairy technology —buffalo milk was processed to make products for the first time in the world. The word ‘Amul’, derived from ‘Amulya’, which means ‘precious’ or ‘priceless’ in Sanskrit, was used to market the range of milk products developed by the Kaira Union. It is also an acronym for Anand Milk Union Ltd.

Dr Kurien had a vision. He wanted to offer small-scale dairy farmers quality-control units and centralised marketing, which were missing at the time in the dairy economy. Thus, the Gujarat Cooperative Milk Marketing Federation (GCMMF) was created in 1973 to market milk and all milk products produced by six district cooperative unions in Gujarat. GCMMF is the largest exporter of dairy products in India and Amul is the umbrella for all of its products.

Awards, accolades, and a global presence

Over the years, Amul, together with GCMMF, has won numerous awards. Some of these include the Rajiv Gandhi National Quality Award, 1999; the Golden Trophy for Outstanding Export Performance, 2009-10; Best Marketing Campaign, 2014; and World Dairy Innovation Award, among many others. Amul earned recognition all over the world when GCMMF  introduced it on the Global Dairy Trade (GDT) platform, where only the six top dairy players across the world sell their products.

More than a mere slogan

Amul’s famous slogan, which is now a part of its logo, was created in 1994 by Shri Kanon Krishna of a Mumbai-based advertising agency called Advertising and Sales Promotion (ASP). According to Amul, the Taste of India slogan is more than just corporate positioning or advertising jargon. This slogan lends meaning to the brand’s never-ending commitment to taking quality food and products to the rural man, which he otherwise couldn’t have afforded.

The Butter Girl

Amul did not always have the round-eyed moppet as its mascot. The Butter Girl was born in 1966 when Sylvester daCunha, the then MD of the advertising agency handling Amul butter’s account, created her for its campaign. It was a pleasant change from the dull, corporate ads that the previous agency had come up with. Being a seasoned marketer himself, Dr Kurien gave daCunha complete creative freedom to create and release the ads without taking the company’s permission. 30 years later, the Utterly Butterly Girl still wins hearts wherever she is, whether on a billboard or on the packet of butter.

Amul is not just a brand; it is also a movement that represents farmers’ economic freedom. The name is now a household term that is here to stay, and the chubby-cheeked Amul girl will continue to cast a spell on the public.

Economic significance of Algae

People are mainly aware about the algae as seaweeds or algal blooms. They are the organisms with ability of photosynthesis and very much diverse community as well. But algae are important to man and their economic importance is manyfold. They are used as food, fodder and manure. They are also important in industrial field as well as agriculture.

there are 7 major types in algae
  • Chrysophytes
  • Euglenophytes
  • Pyrrophytes
  • Chlorophytes
  • Rhodophytes
  • Phaeophytes
  • Xanthophytes
these are the benificial roles of algae
  1. Algae is a food source: In different parts of the world algae have been utilized as direct source of food. They are rich in proteins, carbohydrates, oils, vitamins and minerals hence used as a diet food. They possess minerals like Cu, Fe, Zn, Co, V, Mn and Cr. About 20 different seaweeds are used as food source. Nostoc,
  2. Algae as fodder: Many seaweeds are as food for cattle, poultry and aquatic organisms. Sargassum is used as cattle feed in China. Laminaria and Fucus are also used for the same purpose. Seaweed meal increases the egg laying capacity of fowls. These eggs contain high amount of iodine and carotene.
  3. Algae in agriculture: Algae are used as green manures in agriculture. Sargassum, Laminaria, Macrocystis and Gracilaria are the most commonly used ones. Seaweed manure increases the yield of barley, potato, coconut palms, citrus etc. Many blue green algae have the ability to fix the atmospheric nitrogen into the soil. So they can be used as biofertilizers. Saline and alkaline soils can be converted into productive ones by growing some blue-green algae on soil. Anabaena, Rivularia, Spirulina are used for this purpose.
  4. Algae in Industries: In Industries many algae have been used as sources for the extraction of commercial products like agar-agar, diatomite, carrageenin and algin. Agar-agar is used as culture media for bacteria. It is also used as emulsifier in ice-cream, fruit jellies and dairy product preparation. Algin is used as painting pastes in textile industry and thickeners in cosmetics, pharmaceutical products etc. Carrageenin which is extracted from Chondrus crispus and Gigartina are used in food industry, textiles and leather industry. It is a remedy for cough.
  5. Algae in sewage disposal: Sewage water contains organic and inorganic substances which makes it low in oxygen content. But sewage finds use in agricultural practice as they are rich in salts. To decrease the foul smell algae are used. Algae are used to decompose the organic and inorganic substances.
  6. Algae and Research: Algae are used in the study of effects of pesticides, herbicides and UV light. They are used in the research for preparing biofuels.
  7. Algae as pollution indicator: Some algae grow well in polluted water as they are more tolerant towards pollution. Growth of these algae indicates the pollution and its intensity. Scenedesmus indicates copper wastes and Ulothrix zonata indicates indicates paper mill wastes.

Though many algae are useful, there are harmful algae are also there. The development of water blooms is considered to be a bad effect of algae. There are some parasitic algae cause diseases in plants. Attachment of algae tp ship retards the speed of the ship. growth of algae on cloths are also seen and they ruin the cloth.

Money and it’s Functions

Money a commodity accepted by general consent as a medium of economic exchange. It is basically the legal tender of exchange. The paper currency which we use today has a long history behind it’s origin and evolution. Even today, money is continuously evolving, going from paper to plastic to digital. Over the years, money has changed it’s forms several times but what hasn’t changed is it’s functions. No matter what form it is used in, money almost always serves the same functions.
The functions of money are categorised as primary, secondary and contingent functions.

Primary Functions of Money:

Under this category, money performs it’s two main functions that are medium of exchange and unit of value. In the former case, money has removed the need of double coincidence of wants, something which was very much needed in the batter system which was used earlier. Being a medium of exchange means being generally acceptable. This gives the user freedom of choice and economic independence. It also acts as an intermediary and facilities exchange.
Money as unit of value means money is the standard for measuring values of all goods and services. This value is expressed in terms of price. Price is in terms of monetary unit and money acts as the determiner of rate of exchange. It also helps in calculating important economic parameters like costs, revenue, profits etc.

Secondary Functions of Money:

Under this, money performs three functions. It acts as a standard of deferred payments, it acts as a store of value and as a transfer of value. Money as a standard of deferred payments means that money acts as a standard for payments, which are to be made in future.
Money as a store of value means that money can be used to transfer purchasing power from present to future. Money is a way to store wealth. Although wealth can be stored in other forms also, but money is the most economical and convenient way. Money as a transfer value refers to the fact that money has velocity. It keeps transferring from person to other person.

https://www.yourarticlelibrary.com/economics/money/primary-and-secondary-functions-of-money/30307

Contingent Functions of Money:


Money performs certain contingent functions. These include: distribution of national income, maximization of satisfaction, basis of credit system, money as the most liquid asset. Money helps in distribution of the national product in the form of rent, wage, interest and profit, which are expressed in money terms. Money helps the consumers and producers in maximizing their satisfaction. A consumer derives maximum satisfaction when marginal utility is greater than marginal cost. Money helps in credit creation for banks. Money as a store of value has encouraged savings by people in the form of demand deposits in banks. These deposits are used for generating credit. Money is the most liquid asset of all assets in which wealth is healed. Individuals hold wealth in numerous forms ranging from currency, demand deposits, time deposits to bonds , savings, treasury bills etc. All these forms can be converted into money and vice versa.

https://www.yourarticlelibrary.com/economics/money/contingent-functions-of-money-in-economics/30310

Keynesian Economics

Keynesian Economics is a macroeconomic theory that came into existence after the fall of Classical Economics. It was given by John Maynard Keynes in order to understand the Great Depression of the 1930s. His theory focussed on aggregate demand and aggregate supply. This theory was the refutation to the classical economics.
Keynes theory of employment was based on the principle of effective demand. According to this, the level of employment in a capitalist economy depends on the effective demand. Unemployment is the result of deficiency of effective demand.
Keynes used the term aggregate demand price and aggregate supply price to explain effective demand.
Aggregate demand price refers to the amount of money which entrepreneurs expect to get by selling the output. It is basically the expected revenue from the sale of outputs at a certain level of employment.
Aggregate supply price on the other hand refers to the proceeds necessary for the sale of output at a particular level of employment. Basically each level of employment is related to a particular aggregate supply price.
The determination of effective demand is done by using aggregate demand price and aggregate supply price. The level of employment is determined when aggregate demand price is equal to the aggregate supply price. This level of employment is also the point of effective demand and here entrepreneurs earn normal profits.

Keynes also criticized the idea of excessive saving, unless it was for a specific purpose such as retirement or education. He saw it as dangerous for the economy because the more money sitting stagnant, the less money in the economy stimulating growth. Instead, he focussed more on investment and highlighted it’s role in determining the level of employment in the economy. According to him, aggregate demand function depends on the consumption function and investment function. A fall in any of these two functions result in unemployment. Thus it is the aggregate demand function which is the effective element in the principle of effective demand.
Keynesian economics focuses on demand-side solutions to recessionary periods. The intervention of government in economic processes is an important part of it. Keynesian theorists argue that economies do not stabilize themselves very quickly and require active intervention that boosts short-term demand in the economy.

https://www.investopedia.com/terms/k/keynesianeconomics.asp

Keynes also reformulated the Quantity Theory of Money. He criticised the classical idea of money being neutral. According to him money is the link between the present and the future. The Keynesian theory emphasises that the price level is in fact a consequence of aggregate demand or expenditure relative to aggregate supply rather than of quantity of money.


https://www.yourarticlelibrary.com/economics/money/keynesian-monetary-theory-money-income-and-prices-with-diagrams/37961


The multiplier effect was developed by Keynes’s student Richar Kahn. According to Keynes’s theory of fiscal stimulus, an injection of government spending eventually leads to added business activity and even more spending. This theory proposes that spending boosts aggregate output and generates more income. The magnitude of the Keynesian multiplier is directly related to the marginal propensity to consume. Keynes and his followers believed individuals should save less and spend more, raising their marginal propensity to consume

Classical Economics

Classical economics relates to the school of thought of economics that originated in Britain during the late 18th and early 19th centuries. The classical economists believed in the existence of full employment in the economy. It is believed that ‘The Wealth of Nations’ by Adam Smith published in 1776 marked the beginning of classical economics. J.B. Say, Alfred Marshall, A.C. Pigou are some of the famous classical economists.
This school of economics focused on the theory called the ‘invisible hand‘ being the highlight at the beginning stages of domestic and international supply and demand. They assumed the economy to be laissez faire capitalist. It was a closed economy with no foreign trade. Labour was a homogenous and wages were flexible. It assumed the economy to be in the long run.


https://cleartax.in/g/terms/classical-economics


The Classical school of thought is based on the Law of Markets given by J.B. Say. According to that law “supply creates it’s own demand“. Therefore there can never be the problem of overproduction or unemployment in the economy as whatever is produced is consumed. Unemployment may occur only in the short run and in the long run, economy tends towards full employment.
The Classical economists also believed in wage price flexibility. This concept was given by A.C. Pigou. It was basically the formulation of Say’s Law in terms of labour market. According to this, whenever there is unemployment in the economy, a general cut in money wages will restore full employment condition. Unemployment is a consequence of the rigid wage structure.
They also believed in the existence of equilibrium in the goods market. It is achieved when savings is equal to investment. This equality is usually brought by the mechanism of interest rate. Similarly, the money market is in equilibrium when the demand for money is equal to the supply of money. This concept was explained in the Quantity Theory of Money.

The Fall of Classical Economics:

During the time of The Great Depression i.e. 1929-1930’s, the classical theory failed to be applicable. It failed to solve the problem of depression that plagued for about 43 months. Keynes criticized the classical theory on several grounds.
First and foremost was the classical assumption of full employment equilibrium. Keynes considered it as unrealistic and argued that the situation in the capitalist economy is underemployment and full employment is a special case. He refuted Say’s law of market and stated that it was demand that created supply. He was also against the idea of laissez faire. He believed that self adjustment was not possible in a capitalist system and this was responsible for the Great Depression. He advocated state intervention within the economy through monetary and fiscal measures.
The wage price flexibility was also heavily criticised. In the modern world, where workers have trade unions, any cuts in wages will lead to strikes and industrial unrest. Keynes also stressed that equality between savings and investment was not brought by rate of interest but instead by the level of income and marginal efficiency of capital.
Lastly, the long run analysis of Classical economy was refuted on the grounds of inapplicability. Since it operated in the long run, it is incapable of solving present day economic problems.

https://www.yourarticlelibrary.com/economics/keynes-criticisms-against-classical-theory/24859

INDUSTRIAL SICKNESS

Industrial sickness refers to the situation wherein an industrial firm performs poorly, incurs losses for several years and often defaults in its debt repayment obligations. The problem of industrial sickness has grown significantly over the years in India and a large number of industrial units were affected by it.

There are various causes of industrial sickness. Firstly, an internal cause can be faults at the planning and construction stage. Faulty decisions like setting up the firm in the wrong location i.e. a location which lacks infrastructure facilities or lacks market availability cause problems in the long run. Unplanned production, unbalanced capital structure etc. are all faulty decision which makes a firm sick.

Defective plant and machinery is another reason for industrial sickness. It has been observed that small scale sector do not seek professional technical guidance in choosing machinery. At times technology adopted is outdated and inappropriate. Production with this sort of technology is bound to be inferior and likely to suffer cost and price disadvantage.
An external cause of industrial sickness is demand and credit restrain. During the times of recession, there is a steep decline of demand in the market. This causes losses to individual units especially the products with high prices like automobiles. If such situation persists for long durations, then industrial units are prone to turn sick.
The most important internal cause of industrial sickness is management problems. Management can make or break a firm. Incorrect managerial decisions pertaining to the fields of finance, production, marketing etc. can ruin a business. Absence of quality control systems, lack of inventory, inadequate maintenance are some examples of mismanagement.
Entrepreneurial incompetence is yet another reason for industrial sickness. Many entrepreneurs in the small scale sector do not have basic knowledge of business, manufacturing, costing, accounts etc. Units set up by them often turn sick.
Industrial sickness can have serious consequences. It is a set back for employment opportunities. When a firm turns sick, it can actually go out of business. Closure of an industrial firm renders its workers unemployment. This situation can be more serious if a big firm with a large number of employees gets shut down. Unemployment brings a lot of complications with itself. This can cause industrial unrest. Closure of a big firm also causes labour unrest which can result in industrial strikes which threatens the peace of industrial environment.
Industrial sickness also leads to wastage of resources. When a sick firm is shut down, resources invested in that unit are wasted. In case of large firms this problem is more serious as a lot of investment is made in its plants and machinery. In fact other industries which are linked to a sick firm through backward or forward linkages, also incur some losses.
Closure of large sick units also effects investors and entrepreneurs and creates a psychology of despair. The prices of share fall down and affect the entire stock market. Even banks and financial institutions which have granted loans to these units suffer losses. Locking up funds in the sick units negatively affects the future lending programmes of banks and financial institutions. Industrial sickness also results in loss of revenue of government. Since industrial sickness has such a wide range of impact, it is considered as a social problem in India.

Income Inequality in India

Income inequality refers to the unevenness in the distribution of income throughout the population. In India, income inequality has emerged as one of the major economic problem and is increasing. According to World Inequality Report 2018, inequality in India has increased substantially from the 1980s onwards. The top 0.1 per cent earners have captured more growth than bottom 50 per cent all combined.
There are several reasons for this inequality. Firstly there is an extreme concentration of wealth and economic power in the hands of large industrialists. They have acquired massive assets over time. This can be due to easy availability of money in form of loans from banks. Secondly, inequalities have existed for a very long time, since the time of colonialization. The zamindari system was responsible for inequalities in land ownership which resulted in concentration of tangible wealth. Even though zamindari system was abolished, the damage had been done. The concentration of land ownership could not be broken. Even today, the main reason for income inequalities in rural areas is the concentration of ownership of lands.

Another reason for income inequality is the rising capital intensity of technology. Over the years, due to digital tsunami and consecutive rise of IT sectors, the demand for labour have significantly reduced over the demand for capital. Reduction in wages and unemployment has increased. More skilled workers have a higher demand and wage in comparison to low skilled workers. This has contributed towards increasing gap in income levels. Furthermore, there exists urban bias in private investments. Mostly rural people are the ones who are not very advanced with the technology. Majority of population in India belongs to rural sector and therefore a pattern of urban bias is observed in private investments. It can be seen as the use of highly mechanised projects. Here the share of wages added is relatively low. This naturally leads to inequality in income distribution and wealth accumulations.
Inflation has also greatly contributed in rising income inequality. It has affected the real incomes of working class while benefited traders, farmers, industrialists. Not much has been done to prevent this effect of inflation and hence the result is income inequality. Even the credit facilities are responsible for income inequalities. Large business frims or individuals have an easy access to loans and financial supply on favourable and supporting terms. They have an access to formal capital market but the vast majority of small marginal farmers, labours etc. do not have this. They depend largely on moneylenders who exploit them by charging high interest rates.
The government has desperately tried to curb these inequalities by taking various measures. Various land reforms and redistribution of agricultural land has taken place and the government has even tried to control monopolies and restrictive trade practices. Several employment and wage policies and social security measures have been undertaken and special programmes for the upliftment of rural population have been taken up. Even then, income inequality exists. All of these measures have little impact on poverty and thus inequality continues to grow.