Tag: Economy

EFFECTS OF GLOBALIZATION ON INDIAN SOCIETY

Globalization has many meaning depending on the circumstance and on the individual who is talking about. There is one of the term of Globalization is a process of the “reconfiguration of geography, so that social space is not entirely mapped in terms of territorial distance, territorial places and territorial borders.” The simple term of globalization refers to the integration of economies of the world through uninhibited trade and financial flows, as also through mutual exchange of technology and knowledge. Ideally, it also contains free inter country movement of labor.

Indian society drastically changes after urbanization and globalization. The economic policies has direct influence in forming the basic framework of the Indian economy. The government shaped administrative policies which aim to promote business opportunities in every country, generate employment and attract global investment. In which the Indian economy witnessed an impact on its culture and introduction to other societies and their norms brought various changes to the culture of this country as well. The developed countries have been trying to pursue developing countries to liberalize the trade and allow more flexibility in business policies to provide equal opportunities to multinational firms in their domestic market. The International Monetary Fund (IMF) and World Bank helped them in this endeavor. Liberalization began to hold its foot on barren lands of developing countries like India by means of reduction in excise duties on electronic goods in a fixed time Frame.

Globalization has several aspects and can be political, cultural, social, and economic, out of Financial integration is the most common aspect. India is one of the fastest-growing economies in the world and has been predicted to reach the top three in the next decade. India’s massive economic growth is largely due to globalization which was a transformation that didn’t occur until the 1990s. Since then, the country’s gross domestic product (GDP) has grown at an exponential rate.

Indian government did the same and liberalized the trade and investment due to the pressure from the World Trade Organization. Import duties were cut down phase-wise to allow MNC’s operate in India on an equal basis. As a result globalization has brought to India new technologies, new products and also the economic opportunities.

Despite bureaucracy, lack of infrastructure and an ambiguous policy framework that adversely impact MNCs operating in India, MNCs are looking at India in a big way, and are making huge investments to set up R&D centres in the country. India has made a lead over other growing economies for IT, business processing, and R&D investments. There have been both positive and negative impacts of globalisation on social and cultural values in India.

Economic Impact:

1. Greater Number of Jobs: The advent of foreign companies led to the growth in the economy which led to creating job opportunities. However, these jobs are concentrated in the various services sectors and led to rapid growth of the service sector creating problems for individuals with low levels of education. The last decade came to be known for its jobless growth as job creation was not proportionate to the level of economic growth.

2. More choice to consumers: Globalisation has led to having more choices in the consumer products market. There is a range of choices in selecting goods unlike the times where there were just a couple of manufacturers.

3. Higher Disposable Incomes: People in cities working in high paying jobs have greater income to spend on lifestyle goods. There’s been an increase in the demand for products like meat, egg, pulses, organic food as a result. It has also led to protein inflation.

Protein food inflation contributes a large part to the food inflation in India. It is evident from the rising prices of pulses and animal proteins in the form of eggs, milk and meat. With an improvement standard of living and rising income level, the food habits of people changed. People tend toward taking more protein intensive foods. This shift in dietary pattern, along with rising population results in an overwhelming demand for protein rich food, which the supply side could not meet. Thus resulting in a demand supply mismatch thereby, causing inflation.

In India, the Green Revolution and other technological advancements have primarily focused on enhancing cereals productivity and pulses and oilseeds have traditionally been neglected.

• Shrinking Agricultural Sector: Agriculture now contributes only about 15% to GDP. The international norms imposed by WTO and other multilateral organizations have reduced government support for agriculture. Greater integration of global commodities markets leads to constant fluctuation in prices.

• This has increased the vulnerability of Indian farmers. Farmers are also increasingly dependent on seeds and fertilisers sold by the MNCs.

Globalization does not have any positive impact on agriculture. On the contrary, it has few detrimental effects as the government is always willing to import food grains, sugar etc. Whenever there is a price increase of these commodities.

• Government never thinks to pay more to farmers so that they produce more food grains but resorts to imports. On the other hand, subsidies are declining so the cost of production is increasing. Even farms producing fertilizers have to suffer due to imports. There are also threats like introduction of GM crops, herbicide resistant crops etc.

• Increasing Health-Care costs: Greater interconnections of the world have also led to the increasing susceptibility to diseases. Whether it is the bird-flu virus or Ebola, the diseases have taken a global turn, spreading far and wide. This results in greater investment in the healthcare system to fight such diseases.

• Child Labor: Despite prohibition of child labors by the Indian constitution, over 60 to a 115 million children in India work. While most rural child workers are agricultural laborer’s, urban children work in manufacturing, processing, servicing and repairs. Globalization most directly exploits an estimated 300,000 Indian children who work in India’s hand-knotted carpet industry, which exports over $300 million worth of goods a year. The many effects of globalization of Indian society and has immense multiple aspects on Indian trade, finance, and cultural system. Globalization is associated with rapid changes and significant human societies. The movement of people from rural to urban areas has accelerated, and the growth of cities in the developing world especially is linked to substandard living for many.

Sources: https://www.clearias.com/effects-globalization-indian-society/

Understanding inflation

The Inequities of Inflation - Positively Naperville

Inflation is a term we here very frequently in today’s world. Several economies of the world are now in the crunches of inflation. In this situation, let us read about inflation in detail.

What is inflation?

In economics, inflation is a general increase in prices of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money. The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index. As prices do not all increase at the same rate, the consumer price index (CPI) is often used for this purpose.

Causes of inflation:

There were different schools of thought as to the causes of inflation. Most can be divided into two broad areas: quality theories of inflation and quantity theories of inflation.

Currently, the quantity theory of money is widely accepted as an accurate model of inflation in the long run. Consequently, there is now broad agreement among economists that in the long run, the inflation rate is essentially dependent on the growth rate of the money supply relative to the growth of the economy. However, in the short- and medium-term inflation may be affected by supply and demand pressures in the economy, and influenced by the relative elasticity of wages, prices and interest rates.

The quality theory of inflation rests on the expectation of a seller accepting currency to be able to exchange that currency at a later time for goods they desire as a buyer. The quantity theory of inflation rests on the quantity equation of money that relates the money supply, its velocity, and the nominal value of exchanges.

Measures of inflation

Consumers’ cost of living depends on the prices of many goods and services and the share of each in the household budget. To measure the average consumer’s cost of living, government agencies conduct household surveys to identify a basket of commonly purchased items and track over time the cost of purchasing this basket. The cost of this basket at a given time expressed relative to a base year is the consumer price index (CPI), and the percentage change in the CPI over a certain period is consumer price inflation, the most widely used measure of inflation.

Core consumer inflation focuses on the underlying and persistent trends in inflation by excluding prices set by the government and the more volatile prices of products, such as food and energy, most affected by seasonal factors or temporary supply conditions. Core inflation is also watched closely by policymakers. Calculation of an overall inflation rate—for a country, say, and not just for consumers—requires an index with broader coverage, such as the GDP deflator.

Types of inflation

Cost-Push Effect

Cost-push inflation is a result of the increase in prices working through the production process inputs. When additions to the supply of money and credit are channeled into a commodity or other asset markets and especially when this is accompanied by a negative economic shock to the supply of key commodities, costs for all kinds of intermediate goods rise.

Built-in Inflation

Built-in inflation is related to adaptive expectations, the idea that people expect current inflation rates to continue in the future. As the price of goods and services rises, workers and others come to expect that they will continue to rise in the future at a similar rate and demand more costs or wages to maintain their standard of living. Their increased wages result in a higher cost of goods and services, and this wage-price spiral continues as one factor induces the other and vice-versa.

Demand-Pull Effect

Demand-pull inflation occurs when an increase in the supply of money and credit stimulates overall demand for goods and services in an economy to increase more rapidly than the economy’s production capacity. This increases demand and leads to price rises.

RBI and credit control

ReserveBankOfIndia (@RBI) / Twitter

RBI governor, Shaktikanth Das, on May 4 2022 revised the repo rates. On this context, let us look more about the credit control measures adopted by Reserve bank of India.

Reserve bank is the apex body to control the banking system in India. As we all know banks are the major link in money supply. Thus, RBI can control the money in the economy by controlling the banks. These policies are termed as monetary policy.

RBI could adopt either quantitative or qualitative methods.

Quantitative methods

Statutory Liquidity Ratio

Statutory Liquidity Ratio or SLR is the minimum percentage of deposits that a commercial bank has to maintain in the form of liquid cash, gold or other securities. It is basically the reserve requirement that banks are expected to keep before offering credit to customers. The SLR is fixed by the RBI and is a form of control over the credit growth in India.

The government uses the SLR to regulate inflation and fuel growth. Increasing the SLR will control inflation in the economy while decreasing the statutory liquidity rate will cause growth in the economy. The SLR was prescribed by Section 24 (2A) of Banking Regulation Act, 1949.

Cash Reserve Ratio

CRR is an essential monetary policy tool used for controlling the money supply in the economy, a regulation implemented in almost every nation by the Central Bank of that country.

CRR rate is the minimum percentage of cash deposits (as specified by RBI) that must be maintained by every commercial bank as per the requirement of the Central Bank.

Cash Reserve Ratio Rate is computed as a percentage of the net demand and time liabilities of each bank. Net Demand and Time Liability is reached with the total of the savings account, current account, and fixed deposit balances.

Bank rate

Bank rate is a rate at which the Reserve Bank of India (RBI) provides the loan to commercial banks without keeping any security. There is no agreement on repurchase that will be drawn up or agreed upon with no collateral as well. The RBI allows short-term loans with the presence of collateral. This is known as Repo Rate. Bank Rates in India is determined by the RBI. It is usually higher than a Repo Rate on account of its ability to regulate liquidity.

Open market operations

Open market operations refer to the selling and purchasing of the treasury bills and government securities by the central bank of any country in order to regulate money supply in the economy.

It is one of the most important ways of monetary control that is exercised by the central banks. Under this system, the central bank sells securities in the market when it wants to reduce the money supply in the market. It is done to increase interest rates. This policy is also known as the contractionary monetary policy.

Similarly, when the central bank wants to increase the money supply in the market, it will purchase securities from the market. This step is taken to reduce the rate of interest and also to help in the economic growth of the country. This policy is known as the expansionary monetary policy.

Qualitative methods

Margin Requirement:

Margin requirement refers to the difference between the current value of the security offered for loan (called collateral) and the value of loan granted. It is a qualitative method of credit control adopted by the central bank in order to stabilize the economy from inflation or deflation.

Rationing of Credit:

Rationing of credit refers to fixation of credit quotas for different business activities which is introduced when the flow of credit is to be checked particularly for speculative activities in the economy.

Moral Suasion:

The central bank makes the member bank agree through persuasion or pressure to follow its directives which is generally not ignored by the member banks. The banks are advised to restrict the flow of credit during inflation and be liberal in lending during deflation.

Microfinance as a tool for financial inclusion

Traditional microfinance and borrower welfare - IGC Growth Brief

Indian economy is one of the developing economies in the world and is expected to reach new heights in the coming decades. But a sizeable population of this economy particularly the poor, underprivileged, disadvantaged and vulnerable group of people does not have access to most basic financial services. Formal lending agencies often left the poor unbanked on account of high levels of transaction cost incurred in lending to the poor. Their access to formal banking channels was constrained to their resource base as well as the nature of formal credit institutions. The demand for collateral security that a micro- borrower did not possess, the credit worthiness of the poor, high transaction cost due to difficulties in screening, and unattractive business proposition due to tiny savings and loans, were the deterrents faced by the formal lending institutions in loaning to the poor. Consequently, the poor continued to be dependent on informal sector lending, paying exorbitant rates of interest or underselling the product and their labor power to the creditor. Formal financial system was less accommodative to women.

The realization that this sort of unequitable development could not lead to the well -being of the society raised the need for financial inclusion. Financial inclusion is delivery of financial services like bank accounts, savings product, remittances and payment services, insurance, financial advisory services and micro credit to weaker sections in rural and urban areas at an affordable cost. It also involves actions to provide access to formal financial system like nationalized banks. Government of India and Reserve bank of India have taken series of measures and have experimented various alternatives to take financial services to the masses, but the task is stupendous, hence the pace of work should be accelerated and sustained. Since the formal banking system was limited to collateral based lending, there arose a need for developing a new system for financing the marginalized sections.

Microfinance by providing small loans and facilities to those who have been excluded from commercial financial services, has wider scope in the area of financial inclusion. The basic idea of microfinance is that poor people are ready and willing to pull themselves out of poverty if given access to economic inputs. The need for informality in credit delivery and easy access is denoted by the fast growth of microfinance providers in reaching out to small borrowers. The major microfinance providers in India are SHG-Bank linkage model, Non- Banking Financial Institutions and some trusts. Among these initiatives Self Help Groups have emerged out as an efficient alternative as they are uniquely positioned among the beneficiaries. Many of them operate over a limited geographical area, have a greater understanding among the rural poor, enjoy greater acceptability among the people and have flexibility in operations providing a level of comfort to their clientele. This fills the existing gap between formal financial networks and unfinanced poor weaker sections which is the intention of financial inclusion.

The SHG-bank linkage program gained extensive acceptance amongst NGO community and bankers. Establishing one million SHGs, the NABARD envisioned covering one third of the rural population in India. By the year 2002–03, promulgations were made for linking 200,000 SHGs. Visually perceiving SHG-bank linkage program emerging as a major way of banking with the poor in the ensuing years, the task force on microfinance estimated that at least 25,000 bank branches, 4000 NGOs, and 2000 federations of SHGs involving 0.10 million personnel of these institutions would scale up microfinance to a great magnitude.

For example, in Kerala, Kudumbashree Mission has emerged as one of the renowned Self-help group initiatives on a worldwide basis. Even though it was incorporated with the mission of women empowerment, it has grown out as source for economic empowerment for the marginalized sections of the society. It has outnumbered several other financial institutions in the case of provision of microfinance and has emerged out as a reliable tool for financial inclusion.

Indian Economy after independence

Source: jagranjosh

Indian economy at the time of Independence was in crucial state. This situation occurred due to the British Colonialism. After independence the Government changed plan for economic growth. The area of attention was shifted from agriculture to industry.

The growth of public enterprise generate employment and reduce poverty. In 1991, a revolution came into place in terms of liberalization, privatization and globalization that shaped the face of Indian economy. The Indian have the lowest per capital income and also the lowest consumption in the world.

The low income level consequent into low saving and thus small or no investment which end with low capital formation. Therefore, the dangerous cycle of poverty running in the country. The First Five Year Plan stated that the Indian economy remained more or less stagnant during colonial regime, because the basic conditions of economy was continuously remain the same.

The impact of modern industrialism in the later half of the 19th century was emerged through import of machine made goods from abroad that impact adversely on the traditional pattern of economic life, however unable to create the spark for Development. The conditioning of state led to decline of productivity especially those engaged in agriculture, the adverse effects. The consequence was a continuously increasing of employment. Hence, there could be no economic progress.

At the time of Independence 80% of population living in rural areas were engaged in agriculture for subsistence purposes; using traditional low productive technique for agriculture. The underdevelopment of Indian economy is reflected in it’s unbalanced occupational structure. Illiteracy was 84% , Communicable disease were widespread due to the absence of a good public health services, mortality rate was very high.

Agricultural activity contributed nearly 50% to Indian’s National Income. Mines, factories and small craftsmen work contributed only one – sixth, even lower than the numbers for trade, transport and communication. After independence, the government concern in the sphere of economic policy was to control persistent and severe inflationary pressure and to alleviate shortage of essential food items, which was increased by the partition of the country.

The industrial Policy Resolution of 1948 stamped as fundamental departure from earlier policy of laissez faire. Finally, the concept of planning Development programme under the auspices of the central government, was accepted and the planning commission was set up in March 1950 to make an assessment of the material capital and human resources of the country and to formulate a plan for the most effective and balanced utilisation of the countries resources.

India embarked upon the programme of planned economic development of the country with the formulation of first year plan that covered the period of 1951 – 1956. The second plan that followed was form 1956 – 1961 and third plan from 1961 to 1966. The other plans followed there after. The Eleventh Five Year Plan has been launched from 2007 – 2012; Twelfth Five year Plan was started from 2013 – 2014.

 

Source: Deccanherald

The first five year plan provided an inclusive general analysis the nature of the country’s Developmental problem and various options for mobilising resources and achieving Development with more equal distribution. There was special emphasis on the role of mass mobilization of idle rural labour and land reform. The plan optimistically project that saving and investment as a proportion of National Income would rise from an estimated 5 – 6% in the early 1950 to 20% by 1968 – 69.

S Chakravarti  had mentioned some shortcomings of Indian economy. Such as

• The basis cause of development was seen as being an acute deficiency of material capital, which prevented the introduction of more productive technologies.

• The limitation on the speed of capital accumulation was seen to lie in the low capacity to save.

• It was assumed that domestic capacity to save and raised by means of suitable fiscal and monetary policies. There were structural limitations preventing conversion of saving into productive investment.

• The inequality in income distribution was considered to a bad thing, a precipitate transformation of the ownership of productive assets was held to be detrimental to the maximization of production and savings.

• Agriculture was subject to secular diminishing returns, industrialization would allow surplus labour currently under employed in agriculture to be more productively employed in industry.

 

Stages in the evolution of a business

Indian economy: Business optimism in India at near 8-year high: Report - The Economic Times

Business refers to the Organization or enterprising entity engaged in commercial, industrial or professional activities. Business activities have existed since ancient ages and over the period it has evolved according to the changes in its environment. Earlier it was limited to mere exchange of goods in return for other and then with the change in conditions it has reached to a stage where people could buy a good or avail a service from a seller who is miles apart even without face-to-face interface.

            In the era of globalization, the scope of a business is very large. There are several examples of businesses growing into huge enterprises from a small virtual venture which even lacked a physical existence in its early stages. Similar to the steps of a ladder, there are several stages like local business, regional business, national business, international business and global business.

Local business

Local business is the first stage of a business enterprise and it exists in the limits of a locality. A local area comprises of surrounding neighborhoods, adjacent areas where native community  lives. The local economy is the most primitive form of economy. It existed since ages. It focuses on a particular locality and acts according to the culture and traditions of the society. The customer base of a local business is very limited as its area of operation is only that locality.

Regional business

Regional business concentrates on different regions of a nation. A region is a unit on earth’s surface that has unifying and defining characteristics. It focuses on a regional area and provides a variety of commodities. It is a business between different areas within a country. Credit sales play an important role in this business. It helps in developing better quality infrastructure and transportation facilities

National business

National business is one that operates within the borders of a particular country. It has a business and customer base across a nation and understands the culture of the country. Since a national business has more locations than a local or regional business, it can be more competitive with its pricing. A nation is an organized political union of its member states.

International business

International business is business among different nations. Nations satisfy each other’s needs by supplying their surpluses and in return brings home the scanty resources. International means It means interaction between two or more nations. It is used as an analog to the word foreign.

Global business

It is a business which operates worldwide. It is the pinnacle of any business enterprise. Global means means entire Earth and not just one or two nations. It is synonymous to universal and worldwide. It has a wider scope than international business.

The basic idea to be imbibed from this topic is that no business becomes huge overnight. Just like human beings, a business also takes time to grow. Not all local businesses emerge out as global giants. Only those firms which could identify the changes in the environment and could act accordingly would be able to reach its pinnacle.

Can India’s rural economy change due to revival in agriculture and cottage industry?

so what comes to your mind when you hear the words economy ,agriculture and industries ,they are somewhere linked right ?we do have a basic idea that agriculture does contribute to our country’s economy and so do these industries but how do they?

India is known as an agricultural country, as most of the population of villages depends on agriculture. Agriculture forms the backbone of the country’s economy. The agricul­tural sector contributes most to the overall economic development of the country.

Did you know that historically, India was the  largest economy of the world for most of two millennia from the 1st until the 19th century .Since the start of the 21st century, annual average GDP growth has been 6% to 7%,and from 2013 to 2018, India was the world’s fastest major growing economy, surpassing China. . The economy slowed in 2017, due to shocks of “Demonetisation” in 2016 and the introduction of the goods and service tax in 2017.In 2020, pandemic has affected trade and India was the world’s 14th largest importer and the 21st largest exporter.

For a continuous duration of nearly 1700 years from the year 1 AD, India was the top-most economy, constituting 35 to 40% of the world GDP .Under British rule, India’s share of the world economy declined from 24.4% in 1700 down to 4.2% in 1950. India’s GDP (PPP) per capita was stagnant during the mughal empire and began to decline prior to the onset of British rule .India’s share of global industrial output declined from 25% in 1750 down to 2% in 1900. At the same time, the United Kingdom’s share of the world economy rose from 2.9% in 1700 up to 9% in 1870.

There is no doubt that our grievances against the British Empire had a sound basis. As the painstaking statistical work of the Cambridge historian Angus Maddison has shown, India’s share of world income collapsed from 22.6% in 1700, almost equal to Europe’s share of 23.3% at that time, to as low as 3.8% in 1952. Indeed, at the beginning of the 20th century, “the brightest jewel in the British Crown” was the poorest country in the world in terms of per capita income. -MANMOHAN SINGH

In the 1980s and early 1990s the tides began to change. Liberalisation came to India and a growing belief contrary to what Nehru believed, began to rise . By the turn of the 21st century, India had progressed towards a free-market economy, with a substantial reduction in state control of the economy and increased financial liberalisation .

 India experienced high growth rates, averaging 9% from 2003 to 2007. Growth then moderated in 2008 due to the global financial crisis. In 2003, Goldman Sachs predicted that India’s GDP in current prices would overtake France and Italy by 2020, Germany, UK and Russia by 2025 and Japan by 2035, making it the third-largest economy of the world, behind the US and China. India is often seen by most economists as a rising economic superpower which will play a major role in the 21st-century global economy.

India started recovery in 2013–14 when the GDP growth rate accelerated to 6.4% from the previous year’s 5.5%. The acceleration continued through 2014–15 and 2015–16 with growth rates of 7.5% and 8.0% respectively. For the first time since 1990, India grew faster than China which registered 6.9% growth in 2015. However the growth rate subsequently decelerated, to 7.1% and 6.6% in 2016–17 and 2017–18 respectively, partly because of the disruptive effects of 2016 Indian banknote demonetisation and to goods and service tax India. India’s GDP growth has been slowing rapidly, from a high of 8.3% in 2016 to just 4.2% in 2019.

Historically, India has classified and tracked its economy and GDP in three sectors: agriculture, industry, and services.

Agriculture and allied sectors like forestry, logging and fishing accounted for 17% of the GDP, the sector employed 49% of its total workforce in 2014.Agriculture accounted for 23% of GDP, and employed 59% of the country’s total workforce in 2016. As the Indian economy has diversified and grown, agriculture’s contribution to GDP has steadily declined from 1951 to 2011, yet it is still the country’s largest employment source and a significant piece of its overall socio-economic development. Crop-yield-per-unit-area of all crops has grown since 1950, due to the special emphasis placed on agriculture in the five-year plans and steady improvements in irrigation, technology, application of modern agricultural practices and provision of agricultural credit and subsidies since the Green Revolution in India. However, international comparisons reveal the average yield in India is generally 30% to 50% of the highest average yield in the world. The states of Uttar Pradesh, Punjab, Haryana, Madya Pradesh, Andhra Pradesh, Telangana, Bihar, West Bengal, Gujarat and Maharashtra are key contributors to Indian agriculture.

At around 1,530,000 square kilometres (590,000 sq mi), India has the second-largest amount of arable land, after the US, with 52% of total land under cultivation.

Agriculture farming in India is a century-old activity, and is currently the highest contributor to the GDP of India. Agriculture remains the largest contributor to the country’s GDP and farmers constitute 58% of India’s population .Farming is one of the oldest economic activity in our country.

As per 2018, agriculture employed more than 50% of the Indian work force and contributed 17–18% to country’s GDP.

The economic contribution of agriculture to India’s GDP is steadily declining with the country’s broad-based economic growth. Still, agriculture is demographically the broadest economic sector and plays a significant role in the overall socio-economic fabric of India.

The main pillar of the rural economy is based on agriculture. Agricultural land and livestock are the primary means of production for people of the rural areas in any society. Livestock farming consists of the major part of the economy of the majority of people. It relies typically on labor-intensive methods for raising crops and healthy livestock. Livestock feed is shipped all over the country, and land is frequently needed for cultivation, farrowing, watering, and other activities.

 The advent of modern technology has also revolutionized the agriculture sector. Farmers are adopting more sophisticated techniques to get more production from small pieces of land. So the use of advanced techniques is urging the farmers to focus on small land in order to get more production. But the farmers also need support from the government and also they need help in hard times like no enough rainfall or over rainfall etc. The government must extend a helping hand towards the farmers ,they are the ones who work selflessly and for the sake of the whole country’s population and they do not worry about in which season they are working in ,they put all their hard work and efforts into their work and they are the ones who worship their proffesion .

The rural economy mainly depends upon agriculture. Even though traditional farming still exists, the use of advanced technology has revolutionized the agriculture sector. It has proved a blessing for small-scale farmers. They can adopt modern agricultural techniques to get more produce from their small farms. Organic farming is another window of opportunity for farmers. They can grow more food to generate better revenue. 

The cottage industry or the small scale industry plays a vital role in the rural economy of India. Majority of the population of India lives in rural areas; it is where the real India resides. Apart from agriculture, the cottage industry is the primary source of livelihood in rural India. Cottage industry or the small scale industry are those where the business is carried on at home with small numbers of workforce or labours . the members may be of the same family, religious groups or the community. Most of the workers of the small scale industry are the traditional artisans who have inherited their work as art from their ancestors.

In India, more than 74 per cent of the total population lives in the villages where their lot is linked with agriculture. They have to live in the villages as they cannot leave their fields which give them their ‘living’. Side by side they must be provided with some kind of cottage industries upon which they can depend during that period in which they remain idle and unengaged’.

After independence, our country has been taking gigantic strides towards industrialisation. Cottage industries can become and alternative means of employment for the people living in the rural areas. Cottage industries will be of benefit for our villages, which form the back bone of the nation.

The place of cottage industries in the national economy in the country has been unique since time immemorial. India was famous, in the past, for the wealth of the land and for the high artistic skill of her craftsmen. India was exporting wonderful jewellery and superfine embroideries to Europe. European merchants were attracted towards India more by her craft and industry than by the rich raw material.

It must not be forgotten that cottage industries are the back-bone of our rural economy and no rural uplift is possible without the protection of and encouragement to these small-scale industries. Apart from all other considerations, small-scale or cottage-industries are essential for providing employment to our tillers of soil in their leisure time or when they remain idle.

To improve and encourage the cottage-industry in our country we have to change the views of the general public. The people should be made interested in patronizing home-made goods. A ready market is a further urgency in this direction.

Rural Co-operatives and Rural Banks should be established and stabilized by the Government for advancing short-term loans on nominal interest.

Lastly, adequate marketing facilities should be arranged for them, as sale of goods has now-a-days become as complicated an affair as production itself.

Hence, the artisans must be helped to get the best price of their goods. Frequent exhibitions should be organized to enable the artisans to show their art and industry and give them impetus and inspiration to create still better patterns of handicrafts.

Basically the agriculture and cottage industries are the main sources of livelihood in India and they contribute most to our economy , we all know that these both professions are being practiced from very long period of time ,like around some centuries in India ,they have been contributing to the country’s economy from very beginning. the rural economy’s most percentage is received from agriculture and cottage industry and without their contribution our country’s economy might destroy or decline very rapidly ,even a small change in their contribution percentage might affect the economy of country ,but its economy right and GDP ,it wont stay constant there are many ups and downs ,in a year our GDP might good where as in the other it might be bad we cannot predict that ,there might be various reasons for the decline of GDP, like in 2017 it was demonitisation and in 2020 the pandemic hit us and it affected the whole world’s economy , and India’s GDP has been declined by 23.9% by 2020.

Agriculture and cottage industry are major contribution of rural economy , and for these people if government is trying to extend a helping hand to them then probably our economy might go to better figures and it’s a fact that our rural economy can be developed by agriculture and cottage industries and the Rural Economy in India is wholly agriculture based and it is of tremendous importance because it has vital supply and demand links with the other Indian industries. Agriculture is the main stay of the Indian economy, as it constitutes the backbone of rural India which inhabitants more than 70% of total Indian population.

Can India's rural economy change due to revival in agriculture and cottage industry?

so what comes to your mind when you hear the words economy ,agriculture and industries ,they are somewhere linked right ?we do have a basic idea that agriculture does contribute to our country’s economy and so do these industries but how do they?

India is known as an agricultural country, as most of the population of villages depends on agriculture. Agriculture forms the backbone of the country’s economy. The agricul­tural sector contributes most to the overall economic development of the country.

Did you know that historically, India was the  largest economy of the world for most of two millennia from the 1st until the 19th century .Since the start of the 21st century, annual average GDP growth has been 6% to 7%,and from 2013 to 2018, India was the world’s fastest major growing economy, surpassing China. . The economy slowed in 2017, due to shocks of “Demonetisation” in 2016 and the introduction of the goods and service tax in 2017.In 2020, pandemic has affected trade and India was the world’s 14th largest importer and the 21st largest exporter.

For a continuous duration of nearly 1700 years from the year 1 AD, India was the top-most economy, constituting 35 to 40% of the world GDP .Under British rule, India’s share of the world economy declined from 24.4% in 1700 down to 4.2% in 1950. India’s GDP (PPP) per capita was stagnant during the mughal empire and began to decline prior to the onset of British rule .India’s share of global industrial output declined from 25% in 1750 down to 2% in 1900. At the same time, the United Kingdom’s share of the world economy rose from 2.9% in 1700 up to 9% in 1870.

There is no doubt that our grievances against the British Empire had a sound basis. As the painstaking statistical work of the Cambridge historian Angus Maddison has shown, India’s share of world income collapsed from 22.6% in 1700, almost equal to Europe’s share of 23.3% at that time, to as low as 3.8% in 1952. Indeed, at the beginning of the 20th century, “the brightest jewel in the British Crown” was the poorest country in the world in terms of per capita income. -MANMOHAN SINGH

In the 1980s and early 1990s the tides began to change. Liberalisation came to India and a growing belief contrary to what Nehru believed, began to rise . By the turn of the 21st century, India had progressed towards a free-market economy, with a substantial reduction in state control of the economy and increased financial liberalisation .

 India experienced high growth rates, averaging 9% from 2003 to 2007. Growth then moderated in 2008 due to the global financial crisis. In 2003, Goldman Sachs predicted that India’s GDP in current prices would overtake France and Italy by 2020, Germany, UK and Russia by 2025 and Japan by 2035, making it the third-largest economy of the world, behind the US and China. India is often seen by most economists as a rising economic superpower which will play a major role in the 21st-century global economy.

India started recovery in 2013–14 when the GDP growth rate accelerated to 6.4% from the previous year’s 5.5%. The acceleration continued through 2014–15 and 2015–16 with growth rates of 7.5% and 8.0% respectively. For the first time since 1990, India grew faster than China which registered 6.9% growth in 2015. However the growth rate subsequently decelerated, to 7.1% and 6.6% in 2016–17 and 2017–18 respectively, partly because of the disruptive effects of 2016 Indian banknote demonetisation and to goods and service tax India. India’s GDP growth has been slowing rapidly, from a high of 8.3% in 2016 to just 4.2% in 2019.

Historically, India has classified and tracked its economy and GDP in three sectors: agriculture, industry, and services.

Agriculture and allied sectors like forestry, logging and fishing accounted for 17% of the GDP, the sector employed 49% of its total workforce in 2014.Agriculture accounted for 23% of GDP, and employed 59% of the country’s total workforce in 2016. As the Indian economy has diversified and grown, agriculture’s contribution to GDP has steadily declined from 1951 to 2011, yet it is still the country’s largest employment source and a significant piece of its overall socio-economic development. Crop-yield-per-unit-area of all crops has grown since 1950, due to the special emphasis placed on agriculture in the five-year plans and steady improvements in irrigation, technology, application of modern agricultural practices and provision of agricultural credit and subsidies since the Green Revolution in India. However, international comparisons reveal the average yield in India is generally 30% to 50% of the highest average yield in the world. The states of Uttar Pradesh, Punjab, Haryana, Madya Pradesh, Andhra Pradesh, Telangana, Bihar, West Bengal, Gujarat and Maharashtra are key contributors to Indian agriculture.

At around 1,530,000 square kilometres (590,000 sq mi), India has the second-largest amount of arable land, after the US, with 52% of total land under cultivation.

Agriculture farming in India is a century-old activity, and is currently the highest contributor to the GDP of India. Agriculture remains the largest contributor to the country’s GDP and farmers constitute 58% of India’s population .Farming is one of the oldest economic activity in our country.

As per 2018, agriculture employed more than 50% of the Indian work force and contributed 17–18% to country’s GDP.

The economic contribution of agriculture to India’s GDP is steadily declining with the country’s broad-based economic growth. Still, agriculture is demographically the broadest economic sector and plays a significant role in the overall socio-economic fabric of India.

The main pillar of the rural economy is based on agriculture. Agricultural land and livestock are the primary means of production for people of the rural areas in any society. Livestock farming consists of the major part of the economy of the majority of people. It relies typically on labor-intensive methods for raising crops and healthy livestock. Livestock feed is shipped all over the country, and land is frequently needed for cultivation, farrowing, watering, and other activities.

 The advent of modern technology has also revolutionized the agriculture sector. Farmers are adopting more sophisticated techniques to get more production from small pieces of land. So the use of advanced techniques is urging the farmers to focus on small land in order to get more production. But the farmers also need support from the government and also they need help in hard times like no enough rainfall or over rainfall etc. The government must extend a helping hand towards the farmers ,they are the ones who work selflessly and for the sake of the whole country’s population and they do not worry about in which season they are working in ,they put all their hard work and efforts into their work and they are the ones who worship their proffesion .

The rural economy mainly depends upon agriculture. Even though traditional farming still exists, the use of advanced technology has revolutionized the agriculture sector. It has proved a blessing for small-scale farmers. They can adopt modern agricultural techniques to get more produce from their small farms. Organic farming is another window of opportunity for farmers. They can grow more food to generate better revenue. 

The cottage industry or the small scale industry plays a vital role in the rural economy of India. Majority of the population of India lives in rural areas; it is where the real India resides. Apart from agriculture, the cottage industry is the primary source of livelihood in rural India. Cottage industry or the small scale industry are those where the business is carried on at home with small numbers of workforce or labours . the members may be of the same family, religious groups or the community. Most of the workers of the small scale industry are the traditional artisans who have inherited their work as art from their ancestors.

In India, more than 74 per cent of the total population lives in the villages where their lot is linked with agriculture. They have to live in the villages as they cannot leave their fields which give them their ‘living’. Side by side they must be provided with some kind of cottage industries upon which they can depend during that period in which they remain idle and unengaged’.

After independence, our country has been taking gigantic strides towards industrialisation. Cottage industries can become and alternative means of employment for the people living in the rural areas. Cottage industries will be of benefit for our villages, which form the back bone of the nation.

The place of cottage industries in the national economy in the country has been unique since time immemorial. India was famous, in the past, for the wealth of the land and for the high artistic skill of her craftsmen. India was exporting wonderful jewellery and superfine embroideries to Europe. European merchants were attracted towards India more by her craft and industry than by the rich raw material.

It must not be forgotten that cottage industries are the back-bone of our rural economy and no rural uplift is possible without the protection of and encouragement to these small-scale industries. Apart from all other considerations, small-scale or cottage-industries are essential for providing employment to our tillers of soil in their leisure time or when they remain idle.

To improve and encourage the cottage-industry in our country we have to change the views of the general public. The people should be made interested in patronizing home-made goods. A ready market is a further urgency in this direction.

Rural Co-operatives and Rural Banks should be established and stabilized by the Government for advancing short-term loans on nominal interest.

Lastly, adequate marketing facilities should be arranged for them, as sale of goods has now-a-days become as complicated an affair as production itself.

Hence, the artisans must be helped to get the best price of their goods. Frequent exhibitions should be organized to enable the artisans to show their art and industry and give them impetus and inspiration to create still better patterns of handicrafts.

Basically the agriculture and cottage industries are the main sources of livelihood in India and they contribute most to our economy , we all know that these both professions are being practiced from very long period of time ,like around some centuries in India ,they have been contributing to the country’s economy from very beginning. the rural economy’s most percentage is received from agriculture and cottage industry and without their contribution our country’s economy might destroy or decline very rapidly ,even a small change in their contribution percentage might affect the economy of country ,but its economy right and GDP ,it wont stay constant there are many ups and downs ,in a year our GDP might good where as in the other it might be bad we cannot predict that ,there might be various reasons for the decline of GDP, like in 2017 it was demonitisation and in 2020 the pandemic hit us and it affected the whole world’s economy , and India’s GDP has been declined by 23.9% by 2020.

Agriculture and cottage industry are major contribution of rural economy , and for these people if government is trying to extend a helping hand to them then probably our economy might go to better figures and it’s a fact that our rural economy can be developed by agriculture and cottage industries and the Rural Economy in India is wholly agriculture based and it is of tremendous importance because it has vital supply and demand links with the other Indian industries. Agriculture is the main stay of the Indian economy, as it constitutes the backbone of rural India which inhabitants more than 70% of total Indian population.

Kudumbashree and micro finance

Kudumbashree, a community organization of Neighbourhood Groups (NHGs) of women in Kerala, has been recognized as an effective strategy for the empowerment of women in rural as well as urban areas: bringing women together from all spheres of life to fight for their rights or for empowerment. The overall empowerment of women is closely linked to economic empowerment. Women through these NHGs work on a range of issues such as health, nutrition, agriculture, etc. besides income generation activities and seeking micro credit.

Kudumbashree differs from conventional programs in that it perceives poverty not just as the deprivation of money, but also as the deprivation of basic rights. The poor need to find a collective voice to help claim these rights. Kudumbashree was conceived as a joint program of the Government of Kerala and NABARD implemented through Community Development Societies (CDSs) of Poor Women, serving as the community wing of Local Governments. Kudumbashree is formally registered as the “State Poverty Eradication Mission” (SPEM), a society registered under the Travancore Kochi Literary, Scientific and Charitable Societies Act 1955. It has a governing body chaired by the State Minister of LSG. There is a state mission with a field officer in each district. This official structure supports and facilitates the activities of the community network across the state.

KUDUMBASHREE MICROFINANCE

 This system operates by encouraging women to form small homogenous groups under the SHG-bank linkage program. The members of these minute groups were encouraged to meet frequently and amass minute thrift amounts from their members. They were also taught simple accounting methods to enable them to maintain their accounts. Individually these poor could never have had enough savings to open a bank account. The first step in establishing links with the formal banking system opened up when the pooled savings enabled them to open a formal bank account in the denomination of the group. These were followed by frequent group meetings. Pooled thrift was utilized to impart lean loans to members for meeting their diminutive emergent needs saving them from debt traps/ money lenders who demanded unusually high rates of interest and accelerated their empowerment through group dynamics, decision-making, and funds management. Peer- screening effect was engendered as borrowers themselves undertook the task of credit evaluation and reduced the transaction costs, community members had much more preponderant information than banks. Peer monitoring effect induced group members to utilize their imprests in productive ways. The desire to preserve valuable ties induced borrowers to spend extra effort if compulsory to secure timely payments. These ties were valuable because they sanctioned members’ borrowing and provided business connections. Moreover, a very consequential feature of group-lending was the collateral effect. Gradually the pooled thrift grew and soon 11 they were adept in receiving external funds in multiples of their group savings. Bank loans enabled the group members to undertake income- generating ventures.

 The various microfinance activities taken up by Kudumbashree are:

  Thrift and credit operations

NHGs are instrumental in thrift mobilization, encouraging the poor to save and to avail low -cost formal credit. They facilitate easy and timely credit to the unreached. The amount of loan to members and the purpose for which the loan should be utilized are decided by the NHG. The repayment is collected weekly during the NHG meetings. It is estimated that the thrift mobilized is on an average Rs 40 per month per member.

Linkage Banking.

NHG-Bank linkage scheme is one of the flagship programmes of Kudumbashree. NABARD SHG-Bank linkage grading procedures are applied while selecting eligible NHGs for availing loan. The NHGs are rated on the basis of a 15 -point index developed by NABARD. Bank will provide loans to those NHGs who pass 80 % of marks in the grading.

  Matching Grant.

 Matching grant is an incentive provided to NHGs. This grant linked to amount of thrift mobilized, performance of NHG in the Grading and loan availed from banks. An amount of 10% of the savings of the NHG subject to a maximum of Rs 5000/- is provided as matching grant to each NHG. The grant is released based on their assessment rated using 15-point grading criteria developed by NABARD.

  Interest Subsidy for Linkage loan.

 Govt of Kerala has introduced a new interest subvention scheme to promote Bank Linkage Program among Kudumbashree Neighborhood Groups. Under this scheme all Kudumbashree NHGs are eligible for interest subvention to avail the loan facility at an interest rate of 4% on credit up to Rs. 3 lakhs. The interest subsidy would be provided as annual instalments to the NHGs.

KAASS.

KAASS, the Kudumbashree Accounts & Audit Service Society; is a homegrown enterprise to ensure proper account keeping in the community network. Each district has been furnished with a KAASS team that has been 12 drawn from commerce graduates and is guided by professional chartered accountants

  Digitization of MIS’ and repayment Info System (E- SHAKTI)

 Keeping in view the Government of India’s mission for creating a digital India, NABARD has launched a project for digitization of all Self -Help Group (SHG) in the country.

RBI ACCOUNT AGGREGATOR FRAMEWORK

What will the future of banking look like in the Gulf? - Arabian Business

The Account Aggregator framework, introduced by the RBI, aims to make financial data more accessible by creating data intermediaries called Account Aggregators (AA) which will collect and share the user’s financial information from a range of entities that hold consumer data called Financial Information Providers (FIPs) to a range of entities that are requesting consumer data called Financial Information Users (FIUs) after obtaining the consent of the consumer.

For example, if a user wishes to apply for a loan, the lender (an FIU) will require access to the previous financial statements of the user – which reside with the user’s Bank (an FIP) – in order to check their creditworthiness. Here’s how an AA will facilitate the flow of information:

  1. The FIU will request the AA to share the desired financial information.
  2. The AA will request the user for their consent to share financial information with the FIU. The Account Aggregator must interact with the customer using either a web-based or a mobile app-based client.
  3. If the user consents, the AA will request the FIP (the User’s bank in this case) to share the financial information.
  4. The FIP will transfer the information, which will be encrypted, to the AA, which will then transfer it to the FIU.

Roles of each party:

  • Banks act as financial data providers. They supply the data required for Reserve bank of India to create a database of the account data and create reliable rankings.
  • Lenders act as financial data seekers. The lenders or financial institutions who provide fund to people acts as the seekers or demands the data aggregated by the Reserve bank.
  • Non-banking finance corporations act as mediums of communication between banks and lenders and they are the links.
  • Third-party service providers work with AAs.

Process

  • An individual or business opens an account with an account aggregator. Then, they link their bank accounts, insurance policies, etc. — which are accounts containing the customer’s financial data.
  • The customer can provide consent to a lender to access their financial data through the NBFC-AA.
  • After consent is provided, the account aggregator seeks permission from the financial data providers to access the customer’s data.
  • The data is sent to the account aggregator, which, in turn, empowers lenders to better evaluate the customer’s financial profile and risk associated with providing a loan.

Banks involved at present are:

These are the banks which act as the data providers:

State Bank of India

 ICICI Bank

Axis Bank

IDFC First Bank

 Kotak Mahindra Bank

 HDFC Bank

 IndusInd Bank

Federal Bank.

Advantages

  • Data scattered around the financial system can be made available under a single database.
  • This helps the institutions build a better understanding of potential customers and tailor their services accordingly.
  • It also enables the free flow of data between banks and financial service providers.
  • Helps financial institutions to make better assessment of creditworthiness of individuals and thus make better loan decisions.
  • Helps to eliminate the limitations of credit rating agencies.
  • Helpful for creditworthy customers

Disadvantages

  • It faces the issue of data privacy.
  • It is proposed as a self- Regulator framework, which would be an issue.
  • This data could be used for several other purposes.

RBI ACCOUNT AGGREGATOR FRAMEWORK

What will the future of banking look like in the Gulf? - Arabian Business

The Account Aggregator framework, introduced by the RBI, aims to make financial data more accessible by creating data intermediaries called Account Aggregators (AA) which will collect and share the user’s financial information from a range of entities that hold consumer data called Financial Information Providers (FIPs) to a range of entities that are requesting consumer data called Financial Information Users (FIUs) after obtaining the consent of the consumer.

For example, if a user wishes to apply for a loan, the lender (an FIU) will require access to the previous financial statements of the user – which reside with the user’s Bank (an FIP) – in order to check their creditworthiness. Here’s how an AA will facilitate the flow of information:

  1. The FIU will request the AA to share the desired financial information.
  2. The AA will request the user for their consent to share financial information with the FIU. The Account Aggregator must interact with the customer using either a web-based or a mobile app-based client.
  3. If the user consents, the AA will request the FIP (the User’s bank in this case) to share the financial information.
  4. The FIP will transfer the information, which will be encrypted, to the AA, which will then transfer it to the FIU.

Roles of each party:

  • Banks act as financial data providers. They supply the data required for Reserve bank of India to create a database of the account data and create reliable rankings.
  • Lenders act as financial data seekers. The lenders or financial institutions who provide fund to people acts as the seekers or demands the data aggregated by the Reserve bank.
  • Non-banking finance corporations act as mediums of communication between banks and lenders and they are the links.
  • Third-party service providers work with AAs.

Process

  • An individual or business opens an account with an account aggregator. Then, they link their bank accounts, insurance policies, etc. — which are accounts containing the customer’s financial data.
  • The customer can provide consent to a lender to access their financial data through the NBFC-AA.
  • After consent is provided, the account aggregator seeks permission from the financial data providers to access the customer’s data.
  • The data is sent to the account aggregator, which, in turn, empowers lenders to better evaluate the customer’s financial profile and risk associated with providing a loan.

Banks involved at present are:

These are the banks which act as the data providers:

State Bank of India

 ICICI Bank

Axis Bank

IDFC First Bank

 Kotak Mahindra Bank

 HDFC Bank

 IndusInd Bank

Federal Bank.

Advantages

  • Data scattered around the financial system can be made available under a single database.
  • This helps the institutions build a better understanding of potential customers and tailor their services accordingly.
  • It also enables the free flow of data between banks and financial service providers.
  • Helps financial institutions to make better assessment of creditworthiness of individuals and thus make better loan decisions.
  • Helps to eliminate the limitations of credit rating agencies.
  • Helpful for creditworthy customers

Disadvantages

  • It faces the issue of data privacy.
  • It is proposed as a self- Regulator framework, which would be an issue.
  • This data could be used for several other purposes.

FINANCIAL INCLUSION

Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and lower income groups at an affordable cost. Financial inclusion, broadly defined, refers to universal access to a wide range of financial services at reasonable cost. These not only include banking products, but also other financial services such as insurance and equity products.

INDICATORS OF FINANCIAL INCLUSION

As per the general laid down standards following are the key indicators of financial inclusion:

 · Formal banking system

This refers to the existence and usage of banking services which are regulated by formal mechanism.

· Formal credit

The usage of formal or recognized credit providers indicates the presence of an inclusive financial system.

· Insurance

Apart from formal lending and depositing the citizens will also have access to proper insurance providers in a well inclusive financial system.

· Savings options

 An inclusive financial system should provide attractive options to deposit the saved funds irrespective of the customer background.

 · Modern banking

Each and every user should have access to modern banking services like electronic banking, mobile banking, internet banking, etc.

FACTORS AFFECTING FINANCIAL INCLUSION

Access to financial services have been recognized as an important aspect of development and more emphasis is given to extending financial services to low-income households. The lack of financial services limits the range of financial services and 7 credits for households. There are multiple factors which have affected the access to financial services, like

· Place of living

 The area of operation of banks are limited to some specific geographical areas which leaves a significant portion of the rural population unbanked.

 · Absence of legal identity and gender biasness

 Due to lack of financial independence and unemployment there exists a bias on the basis of gender in having access to formal financial services.

· Limited knowledge of financial services

 Illiteracy and lack of proper knowledge about banking system has led to reluctance towards formal banking practices among deprived classes.

· Level of income and bank charges

 The charges and fines levied by banks make them less attractive for some classes of society.

 · Rigid terms and conditions

Since formal banking system is subject to strict rules and regulations, many finds it difficult.

 NEED FOR FINANCIAL INCLUSION

 Financial inclusion broadens the resource base of the financial system by developing a culture of savings among large segment of rural population and plays its own role in the process of economic development. Further by bringing low -income groups within the perimeter of formal banking sector, financial inclusion protects their financial wealth and other resources. Financial inclusion also mitigates the exploitation of vulnerable sections by the usurious money lenders by facilitating easy access to formal credit.

India is a nation with a major chunk of the population living under vulnerable conditions. So, it is the duty each and every privileged section to lift the conditions of the underprivileged. Financial inclusion will pave a path of uplifting the society and empowering the people.

Green consumerism: New way of life

Green Consumerism: Importance, Examples and Strategies - Conserve Energy Future

We all are consumers in some way or the other. Even before we are born, we are consumers and this cycle completes only after our death. In this era of consumerism, it is extremely difficult for one to not be a consumer and being a consumer is something to be ashamed of.

Even though being a consumer is not bad, exploitation by consumer is something to worry about. Unlike a socialist economy in a capitalist world, the producers produce what the consumers demand. So, the responsibility vested with the consumer is rising day by day. When a consumer makes an irresponsible choice, he is encouraging the producer to be exploitative. Realising this power of consumers, a new term has originated, green consumer.

Who is a green consumer?

A green consumer is a person who makes a wise choice. They buy a product or avail a service after considering the environmental impact. They check the components of the product, the environmental effects of the product and such aspects in detail.

Economic, social, and cultural forces have set the framework for green consumerism. This is because it is a social attitude and movement in the modern era, especially aimed at encouraging people to be more aware of the firms’ production processes and only to buy or use products and services that do not harm the environment. For this reason, green consumerism has created a balance between the buyers’ behaviours and the organizations’ profit objectives as it mostly based on the sustainable and pro-environmental behaviour of consumers.

Why is it important to be a green consumer?

From second half of the twentieth century, world has started its efforts for environment conservation. Even though commerce and industries are one of the largest contributors to environment degradation, they were the last to act for environment protection. One such arena is green consumerism. In a world which spins on the axis of consumerism it is important for a consumer to make environment friendly choices. Also, there is shift in the mindset of the businesses from seller centric to consumer centric approach. Recognizing this immense power vested with them consumers could influence the market to produce environment friendly goods. Also, the fact that environment degradation could lead even to the extinction of humankind has opened the eyes of general public.

How to be a green consumer?

  • Use paraben free products.
  • Use cloth bags and don’t demand plastic carry bags.
  • Promote organic goods.
  • Avoid using synthetic materials that could harm the world
  • Avoid pollutants while choosing products.
  • Use recycled products.
  • Avoid the practice of use and throw.
  • Give importance to energy efficiency.
  • Practice modern methods of environment protection.
  • Shop according to the need.
  • Minimize paper usage
  • Check energy labels in daily utility products
  • Avoid using bottled water
  • Reduce electricity consumption
  • Reduce your carbon footprint
  • Check for environment friendly certification.

Ultimately change of mindset is the most significant factor in green consumerism. It requires people to avoid certain comforts and embrace the difficult but fruitful path. It is the duty of consumers to influence the producers to shift towards a greener path. The consumer is the king in the present scenario. They should use their power for the good of the world.

Let us all strive to act green for a better future. We should lead a sustainable living and preserve what inherited for the coming generations.

How to spot a pyramid scheme.

A pyramid scheme is a fraudulent system of making money based on recruiting an ever-increasing number of “investors.”  The initial promoters recruit investors, who in turn recruit more investors, and so on. The scheme is called a “pyramid” because at each level, the number of investors increases. The small group of initial promoters at the top require a large base of later investors to support the scheme by providing profits to the earlier investors.

Let’s assume the following: Founder Mike sits alone at the top of the heap, represented by the number “one.” Assume Mike recruits 10 second-tier people to the level directly below him, where each newbie must issue him a cash payment for the privilege of joining. Not only do those buy-in fees funnel directly into Mike’s pocket, but each of the 10 new members must then recruit 10 tier-three members of their own (totaling 100), who must pay fees to the tier-two recruiters, who must send a percentage of their takes back up to Mike. According to the hard-sell pitches made at recruitment events, those bold enough to take the pyramid plunge will theoretically receive substantial cash from the recruits below them. But in practice, the prospective member pools tend to dry up over time. And by the time a pyramid scheme invariably shuts down, the top-level operatives walk away with loads of cash, while the majority of lower-level members leave empty-handed. It should be noted that because pyramid schemes heavily rely on fees from new recruits, the vast majority do not involve the sale of actual products or services with any intrinsic value.

Unfortunately, these types of scams sometimes prey on people who need income quickly. For example, if you lost your job and are having a hard time finding a new job, you might be more willing to look into an opportunity that offers a fast return. But avoid the temptation to overlook the feeling that something is too good to be true. Instead, take a moment to calm yourself so you can make a legitimate plan after losing your job. Go over your budget—or create one for the first time—so you can manage your money in the best way possible while you try to increase your income.

How to Spot a Pyramid Scheme

Pyramid schemes and MLM sound a bit alike, don’t they? Here are some signs of a pyramid scheme, provided by the US Securities and Exchange Commission, to help you understand whether you’re considering a scam or a legitimate MLM opportunity:

  • You’re not selling something real. Legitimate MLMs sell tangible goods—many times there’s a ready-made market for them.
  • Get-rich-quick promises. If you’re being offered overnight success, get-rich-quick guarantees, or passive income promises, it’s probably too good to be true. People who make money with legitimate MLMs put a lot of time and effort into their businesses.
  • The company can’t prove it generates retail income. If the business can’t show you financial statements that demonstrate income from the sale of product, it could be generating all its income from recruiting people into the pyramid.
  • Strange or unnecessarily complex commission processes. Legitimate MLMs have easy-to-understand, product-based commissions.

The Bottom Line

Pyramid schemes are illegal in many countries. The model of profiting by using the network effect often traps individuals into recruiting their acquaintances, which can feel slimy for everyone involved and can ultimately strain relationships. Some people may shoot their shot each time and invest in multiple schemes losing money each time. Victims of pyramid schemes are often embrassed into silence and keep blaming themselves for not being tenacious enough to earn the promised returns, when in truth it’s the system that is faulty. Get rich quick schmes never work and will allways have some strings attached to it that can put people into legal trouble. Vigilance and knowledge about where your money goes are important factors that people must know, preventing them from falling pray for traps like the pyramid scheme.

sources – https://www.investopedia.com/insights/what-is-a-pyramid-scheme/ https://www.credit.com/blog/what-is-a-pyramid-scheme/

All you need to know about an Economic Recession.

The National Bureau of Economic Research (NBER) defines a recession as “a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income, and wholesale-retail trade.” A recession is also believed to be signalled when businesses cease to expand, the GDP diminishes for two consecutive quarters, and the unemployment rate rises. The nature and causes of recessions are simultaneously evident and uncertain. Recessions are, in essence, a cluster of business failures being realized simultaneously. Firms are forced to reallocate resources, scale back production, limit losses, and, usually, lay off employees. Those are the clear and visible causes of recessions. There are several different ways to explain what causes a general cluster of business failures, why they are suddenly realized simultaneously, and how they can be avoided.

What Causes a Recession?

Some recessions can be traced to a clearly-defined cause. For instance, the recession of 1973-1975 began as a result of the 1973 oil crisis. However, most recessions are caused by a complex combination of factors, including high interest rates, low consumer confidence, and stagnant wages or reduced real income in the labour market. Other examples of recession causes include bank runs and asset bubbles.

Psychological Factors of a Recession

Psychological factors are frequently cited by economists for their contribution to recessions also. The excessive exuberance of investors during the boom years brings the economy to its peak. The reciprocal doom-and-gloom pessimism that sets in after a market crash at a minimum amplifies the effects of real economic and financial factors as the market swings. Moreover, because all economic actions and decisions are always to some degree forward-looking, the subjective expectations of investors, businesses, and consumers are often involved in the inception and spread of an economic downturn.

Economic Factors of a Recession

Real changes in economic fundamentals, beyond financial accounts and investor psychology, also make critical contributions to a recession. Some economists explain recessions solely due to fundamental economic shocks, such as disruptions in supply chains, and the damage they can cause to a wide range of businesses. Shocks that impact vital industries such as energy or transportation can have such widespread effects that they cause many companies across the economy to retrench and cancel investment and hiring plans simultaneously, with ripple effects on workers, consumers, and the stock market. There are economic factors that can also be tied back into financial markets. Market interest rates represent the cost of financial liquidity for businesses and the time preferences of consumers, savers, and investors for present versus future consumption. In addition, a central bank’s artificial suppression of interest rates during the boom years before a recession distorts financial markets and business and consumption decisions.

What Are the Indicators of a Recession?

Economists determine whether an economy is in recession by looking at a variety of statistics and trends. Factors that indicate a recession include:

  • Rising in unemployment
  • Rises in bankruptcies, defaults, or foreclosures
  • Falling interest rates
  • Lower consumer spending and consumer confidence
  • Falling asset prices, including the cost of homes and dips in the stock market

All of these factors can lead to an overall reduction in the Gross Domestic Product (GDP). The European Union and the United Kingdom define a recession as two or more consecutive quarters of negative real GDP growth.

Impact of Covid-19 Pandemic on the Economy

In February 2020, the National Bureau of Economic Research (NBER) announced that according to their data, the U.S. was in a recession due to the economic shock of the widespread disruption of global and domestic supply chains and direct damage to businesses across all industries. These events were caused by the COVID-19 epidemic and the public health response. Some of the underlying causes of the two-month recession (and economic hardship) in 2020 were the overextension of supply chains, razor-thin inventories, and fragile business models. The pandemic-related recession, according to NBER, ended in April 2020, but the financial hardship caused by the pandemic is still impacting Americans.

For simpler understanding-

https://www.youtube.com/watch?v=SwaCg7Gwtzw: All you need to know about an Economic Recession.