reducing/eliminating unemployment

15/04/2019

Indian political parties seem to think that government can do everything including creation of of jobs on its own. But this is not possible. Government should involve the rich people who can invest their money in establishing factories, business establishments, service establishments etc which can provide jobs to the people, produce goods and services and thus increase the GDP of the country.If the country is to develop, there is need for capital which rich people can provide, there is need for workers who can work, there is need for services like transport, electricity, trade etc.which service establishments can provide. Therefore it is necessary to have harmonious relationship between different contributors and effective coordination. The government’s contribution in economic development should be indirect in the form of facilitation, concessions, infrastructure development. Government’s priority should be improvement in law and order situation, provision of social security and similar things.

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Demonetization- should it be put to plebiscite

24/11/2016

There are different claims about the support or opposition to the scheme of Govt.of India of demonetization of Rs.500 and Rs.1000 currency notes being implemented by the Government. Opponents talk of the damage to the economy, the GDP lowering by a few percentage points with no success in bringing out black money, in eliminating fake currency notes or in eliminating corruption. And they also talk of untold suffering of the people, with no money to buy essential items of consumption and the loss of lives of several people. They demand withdrawal of the scheme. At the same time while admitting the sufferings of the people, the government asserts that the suffering is only for a short period, but there are long term gains in terms of elimination of black money, fake currency notes and corruption and assert that the scheme will continue. The issue being very important and serious, it should be put to plebiscite and the outcome of the plebiscite should be respected and implemented and no further discussions should take place on the issue.


Capital,wages,prices,taxes

05/06/2016

If the owner/company does not invest capital, workers do not get employment and earn wages. If the workers do not work, owner/company does  not get profit. There are people who think that excess(more than reasonable) profit should be distributed among the workers. Some others think that excess profit is due to the company charging higher than the reasonable price and that prices should be reduced so that the profits of the company are reasonable and the consumers are not exploited. There is yet another view that the government should increase the tax rates or new taxes should be imposed. All the views seem to be correct.The point to be considered and decided is which action will expedite development of the country as a whole. Going by the experience, government getting more taxes is not going to help the country much as benefits of its schemes do not reach the people in full and often result in wasteful and unproductive work. As the number of consumers is too large, the price reduction can only be negligible and the consumers will not feel the benefit.As regards increase in wages/payment of bonus to workers, this will increase demand for products which may lead to higher  production and higher GDP. However, if the workers are already getting reasonable salaries, they should not get additional amount.The only option left is to allow the company to retain the excess profits, so that it can expand its existing factory or set up new factories. However, it should be made clear that new taxes are not imposed only if the profits are used for expansion of the existing factory or setting  up of a new factory, thereby generating employment, increasing production and thus  contributing to the expansion of  GDP of the country..

 


Life Expectancy in India and neighbouring countries

14/09/2014

Life Expectancy at birth in India increased from 58.5 years in 1990 to 64.19years in 2010 but it is still below the world average of 67.88 years, according to UN POPULATION PROSPECTS 2010. India ranks 146th among 198 years.All the neighbouring countries have higher life expectancy than India as seen below.

India 64.19
Pakistan 64.57
Bhutan 65.79
Nepal 67.42
Bangladesh 67.84
Sri Lanka 74.25
Maldives 75.55

Japan with life expectancy of 82.73 years ranks no.1.Life expectancy depends on diet, medical facilities, accidents, climatic conditions etc. The fact that some people in India live upto 100 years shows that climatic conditions are alright in India.

India’s per capita production/ availability of food grains is only around 200 kg per year (260 million MT for 1270 million people) while the world average producion is over 350 kg/per head/per year. India should stop thinking that it is surplus in food grain production.

Though India has excellent medical facilities in several cities,the overall expenditure on health in India is only around 4% of GDP while Sri Lanka and Maldives spend around 8% of their GDP on health. Japan and other developed countries spend around 10% of their GDP on health.It is to be noted that per capita GDP in India being lower than than in Sri Lanka and Maldives(less than half), in absolute terms expenditure on health per person in India is very very low.

If life expectancy at birth in India is to go up substantially, food grain production should increase and per capita expenditure on health should increase significantly.


Rate of exchange between dollar and rupee

28/09/2013

The Finance Minister is reported to have said that the correct rate of exchange between US$ and Indian Rupee is US$1= Rs.59 or Rs.60. This does not appear to be correct.

The wages for an hour of an unskilled worker on an average is about US$ 8/- in United States.In India it is about Rs.50/’ In this case US$ 8= Rs.50 or 1 dollar is equal to about Rs. 6.25. A cup of coffee in Food Courts on average costs about US$1.00/- In similar establishments in India, it is about Rs.30/- In this case 1 US dollar is equal to Rs.30/- Average price of 1 litre of milk in US is about 1 dollar. In India, it is about Rs.30. In this case also 1 dollar is equal to only Rs.30/- Of course in manuufactured goods, 1 dollar may be equal to Rs.40 or more. Taking all the products and services (GDP) in India, IMF/World Bsnk etc.estimated in 2012,India’s GDP to be around 5 trillion dollar by Purchasing Power Parity method and nearly 2 trillion dollars by rate of exchange method The rate of exchange in 2012 wad about Rs.50 per dollar. This shows that the real parity between dollar and rupee in 2012 should have been only Rs.20/dollar. in 2013 it could be about Rs.30/-.


Bringing more people in the work force

18/04/2012

In the past -in 50s and 60s,the minimum qualification required for admission to most of the trades in Industrial Training Institutes (ITIs) is pass in 8th Class,while at present only for a very few-one or two-courses the minimum qalification required is 8th Class,while for the rest, it is 10th class. Similarly one could go for Teachers Training course after passing 8th class, to be able to teach in primary schools, while at present it is pass in 12th class. With a view to bring more people to work force, it would be useful if minimum qualification required for admission to ITIs and Teachers’ Training Institutes is brought down to 8th class.

Similarly,there was a category of doctors who spent just 3 years after school education to become doctors. This course should be revived.

The school education now consists of 5 years of primary education, 3 years higher elementary education,2 years high school and 2 years higher secondary school edcation, making a total of 12 years. This can be reduced initially to 11 years and later to 10 years. One should go for university education- degree course in Arts, science,medicine etc after completing 10 years of school education. Thls will make available to the country about 10% additional work force.

In India, life expectancey at birth has increased to about 67 years now (2011)from around 32 in 1951. Correspondingly the retirement age should also go up. It would probably be just to increase retirement age to 65.This alone will increase the strength of the work force by about 10% – 15%

The larger the work force the higher the GDP of the country. One of the reasons for higher Per capita GDP in developed countries is that over 65% of the population there work.Similarly one of the reasons for lower Per capita GDP in developing countries paticlarly the ones in Africa is that there the work force is less than 50% of the population,mainly due to high birth rates.


Overvalued and undervalued currencies

15/04/2012

In India Rs.25 can get one kilogram of good quality rice. In United States of America US$ 1 can buy one kg of comparable quality of rice. The rice being same in both cases, US$1 should be equal to Rs.25. But one can get in the banks or elsewhere about Rs.50 for 1 US$. This means that Indian Rupee is undervalued by 2 times. In some other cases 1 US$ may be equal to Rs.50 or Rs.20 or so. When we take the value of the total production of goods and services, i.e. GDP.we get an idea of how much the currency of a country is undervalued or overvalued. International Financial organisations like IMF, compute the GDP of a country both in nominal terms ie. on the basis of rates of exchange and on Purchasing Power Parity (PPP) terms. From these figures we find that while currencies of most of the developed countries are overvalued, the currencies of the developing countries are generally undervalued.

The major countries whose currencies are undervalued are:

1.India by 2.8 times
2.Iran by 2.2 times
3.Taiwan by 2.2 times
4.China by 1.9 times
5.Mexico by 1.7 times
6.Russia by 1.6 times
7.South Korea by 1.6 times
8.Poland by 1.6 times
9.Turkey by 1.6 times
10.Indonesia by 1.6times

The overvalued major currencies are those of:

1.Australis 1.4 times
2.Canada 1.2 times
3.Japan 1.2 times
4.Italy 1.2 times
5.France 1.2 times

In the past Indian Rupee was undervalued by 3-4 times. As the economy expands,the currency becomes stronger. May be in the coming years, as the economy expands,Indian Rupee may not be so much undervalued as now. This will mean that the imported goods may not be so much costly as now.