Surgical Strike on Black Money - Impact on India Economy

Rs 500 & Rs 1000 Note Pulled out from Market -

Issue and Challenges -

1. 84% of txn are moving in Rs 500 & Rs 1000 note challenge is RBI have 100 denomination note in place of 500 and 1000.
2. Major impact on common man which doesn't have sufficient money in home.
3. Micro and medium level trader have facing problem to move daily business without Rs 500 and 1000 note.
4. This two months have marriage season. Common man facing problem to handle financial txn.
5 . Still, Financial inclusion is not complete in India. I.e. Most of people don't have bank account. how to exchange and do other financial activity.
6. Today price of gold has increased due to buy gold in place of big denomination note. It is not clear about to catch high gold txn on jewellery shop.
7. Local trades are running slow due to insufficiency of 100 Rs denomination note.
8. What will happen after 5 yrs of new currency. Can black money will not be pile up in economy again?

Positive Outcomes -

1. High cash will inflow in economy.
2. Black money will be out at some level.
3. Major impact will be on financial terrorism.
4. Inflation in Real estate will be low because major money moves in this sector.
5. Sell of Banking products like Dr and Cr cards, Bank a/c, merchant banking machine will be high.
6. This decision will be push digital banking.
7. Digital txn will be high.

Inflation Vs Income in terms of good GDP

Extract –

Ø Investment is slow because income is low.

Ø This indicates jobless growth.

Ø Major part money of money is going to rich person and transmute in black money.

Ø Corruption is high.

Ø Some part of GDP is not growing.

Ø Jobless growth.

Ø Major part of population is unemployable.

Ø Currency is weakening.

Ø Unhealthy Development.

Ø Exclusive Growth.

Ø Create bubbles in Economy.

Ø Political instability.

Rishtey - Highway ----- Anguish of Woman - Hypocrisy of Relationship

The first dialogue -

I was eleven years old. An uncle came to my house. I was alone in the house one day and he called me, I went in the afternoon He called and said come, sit on laps
Again.....

I was very young, I did not in some sense, was just painful, time - often, great pain.

Today, twelve years ago, he still comes to my house, call me daughter, and we both saw him, I'm smiling like nothing happened not talk comfortably. Now everything is fine.

Second dialogue -

I stayed with him throughout life but He is not able to understand that what I am.He can kiss and say sweet heart only. This is a lie like thousands of lie in a life.

Third Dialogue -

Do not go there, where I am coming from, where are there I do not want to reach I'm willing to live in the midst of it. I'm trying to show the way continuously.

पहला संवाद -

मै ग्यारह साल की थी। एक चाचा मेरे घर आते थे। एक दिन मै घर मे अकेली थी दोपहर को वा आए और उसने मुझे बुलाया मै चली गयी , गोद मे बिठाया
फिर .....

मै बहुत छोटी थी मुझे कुछ समझ मे नही आता था, सिर्फ दर्द होता था, बार - बार , बहुत दर्द ।

आज बारह साल हो गए वो आज भी मेरे घर आता है मुझे बेटी बुलाता है, उसे देखकर मै मुस्कुराती हुँ और हम दोनो आराम से बाते करते है जैसे कुछ हुआ ही नही। अब सब ठीक है ।

दुसरा संवाद -

जिन्दगी भर मै उसके साथ रह लुंगी पर वो मुझको नही समझ पाएगा कि मै कौन हुँ।
उसे केवल चुंबन करके स्वीट हार्ट बोलने आता है। जिन्दगी की हजार झुठ मे से यह भी एक झूठ है।

तीसरा संवाद -

जहाँ से आ रही हु वहा जाना नही चाहती, जहाँ जा रही हुँ वहाँ पहुँचना नही चाहती मै उसके बीच मे रहना चाहती हुँ । मै चाहती हुँ यह सफर यु ही चलता रहे।

Contract Theory - Nobel Prize 2016

I am happy to hear this theory got Nobel Prize. This theory reveals side effect of miscalculated profit which imposed to workers or employees by companies for ambition in the process of contract between employer and employee or worker and companies.

This theory indicates about gap between employer and employee. Somewhere employees are in horrible situation particularly in pvt companies which exploit by Sr management of company.

Harvard's Oliver Hart and Bengt Holmstrom from the Massachusetts Institute of Technology have won the Nobel Prize for economics for their research into contract theory. Their contributions have helped our understanding of the often conflicting incentives that operate in the contracts that enable cooperation between individuals, between employers and their workers, between governments, and which affect all of our lives.

I am sharing extract basis conversation between Arnab Bhattacharjee, Professor of Economics, Heriot-Watt University andJoseph Byrne, Professor of Economics, Heriot-Watt University.

Some extract are following -

A comprehensive framework for analyzing many diverse issues in contractual design, like performance-based pay for top executives, deductibles and co-pays in insurance, and the privatization of public-sector activities.

Risk sharing

Holmström, from Finland, developed research on optimal design of contracts from the perspective of an employer and their arrangements with a worker. This is work in the area of the “principal-agent problem”, where the employer is the principal. Here, there is potentially an issue in designing the best contract since there are competing incentives for the principal and agent, although they would still like to cooperate.

Risk sharing is an important part of this relationship, since workers would rather not have to bear all the uncertainties a firm experiences with variable revenue and profits. Firms would rather pass on some of these risks to workers, such that their costs are aligned with revenue. Holmström developed the informative principle, setting out how optimal pay should be linked to performance.

In our post-financial crisis world, we would all probably now agree that we should not reward the chief executive of a company with a large bonus for outcomes that are random. Further, career path matters for optimal contracts, for example we should pay different bonuses to younger or older workers, because younger workers can be rewarded with potential promotion in the future.

In the context of insurance contracts, problems can arise because individuals can become more careless after the contract has been agreed. Specifically there may be a conflict of interest between the less-than-moral contract holder or issuer. Indeed, the fact that it is difficult to measure compliance with a contract, and who was responsible for violations, can also present a challenge.

The Relevance -

The award award tends to reflect the world’s economic preoccupations, rewarding work which sheds light on areas which have demanded, and perhaps confounded, financial and political attention.

Hart and Holmström’s work has made a significant contribution to age old questions and new issues in economics. They can resolve some of the competing incentives in contract design while allowing cooperation. In many ways, their contributions are fundamental to modern ways of thinking in economics, but also have substantial cross-overs with many other areas of society and policy where contracts are very important.

In deciding to award the prize, the Royal Swedish Academy of Sciences have perhaps emphasized the point that the applications of these methods and theories are pervasive, and anyone interested in contracts may benefit from an understanding of the key principles behind their contributions. In some ways, that probably includes almost all members of society and the economy – individual households, workers and firms, the government and multilateral agencies.

Now the question of relevance to this theory. Need of hour is implementation and utilization of this theory for prosperity of employees.

Welcome to your important comments and Like

Ajay kumar - ajay.mrim@gmail.com

RBI & Govt – Dr D Subba Rao

I have listened first time to Dr D Subbao Rao at unofficial forum in IIM Banglore through social media.

 Dr Rao was bureaucrat. He was finance secretary before joining as R.B.I Governor. Why Dr Rao is important because of time to join R.B.I. Governor. He was joined in yr 2008 when financial crisis and turmoil happened. He joined on 5the September 2008 and Lehmen Brothers collapsed on 16th September 2008.

We know India had least affected or not affected from financial crisis. It is important that no one Indian financial institution was collapsed while Bank had collapsed in U.S.,U.K.,France, & Spain. We can devote to work of Dr Rao as a R.B.I. Governor. Rupees were stable, Inflation was not high, and Growth was balanced. It was difficult time to make balance between growth and inflation, Regulate interest rate (saving and credit) ,liquidity in the moment of financial crisis by R.B.I Governor Dr Rao.

 P Chidamabaram Ex finance minister of India. He is finance minister who appointed R.B.I. Governor Dr Jalan, Dr Y.V. Reddy, Dr Rao & Dr Rajan. He said if two people are agree on everything one of them is stupid. It indicates disagreement between Govt & R.B.I. He said Policy making is never black & white. It is not choice between A & B. It is nuance exercise. It is a art & craft. Sometime It can be yes or no by compelling political situation. He said R.B.I cannot hold all financial institution in India. Its hold some fraction of financial institution. So, It means it cannot be completely responsible for any financial decision.

Why I am writing about such kind of thing because Dr Rajan will end the term of R.B.I. Governor on 4th September 2016. Who will be Next R.B.I. Governor? To whom to appoint R.B.I. Governor of India after Dr Rajan by Modi Government.  Can R.B.I. preserve their autonomy?

Decisive Challenges in Indian Economy

Many country depend on other country to make healthy to their economy in global village, like America seems to India as a important destination to make their prosperous economy but if crisis and challenges will exist in one country, another country cannot go ahead to make economy healthy & prosperous So, we can see the towards importance of millennium development goal.

Challenges are lying in Indian economy. Its effect adversely to GDP. First we know the definition of GDP.

Definition - Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well. GDP includes all private and public consumption, government outlays, investments and exports minus imports occur within a defined territory. Put simply, GDP is a broad measurement of a nation's overall economic activity.
We cannot increase GDP % until Govt does not curb below challenges -

• Water Crisis
• Agricultural
• Agricultural Land Issue

Water Crisis -   Total available water in India -

Data depict the situation of India in terms of water demand.

Consumption of water in India future projection -

Ground water usages pattern in different states -

Above all graphs shows water crisis in India.  12 states facing water crisis. Major states are Maharashtra, U.P., Teleangana and others. Ponds and River acquired by Land Mafia. Government is not taking responsibility and they do not have concrete plan to curb water crisis and ensure water availability to meet future demand. Data are showing the major water crisis in India, Latur district in Maharashtra where 2.5 cr liter water require but available water is 1.5 cr liter through different resources.

• Agricultural -

Agriculture plays a vital role in India’s economy. Over 58 per cent of the rural households depend on agriculture as their principal means of livelihood. Agriculture, along with fisheries and forestry, is one of the largest contributors to the Gross Domestic Product (GDP).

As per estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock, forestry and fishery) was 15.35 per cent of the Gross Value Added (GVA) during 2015–16.

Production of Agricultural in India is sufficient but Farmers doing suicide because they do not get proper profit.  Public distribution system is not good as required. India is facing lack of technology & digitization in agricultural. Still farmers are using high consumption of water and they do not aware about soil science. Still, Bank and Financial industry do not have suitable financial product for farmers.

We can see below graph Agri contribution in GDP is declining yr on yr.

• Agricultural Land Issue –

This is a very specious argument that is being made.Data from world Bank shows that around 60.3 percent of India's land area is agricultural land. The bank defines agricultural land as “share of land area that is arable, under permanent crops, and under permanent pastures.” In fact India has the second largest agricultural land in the world. As India Brand equity foundation, a trust established by the Ministry of Commerce and Industry points out: “At 157.35 million hectares, India holds the second largest agricultural land globally but below cycle represent if population is not balanced with land area it will create different kind of issue like degradation of agricultural land, water crisis and sustainability of human beings.

Below data depict that Land availability per person in India –

• Conclusion – I think any country must calculate the figure of requirement of below thing as proportion to population

1. Water
2. Land
3. Food
4. Energy
5. Job
6. Industry
7. Investment

Basis population and it should make balance between population and above need. In India Still government do not have strong population policy. How can Government use their population as a human resource? If people are poor & unskilled, it is worthless for government except vote bank. Still, Indian politician are using Indian population for vote bank and do not care about availability of resources and challenges for people of India.

We can see our GDP 7 to 7.5 % but it is a virtual figure exact figure can be 6 to 6.1 Government do not have concrete policy for equal growth of Indian people.

Comments are welcomed....

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