Unemployment and how to tackle unemployed in india

 Unemployment 

What should be done?

India is a country full of immense potential for economic development. The pace of development of the country so far has also been good.What is needed now is to focus on inclusive and sustainable development.While creating abundant employment opportunities.

This is possible only when our economic policies are made keeping in mind the huge population of our country so that every one can get employment.

 In this regard, first of all the problems prevailing in the agriculture sector and Micro, Small and Medium Enterprises (MSMEs) should be removed. Promotion of food processing in agriculture, expansion of irrigated area Doing. Initiating the Second Green Revolution and Horticulture Mission It will be helpful in fulfilling the goals of• 

Just like that. Ensuring easy access to loans in the MSME sector.Simplifying regulation, promoting technological up-gradation,ensuring access to the market for their products, etc.will prove to be effective in creating employment opportunities.•

 The second major effort in this regard should be made in the form of accelerating the pace of development of human resource. A big initiativein this direction should be taken from education that we should make quality changes in the overall structure of education and the curriculum should be made job oriented.

Comprehensive structure for providing skill training required for employment will have to be created. At the same time, better exploitation of the potential of human resource has to be focused by improving the health sector infrastructure. 

Along with the development of human resource, we have to accelerate the pace of development of physical infrastructure. Doing this will prove to be helpful in accelerating the economy, as well as solving the problem on the employment front to a great extent.

The third major effort to improve employment generation should be in the form of giving priority to the development of rural economy. By providing facilities like education, health, electricity, road, transport and communication etc.in the villages, we can also make it an engine of economic development and also provide employment to the people.

 In this regard we need to adopt the 'PURA' model of former President Dr.Abdul Kalam. By making villages the center of economic activities, we will be able to make additional people engaged in agriculture, partners in other economic activities, which will reduce the burden on agriculture and people will also get employment at the local level, which will also accelerate inclusive development

.

Another major effort in relation to employment generation should be related to taking the possibilities arising out of the people in the new economic sectors. 

World fourth industrial revolution We are passing through an era in which the digital world is expand in rapidly. Research and development work is going on at a rapidly in new areas like Big Data, Cloud Computing and Block chain Technology.We should not just be a witness to this change, but adopt it and become a participant in it and should be benefited.

Conclusions

Ultimately it can be said that India may not be caught in any major job crisis, but the employment crisis has definitely increased. While accepting this truth, we should focus on identifying its root causes and removing them quickly.

We are also able to do this by revising our economic policies from time to time and making them job-oriented and by leveraging the possibilities emerging in new economic areas in our Country In The World.

Unemployment and challenges to generate an employment in india

 Unemployment

Development brings about two kinds of changes in the lives of the people- increase in the income of the employed people and employment of the unemployed people where as in spite of rapid economic growth in India progress on both the fronts has been slow. These aspects were also accepted in the Economic Survey.After the financial crisis of 2008, the country's export situation improved, which increased the amount of employment in two sectors of the economy (cotton textile industry and information technology).   But the current scenario is such that both these sectors are neither able to help in exports nor  employment. The position of other components of the economy is also mixed.The manufacturing sector has improved but the Gross Value Added (GVA) of this sector has steadily declined. The condition of the textile sector, which is the largest employer after agriculture, is also not good. Not only this, there is also a crisis in the information technology and BPO sector.This sector is already in crisis due to domestic and international pressures and with it increasing automation is also holding back employment growth.  Startups are not getting venture capital and the lending capacity of banks is sluggish due to rising NPAs.Due to the above reasons, employment growth is being affected, making it even more challenging to achieve the goal of financial inclusion and inclusive growth.

Challenges of generate employment in india

The Indian economy is growing rapidly, but the level of employment remains a problem.

The challenges at the level of employment generation are due to

• Concentration of economic activities in big cities only
• Lack of diversification in economic activities
• Decrease in the quality of education and training
•  Less importance to the rural economy •
• Development of new areas not being done at the expected level

The contribution of the service sector in the economy should be more,while the development of industries should be more in the states with more population.

 Challenges analysed on the basis of above points Is. That situation of employment is when many programs like 'Make in India' and 'Skill India' are being run by the government for employment generation. Apart from this, major schemes like National Rural Employment Program, Integrated Development Programme, Jawahar Rozgar Yojana,Swarna Jayanti Gram Swarozgar Yojana, Sampoorna Gramin Rozgar Yojana, MahatmaGandhi National Rural Employment Guarantee Scheme (MNREGA) are already being run.

Tackling challenges

Rural unemployment is currently the highest, but it can be converted into opportunity. But this will be possible only when people will be given training in modern technology in relation to farming, horticulture,animal husbandry, plantation, repair of agricultural machinery etc.and rural construction programs will be expanded. Waste land will be brought under agriculture. This will increase the amount of employment in rural areas. The demand for good seeds, fertilizers and machinery has increased in the country. Many people can get employment in the work of selling and supplying them. It would be better if the Central and State Governments expand the Skill India Centers in rural areas. This will encourage weaving, mechanics, operation and handicrafts and employment opportunities will be created. Youth also get opportunity to improve their career in medical, real estate, education and training, IT,manufacturing, banking and other financial services etc., but this will be possible only when public and private sector will increase investment in it.IT new development centers are opened in small towns, it will lead to decentralisation of industrial structure and make the economy more self-sufficient. So far, grants and incentives are given only on the basisof production. It would be better to change this base and give them on the basis of providing employment opportunities.

Apart from this, if the banking group expands in rural areas, lakhs of people can get employment here. Similarly, in the health sector, the government can generate employment by promoting investment. Even today there is a severe shortage of health centers in rural areas. If the government expands these, then not only will employment be created but people living in remote areas will also get health benefits. The development of small industries is most important for increasing employment. According to economists, by investing the same amount of capital in small scale industries employ five times more people than large industries. Unemployment is not just an economic problem. It is a matter that is equally concerned with crime control and social peace. If unemployment continues to rise, it will erupt in the form of dissatisfaction.

Human Development Meaning

   Human Development

• Investment in human resources is a pre-requisite for a healthy and productive nation building a nation. Being a developing economy, India does not have enough financial space to increase expenditure on important social infrastructure like education and health. However, in view of the limited resources, the Government has consistently accorded priority to the strengthening of the educational and health status of the people.

• education The Government of India is committed to achieve the Sustainable Development Goals for Education by 2030 in terms of “ensuring inclusive and quality education for all categories of students and promoting life long learning”. The Right of Children to Free and Compulsory Education Act, 2009 was enacted in 2010 with the objective of achieving this, which provides for a just legal framework and free and compulsory admission to primary education for all children in the age group of 6-14 years, Entitlement to attendance and primary education. It provides children the right to an appropriate quality education based on equity and non-discriminatory principles. 

• India has improved enrollment rates,completion rates and school enrollment rates at the primary level.Significant progress has been made in quantitative indices like building/classroom, other physical infrastructure like drinking water facilities, toilet facilities and appointment of teachers etc. 

• Apart from quantitative indicators, the quality of education also needs to be monitored and evaluated.

• The Right of Children to Free and Compulsory Education Act, 2009 Student-teachers in both primary and upper primary schools women's.

• Sets guidelines for maintaining standards and norms relating to ratio, building and infrastructure, school working days, working hours of teachers. Some studies have discussed the effects of PTR on learning attainment extensively and claimed that SCR (Student Classroom Ratio-SCR) and PTR had positive effects on school participation and grade attainment.

• Gender inequalities in enrollment in higher education still persist, with the government constantly striving to improve the net entry rate of women in higher education. As a result of the continuous efforts of the Government through programs like 'Beti Bachao, Beti Padhao', the GPI at the primary and secondary levels of enrollment has improved substantially.

• The 'Beti Bachao, Beti Padhao' scheme has been started to promote the life, protection and education of the girl child. Its objective is to address the issue of declining child sex ratio through a comprehensive campaign aimed at changing the social mindset. Launched in 2015, this scheme is a joint effort of three ministries namely Women and Child Development, Health and Family Welfare and Human Resource Development.

Factors affecting economic growth and economic development 

(1):-Natural resources (land, soil, minerals) are one of the main factors affecting the development of any economy. Abundance and quality of natural resources is essential for economic development.

(2):-Capital formation is a process by which the savings of a community are used for investment in capital goods, such as plants, land, machines, which increase the production capacity of the country and the efficiency of workers. Often, when a large part of the national income is saved and reinvested, the pace of economic development accelerates.

(3):-The rate of industrialization should also be high for rapid economic growth. As the level of industrialization in a country increases, new employment opportunities will be created and production will continue to increase in the same proportion.

(4):- The role of the service sector in the economy is important.Presently the service sector is contributing about 50 percent of India's GDP. New employment opportunities are created in the service sector and due to this, there is a continuous increase in GDP.

(5):- Technological advancement is a very important factor in influencing economic growth.With the use of good technology, it becomes possible to produce more with the help of given resources to produce enough with less quantity of resources.

(6):- The rate of economic growth also depends on the nature of the economy.Today the private sector plays an important role in the capitalist economy.The availability of resources in the economy increases with the help of private sector and foreign investment. This results in an increase in the rate of capital formation and investment.

(7):-Political stability and strong governance are essential and help full in economic growth. This increases the confidence of investors and attracts domestic and foreign capital.

(8):-Population is an important factor in economic development.Labor is available for production work from human beings. If the labor force in a country is efficient, then its production capacity will definitely be high.

What is Energy Security and why the needs of India Energy Security

 Energy security

Is the un interrupted availability of energy sources at an affordable price. Energy security is like an umbrella whose shadow includes many issues, such as economic growth, sustainable and inclusive growth, standard of living and consumption level of resources. etc. 

                                                 There are many dimensions related to  energy security, including long term energy security, short term energy security, commercial energy security and non-commercial energy security etc.

      Energy security.Energy Security It is the corner stone of any country's progress. The per capita energy consumption in a country is an indicator of its standard of living. Energy is necessary for industrial development Energy availability and energy security will be helpful for present as well as for future construction.

Why the need for energy security in India?

Affordable and sustainable energy availability is a basic requirement of modern industries and civilization and is essential for the progress of the country.

Hence the need for energy security can be understood from the following points-

• To ensure industries and economic development in India

• Energy consumption and energy availability reflect the standard of living of a country, so in order to raise the standard of living of the population of India

• To meet the needs of sustainable development

• To tackle the challenges of clean development and climate change

• At present the energy dependence is dependent on conventional energy sources.To continue the power supply uninterrupted after they are exhausted

• To maintain an affordable and sustainable supply of energy.

• India imports essential energy. It is expected to increase further in the coming years. To reduce this import-dependence.

What is The Central Bank

 DEFINITION OF A CENTRAL BANK

A central bank has been defined in terms of its functions. According to Vera Smith, "The definition of central banking is a banking system in which a single bank has either complete control residuary monopoly of note issue." W.A. Shaw defines a central bank as a bank which controls credit.

 Hawtrey, a central bank is that which is the lender of the last resort. According to A.C.L. Day, a central ba is "to help control and stabilise the monetary and banking system." According to Sayers, the central bank "is the organ of government that undertakes the major financial operations of the government and by its conduct of these operations and by other means, influences the behaviour of financial institutions so as to support the economic policy of the government." Sayers refers only to the nature of the central bank as the government's bank. 

All these definitions are narrow because they refer only to one particular function of a central bank. primary or a On the other hand, Samuelson's definition is wide. According to him, a central bank "is a bank of bankers. Its duty is to control the monetary base.... and through control of this 'high-powered money' to control the community's supply of money." But the broadest definition has been given by De Kock in his book Central Banking. In his words, a central bank is "a bank which constitutes the apex of the monetary and banking structure of its country and which performs as best as it can in the national economic interest, the following functions:

(i) The regulation of currency in accordance with the requirements of business and the general public for which purpose it is granted either the sole right of note issue or at least a partial monopoly thereof.

(ii) The performance of general banking and agency for the state.

(iii) The custody of the cash reserves of the commercial banks.

(iv) The custody and management of the nation's reserves of international currency.

(v) The granting of accommodation in the form of re-discounts and collateral advances to commercial banks, bill brokers and dealers, or other financial institutions and the general acceptance of the responsibility of lender of the last resort.

(vi) The settlement of clearance balances between the banks.

 

Failures of Planning

(1):- The central theme of planning was the eradication of poverty, but a large part of India's population is still living below the poverty line.

(2):- Despite the creation of more and more employment opportunities during the schemes, the problem of unemployment has not reduced. The problems of educated unemployment, disguised unemployment and under-employment exist on a large scale in India.

(3):- Even today the development of infrastructure (which includes electricity,roads,dams, bridges, schools, universities, hospitals, railways, ports etc.) is insufficient in India.

(4):-Economic and social equality, the main goals of planning were accepted, but the irony is that the problem of inequality continued to deepen even during the period of planning.

(5):-There has been a tendency for people's real incomes to decrease due to ever-increasing inflation and due to this the gap in the economic divide between the rich and the poor has started widening.

Achievements of Planning in India

 Achievements of Planning in India

(1):- Increase in national income is a sign of economic growth. The growth rate of national income during the five year plans has been an average of 5 per cent per annum. The increase in national income has helped in breaking the vicious circle of stagnation of the economy.

(2):- The quality of life of the people has increased due to.  increase  in per capita income. The growth rate in per capita income at constant prices during the period 1951-2016 has been around 3per cent per annum.

(3):- The rate of capital formation has increased significantly during the period of the Five Year Plans. However, this growth has not been continuous. The rate of capital formation depends on the rate of saving and investment.

(4):- During the planning period, there has been a lot of institutional and technological changes in the agriculture sector.

(5):- During this period, there has been a steady increase in agricultural production due to the use of improved varieties of seeds, fertilizers and pesticides,agricultural mechanization and technology in the agriculture sector.

(6):- The industrial sector grew significantly during the plans. Industries were diversified and modernised. The growth rate of industrial production during the plan period has been about 7 percent per annum.

(7):-There has been a significant change in the basic economic structure during the planning period. There has been a lot of development in roads, means of transport and communication, irrigation facilities, electricity supply, banking, insurance,railways etc.

(8):-Health and education facilities have developed significantly during the plan period. Life expectancy has increased. Maternal mortality rate and infant mortality rate have decreased. There has also been an increase in the number and quality of educational institutions, universities, research and research etc.New employment opportunities have also been created.

Planning And There Objective 

Planning 

Economic planning means- according to the accepted national priorities.Accordingly, to use the resources of the country in various developmental activities. Economic planning is an organized economic effort,in which natural, economic and human resources are coordinated and controlled judiciously in order to achieve the goals of economic and social development specified by the state in a given period. Planning in India is a subject of the Concurrent List (Seventh Schedule).

Planning objectives

• Ensuring the best use of resources

• Ensuring logical distribution of resources

• Eliminating poverty and unemployment Developing infrastructure.

•  Integrated development of agriculture and industries 

• Achievement of all other goals of social justice and development

• To establish politico-economic democracy

• Self-reliance and modernization Promotion of investment and capital formation 

• Emphasis on inclusive growth along with rapid economic growth.

What are the root causes of unemployment?

UNEMPLOYMENT 

What are the root causes of unemployment?

(1):- Getting employment to every person who wants to work is a sign of an inclusive and prosperous economy. Progress has been made in this direction in India but it is not satisfactory due to many reasons.

(2):- The biggest reason is the huge population of this country, in which only a gradual increase is being recorded. Since the burden of population is very high relative to the availability of resources,it is almost impossible for everyone to get quality employment.

(3):- After adopting the process of liberalization, privatization and globalization in the economy, a discourse emerged that India's huge population is not a burden but it can be converted into boon; This was called the 'demographic dividend'.

(4):- The implication of this idea is that due to the large population, labor is available cheaply in India, which will reduce the cost of production of goods and services in India as compared to other countries. This will give India an edge in the competition in the global markets.

(5):-Now if we look at how true this has been, we find that India has certainly taken advantage of cheap labor available due to overpopulation, especially in the service sector; But it did not live up to the potential inherent in India.

(6):-The question arises that why did not live up to the possibilities.The simple answer is that we have not developed human resources as per the requirement. To take advantage of the 'demographic dividend', it was necessary that our education system was in line with the market system and focused on skill development of the job seekers.

(7):- It is a great misfortune that we have adopted the market system, but we are not able to prepare the curriculum and provide proper training accordingly. Both these works were done on a limited level, so its benefit was also limited.

(8):- Among the root causes of unemployment, the second major reason is related to the nature of economic growth of the country which is commonly termed as 'jobless growth'.

The implication of this is that even though the Indian economy is registering a growth rate of more than 7%, jobs are not being created accordingly.

(9):- Indeed, employment generation in line with GDP growth is possible only when the labor intensive manufacturing sector accounts for the largest share of growth, as in China. Being a leader in the manufacturing sector, China continues to dominate the world market and the employment situation there is also good.

(10):- India lags behind in the development of the manufacturing sector, which we have to bear in the form of deficit in foreign trade and creation of less employment opportunities.

(11):- The third root cause of unemployment is related to agriculture. The agriculture sector in India may be huge but we could not harness the employment generation potential in the agriculture sector. Initiatives in this direction began in the 1970s in the form of the Green Revolution. Efforts were made to achieve self-reliance and employment generation in agriculture by mechanization of agriculture, expansion of irrigation facilities, use of quality seeds and fertilizers and pesticides etc.

(12):- These efforts proved to be less in harnessing the potential of the agricultural sector because the Green Revolution spread to a limited area of ​​the country, leaving the eastern part of the country almost untouched by it.

(13):- At the same time, the size of the land holdings kept on shrinking with the increase in population; And people who are more engaged in agriculture than necessary could not be transferred to non-agricultural activities.

(14):- Agriculture in India was basically dependent on the monsoon and due to the involvement of more people in it than necessary, unemployment also increased rapidly.

(15):- The fourth root cause of the unemployment crisis has been our policies in which, instead of emphasizing on the development of the rural economy, the expansion of industrial activities was allowed to be confined to the cities. Despite the fact that the majority of India's population lives in villages, we focused on making cities the engine of economic activity.

(16):- Despite the abundance of resources in the villages, less attention was paid to adopting necessary measures like capital investment, infrastructure development,human resource development etc. for its economic exploitation.If economic activities were expanded in the villages as well as the  cities, then the problem of unemployment would have been removed to a great  extent, as well as migration would have been curbed and the burden on  the cities would not increase beyond capacity.

(17):-  In the course of discussing the root causes of unemployment, it is also necessary that we should also discuss the immediate reasons due to which the unemployment crisis seems to be increasing in recent times. One reason for this is 'the conditions arising out of demonetisation' and the otheris 'increasing automation'.

(18):- The cash crunch created in the process of demonetisation affected the activities of India's micro, small and medium enterprises and also the construction-manufacturing sector. These are the sectors in which employment is generated in abundance. The direct impact of the slowdown in these sectors is visible in the form of rising unemployment.

(19):- Similarly, increasing automation has posed a new challengeto the employed people not only in India but globally. According to an estimate, by the year 2025, one-fourth of the people working in various sectors may be victims of automation. This threat is increasing rapidly, especially in technology-based enterprises.

(20):- India lags behind in the development of the manufacturing sector, which we have to bear in the form of deficit in foreign trade and creation of less employment opportunities.

Conclusion:- Challenges of employment generation in the country The Indian economy is growing rapidly, but the level of employment remains a problem. The challenges at the level of employment generation are due to Concentration of economic activities in big cities only  Lack of diversification in economic activities Decreased quality of education and training 

                          The challenges have been analysed on the basis of the above points. This situation of employment is when many programs like 'Make in India' and 'Skill India' are being run by the government for employment generation. Apart from this, major schemes like National Rural Employment Program, Integrated Development Programme, Jawahar Rozgar Yojana,Swarna Jayanti Gram Swarozgar Yojana, Sampoorna Gramin Rozgar Yojana, MahatmaGandhi National Rural Employment Guarantee Scheme (MNREGA) are already begin at time.

V.K.R.V. RAO The Indian Economists Philosopher

 V.K.R.V. RAO

Dr.V.K.R.V.Rao, a father figure among the 20th century Indian economists, was one of those rare intellectuals who sincerely cared for national interests in general and economists in particular. Dr.Rao has an active work span of about six decades. During this period, he presided over most of the professional conferences and served as an active member in various governmental committees and accepted various assignments, as Vice-Chancellor of Delhi University, as member of the Planning Commission and a Cabinet Minister of the Government of India.

                                                     He founded and nursed a leading Research Journal, "The Indian Economic Review". Professor V.K.R.V.Rao was an internationally renowned economist. In the economic literatue, his contributions will always be remembered.

Ramesh Chandra Datt The Indian Economists Philosopher

 ROMESH CHANDRA DUTT

R.C. Dutt belonged to an eminent educated Bengal family. He was born in 1848 in Calcutta. He joined the Indian Civil Service in 1869 and served in many capacities. In 1899, he was elected as the President of the Indian National Congress. In his later years, he was appointed as a lecturer in Indian History at the University of London. The economic ideas of Dutt are found in his two important books : (1) The Economic History of India - 2 volumes and (2) Famines in India - 2 volumes. Gadgil described Dutt's Economic History of India as "almost the first history of a colonial empire." Thus while the first book deals with the economics of colonisation, the second one deals with the conditions of agricultural population in India and the causes and remedies of famines on India. R.C. Dutt's another book "Famines in India" provided such a vivid description

RC Datt believed that there was a closed relationship between political and economic phenomena the social and economic equilibrium was dynamic.

Mahadev Govind Ranade The Great Indian Economists Philosopher

 MAHADEV GOVIND RANADE 

Mahadev Govind Ranade has been called as the father of Renaissance in western India. He influenced everyone who came in his contact. Ranade was born at Nasik on 18th January, 1842. After taking his M.A. Degree from Bombay University in 1865, he qualified himself for the degree of Law. He taught economics at the University of Bombay for some time. Later on, he entered judicial service and became the judge of the Bombay High Court. Since then, Ranade was popularly known as Justice Ranade. He was in that post till his death in 1901. In 1878, Ranade started the publication of the 'Quarterly Journal'. In 1884 he helped in founding the 'Deccan Education Society'. The aim of this society was to provide western education to the rising generation without exposing it to the antinational bias of English educators. From this, it is deduced that while recognising the merits of western education, Ranade wanted to adopt it without loosing the spirit of rationalism. The economic ideas of Ranade are found in his most important works: "Essay on Indian Political Economy" (1898) and "The Rise of Maratha Power" (1900).

Dadabhai nauroji The Economists Philosopher

 DADABHAI NAOROJI

Dadabhai Naoroji, "The grand old man of India" was one of the founders of Indian Nationalism His teacher called him "The Promise of India". Born in a Parsi family of Bombay, Naoroji became the first Indian Professor in Elphinston college, Bombay, the founder of the East India Association (1886), the first Indian to be elected as member of British Parliament (1893), the first Indian member of the Royal Commission, and above all, first Indian economist of the 19th century. He was elected President of the Indian National Congress thrice in 1886, 1893 and 1906. Naoroji's economic ideas are contained in his book, "Poverty and Un-British Rule in India".

Dada bhai nauroji analysed the effect of the British rule on India economy he pointed out how the Britishers were responsible for causing drain on the Indian resources and generating poverty in India

Thiruvalluvar The India Economists Philosopher

 Thiruvalluvar

The economic ideas of Thiruvalluvar are found in his immortal work, Thirukkural, a book of ethics. Even though scholars differ widely over the estimation of the period of Thiruvalluvar, it is generally believed that, he belonged to the Sangam Age in TamilNadu, around 3rd century AD. Thiruvalluvar's work is marked by pragmatic idealism.

 Thirukkural contains three important parts, viz., Aram, Porul, and Inbam which literally means Dharma (Ethics), Artha (Polity) and Kama (Bondage or love), which are the aims of life of a Hindu. The fourth aim of life was Moksha or Veedu (Liberation).

 Thiruvalluvar deliberately excluded this fourth division in his book, as it is the exclusive area of spiritual literature. Thus Thiruvalluvar did not mix spiritualism with earthly things. A large part of Valluvar's economic ideas are found in the second part of Thirukkural-the Porutpal It deals with wealth. Thiruvalluvar was a pragmatic thinker and his porutpal shows three characteristic features of the author. Firstly, Thirukkal has certain elements of classicism. So he can be identified as a classical economist.

 Secondly, his economic ideas were based under ethics and hence he can be called as normative economist. Finally, his treatise speaks about general welfare and hence he can be identified as a welfare economist. Thus he had in him, classicism, normatism and welfare ideal. Thiruvalluvar was a fundamental thinker. He believed that rains were the basic support of life Since rain furnishes food, it forms the basis for stable economic life.

 Agriculture which is the most fundamental economic activity depends on rain. "It is rain that both ruins and aids the ruined to rise

The Main Features Of Arthshastra

Kautilya ka arthshastra 

The Main Features Of Arthshastra 

In the book of Arthshastra written by kautilya.  In this book the concept of a state how to handle some situations and how to build a great and Welfare state.

Wealth

The concept of wealth as held by Kautilya was very wide in its scope. To him, wealth included money,commodity, the acquired wealth, public or private property, precious metals, the accumulated wealth, negotiable and transferability and the power of appropriation. He also included labour and forest produce in wealth.

Varta

Ancient thinkers used the word Varta to mean the science of national economy. Kautilya included agriculture, animal husbandry and trade in Varta. According to Mahabharat, Varta was the roof of the world, a thing which was most essential for economic stability.

Agriculture and Animal Husbandry Agriculture and Animal Husbandry formed the important components of Varta. These were regarded as the basic sources of new wealth. Agriculture was given the pride of place among the occupations adopted by the people. Shukracharya was of the firm belief that by birth nobody was a Brahmin or Kshatria or Shudra. It was on the basis of their occupation that they are distinguished from one another. 

Labour

The ancient sages appreciated the dignity of labour for 100 years. Manu and Kautilya have deal with the methods for the regulation of wages and for the settlement of disputes between employers and workers. Kautilya did not recommend slave labour. But hired labour was there. Kautilya had laid down a code of labour discipline.

Trade

Gold and bullion was regarded as a means of producing wealth, and trade was the sum of industrialiesd capital. Kautilya devoted a good deal of attention to the problems of trade such as galation and development of trade by the state and the different taxes to be levied on the commodities that entered into trade. 

Value

Regarding value, the ancient thinkers of India seemed to have some ideas on value which are relevant to modern times.

Population

The ancient thinkers had no fear of growing population. The Vedas were for more married couple. Population could not grow beyond a reasonable limit owing to the high death rate due to constant wars between small states and loss of life due to the inadequate medical facilities. 

Slavery

In Ancient India, a slave was treated as a member of family, and was not asked to do a degrading work. A slave was a hereditary domestic servant who could not use his personal earnings and could not own property. 

Welfare State

The ancient Indian writers had a clear idea of the welfare state. welfare state is main  features of any state because any state they main aims to a society needs fullfill and this is important in every state .

Kautilya ka arthshastra introduction

Arthshastra: Kautilya 

Introduction of Arthshastra 

The main source of information regarding the economic thought in ancient India are the Vedas, the Upanishads, the Epics and treatises like Kautilya's Arthashastra.

 Thiruvalluvar's Thirukkural throws light on the economic thought in ancient South India. The Vedas depict the life and work in the early Vedic period. Kautilya's Arthashastra gives details of the political, social, economic and military organisation of the Mauryan Empire. Kautilya's Arthashastra is the chief source of information. He was the Chief Minister of Chandra Guptha Maurya. 

He was responsible for getting Chandra Guptha the Kingdom of Land. Kautilya has given a vivid description of the administrative procedures, duties of Kings, Ministers and Government officers. Kautilya's Arthashastra is based on earlier treatises and is divided into fifteen chapters covering 430 pages. The treatment in his book is quite comprehensive and systematic.

 It covers almost every aspect of theory and practice of Economics. It also deals with the Government of towns and villages, law courts, rights of women, maintenance of the old and helpless, marriage and divorce, public finance, maintenance of Army and Navy, diplomacy, agriculture, spinning and weaving and a number of other subjects. 

The classical theory of employment defination by Keynes

What is The Classical Theory Of Employment In The Words Of Keynes 

 John Maynard Keynes in his General Theory of Employment, Interest and Money published in 1936, made a frontal attack on the classical postulates. He developed a new economics which brought about a revolution in economic thought and policy. 

                                 The Gerneral Theory was written against the background of classical thought. By the "classicists" Keynes meant "the followers of Ricardo, those, that is to say, who adopted and perfected the theory of Ricardian economics." They included, in particular, J.S. Mill, Marshall and Pigou. Keynes repudiated traditional and orthodox economics which had been built up over a century and which dominated economic thought and policy before and during the Great Depression. 

                                   Since the Keynesian Economics is based on the criticism of classical economics, it is necessary to know the latter as embodied in the theory of employment.

Importance of circular flow in Economics

IMPORTANCE OF THE CIRCULAR FLOW

The concept of the circular flow gives a clear-cut picture of the economy. We can know whether the economy is woking efficiently or whether there is any disturbance in its smooth functioning. As such, the circular flow is of immense significance for studying the functioning of the economy and for helping the government in formulating policy measures.

Study of Problems of Disequilibrium

It is with the help of circular flow that the problems of disequilibrium and the restoration of equilibrium can be studied.

Effects of Leakages and Inflows

The role of leakages enables us to study their effects on the national economy. For example, imports are a leakage out of the circular flow of income because they are payments made to a foreign country. To stop this leakage, government should adopt appropriate measures so as to increase exports and decrease imports. 

Link between Producers and Consumers.

The circular flow establishes a link between producers and consumers. It is through income that producers buy the services of the factors of production with which the latter, in turn, purchase goods from the producers. 

Creates a Network of Markets. 

As a corollary to the above point, the linking of producers and consumers through the circular flow of income and expenditure has created a network of markets for different goods and services where problems relating to their sale and purchase are automatically solved.

Inflationary and Deflationary Tendencies.

Leakages or injections in the circular flow disturb the smooth functioning of the economy. For example, saving is a leakage out of the expenditure stream. If saving increases, this depresses the circular flow of income. This tends to reduce employment, income and prices, thereby leading to a deflationary process in the economy. On the other hand, consumption tends to increase employment, income, output and prices that lead to inflationary tendencies. 

Basis of the Multiplier

Again, if leakages exceed injections in the circular flow, the total income becomes less than the total output. This leads to a cumulative decline in employment, income, output, and prices over time. On the other hand, if injections into the circular flow exceed leakages, the income is increased in the economy. This leads to a cumulative rise in employment, income, output, and prices over a period of time. In fact, the basis of the Keynesian multiplier is the cumulative movements in the circular flow of income.

Importance of Monetary Policy

The study of circular flow also highlights the importance of monetary policy to bring about the equality of saving and investment in the economy. The credit market itself is controlled by the government through monetary policy. When saving exceeds investment or investment saving, money and credit policies help to stimulate or retard investment spending. This is how a fall or rise in prices is also controlled.

Difference between flow of fund account and national income account in economics

DIFFERENCE BETWEEN FLOW OF FUNDS ACCOUNTS AND NATIONAL INCOME ACCOUNTS 

The flow of funds accounts differ from national income accounts in many ways.

(1):- The national income accounts are confined exclusively to nonfinancial transactions. They neglect the link between saving and investment aggregates with lending and borrowing by different sectors of the economy.

 

(2):-The national income accounts confine all real investment to the business sector with the exception of building construction. Consumers and governments are not allowed to invest in national income accounts. The flow of funds accounts treat consumer purchases of durable goods as real investment. Government enterprises are included in the producing sector of national income accounts but in the flow of funds accounts they are included in the government sector.

(3):-The number of sectors in flow of funds accounts are more with larger details than in the national income accounts. They are defined institutionally in flow of funds accounts whereas they are defined functionally in national income accounts.

(4):-There are fewer imputations in the flow of funds accounts than in national income accounts. For instance, taxes are carried on a cash basis in flow of funds accounts whereas some sectors are shown on an accrual basis in national income accounts.

Difficulties of Social Accounting in Economics

Difficulties of Social Accounting

The social account present the following difficulty as follows:-

Imputations

In preparing social accounts all income and payment are measured in money.

But there are many goods and services which are difficult to impute in terms of money. They are services of the housewife in her home, painting as hobby by an individual, a teacher teaching his children at home, etc. Similarly there are a number of non-traded or non-marketed products and services. They are vegetables produced in the kitchen garden and consumed by the family itself, rental value of house occupied by the owner himself, a portion of farm produce retained by the farmer for personal consumption, etc. All such non-market transactions which cannot be assessed in money terms present problems in preparing social accounts accurately

Double Counting

The greatest difficulty in preparing social accounts is of double counting. It arises from the failure to distinguish between final and intermediate products. For instance, flour used by a bakery is an intermediate product and that by a household the final product. Similarly, 'the purchase of a newly constructed building by the government is taken under consumption output of the economy.

Public Services

Another problem is of estimating a number of public services in social accounts. They are police, military, health, education, etc. Similarly, the contributions made by multipurpose river valley projects cannot be fitted into the social accounts because of the difficulty of assessing their numerous benefits in monetary terms.

Inventory Adjustments

All inventory changes whether negative or positive are adjusted in the production accounts by inventory valuation adjustment. But the difficulty is that firms record inventories at their original costs and not at their replacement costs. When prices rise, there are gains in the book value of inventories. But when prices fall, there are losses in the value of inventories, So for corred calculation of inventories in business accounts under social accounting, inventory valuation adjustmen is required which is a very difficult thing.

Depreciation

Another problem in business accounts under social accounting is of estimatin depreciation. For instance, it is very difficult to estimate the current depreciation rate of a capital ass whose expected life is very long, say fifty years. The difficulty increases further when prices of asse change every year. Unlike inventories, it is very difficult to have depreciation valuation adjustment in social accounts.

Importance Of Social Accounting In Economic 

The importance of social accounting in economy is very important because social accounting helps in understanding the structure of economy and relative importance the different sector and flows

it is very important because they are understand the government policies in future and present condition.

The uses of social accounting are as follows: 

In Classifying Transactions. 

Economic activity in a country involves innumerable transactions relating to buying and selling, paying and receiving income, exporting and importing, paying taxes, etc. The great merit of social accounting lies in classifying and summarising these different kinds of transactions properly, and deriving from these such aggregates as national income, national expenditure, saving, investment, consumption expenditure, production expenditure, government spending, foreign payments and receipts, etc.

In Understanding Economic Structure. Social accounting helps us to understand the Structure of the body economic. It tells us not only about the national income but also about the size of production and consumption, the level of taxation and saving and the dependence of the economy upon foreign trade.

In Understanding Different Sectors and Flows.

Social accounts throw light on the relative Importance of the different sectors and flows in the economy. They tell us whether the contribution of the production sector, the consumption sector, the investment sector or the rest of the world sector is greater than the other sectors in the national accounts.

In Clarifying Relations between Concepts. 

Social accounts help in clarifying the relationships between such related concepts as net national product at factor cost and gross national product at market prices.

In Guiding the Investigator. 

Social accounts are a guide for the economic investigator by indicating the type of data which might be collected for analysing the behaviour of the economy. Such data might relate to gross national product, government expenditure on goods and services, private consumption expenditure, gross private investment, etc.

In Explaining Trends in Income Distribution. 

Variations in the components of social accounts are a guide to the trends in income distribution within the economy. 

In Explaining Movements in GNP. Movements in gross national product valued at constant prices and expressed per head of population indicate changes in the standard of living. Similarly, changes in the level of productivity can be measured by relating gross national product valued at constant prices to working population per head.

Provide a Picture of the Working of Economy.

Social accounts provide an ex part picture of the working of the economy. "They can also be used as a framework for drawing up an ex ante forecast of the likely outcome of the economy in the future. Thus, social accounts ensure consistency of forecasts, both internally and in relation to other known facts."

In Explaining Interdependence of Different Sectors of the Economy.

Social accounts also provide an insight into the interdependence of the different sectors of the economy. This can be known from a study of the matrix of social accounts.

In Estimating Effects of Government Policies

The importance of social accounts lies in estimating the effects of government policies on different sectors of the economy and in formulating new policies in keeping with changes in economic conditions, as revealed by national income accounts. Their main function is to help the government judge, guide or control economic conditions and to formulate economic policies which aim at maximisation of national income, keeping employment at a high levell reducing inequalities of income and wealth, preventing undue rise in prices, conserving foreign exchange etc. 

Helpful in Big Business Organisations. Social accounts are also used by big business house for assessing their performance and to improve their prospects on the basis of the statistical information about the various sectors of the economy.

Useful for International Purposes

Social accounting is also useful for international purpose A comparative study of the social accounts of different countries of the world helps in the categorisation of countries into underdeveloped, less developed and developed. It is on the basis of social accounts that the various agencies of the United Nations make provisions for aid to poor countries of the world

What is Social Accounting?

SOCIAL ACCOUNTING

What is Social Accounting?

The term 'social accounting' was first introduced into economics by J.R. Hicks in 1942, In his words, it means 'nothing else but the accounting of the whole community or nation, just as private accounting is the accounting of the individual firm'.Social accounting, also known as national income accounting. is a method to present statistically the inter-relationships between the different sectors of the economy for a thorough understanding of the economic conditions of the economy. It is a method of studying the structure of the body economic. It is a method of studying the structure of the body economic.

                  It is a technique of presenting information about the nature of the economy with a view not merely to get an idea of its prosperity, past or present, but also to get guidelines for state policy to influence or regulate the economy. In the words of Edey, Peacock and Cooper: "Social accounting is concerned with the statistical classification of the activities of human beings and human institutions in ways which help us to understand the operation of the economy as a whole. The field of studies summed up by the words 'social accounting' embraces, however, not only the classification of economic activity, but also the application of the information thus assembled to the investigation of the operation of the economic system." In other words, social accounting describes statistically the economic activities of the different sectors of the entire economy, which indicates their mutual relationships and provides a framework for analysis.

What is Unemployment and types of unemployment in Economics

UNEMPLOYMENT 

Unemployment has been one of the most persistent and manageable problem facing or industrial contries off d world and the same time the goal of public policies has been to remove unemployment and to achieve full employment in such countries.

Types of Unemployment 

Frictional Unemployment 

Frictional unemployment exists when there is lack of adjustment between demand for and supply of labour. These maybe due to lack of knowledge on the part of employers about the availability of worker or on the part of workers that employment is available at particular place. It is also caused by lack of necessary skill for a particular job, labour immorability, breakdowns of machineries, shortage of raw material,  etc. The period of unemployment between losing one job and finding 

another is also included under frictional unemployment.

Cyclical Unemployment 

Cyclical unemployment arises due to cyclical fluctuations in the economy they may be also  generated by international forces.  A  Business cycle consists of alternating period of booms and depressions it is during the downswing of the business cycle that income and output  fall  leading to widespread unemployment

Technological Unemployment 

Keynes failed to take into account technological unemployment that has taken place more rapidly in the post war period modern production process is essentially dynamic where innovations lead to the adoption opening machineries and inventions there by displacing existing workers living behind a trail of unemployment.  When there is automation or displacement of old technology by a new one requiring less worker than before, technological unemployment.

Seasonal Unemployment 

Seasonal unemployment results from seasonal fluctuations in demand employment in ice factory is only for the summer. Similarly ice cream seller remain unemployed during winter and ChestNut seller during summer. The  same is the case with agriculture worker who remain employed during harvesting and sowing seasons and remain idle for the rest of the year.

Disguised Unemployment 

Disguised unemployment or concealed unemployment or underemployment is a notable features of under developed countries. Such unemployment is not voluntary but involuntary. People are prepared to work but they are unable to find work through out the year due to the lack of complementary factors. Such unemployment is found among rural landless and small farmers due to the seasonal nature of form operations and inefficient land and equipment to keep them fully employed.  A person is said to be disguised and Employment is contribution to output is less than what he can produce by working for normal hour per day.  His   marginal productivity   is nil aur nagligible and  withdrawing such labours, from output can be increased.

Structural Unemployment 

Structural unemployment results from a variety of causes.It may be due to lack of the co-operant factor of production, or change in the economic structure of the society.  The word structural implies that the economy the economic change   are massive, extensive, deep seated, amounting to transformation of an economic structure.  The production functions  or labour supply distribution.

Conclusion 

There are also other type of underemployed person in such countries. A person is considered to be underemployed if he is forced by unemployment to take a job that he thinks is not adequate for his purpose, or not commensurate  with his training. 

Furture, there are those who work full time in term of hours per day but earn very little to rise above the poverty level. They are hawkers, petty traders, rickshaw puller, workers in hotels and restaurants and in repair shops, etc. In urban areas. Open and disguised unemployed in urban and rular areas are estimate at 30-35 Per cent of the labour force in   underdeveloped country.

Proposition And Implication Of The Say's Law of Market

 

Say's Law of Market 

Proposition And Implication Of The Say's Law of Market 

Say's propositions and its implication present the true picture of the market law these are given below

Full Employment in the Economy 

The law is based on the proposition that their is full employment in the economy. Increase in production means more employment to the factor of production. Production continues to increase until the level of full employment is reached. Under such a situation, the level of production will be maximum

Proper Utilisation of Resources

If there is full employment in the economy idle resources will be properly utilised will be further help to produce more and also generate more income.

Perfect Competition

Says law of market is based on the proposition of perfect competition in labour and product market other continue or perfect competition or as given below:-

Size of the Market 

According to Say's law, the size of the market is large enough to create demand  for goods. Moreover the size of the market is also influenced by the forces of demand and supply of various inputs.

Automatic Adjustment Mechanism

The law is based on the preposition that they are is automatic and self adjusting mechanism in different market.

 Disequilibrium in any market is a temporary situation. For example in capital market the equality between saving and investment is maintained by the rate of interest while in the labour market the adjustment between demand and supply of Labour is maintain by the wage rate

Role of Money as Neutral

The law is based on the proposition of a barter system where goods are exchanged for goods. But it is also assumed that the role of money is neutral. Money does not affect the production process.

Laissez-fair Policy

The law assume a closed capitalist economy which follows the policy of Lassez-fairs. The policy of Laissez-faire  is essential for an automatic and self adjusting process of full employment equilibrium

Saving as a Social Virtue

All factor income is spend in buying goods which they help to produce. Whatever is saved is automatically invested for frother production. In other word saving is a social virtue.

Defination of Say's Law of Market

 Say's Law of Market 

Say's law of market is the core of the classical theory of employment. An early 19th century French economist J.B Say,  enunciated the proposition that " supply create its own demand "  therefore there cannot be general overproduction and the problem of employment in the economy.

On the other hand, if there is general overproduction in the economy, then some labours may be asked to leave their jobs their may be the problem of unemployment in the economy for sometime . In the long run the economy will automatically tend toward full employment.

In Say's words " It is production which create markets for goods of product is no sooner created then it, from that instand, Affords a market for other products to the full extend of its own value. Nothing is more favourable to the demand of one product, then supply of another.

The Circular Flow Of Income 

The circular flow means the  unending flow of production of goods and services, income and expenditure, in any economy it so the distribution of income in a circular manner between the production unit and households.

These are land, labour, capital, and entrepreneurship.

• The payment for the contribution made by fixed natural resources is known as rent.

• The payment for the contribution made by a human worker is known as wage.

• The payment for the contribution made by capital is known as interest.

• The payment for the contribution made by interpreneurship is known as a profit.

Explanation:-. 

The outer loop of the diagram shows the flow of factor services from household to firm and the corresponding flow of  factor payment from firms to households.

The inner loop shows the flow of goods and services from firms to household and the corresponding flow of consumption expenditure from household to firms.

The entire amount of money, which is paid by firms  as a factor payment is paid back to back by the factors owners to the firms.

Method of Calculating National Income 

There are three non method by which national income is determine these are:-

• value added method
• expenditure method
• income method

Value Added Method

The value added method is also known as the product method or inputs method. Its primary objective is to calculate national income by taking the value added to a product during the various stage of production into account.

Therefore the formula for calculating the national income by the value added method can be expressed as.

National Income ( NI )=( NDpfc )+Net factor income from abroad 

Expenditure Method 

The expenditure method of national income calculation is based on the expenditure taking place in the economy the expenditure that happen in an economy can be done by individual household business enterprises and the government.

Therefore the formula for calculating the national income by the expenditure Method can be expressed as.

National Income ( NI )=C+G+I+(X - M)

or

National Income (NI)=C+G+I+NX

Income Method 

The third method to calculate national income is the income method. It is based on the income  generated by the individual by providing services to the other people in the country either individually or by using the asset at disposal.

The income method takes the income generated from land, capital in the form of rent, interest wage,  and profit into calculate consideration.

The national income by income method is calculated by adding up the wages, interest earn on capital,  profit earned, rent obtain from land,  and income generated by the self-employed people in an  economy. It is known as NET domestic product at factor costs or NDPfc

It can be expressed in a formula as:- 

NNPfc=NDPfc+Net factor income from 

                             abroad 

The Circular Flow Of Income 

The circular flow of income and expenditure refer to the process whereby national income and expenditure of an economy follow in a circular manner continuously through time.

The various components of national income and expenditures such as saving, investment, taxation, government expenditures, exports, import, etc. Are soon on diagram in the form of current and cross current in such a manner that national income equal National expenditure.

The circular flow of income or circular flow is a model of the economy in which the major exchange are represented as follows of money good s and services etc between economic agent the flow of money and goods exchange in a closed circular but in the opposite direction the circular flow analysis is the basis of national account and hence of macroeconomics.

Relation between Economic Welfare And National Income 

Alfred Marshal prof. A. C Pigou  and J.R.Hicks  say that there is a close relationship between economic welfare and national income,  because both of them are measures in the term of money.   When national income increase, total welfare also increases and vice versa.

The effect of National Income on economic welfare can be study in two ways:-. 

• By change in the size of National Income 

• By change in the distribution of National Income 

(1):-  The change in the size of National Income.

The positive change in the national income increases its volume. As a result people consume more of goods and services which lead to increase in the economic welfare where as the negative change in the national income, result in reduction of its volume. people get laser goods and services for consumption which leads to decrease in economic welfare.

(2):- The  change in the Distribution of National Income 

The distribution of national income takes place in two ways, firstly by transferring wealth form poor to reach and secondly, from the  Rich to the poor but it is advisable to follow the second way in the distribution of national income.

The actual relation between the distribution of national income and economic welfare Concerns  the transfer of wealth flow from the rich to the poor. The redistribution of wealth in favour of the poor is brought about by reducing the wealth of rich and increasing the income of the poor.

The  increase in national income leads to increase in economic welfare provided that the income of the poor increases in instead of decreasing and they improve their standard of living and that the income of the rich decreases in such a way that their are productive capacity. Investment and capital accumulation do not decline.

National income as a Measure of Economics Welfare 

GNP is not satisfactory measures of economic welfare because the estimate of national income do not include certain services and production activity which effect welfare discuss below some of the factors which affect human welfare but or not included in the GNP estimates.

Quality of Life

GNP estimates do not include the quality of life which reflects the community welfare life is overcrowded cities is full of tension, road are overcrowded. There is a loss in time, environment become polluted. There are the problem of water, power housing, transportation, etc. Crime spread. Life become complex and the quality of life deteriorated consequently social welfare is reduced but all these stresses and strain of city life are not included in the national income estimates.

Nature of Production

GNP estimates do not reflect the capacity of different Goods to provide different levels of satisfaction to the community. The  same amount of money spent on a nuclear bomb or on building across a river added equally to the national income. But they provide different levels of satisfaction to the community. A Bomb does not increase welfare while a dam increase welfare.

Leisure 

One of the important thing that affects the welfare of society is Leisure. But it is not included in GNP.  For example longer working hours may make people unhappy because their Leisure is reduced. On the country shorter working hours per week mein increase leisure and make people unhappy more or less leisure enjoyed by the community such as such me affect the total output of the economy but the value of leisure is excluded from the national income estimates.

Externalities 

Similarly there are externalities which tend to increase or decrease welfare but they are not included in GNP estimates. An externalities is cost or benefit conferred upon second or third parties as a result of acts of individual production and consumption. But the cost benefit of an externality cannot be measured in money terms because it is not included in market activities. 

An example of an external benefit is the pleasure one man drive from the neighbour's fine garden.  An example of external cost is environmental pollution caused by industrial plants. The former tends to increase welfare and the letter trends to reduce it. Since externalities are untreated interdependence they are excluded from national income extimates. 

Standard of Living

National income also does not reflect standard of living of the community which determine its welfare. If more National expenditure is incurred on the production of r and armanent arms and ammunitions and on capital goods and less on producing consumption goods, this difference is not reflected in GNP estimate. but the reduction in the production of consumption goods and tends to decrease the welfare of the people, while the increase in the expenditure on armanents and capital goods does not increase welfare.

method of measuring national income

Method Of Measuring National Income 

There are four method of measuring national income which method is to be used depend on the availability of data in a country and the purpose in hand all all for method of measuring national income is below on the following way :-

Product Method 

According to this method the total value of final good and services produced in a country during a year is calculated at market price at to find out the GNP the data of all productive activities agriculture products, wood received from forest, minerals received from mines, commodity produced by industry, the contribution of two production made by transport communication insurance companies, lawyer,  doctor, teacher, etc. or collected and assessed at market price only the final good and services are included and the intermediary goods and services are left out.

Income Method

According to this method, the net income payments received by all citizens of a country in a particular year are added up, net income that accure  to all factor of production by way  of net rent, net wages, net interest, and net profit, or all added together but income received in the form of transfer payment are not included in it the data pertaining to income or obtained from different sources from income tax department in respect of high income.   group and in case of worker from their wage bills.

Expenditure Method

According to this method the total expenditure  incurred by the society in a particular year is added together and includes personal consumption expenditure, net domestic investment, Government expenditure on  goods and services and net foreign investment this concept is based on the assumption that national income equals National expenditure.

Value Added Method

Another method of measuring national income is the value added by industries. The difference between the value of material outputs and inputs at each state of production is the value added. If all such difference are added up for industries in the economy, we arrive at the gross domestic product.

The Importance Of National Income Analysis

The Importance Of National Income Analysis

Economy :-

National income data are of great importance for the economy of a country. These days the national income data or regarded as account of the economy, Which are known as social accounts. These refer to net national income and net national expenditures, which ultimately equal each other social account tell us how the aggregate of a nation income, output,  and product result from the income of different individual product of industries and transactions of international trade.

Economic Planning :- 

In the present age of planning the national data are upgrade importance for economic planning it is essential that the data pertaining to a country grows income, output, saving and consumption from different sources should be available.

National Policies :- 

National income data from the basis of national policies such as employment, policy, because these figures enabled us to know the direction in which the industrial output, investment and saving etc.  Change and proper measure can be adopted to bring the economy to the right path.

Per Capita Income :-

National income data or significant for a countries' for capita income which reflect the economic welfare of the country.  The higher the per capita income, the higher the economic welfare of the country.

Research :-

The national income data or also made a use of by the research scholars of Economics. They make use of the various data of the country input, output, saving, consumption, investment, employment, etc. Which are obtained from the social account.

Economic Model :-

The economist propound  short run as well as long run economic models or long run investment model. In which the national income data are very widely used.

Distribution of Income :- 

National income statics enable us to know about the he distribution of income in the country. From the data pertaining to Wage, rent, interest, and profit we learn of the disparities in the income of different sections of the society.

Economic Structure :-

National income statistics enable us to have clear idea about the structure of the economy. It enables us to know the relative importance of the various sector of the economy and their contribution towards national income. From these studies we learn how income is produced, how it is distributed, how much is spent or text.

Budgetary Policies :-

Modern Government try to prepare their budget within the framework of national income data and try to formulate anti-cyclical   policies according to the fact revealed by the national income estimates. Even the taxation and borrowing policies are so framed as to avoid fluctuation in national income.

National expenditure :-

National income studies so how National expenditure is divided between consumption expenditure and investment expenditure it enable us to provide for reasonable this depreciation to maintain the capital stock of a community to liberal allowance of depreciation May prove harmful as it may unnecessarily lead to our reduction in conception

Distribution of Grant in aid :-

National income extimates help a  fair distribution of grand in aid  by the federal government to the state government and other constituent unit.

Standard of Living Comparison :-

National income studies help us to compare the standard of living of people in different countries and a people living in the same country at different times.

International Sphere:-

National income studies are important even in the international sphare as the estimate not only help us to fix the burden of international payments equitably amongst different nations but also enable us to determine the subscriptions and Quatas of different countries to international organisation like the UNO, IMF,  IBRD,  etc.

Defence and Development :-

National income estimates help us to divide the national product between defence and development purposes. From such figure we can easily know how much can be spared for war by the civilian population.

Public Sector :-

National income figure enable us to know the relative roles of public and private sector in the economy. If most of the activities are performed by the state, we can easily conclude that public sector is playing a dominant role.

What do we mean by stock and flow concept?

What do we mean by stock and flow concept?

These terms are commonly used in macroeconomic national income accounting we have seen the meaning of national income and also basic conversion number for formulas under national income accounting

A stock is a quantity measured at a particular point in a time. For example on January 1, 2022 you have to 4000 rupees in your bank account in is a stock concept rupees 4000 not lying in the wallet of Raj Kumar student is also an example of stock variable. All such value or stock value as they are measured at a specific point of time. Other examples of the stock concept include capital, money supply, etc.

What do you mean by Flow Concept 

A Flow Concept is  quantity measured over a specific period. For example:- your  pocket allowance is 4000 rupees, per month on which you will get 8% interest by the bank so this value is a flow concept because they are measured over an hour, a month, an year.

Difference between stock and flow concept

 Stock

                      

• It refers to those variables which are
• measured at a particular point in time.

• It is not a time dimensional.

•  It is a static concept.

• Example:- the stock of good as on

                        1 January 2022

Flow

• it is measured over a period of time or during a month

• it is a time dimensional concept hai

• it is a dynamic concept

• example production of good during the month of January 2022

All examples of stock and flow concept

Stock concept example

• wealth
• water in a tank
• Bank deposits 
• capital
• machinery of a sugar mill 
• loan taken by a country from ROW
• Distance between Delhi and Chandigarh
• Rice store in a godown area
• Money supply

Flow concept example

• income
• investment
• water in a stream 
• interest on capital
• capital formation
• monetary expandincture like electricity
• production

Relation between stock and flow concept

They both are inter-related to each other. The stock has an influence over flow variable, that is, it can change the flow variable. For example, an increase in Bank deposit ( stock ) can cause an increase in the income of a consumer in the form of interest.