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People’s Part in Indian Economy – I

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Economy is one of the most dreaded subjects, still the most important course to be studied for building nations. What is Economy? We all have a threshold understanding of what Economy is. I need not to go into depth. We all have elementary knowledge about all the indicators discussed in Economy. To name a few, GDP, Gross Domestic Product, Per Capita Income, Inflation etc.

Let us have a little talk about Economic Picture of present day India. Let us discuss some gist of the Economy.

Well, we all know what per capita income is. It is the amount resulting from dividing the GDP by Total Population of the nation. In India’s case the population is very high and growth rate of population is not low as well.

Per Capita Income

Per Capita Income

The ways to increase the per capita income are

1. Increase the GDP of the nation.

2. Decrease the population of the nation.

How are we going to do this? The point 2, decrease the population is easy to understand. If the Fertility Rate is lesser than 2, the population decreases. That is, the fertility per woman should be lesser than 2. If it is equal to 2, the population stagnates. If it is lesser than 2, i.e. 1.9, 1.8, 1.5, it decreases. Majority of the Developed Nations have it lesser than 2.

Following, one can see the population of major nations and also, it can be ascertained the population growth rate is positive.

Population india us china

Total Population

Moreover, the Fertility Rate of India and the Permanent 5 nations in UN is as follows:

Fertility Rate India

Fertility Rate – Children per Woman

Please note the fertility rate of India alone is greater than 2 which is 2.51. Nevertheless, the evident continuous decrease is a good news.

Hence, the only means to decrease population soon, is to decrease the Fertility Rate as far as possible in India. It can be decreased much, if Indians produce only one child for time. With Fertility Rate equal to 2, the population curve shown above will become parallel to x-axis. The population will become constant but it would be still very high. If the Fertility Rate for the nation could be managed to be reduced further, the population of the nation will start decreasing. This will decrease the pressure on the resources of the nation. This milestone is to be achieved. Lesser manageable population with Fertility rate of 2, which means constant lesser population, is the goal.

Well, accordingly, I can say, that if Indians manage Fertility Rate of 2, GOI can definitely create or generate resources enough for whatsoever total population India has at that time; making Fertility Rate the only important, crucial indicator. The GDP should be directly proportional to the Total Population. Larger population will need higher GDP for maintaining the “Per capita income” standards.

Hence, People of India, produce less. Be content with one child. This is democracy and not communism like China. Hence, only directives could be given to the citizens. GOI cannot force and push citizens to one child policy, as done in China. This should be a conscious step to be taken by citizens at their part only.

The next point is, Increasing the GDP. How to do that? Or, how it occurs? Or What is the dynamics? Our aim should be to first reduce the number of variables in equations and also, the indicators on which we need to concentrate. The only variable for GDP is business. Well the second one is definitely agriculture. But let us first tackle Business.

GDP

Gross Domestic Product

The Vaish, the Baniyas, the Vishnu-Laxmi Putras. Here, I am going to touch the epic debate of Socialism and Capitalism. Through out history it is seen as well as quoted again and again, the societies keep on oscillating between these two extremes. That is what Karl Marx theory propose: the capitalism one day has to give way to socialism, etc etc.

In capitalism, there are business men. Strong, influential and powerful businessmen and business houses. As they grow their acumen for business, their money grows, thereby grows their stature. A business man becomes bigger larger huge businessman. Now, he keeps on investing more and more under his name, under one flag. Hence, all the money keeps on gathering in some couple of hands. Hence, the GDP increases but the inequalities in the country increases too. And it is reported in many societies that meager 1% of the population is holding 30% of total GDP to emphasize on this point only (this is just an example). Remember the popular “Occupy Wall Street” protest. That protest happened in US: the best capitalist nation today; having highest GDP but having inequalities higher than India (higher inequality results in higher GINI index). The GINI index is used as indicator for unequal distribution of income. The trend is shown below. It can be seen that the inequalities and hence, the index are increasing in India too.

Gini Index

GINI Index – For Equality Measurements

Hence, the GDP is not the right criteria to judge whether the nation is prosperous or not. In turn, a conclusion is reached that the “per capita income” is also not the right criteria to judge the prosperity of society, because it just shows the average income of the society, which does not necessarily mean that every person in that society in earning equal to “per capita income”. It is possible that a country having quite high GDP, may have higher per capita income but still, the inequalities exists. USA being the epitome of such society; having higher GDP with higher inequalities, comparative to India. For instance, Google, McD, Pepsi, Coke and other big houses of USA generate quite a GDP for the nation. But still inequalities are not addressed. Hence, GDP or “per capita income” indicators both are not sufficient to judge the prosperity of the nation.

There is a need to define suitable criteria for the above said purpose.

Purpose: Higher “per capita income” and Higher Equalities (Lower GINI index).

1.Higher Per Capita Income: Higher GDP and Lower Population

2. Higher Equality: Proper distribution of GDP (National Income), Lower GINI index.

Better Distribution of High GDP. Capitalism ending at Socialism!! Can we reach the solution of the problem consciously? Is it possible?

Yeah. It is. With sound fundamentals.

The problem of India lies in this fact, that India has been led by “Not that economically smart” leaders, and “very smart bureaucrats” but People of India being “unaware and uneducated” of this subject. “What is it that a common man should do” is missing. What is the directive to the common man. There is no such directive to People of India for uplifting the economy by the GOI or by the very intelligent Economists or by the very intelligent Bureaucrats.

In this case, my studies reflect that, only and only, the People of India can help themselves. Together. Nobody alone. Nobody else.

The People of India should be made aware of what they should do at their level.

Hence, I write this article with a hope, that the article reaches masses.

Please continue with the next article. If you feel the article preaches right, do not forget to share the article on facebook and other social platforms. Please help in spreading the words.

Make world more equitable.

People’s Part in Indian Economy – III

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Ladies and Gentlemen. Hereby I write the third part of the series “People’ Part in Indian Economy”.

In earlier articles, it was established that there are two vital economic indicators which are capable of displaying the real picture of economic state of the nation:

1. GDP (PPP) per capita.

2. GINI Coefficient.

Hence, we should now create some tool to compare the various economies on the above said indicators. High GDP ppp per capita and Low GINI coefficient.

Here we go. Following is a Scatter Graph “GDP (PPP) per capita Vs GINI Coefficient” for the world’s most important economic centers: G20 Nations. G20 is a group of 20 major economies in world. On x-axis, GINI Coefficient is shown and on y-axis, GDP (PPP) per capita of the various nations is used.

GDP (PPP) per capita vs GINI Coefficient

GDP (PPP) per capita vs GINI Coefficient

India enjoys one of the very prestigious position in G20. Well, from the above graph it doesnt seem so. India is at the last of the positions. Why so?

Following are the statistics for description of G20 properly. Please have a look.

Decreasing Order of GDP nominal for G20

GDP Nominal for G20

Decreasing Order of GDP PPP for G20

GDP PPP for G20

India stands tenth in the list of GDP (Nominal) which is good enough when compared in a group of G20. Moreover, the GDP (PPP) criteria, the indicator which is more potent in explaining the mechanics of Domestic markets, India stands a robust 3rd position. It should be noted that GDP (PPP) of US at second position is worth 2.5 times that of India. Hence, a huge gap is found at this position. GDP(PPP) is favoured in my analysis over to GDP Nominal because GDP (PPP) is better index. Ask for more explanation if have doubts.

Explaining the scatter graph now. The x-Axis shows the GDP(PPP) per capita, and because the population of India is huge, in spite of a very healthy GDP (ppp), the GDP (ppp) per capita is reduced to just meager US$5777; compared to US $54678 and China US$12893. Here is where Population hurts.!!

But huge population is an advantage also. I talk later about that. Demography!

If we divide the scatter graph into four quadrants. And name them anticlock wise from I to IV, the economies lying in II quadrant of the graph (high GDP ppp per capita and Lower GINI coefficient) are the best economies in world. These are the economies who have a Huge GDP, Well Managed Population, and Best Distribution of GDP (total income) among the Population. Just like a nation where all are earning handsomely. Enjoying a genuine standard of Living. Hence, Australia, Germany, France, Canada, UK, South Korea are the most prosperous nations in the Group of 20.

INDIA:

The GINI Coefficient of India is 33.9 and that of France is 32.7. Quite good. It means the money in India is distributed similar to France. But GDP(PPP) per capita is so less that almost everybody is getting almost Nothing.!! India needs to increase the GDP (PPP) in every state and district separately. Indians should buy Indian goods. There is a difference between GDP Nominal and GDP ppp: Indians purchasing Indian goods will increase the GDP ppp. That is what we want.

GINI Coefficient for G20

GINI Coefficient for G20: Lower is the Coefficient, better it is.

Moreover, the GINI Coefficient in India is varying in following trend.

India GINI index variation

India GINI Index Variation

This article is written to conclude the earlier discussion done in Part I and Part II.

The Goal

The Goal

1. Population should be controlled. Fertility Rate should be lower than 2. Hence, Indians those are content with one child or those who could convince themselves for one child, should bring up one child only. It would be beneficial to India. Even if small minority does that. The rate is 2.51. It may or may not reduce to 1.5 but, nevertheless, if reduced to 2, will serve India much. Those who are able to convince themselves. India is a democracy, force cannot be used regarding Fertility.!!

2. Citizens as Producers of Goods. India needs business houses. Small, but many. MSME will help us generate GDP as well as distribute GDP. Big business houses help only in generating GDP and ignore the distribution factor. Indians have JOB Mentality. It should be removed.!!! Be self-employed. Not necessarily, that every body should have a Multi Dolor business like flipkart, but a business as small as an individual Doctor, Web Designers, and other self-employee, are the antidote for sick economy. “Be Self-Employed” and “Don’t do Job” attitude. It may generate small GDP at individual center but because India has huge population and lot many such centers could be created, HUGE GDP can be generated. HUGE GDP!! Good Distribution!! This is where demography comes into picture. Huge population which is seen bane, could be converted into boon by this very step. People will bless the huge population. Moreover, demographers say India is a young nation. This is where young, dynamic, powerful, intelligent youth will help!! “Power of Demography”. Quality of your products is crucial to be maintained always. Consumers will prefer Quality only.

3. Citizens as Consumers. India is a big market. Irony is, Indian Companies are not able to tap. Citizens should diversify their shopping kart. Give chance to non-established companies. The companies which are new. Let them earn, let them be stable, let them grow. Only then, one day, these new companies will beat established companies. The R&D of these companies will grow. “Purchase from non-established companies” should be attitude. Their is a problem with Indian attitude. Hero-Worshiping is very dominating in India. Shahrukh Khan Movies will always earn money whether they are good enough or not. Rajnikant likewise. In movies, in politics, everywhere. Now, Narendra Modi is a brand. Everybody associated with him. Similarly, in economics also, there is chunk of consumers those who prefer only already tried material. They want to purchase from one same brand again and again. Ex. Reebok, Nike, or for e-commerce: flipkart. And they are so stubborn, prejudiced or insecure, that they seldom give chance to other brands. This sticking with brands is against the principle of “Distribution of GDP”. Money is gathering in one hand only. Please do not do that. Vivekananda preached “No Hero-Worshiping”.

4. Preference Order Graphically. Provided the quality of the product is never negotiated, preference should be given to the products manufactured in your district first, then your state and then you nation. Then only, in the case of non-availability of desired product, the preference should go to foreign companies. “Be Patriotic to the core.”

HOPE

Similar analysis have to be performed on Indian States too. Interesting conclusions could be reached. Which state needs to improve at what indicator could be established. Wait for the next series.

Jai Hind