Economics – Kailasha Foundation

Agricultural Activities Exempted from GST

Shubham choudhary — Tue, 12 Feb 2019 17:01:06 +0000

Services relating to the cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of—
(a) agricultural operations directly related to the production of any agricultural produce including cultivation,
harvesting, threshing, plant protection or testing;
(b) supply of farm labour;
(c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market;
(d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;
(e) loading, unloading, packing, storage or warehousing of agricultural produce;
(f) agricultural extension services;
(g) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.

Agricultural produce: means any produce out of cultivation of plants and
rearing of all life forms of animals, except the rearing of horses, for food,
fibre, fuel, raw material or other similar products, on which either no further
processing is done or such processing is done as is usually done by a
cultivator or producer which does not alter its essential characteristics but
makes it marketable for the primary market.
Agricultural Produce Marketing Committee or Board: means any
committee or board constituted under State law for the time being in force
for the purpose of regulating the marketing of agricultural produce
Services by way of transportation by rail or a vessel from one place
in India to another of agricultural produce.
Services provided by a goods transport agency, by the way of transport in a goods carriage of agricultural produce
Agricultural extension: means application of scientific research and
knowledge to agricultural practices through farmer education or training.

Source: ICAI Study Material

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Interim Budget 2019

Nancy Naina — Fri, 01 Feb 2019 15:30:55 +0000

The Interim Finance Minister Piyush Goyal on Friday presented the sixth and the much awaited Union Budget of the Narendra Modi government in Lok Sabha. Goyal was appointed interim finance minister on January 23 with Arun Jaitley undergoing treatment. Here are some highlights from the Budget 2019 presented by Piyush Goyal.

A big announcement for MNREGA

Goyal announced to allocate ₹60,000 crore for MNREGA in the year 2019-20. He also announced 143 million LED bulbs to provide illumination to all houses and save electricity. Mr. Goyal promises to provide a home to all by 2022.

Farmers will be given 6,000 rupees in their accounts.

The Finance Minister announced in parliament a direct support ₹6,000 per hectare in farmer’s bank accounts directly. Prior to the election, ₹2,000 will be given as the first installment. This money will go into the accounts who own up to 2 hectares of land. This will benefit the families of 12 crore farmers. The scheme, which will be applicable from 01st December 2018 and will cost about ₹75,000 crore to our government. Also, interest on the loans given for animal husbandry and fishery care will be given 2% discount.

₹750 crore will be spent on Kamdhenu Scheme

The finance minister said during the presentation that our government always works for Gaw Sewa. ₹750 crore will be spent on Kamdhenu scheme.

Gratuity limit has been increased from ₹10 lakh to ₹30 lakh

Goyal announced “Gratuity limit has been increased from ₹10 lakh to ₹30 lakh. Prime Minister Shram Yogi Mudan (Mega Pension Scheme) has been started to give pension to people in the unorganized sector, contributing only 100 rupees per month. After giving the work, workers will get a pension of ₹3,000 after the age of 60. This will benefit 10 million workers in the unorganized sector. India will become the largest pension plan in the world of the unorganized sector”.

Estimates of the fiscal deficit this year will be 3.4 percent of GDP

The fiscal deficit in the current financial year 2018-19 will be 3.4% of the GDP. The current account deficit will be around two and a half percent of GDP this year. The last five years the country has received FDI worth $239 Billion.

Tax assessment processes will be modified

The Finance Minister said today “Do not go to offices for tax assessment now. IT returns will be processed in 24 hours.
If any notice comes manually to the assessee, he can write to department & officials to ask the information only through online mode which will result in the big opportunity for CAs to save time and manpower.
Within almost two years, almost all assessment and verification of IT returns will be done electronically by an anonymized tax system without any intervention by tax officials.

Income Tax free up to ₹5 lakh

The limit of income tax exemption has been increased from ₹2.5 lakh to ₹5 lakh. Now tax will not be levied to the income of five lakh rupees. No tax will be required to invest ₹1.5 lakh the in the provident fund or equity. If so, if a person’s income is ₹6.5 lakh and he invests ₹1.5 lakh rupees then he will not have to pay any kind of tax. Assessee must be clear that Income Slab has not changed. Rebate under section 87A has only been changed from ₹2,500/- to ₹12,500/-.
Simultaneously, standard deduction has been increased from ₹40,000 to ₹50,000 for salaried class people.

TDS limit on interest income increased to ₹40,000

Interim Finance Minister Piyush Goyal on Friday announced to increase the tax deduction limit on the income from interest of ₹10,000 to ₹40,000 per year. In case of senior citizens, the limit has been increased to ₹50,000. Presenting the Budget 2019-20 in the Lok Sabha, he said it will benefit the senior people and the small depositors who depend on the interests of deposits of banks and post offices. So, these depositors could demand a refund of tax deducted at interest income up to ₹10,000 per year.

Few more points to be highlighted from the Budget 2019

● There will be a single window for approval for Indian filmmakers. Anti-camcording provision to be introduced to the Cinematography Act to combat film privacy.

● The vision for 5 lakh digital villages in next 5 years.

● More than ₹3 lakh crore has been announced for the defense sector.

● Those MSMEs who are registered with GST will get 2% interest relief.

● 26 weeks of maternity leave to empower women has been granted in this budget.

● Goyal said our government has delivered 6 crores free LPG connections under Ujjwala Scheme.

● PCA restriction has abolished from 3 major banks namely, BoI, BoM and OBC.

● 22nd AIIMS has to built-in Goyal’s home state Haryana.

● GST has been continuously reduced, resulting in relief of ₹80,000 crores to consumers; most items of daily use for the poor and middle class are now in the 0%-5% tax bracket.

● Benefits under Sec 80(i)BA being extended for one more year, for all housing projects approved till the end of 2019-2020.

● Businesses with less than ₹5 crore annual turnover, comprising over 90% of GST payers, will be allowed to return quarterly returns.

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UNION BUDGET 2018-19: RURAL, FARMERS & SENIOR CITIZENS

Shiv Prakash Gupta (SPG) — Fri, 02 Feb 2018 04:30:12 +0000

UNION BUDGET 2018-19: RURAL, FARMERS & SENIOR CITIZENS

image source – pib

Mr. Arun Jaitley, Finance Minister presented the budget for the financial year 2018-19 in Parliament on 01^st February, 2018 which was to strengthen various sectors like agriculture, MSME, health and education. He further added a series of structural reforms which will push India forward among the fastest growing economies of the world. Country firmly on course to achieve over 8 % growth as manufacturing, services and exports back on good growth path.

Agriculture and Rural Economy

Government proposed to raise volume of Institutional Farm Credit for agriculture sector to Rs.11 lakh crore for the year 2018-19 from 8.5 lakh crore in 2014-15.
MSP for all unannounced kharif crops will be atleast one and half times of their production cost.
Two New Funds with a total corpus of 10,000 crore announced for Fisheries and Animal Husbandary Sectors under the name of Fisheries and Aqua culture Infrastructure Development Fund (FAIDF) sector and an Animal Husbandry Infrastructure Development Fund (AHIDF).
“Operation Green” (a new scheme) launched to address price fluctuations in potato, tomato and onion for benefit of farmers and consumers with a corpus of 500 crore.
Proposition for developing existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs) to protect the interests of 86% small and marginal farmers.
Re-structured National Bamboo Mission (termed Bamboo as “Green Gold”) gets 1290 crore.
Proposition has been made to extend the facility of Kisan Credit Cards to fisheries and animal husbandry farmers to help them meet their working capital needs.

image source – pib

Air Transport

hawaai chappal wale bhi hawa mein udenge..

image source – pib

Proposition has been made to expand the airport capacity more than 5 times to handle a billion trips a year under a new initiative – NABH Nirman.
Under the Regional connectivity scheme of UDAN (Ude Desh ka Aam Nagrik) initiated by the Government last year, 56 unserved airports and 31 unserved helipads would be connected.

Digital Economy

NITI Aayog will initiate a national program to direct efforts in artificial intelligence.
Department of Science & Technology will launch a Mission on Cyber Physical Systems to support establishment of centres of excellence for research, training and skilling in robotics, digital manufacturing, big data analysis, quantum communication and internet of things.

image source – pib

Defence

Proposition has been made to develop two defence industrial production corridors recognizing the sacrifices made by the Armed Forces.

image source – pib

Disinvestment

The Finance Minister announced disinvestment target of 80,000 crore for 2018-19.
3 Public Sector Insurance companies- National Insurance Co. Ltd., United India Assurance Co. Ltd., and Oriental India insurance Co. Ltd., will be merged into a single insurance entity which will boost the insurance sector.
Proposition to revise emoluments to 5 lakh, Rs. 4 lakh and Rs. 3.5 lakh per month for the President, the Vice President and to Governor respectively. These emoluments were last revised in 2006.

image source – pib

Education, Health and Social Protection

Estimated budgetary expenditure on health, education and social protection for 2018-19 is Rs.1.38 lakh crore against estimated expenditure of Rs.1.22 lakh crore in 2017-18.
Tribal students to get Ekalavya Model Residential School with Navodaya Vidyalayas to provide the best quality education with special facilities for preserving local art and culture in each tribal block by 2022. Welfare fund for SCs gets a boost.
Government would launch the Prime Minister’s Research Fellows (PMRF) scheme this year which would help 1,000 best B.Tech Students to avail the facilities to do Ph.D in IITs and IISc, with a handsome fellowship.
World’s largest Health Protection Scheme covering over 10 crore poor and vulnerable families launched with a family limit upto 5 lakh rupees for secondary and tertiary treatment.

image source – pib

Employment Generation

Government will contribute 12% of the wages of the new employees in the EPF for all the sectors for next 3 years.
Proposition to make amendments in the Employees Provident Fund and Miscellaneous Provisions Act, 1952 to reduce women employees’ contribution to 8% for first 3 years of their employment against existing rate of 12% or 10% with no change in employers’ contribution.
To create more employment, deduction of 30% on emoluments paid to new employees under Section 80-JJAA to be relaxed to 150 days for footwear and leather industry.

Fiscal Management & Taxation

image source – pib

Fiscal Deficit of 3% of GDP for the year 2018-19 has been projected.
Proposition to provide 100% deduction to companies registered as Farmer Producer Companies with an annual turnover upto 100 crore on profit derived from such activities, for a period of 5 years from financial year 2018-19 which will promote post harvest agriculture activities and also encourage “Operation Greens” announced earlier and would give a boost to the Sampada Yojana.
Turning to the real estate sector, the Finance Minister has proposed that no adjustment shall be made in respect of transactions in immovable property, where the Circle Rate value does not exceed 5% of the consideration. This would minimize hardship in real estate transactions.
No changes in Tax Rate of all persons except Companies.
Education Cess is being increased from 3% to 4% to be known as Education and Health Cess.
Long Term Capital Gain exemption allowed previously under section 10 (38) in respect of listed STT paid shares being withdrawn. However, capital gain upto 31^st January, 2018 shall not be taxed as cost of acquisition will be taken as Fair Market Value as on 31^st January, 2018.
Tax on STT paidLong Term Capital Gain will be 10% under section 112A. Further such tax will be liable for TDS.
Standard Deduction of Rs 40,000 for salaried employees. However, benefit of transport allowance of Rs 19,200 and Medical Reimbursement of Rs 15,000 under Section 17(2) are being withdrawn resulting into net benefit to salaried class only Rs 5,800.
Provision of Section 43CA, 50C and 56(2)(x) being amended to allow 5% of sale consideration in variation vis a vis stamp duty value on account of location, disadvantage etc.
Provision of section 40(ia), 40A(3) and 40A(3A) are being made applicable to Charitable Trust.
Agriculture Commodity Derivates income /loss also not to be considered as speculative under section 43(5).
Income Computation and Disclosure Standards(ICDS) being given statutory backing in view of decision of Delhi High Court decision. Marked to market loss computed as per ICDS to be allowed under section 36. Gain or loss in Foreign Exchange as per ICDS to be allowed under new section 43AA.
Construction Contract income to be computed on percentage completion method as per ICDS.
Valuation of Inventory including Securities to be as per ICDS.
Conversion of stock in trade to capital asset to be charged as business income in the year of conversion on Fair Market value on the date of conversion.
54EC benefit of investment in Bonds to be restricted to Capital gain on land and building only. Further period of holding being increased from 3 years to 5 years.
PAN to be obtained by all entities including HUF other than individuals in case aggregate of financial transaction in a year is Rs 2,50,000 or more. All directors, partners, members of such entities also to obtain PAN.
All companies irrespective of income need to file income tax return and in case it is not filed, such companies will be liable for prosecution irrespective of the fact whether it has tax liability of Rs 3,000 or not.
Assessments to be E-assessed under new section 143(3A). No adjustment under section 143(1) while processing on account of mismatch with 26AS and 16A.
Deemed dividend to be taxed in the hands of the company itself as Dividend Distribution of tax @ 30%.
Penalty for non filing financial return as required under section 285BA being increased to Rs 500 per day.

Relief to Senior Citizens has also been proposed. The proposals are :-

Increase in deduction limit for medical expenditure for certain critical illness from 60,000 (in case of senior citizens) and from Rs. 80,000 (in case of very senior citizens) to Rs. 1 lakh for all senior citizens under section 80DDB.
Hike in deduction limit for health insurance premium and/ or medical expenditure from 30,000 to Rs. 50,000 under section 80D.
Exemption of interest income under section 80TTA on deposits with banks and post offices are proposed to be increased from 10,000 to Rs. 50,000. TDS shall not be required to be deducted under section 194A. Benefit will also be available for interest from all fixed deposit schemes and recurring deposit schemes.
Concessions will give extra tax benefit of 4,000 crore to senior citizen. It is also proposed to extend the Pradhan Mantri Vaya Vandana Yojana up to March, 2020. The current investment limit is also proposed to be increased to Rs. 15 lakh from the existing limit of Rs. 7.5 lakh per senior citizen.

Medium, Small and Micro Enterprises (MSMEs) and Employment

A corpus fund of 3794 crore has been provided for giving credit support, capital and interest subsidy and for innovations.
Proposition of 3 lakh crore for lending under MUDRA Yojana for 2018-19 after having successfully exceeded the targets in all previous years. MUDRA Yojana launched in April, 2015 has led to sanction of Rs.4.6 lakh crore in credit from 10.38 crore MUDRA loans. 76% of loan accounts are of women and more than 50% belong to SCs, STs and OBCs.

image source – pib

Sources:

PIB
FM’s Budget Speech

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Recapitalisation – Why do Banks need to Recapitalise?

Rahul Jindal — Wed, 15 Nov 2017 05:30:24 +0000

The Centre on October 24, announced a re-capitalisation plan of ₹2.1 lakh crore, unveiling a two-year roadmap to strengthen NPA-hit public sector banks, which includes re-capitalisation bonds, budgetary support, and equity dilution.

Why do banks need to recapitalise?

It’s like this. Banks create money. They can create money at will really. If I lend you money, and you put it back in a deposit in my own bank, I have created money.

Now, what constraints banks have, is their capital. For every loan I make, I need to have 10% of it as my capital. So if I have Rs 100, I can give out Rs 1000 in loans.

Now if I lose Rs 50 on those loans because some fellow defaulted (5% NPA) then my loss hits my capital. My capital falls to Rs 50.

Now I have only Rs. 50 on Rs. 950. So at this point, I have to raise capital to come back to 10% capital ratio. Or, I have to somehow call in loans. Calling on loans isn’t possible so I stop lending more.This is what has happened.

Public sector banks have frozen up on lending because they can’t lend more, as their capital ratios will not allow any more.

Banks have Rs 100 capital and have lent Rs 1500 (6% capital ratios) They have losses of Rs 50 they know about and are unwilling to take (net NPAs). So the government gives them Rs 50. Their capital increases to Rs. 150. Then they take the Rs. 50 loss.

So now they have Rs 100 capital on Rs. 1450 lent which is a better capital ratio than before.

Because of better capital ratios, banks can now raise more capital – say another Rs 50 is raised. Now they have the ability to lend another 500 rupees, to maintain say an 8% capital ratio.

Effectively, what the government wants to do is force banks to take losses by pushing NPAs to real losses, as the government replenishes the capital that is lost.

The recapitalisation programme for public sector banks is likely to boost equity market sentiment as it fuels growth recovery hopes, though the recapitalisation amount may create a supportive environment for growth, it may not drive growth by itself.

Given that over the last five years, the Centre has infused about ₹89,000 crore (2012-2017) into PSBs, the bounty is sure to please the markets. But given that the capital the Centre has infused over the past several years has not aided growth and only helped banks fund losses on account of huge loan defaults, there is an urgent need to also start structural reforms within the sector.

While the main aim of the Centre’s step is to boost lending activity, going by past data, capital infusion alone cannot ensure credit growth, structural changes at SOE banks (State – Owned – Enterprise) in terms of HR practices, incentive structures and independent boards need to be followed up.

The current love of capital infusion in PSBs entails mobilisation of capital, with maximum allocation in the current year, to the tune of about Rs 2,11,000 crore over the next two years, through budgetary provisions of Rs 18,139 crore, and recapitalisation bonds to the tune of Rs 1.35 lakh crore. The overall loan growth for all PSBs put together was an only 2 percent in 2015-16, even as the Centre infused around ₹20,000 crore during the year. The trend has been no different in 2016-17, with loan growth for PSBs still a meagre 1.9 percent.

The recent CRISIL report stated that banks need to keep aside 3.3 lakh crores as NPA provisioning in FY18, which is 50 percent more than that of last fiscal (2.2 lakh crore). This reveals that the Centre’s funds have gone mostly to fund banks’ losses on account of huge loan defaults.

Having said that Centre’s capital infusion, even this time around will continue to fund these banks’ losses rather than growth for some time. As a fire-fighting measure, the Centre’s recap plan can help banks clean up their balance sheets and prepare themselves for the next period of lending.

As a matter of fact, the Centre’s recap plan did have a great short-term impact on the stock markets. After the announcement on 24^th October, markets reap dividends on 25^th of October. The recap news lifted the spirits of share markets, where the BSE SENSEX closed over the 33,000 mark for the first time and Nifty scales new high as stocks of PSBs record gain.

However, The Centre’s decision to recapitalise banks with government bonds worth Rs 1.35 lakh crore is nothing but the taxpayer bailing out India’s public sector banks whose capital base stands eroded because of mounting loan defaults by 50 large corporate groups.

Though the government says this won’t increase the fiscal deficit as no cash outflow is involved, it does have other effects of a higher fiscal deficit such as increased interest payment by the government on the bonds issued to banks. Let us now hope that the higher fiscal deficit would not add to the demand-side pressure, and there will be a negligible impact on CPI inflation.

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Stop running after MBA – MBE is the next big thing

Ambika Sarawgi — Wed, 04 Oct 2017 05:30:11 +0000

“What after graduation?”

This is the most common question which comes in the mind of every undergraduate student. You are in a complicated mess, what to pursue in life, which career will yield maximum opportunities, which will provide future security etc. Your parents are expecting a well-paid job out of you, whereas your friends are pressurizing you to do an MBA. Still, you are not sure whether MBA is the right option for you. You may want to go for a managerial degree which is more comprehensive and covers vast subjects. Then, MBE is the option for you.

What is MBE?

The Masters in Business Economics (MBE) is the amalgamation of management, business, and economics techniques. This course is based on economic principles which help in making decisions according to the changing business environment. It provides an in-depth view in markets to understand and anticipate the behavior in future. MBE, a master of problem-solving and tackling management challenges that a growing business might throw.

The main objective of the course is to create management professionals who can apply economics theories in effective management.

MBE is a two-year period course with four semesters of studies. Students are given a strong grounding in fundamentals of micro and macroeconomics, quantitative techniques and other relevant functional areas.

Eligibility-

Most colleges require an undergraduate degree is commerce or business studies with an aggregate of 50 per cent. Those who wish to apply from the science, engineering, or arts background have to meet a 55 per cent criterea. This will vary from one institute to another.

Career Prospects-

Career scope is immense. Pursuing an MBE will get you at the right places, fast. You can land a plum job in the multi-national corporations as well as companies.

The opening could be one in organisations like the Indian Oil Corporation, LG Electronics, National Housing Bank, Prudential ICICI, SAIL, American Express Bank, Citibank, Coca Cola, HDFC and CICI Bank, TCS, HTA, TERI, PWC and Ernst and Young.

You could serve as consultants, resource economists, policy advisors or analysts in a number of public and private sector organizations. Research in the area of economics is also a prospect you could look into. The starting salary of an MBE graduate can be anywhere between Rs 3 lakh to Rs 4.5 lakh and can grow even more. The popularity of this programme can be gauged from the fact that it is being offered worldwide, in over 30 universities, including the Harvard Business School.

MBA in Business Economics today attracts people who have the potential and drive to lead, own, create and transforms business enterprises. The program provides candidates an ability to use the basics of business and to incorporate them into the highly advanced & ever-changing global marketplace. It provides a strong foundation in economic principles. The program does not presume prior knowledge or training in economics. It develops the economic skills and problem-solving skills.

So MBA vs MBE?

It depends on your likings and taste. If you’re more interested in the economic aspects, then an MBE is for you. A course in MBE covers Finance, Marketing, and Economics that make it as good as an MBA degree!

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DAILY GK COURSE QUIZ 161: 10 Questions to tease your Brain

PRASHANT SHARMA — Fri, 15 Sep 2017 09:59:24 +0000

Daily GK Course Quiz 161 – Kailasha Foundation

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Time Wages and Piece wages – Economics Notes by KFDN

Shubham choudhary — Sun, 30 Jul 2017 11:30:24 +0000

Wages are a payment for the services of labor, whether mental or physical. Though in ordinary language an office executive, a minister or a teacher is said to receive a salary; a lawyer or a doctor a fee; and a skilled or unskilled worker a wage, yet in economics, No such distinctions are made for different services and all of them are said to receive a wage.

In other words, wages include fees, commissions, and salaries.

Time and Piece wages

The wages which are paid weekly, fortnightly, or monthly and partly at the end of the year in the form of bonus are called Time wages. A bonus may be the task wage if a work is finished within specified period or before that. Wages are also paid in accordance with the amount of work done say in a shoe factory or a tailoring department as per one pair of shoes or pants manufactured. If rate per pair of shoes or for pants is Rs. 50, a worker will be paid according to the number of pair of shoes or pants manufactured this is called Piece wages.

Chapter notes on Type of Economy – Click Here

Money and Real wages

Money wages relate to the amount of money income received by workers for their services in production. It is also called as nominal wages.

Real wages include the various facilities, benefits, and comforts which workers receive in terms of goods and services for their work.

These are in addition to the money wages of workers.

Real wages depends upon following factors:

Price level: The purchasing power of money depends upon the price level. When the price level rises, the purchasing power of money gets reduced, thus adversely affects the real wages of workers. Every increase in the price level reduces the purchasing power of money. This leads to falling in real wages of workers.
Money wages: The size of the pay packet received by the worker is an important determinant of his real wages. The greater the money wages, the greater will be the real wages, other things remaining the same.
The regularity of work: A permanent job, even though it carries a smaller money income, is considered to be better than a temporary job which may yield high rewards in term of money.
Nature of work: The nature of work also plays an important role in determining the level of real wages. Some jobs are pleasant while others are not. Similarly, some occupations are enjoyable while others are not All these considerations have to be given weightage in determining real wages.
Future prospects: An occupation carrying the promise of better prospects of promotion in the future is considered to be better than the one which doesn’t do so, even the money wages offered by the latter may be high.
Extra benefits: In some occupations, employees receive in addition to their pay, some extra benefits. For example, the manager of the firm gets an addition to his pay, a well-furnished bungalow, free medical help etc.
Trade expenses: These refer to the expenses one has to incur in the course of one’s occupation. These expenses are high in some occupations while in others they may be moderate. These expenses should be deducted from the money income in order to arrive in the real wages.
Social prestige: The real wages of employees engaged in prestigious occupations are high as compared to real wages of employees working in ordinary occupations.

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TYPES OF ECONOMY – Chapter Notes By KFDN

Shubham choudhary — Thu, 27 Jul 2017 12:30:01 +0000

An Economy or Economic system is a system or mechanism of production, distribution, and consumption. An Economic system deals with the production, distribution, and consumption of goods and services in a particular society. The Economic system is composed of people, institution, and their relationships. An Economy basically deals with the resource allocation problem of Economics.

In these notes, you will learn about three different types of Economy viz.

CAPITALIST ECONOMY/LAISSEZ-FAIRE ECONOMY
SOCIALIST ECONOMY
MIXED ECONOMY

CAPITALIST ECONOMY/LAISSEZ-FAIRE ECONOMY

Image Source – Internet

In this economy, resources are managed by and owned by private persons.
It is a free economy and there are no government interventions.

FEATURES:

Right to private property: Factors of productions are under private ownership and they are free to use in like manner.
Freedom of enterprises: Producers are free to produce what they want.
Freedom of choice to consumers(Consumer sovereignty): Consumers are free to choose that good which they want to buy.
Profit motive: Producers produce those goods which give them a higher profit. Capitalism is a system of mutual exchange where the price-profit mechanism plays a crucial rule.
Competition: Due to freedom of choice of consumer there is a great competition among sellers.
Uneven distribution of profit: There is an uneven distribution of income due to unequal distribution o property.
Price determination: In the market economy price is determined through Price mechanism i.e. by the equilibrium of price and supply price is determined.
More innovation

Merits of the Capitalist economy:

Increase in production
Quality products at low costs
Progress and prosperity
Maximum welfare
Optimum use of resources
Flexible system

How capitalist economy resolves their central economic problem:

What to produce: That goods will be produced which are more demanded by the consumer due to increasing demand price will rise and it will give more profit to the producer.
How to produce: By that technique goods will be produced due to which cost will be minimum.
Technique:
1. (A) Labour intensive
2. (B)Capital intensive
For whom to produce: For those who have higher buying capacity.
What provisions will be made: It depends on rate of return on capital

DEMERITS:

Leads to monopoly
Inequalities
Depression and unemployment
Insufficient production
Class conflict

GST-Know All About It

SOCIALIST ECONOMY

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It is also called Command economy or centrally planned economy.
There is a central authority who decides about the price of a commodity.

Features:

Collective ownership: There is collective ownership which means on resources ownership is of the state.
Centrally planned authority: There is a central planning authority who decides how to produce, what to produce, whom to produce and what provisions should be made.
Absence of consumer choice: Here restricted goods is produced hence there is no choice to the consumer.
Relatively equal income distribution: Here private capital is narrowed due to which there is equality of income.
Minimum role of price mechanism: Due to presence of central planning authority
Service motive: Here goods are produced with service motive to society.

MERITS:

Greater economic efficiency
Greater welfare due to less inequality of income
Absence of monopolistic practices.
Absence of business fluctuations.

DEMERITS:

Loss of consumer’s sovereignty
No freedom of occupation
Misallocation of resources
Bureaucratic

MIXED ECONOMY

Co-existence of private and public ownership.
The existence of economic planning
It is also a planned economy government has a clear and definite role.
Government also creates atmosphere for private sector

MERITS:

Best allocation of resources
general balance
Welfare state

DEMERITS:

Non-cooperation between the two sectors.
Inefficient public sector.
Economic fluctuations.

Read about GST Here

Indian Economy

The Indian economy is a mixed economy. The public sector and private sector co-exist.
There is an economic planning in India. There is a planning commission at the center.
It formulates five years plans with the principle objective of achieving growth with social justice.
It lays down priorities, targets, and policies for the different sectors of the economy.

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DAILY GK COURSE QUIZ 79 – Practice makes a man perfect

Ankit Keshan — Fri, 23 Jun 2017 10:00:24 +0000

Daily GK Course Quiz 79 – Kailasha Foundation

Daily GK course quiz 79 is brought to you by Kailasha Foundation – Fun & Learn Portal to help you boost yourself for all kinds of competitive exams with our specially tailored general knowledge content from national, international, history, polity, economy, science and all kinds of sections. With daily GK course quiz 79, we have delivered 790 GK questions so far to you in an interactive environment.

The United Nations declared 2012 as the International Year of which thing?

Cooperatives

Culture

Climate

Economy

Correct! Wrong!

Which gland is both exo and endocrine gland?

Thyroid

Pancreas

Appendix

None of these

Correct! Wrong!

By whom was the Constitution of India adopted?

Legislative Council

Jawahar Lal Nehru Alone

Constituent Assembly

Legislative Assembly

Correct! Wrong!

By which the maximum amount of energy in the present day world is provided?

Coal

Petrol

LPG

Nuclear Fission & Fusion

Correct! Wrong!

In ancient India, Nalanda University was a great centre for the study of which religion?

Sikhism

Islam

Christianity

Mahayana Buddhism

Correct! Wrong!

The first law of thermodynamics is concerned with the conservation of which thing?

Momentum

Energy

Angular Momentum

Kinetic Energy

Correct! Wrong!

Which state produces maximum Soya bean?

Madhya Pradesh

Maharashtra

Uttar Pradesh

Uttarakhand

Correct! Wrong!

When is World Day for Water, recognized by the UN observed?

22 April

22 March

22 May

22 Feb

Correct! Wrong!

Which country is rich in oil?

India

Malaysia

Pakistan

Indonesia

Correct! Wrong!

By whom was the first Muslim invasion of India lead?

Ibrahim Lodi

Muhammad Bin Qasim

Muhammad Gori

Mahmood Gaznawi

Correct! Wrong!

DAILY GK COURSE QUIZ 79 - 10 Questions for your daily dose

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