tag:blogger.com,1999:blog-64887998211990302212024-03-13T06:16:17.987-07:00Current Economic Topicsscript type="text/javascript"
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script type="text/javascript" src="http://adhitzads.com/77542"/scriptforamshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.comBlogger45125tag:blogger.com,1999:blog-6488799821199030221.post-29039026180437610462010-06-08T23:44:00.000-07:002010-06-08T23:49:03.377-07:00World Economic Situation and Prospects<span class="Apple-style-span" style="font-family: Verdana, Arial, Helvetica, Geneva, Swiss, sans-serif; font-size: 13px; "><p align="justify" style="margin-top: 4px; margin-bottom: 4px; ">World Economic Situation and Prospects (WESP) is a joint product of the Department of Economic and Social Affairs, the United Nations Conference on Trade and Development and the five United Nations regional commissions. It provides an overview of recent global economic performance and short-term prospects for the world economy and of some key global economic policy and development issues. One of its purposes is to serve as a point of reference for discussions on economic, social and related issues taking place in various United Nations entities during the year.<br /></p><p align="justify" style="margin-top: 4px; margin-bottom: 4px; "> </p><p align="justify" style="margin-top: 4px; margin-bottom: 4px; ">The World Economic Situation and Prospects update as of mid-2010 highlights that while the world economy continued to improve in the first half of 2010, leading to a slight upward revision in the United Nations outlook for global growth, the pace of the recovery is too weak to close the global output gap left by the crisis. It also points out that the recovery is uneven across countries, with encouraging growth prospects for some developing countries, but lacklustre economic activity in developed economies and below potential growth elsewhere in the developing world. The Report argues that important weaknesses in the global economy remain, and draws attention to some of the policy challenges that need to be addressed to solidify and broaden the recovery.</p><p align="justify" style="margin-top: 4px; margin-bottom: 4px; "> </p><p align="justify" style="margin-top: 4px; margin-bottom: 4px; "><strong>World Economic Situation and Prospects 2010 </strong><br /><em><strong><br /></strong></em></p><p style="margin-top: 4px; margin-bottom: 4px; ">The world economy is on the mend. After a sharp, broad and synchronized global downturn in late 2008 and early 2009, an increasing number of countries have registered positive quarterly growth of gross domestic product (GDP), along with a notable recovery in international trade and global industrial production. World equity markets have also rebounded and risk premiums on borrowing have fallen.</p><p style="margin-top: 4px; margin-bottom: 4px; "> </p><p style="margin-top: 4px; margin-bottom: 4px; "> World gross product (WGP) is estimated to fall by 2.2 per cent for 2009, the first actual contraction since the Second World War. Premised on a continued supportive policy stance worldwide, a mild growth of 2.4 per cent is forecast in the baseline scenario for 2010. According to this scenario, the level of world economic activity will be 7 per cent below where it might have been had pre-crisis growth continued.</p><p style="margin-top: 4px; margin-bottom: 4px; "> </p><p style="margin-top: 4px; margin-bottom: 4px; "> The report cautions that despite these more encouraging headline figures, the recovery is uneven and conditions for sustained growth remain fragile. Credit conditions are still tight in major developed economies, where many major financial institutions need to continue the process of deleveraging and cleansing their balance-sheets. The rebound in domestic demand remains tentative at best in many economies and is far from self-sustaining. Much of the rebound in the real economy is due to the strong fiscal stimulus provided by Governments in a large number of developed and developing countries and to the restocking of inventories by industries worldwide. Consumption and investment demand remain weak, however, as unemployment and underemployment rates continue to rise and output gaps remain wide in most countries. In the outlook, the global economic recovery is expected to remain sluggish, employment prospects will remain bleak and inflation will stay low.</p><p style="margin-top: 4px; margin-bottom: 4px; "> </p><p style="margin-top: 4px; margin-bottom: 4px; "> The report also highlights a number of risks and uncertainties to the outlook, including a premature exit from the stimulus measures and a hard landing of the dollar due to the renewed widening of the global imbalances. In terms of policy measures, the report recommends continued fiscal stimulus measures in the short run, a continued focus on the rebalancing of economic growth in a number of respects, better policy coordination, strengthened global governance and more decisive reforms of the global financial system.</p></span>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-36288696050240330892010-06-08T22:51:00.000-07:002010-06-08T22:52:01.417-07:00Current Inflation Rate<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">The <b>current inflation</b> rates across the world, as of April 2009, were low due to the global recession that peaked in September 2008. The recessionary pressures felt across the globe resulted in a massive decline in the supply of money. This, in turn, affected <a href="http://www.economywatch.com/inflation/rate/current.html" target="undefined"><span style="color:windowtext">commodity prices</span></a>, resulted in low inflation rates. Current inflation is measured by the International Monetary Fund.<o:p></o:p></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal;mso-outline-level:2"><b><u><span style="font-size:14.0pt; font-family:"Arial","sans-serif";mso-fareast-font-family:"Times New Roman"">Current Inflation Trends in the World<o:p></o:p></span></u></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">According to an IMF report, headline inflation in the developed nations is expected to decline from 3.5% in 2008 to a record low of 0.25% in 2009. It is expected to recover to 0.75% in 2010. In the emerging economies, inflation is expected to fall to 5.75% in 2009 and 5% in 2010, from 9.5% in 2008. For the quarter ended March 31, 2009, the current <a href="http://www.economywatch.com/inflation/rate/current.html" target="undefined"><span style="color:windowtext">inflation</span></a> rates of major nations are listed in the table given below:<o:p></o:p></span></p> <table class="MsoNormalTable" border="1" cellspacing="0" cellpadding="0" width="300" style="width:225.0pt;mso-cellspacing:0in;mso-yfti-tbllook:1184;mso-padding-alt: 0in 0in 0in 0in"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.0pt"> <td width="150" valign="top" style="width:112.5pt;padding:0in 0in 0in 0in; height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Countries</span></b><span style="font-size:14.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman""><o:p></o:p></span></p> </td> <td width="150" valign="top" style="width:112.5pt;padding:0in 0in 0in 0in; height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Current Inflation (%)</span></b><span style="font-size:14.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman""><o:p></o:p></span></p> </td> </tr> <tr style="mso-yfti-irow:1;height:15.0pt"> <td width="150" style="width:112.5pt;padding:0in 0in 0in 0in;height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">New Zealand<o:p></o:p></span></p> </td> <td width="150" style="width:112.5pt;padding:0in 0in 0in 0in;height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">3<o:p></o:p></span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:15.0pt"> <td width="150" style="width:112.5pt;padding:0in 0in 0in 0in;height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">UK<o:p></o:p></span></p> </td> <td width="150" style="width:112.5pt;padding:0in 0in 0in 0in;height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">2.9<o:p></o:p></span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:15.0pt"> <td width="150" style="width:112.5pt;padding:0in 0in 0in 0in;height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Australia<o:p></o:p></span></p> </td> <td width="150" style="width:112.5pt;padding:0in 0in 0in 0in;height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">2.5<o:p></o:p></span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:15.0pt"> <td width="150" style="width:112.5pt;padding:0in 0in 0in 0in;height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">EU<o:p></o:p></span></p> </td> <td width="150" style="width:112.5pt;padding:0in 0in 0in 0in;height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">0.6<o:p></o:p></span></p> </td> </tr> <tr style="mso-yfti-irow:5;height:15.0pt"> <td width="150" style="width:112.5pt;padding:0in 0in 0in 0in;height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Japan<o:p></o:p></span></p> </td> <td width="150" style="width:112.5pt;padding:0in 0in 0in 0in;height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">-0.3<o:p></o:p></span></p> </td> </tr> <tr style="mso-yfti-irow:6;mso-yfti-lastrow:yes;height:15.0pt"> <td width="150" style="width:112.5pt;padding:0in 0in 0in 0in;height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">US<o:p></o:p></span></p> </td> <td width="150" style="width:112.5pt;padding:0in 0in 0in 0in;height:15.0pt"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">-0.4<o:p></o:p></span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal;mso-outline-level:2"><b><u><span style="font-size:14.0pt; font-family:"Arial","sans-serif";mso-fareast-font-family:"Times New Roman"">Calculation of Current Inflation Rates<o:p></o:p></span></u></b></p> <p><span style="font-size:14.0pt;font-family:"Arial","sans-serif"">Current inflation rates are calculated for different timeframes - from as short a period as a week to as long as a year. Short-term inflation rates facilitate the analysis of the sudden effects of economic, political and social changes on current inflation. Long-term rates are a better measure, as they reflect the economic situation in a more comprehensive way by rounding off the effects of sudden price movements.<o:p></o:p></span></p> <p><span style="font-size:14.0pt;font-family:"Arial","sans-serif"">The current inflation rates released by the IMF and various national governmental bodies are calculated on an annual basis. The weekly and monthly figures announced by these organizations are annualized figures.<o:p></o:p></span></p> <h2><u><span style="font-size:14.0pt;font-family:"Arial","sans-serif"">Current Inflation and Unemployment<o:p></o:p></span></u></h2> <p><span style="font-size:14.0pt;font-family:"Arial","sans-serif"">According to an ILO report, the world unemployment rate is projected to reach 7.1% in 2009 if the sluggish economic performance continues. This is estimated to increase worldwide unemployment by 50 million. According to the Bureau of Labor Statistics, 651,000 jobs were lost in February 2009 in the US alone.<o:p></o:p></span></p> <p><span style="font-size:14.0pt;font-family:"Arial","sans-serif"">The IMF has projected world<span class="apple-converted-space"> </span><a href="http://www.economywatch.com/inflation/rate/current.html" target="undefined" id="KonaLink3" style="cursor:pointer;border-top-color:transparent !important; border-right-color:transparent !important;border-bottom-color:transparent !important; border-left-color:transparent !important;background-attachment:initial !important; background-origin: initial !important;background-clip: initial !important; bottom: 0px;outline-style: none;outline-width: initial;outline-color: initial; background-position:initial initial !important;background-repeat:initial initial !important; right:0px"><span class="klink"><span style="color:windowtext"><span style="border-top-color:initial !important;border-left-color:initial !important; border-right-color:initial !important;border-bottom-color:initial;background-attachment: initial;background-origin: initial;background-clip: initial;background-position: initial initial;background-repeat:initial initial;float:none">economic</span></span><span class="apple-converted-space"><span style="color:windowtext"> </span></span></span><span class="klink"><span style="color:windowtext"><span style="border-top-color:initial !important; border-left-color:initial !important;border-right-color:initial !important; border-bottom-color:initial;background-attachment:initial;background-origin: initial; background-clip: initial;background-position:initial initial;background-repeat: initial initial;float:none">growth</span></span></span></a><span class="apple-converted-space"> </span>at 0.5% for 2009, a record low since World War II. However, given the constant efforts to ease credit strains by implementing expansionary fiscal and monetary policies, the world economy is expected to recover by 2010.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-size:14.0pt;line-height:115%;font-family: "Arial","sans-serif""><o:p> </o:p></span></p>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-87051003770457033432010-06-08T22:46:00.000-07:002010-06-08T22:50:35.795-07:00Deflation, Inflation vs Deflation<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><b><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Deflation</span></b><span style="font-size:14.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman""> refers to a sustained decline in the price level of goods and services. It occurs when the annual inflation rate falls below zero percent (a negative inflation rate), resulting in an increase in the real value of money. The vicious cycle of declining demand and rising unemployment often leads to an economic depression.<o:p></o:p></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal;mso-outline-level:2"><b><u><span style="font-size:14.0pt; font-family:"Arial","sans-serif";mso-fareast-font-family:"Times New Roman"">Causes of Deflation<o:p></o:p></span></u></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Deflation in an economy can be attributed to more than one factor, including:<o:p></o:p></span></p> <p class="MsoListParagraphCxSpFirst" style="margin-bottom:0in;margin-bottom:.0001pt; mso-add-space:auto;text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1"><span style="font-size:14.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">When the risk adjusted return on assets becomes negative, buyers and<a href="http://www.economywatch.com/inflation/deflation/" target="undefined"><span style="color:windowtext;text-decoration:none;text-underline:none">investors</span></a> start to hoard currency instead of investing it.<br /> <br /> <o:p></o:p></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-bottom:0in;margin-bottom: .0001pt;mso-add-space:auto;text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1"><span style="font-size:14.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Sustained decline in the velocity of money or a decline in the number of money transactions.<br /> <br /> <o:p></o:p></span></p> <p class="MsoListParagraphCxSpLast" style="margin-bottom:0in;margin-bottom:.0001pt; mso-add-space:auto;text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1"><span style="font-size:14.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Higher interest rates initiated by the country’s central <a href="http://www.economywatch.com/inflation/deflation/" target="undefined"><span style="color:windowtext;text-decoration:none;text-underline:none">bank</span></a> to control inflation.<o:p></o:p></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal;mso-outline-level:2"><b><u><span style="font-size:14.0pt; font-family:"Arial","sans-serif";mso-fareast-font-family:"Times New Roman"">Effect of Deflation on the Economy<o:p></o:p></span></u></b></p> <p><span style="font-size:14.0pt;font-family:"Arial","sans-serif"">A fall in the price of goods and services increases the purchasing power of the people. This might present a positive picture in the short run. However, if this effect extends, it leads to deflation, adversely impacting the economy. With deflation, prices and wages begin to fall. Consequently, the supply of<span class="apple-converted-space"> </span><a href="http://www.economywatch.com/inflation/deflation/" target="undefined" id="KonaLink3" style="cursor:pointer;border-top-color:transparent !important; border-right-color:transparent !important;border-bottom-color:transparent !important; border-left-color:transparent !important;background-attachment:initial !important; background-origin: initial !important;background-clip: initial !important; bottom: 0px;outline-style: none;outline-width: initial;outline-color: initial; background-position:initial initial !important;background-repeat:initial initial !important; right:0px"><span class="klink"><span style="color:windowtext;text-decoration: none;text-underline:none"><span style="border-top-color:initial !important; border-left-color:initial !important;border-right-color:initial !important; border-bottom-color:initial;background-attachment:initial;background-origin: initial; background-clip: initial;background-position:initial initial;background-repeat: initial initial;float:none">money</span></span></span></a><span class="apple-converted-space"> </span>shrinks, resulting in even lower prices and wages. This creates a vicious 'deflationary spiral' of negatives, including declining profits, closing factories, shrinking incomes and employment and a rise in defaults on loans by individuals and companies. Deflation creates a liquidity trap in the economy when lower interest rates fail to stimulate spending. Deflation usually occurs during recessionary times and tends to aggravate its negative effects.<o:p></o:p></span></p> <h2><u><span style="font-size:14.0pt;font-family:"Arial","sans-serif"">Inflation vs Deflation<o:p></o:p></span></u></h2> <p><span style="font-size:14.0pt;font-family:"Arial","sans-serif"">Inflation is the opposite of deflation and refers to a rise in the general level of the prices of goods and services. Deflation is considered as negative inflation because it increases the real value in money, whereas inflation has the reverse effect. Deflation causes a burden on<span class="apple-converted-space"> </span><a href="http://www.economywatch.com/inflation/deflation/" target="undefined" id="KonaLink4" style="cursor:pointer;border-top-color:transparent !important; border-right-color:transparent !important;border-bottom-color:transparent !important; border-left-color:transparent !important;background-attachment:initial !important; background-origin: initial !important;background-clip: initial !important; bottom: 0px;outline-style: none;outline-width: initial;outline-color: initial; background-position:initial initial !important;background-repeat:initial initial !important; right:0px"><span class="klink"><span style="color:windowtext;text-decoration: none;text-underline:none"><span style="border-top-color:initial !important; border-left-color:initial !important;border-right-color:initial !important; border-bottom-color:initial;background-attachment:initial;background-origin: initial; background-clip: initial;background-position:initial initial;background-repeat: initial initial;float:none">borrowers</span></span></span></a>and holders of various illiquid assets and is favorable for savers and holders of liquid assets and currency. On the other hand, inflation favors short-term consumption and borrowers and is a burden on currency holders and savers.<o:p></o:p></span></p> <p><span style="font-size:14.0pt;font-family:"Arial","sans-serif"">Both<span class="apple-converted-space"> </span><a href="http://www.economywatch.com/inflation/deflation/" target="undefined" id="KonaLink5" style="cursor:pointer;border-top-color:transparent !important; border-right-color:transparent !important;border-bottom-color:transparent !important; border-left-color:transparent !important;background-attachment:initial !important; background-origin: initial !important;background-clip: initial !important; bottom: 0px;outline-style: none;outline-width: initial;outline-color: initial; background-position:initial initial !important;background-repeat:initial initial !important; right:0px"><span class="klink"><span style="color:windowtext;text-decoration: none;text-underline:none"><span style="border-top-color:initial !important; border-left-color:initial !important;border-right-color:initial !important; border-bottom-color:initial;background-attachment:initial;background-origin: initial; background-clip: initial;background-position:initial initial;background-repeat: initial initial;float:none">inflation</span></span></span></a><span class="apple-converted-space"> </span>and deflation can negatively impact the economy. However, most economists consider the effects of moderate long-term inflation to be less damaging than deflation.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-size:14.0pt;line-height:115%;font-family: "Arial","sans-serif""><o:p> </o:p></span></p>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-78532341124462516372010-06-08T22:44:00.000-07:002010-06-08T22:46:11.238-07:00Inflation Rate, Inflation Rates, Rate of Inflation<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">The<b> <a href="http://www.economywatch.com/inflation/rate/" target="undefined"><span style="color:windowtext">inflation</span></a> rate</b> is the percentage by which prices of goods and services rise beyond their average levels. It is the rate by which the purchasing power of the people in a particular geography has declined in a specified period. The rate of inflation may be calculated weekly, monthly or annually. However, it is always expressed as an annualized figure.<o:p></o:p></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal;mso-outline-level:2"><b><u><span style="font-size:14.0pt; font-family:"Arial","sans-serif";mso-fareast-font-family:"Times New Roman"">Inflation Rate: Indices<o:p></o:p></span></u></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">The inflation rate can be calculated for different price indices. For the national inflation rate, the consumer price index (CPI) is considered. This index measures the actual prices of goods and services needed by the common man. The inflation rate can also be measured by the following indices:<o:p></o:p></span></p> <p class="MsoListParagraphCxSpFirst" style="margin-bottom:0in;margin-bottom:.0001pt; mso-add-space:auto;text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1"><span style="font-size:14.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Cost-of-living index (COLI): This is used to adjust <a href="http://www.economywatch.com/inflation/rate/" target="undefined"><span style="color:windowtext;text-decoration:none;text-underline: none">income</span></a> scales so that the real value of earnings remains the same.<br /> <br /> <o:p></o:p></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-bottom:0in;margin-bottom: .0001pt;mso-add-space:auto;text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1"><span style="font-size:14.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Producer price index (earlier Wholesale Price Index): This measures the average change in prices that domestic producers receive for their products. This index measures the growing pressure on producers due to changes in the costs of their raw materials. This pressure might get passed on to consumers, absorbed by profits or offset by a rise in productivity.<br /> <br /> <o:p></o:p></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-bottom:0in;margin-bottom: .0001pt;mso-add-space:auto;text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1"><span style="font-size:14.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Commodity price index: This measures the prices of a selected group of <a href="http://www.economywatch.com/inflation/rate/" target="undefined"><span style="color:windowtext;text-decoration:none;text-underline:none">commodities</span></a>.<br /> <br /> <o:p></o:p></span></p> <p class="MsoListParagraphCxSpLast" style="margin-bottom:0in;margin-bottom:.0001pt; mso-add-space:auto;text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1"><span style="font-size:14.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Core price index: This removes the volatile components (primarily food and oil) from broader indices, like the CPI. Short term changes in demand and supply conditions do not significantly affect such indices. Central <a href="http://www.economywatch.com/inflation/rate/" target="undefined"><span style="color:windowtext;text-decoration:none;text-underline:none">banks</span></a> use it to assess the need for adjusting the monetary policy.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-size:14.0pt;line-height:115%;font-family: "Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal;mso-outline-level:2"><b><span style="font-size:14.0pt; font-family:"Arial","sans-serif";mso-fareast-font-family:"Times New Roman"">Methods of Calculating the Inflation Rate<o:p></o:p></span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">The two main methods used to calculate the inflation rate are:<o:p></o:p></span></p> <p class="MsoListParagraphCxSpFirst" style="margin-bottom:0in;margin-bottom:.0001pt; mso-add-space:auto;text-indent:-.25in;line-height:normal;mso-list:l1 level1 lfo2"><span style="font-size:14.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Base period: This method is the more common of the two and assigns a relative weight to each element while making calculations.<br /> <br /> <o:p></o:p></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-bottom:0in;margin-bottom: .0001pt;mso-add-space:auto;text-indent:-.25in;line-height:normal;mso-list:l1 level1 lfo2"><span style="font-size:14.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Chained measurements: In this method, the contents of the ‘commodity bundle’ are adjusted, along with the prices. Besides, individual time periods in which the price levels fluctuate are also taken into account.<o:p></o:p></span></p> <p class="MsoListParagraphCxSpLast" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-add-space:auto;text-indent:-.25in;line-height:normal;mso-list:l1 level1 lfo2"><span style="font-size:14.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Any undesired change in the rate of inflation can affect the economy and national development at large. The appropriate estimation of inflation rates is necessary to get an overview of the national economy.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman""><o:p> </o:p></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal;mso-outline-level:2"><b><span style="font-size:14.0pt; font-family:"Arial","sans-serif";mso-fareast-font-family:"Times New Roman"">Inflation Rate: The Formula<o:p></o:p></span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">The equation to calculate the inflation rate is:<o:p></o:p></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Inflation Rate = (Po- P-1)* 100 / P-1,<o:p></o:p></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">where<o:p></o:p></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Po = the present average price<o:p></o:p></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">P-1 = the price that existed last year.<o:p></o:p></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-size:14.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">The inflation rate is always stated as a percentage. Another way of calculating the inflation rate is to apply the log rule. The inflation rate is important, since it is subtracted from various economic rates in order to eliminate the impact of inflation. The real increase in wages is also counted by taking into account the prevailing inflation rate.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-size:14.0pt;line-height:115%;font-family: "Arial","sans-serif""><o:p> </o:p></span></p>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-75061073312918153482010-06-08T22:22:00.001-07:002010-06-08T22:22:55.391-07:00World Economy<span class="Apple-style-span" style="font-family: verdana; font-size: 11px; "><div align="justify" class="runner" style="font-family: verdana; color: black; text-decoration: underline; font-size: 11px !important; font-weight: normal; padding-bottom: 10px; padding-left: 5px; padding-top: 5px; "><table cellpadding="0" cellspacing="0" width="100%" border="0" style="font-family: verdana; font-size: 11px; color: black; font-weight: normal; text-decoration: none; "><tbody><tr><td valign="top"><table cellpadding="0" cellspacing="0" width="100%" border="0" style="font-family: verdana; font-size: 11px; color: black; font-weight: normal; text-decoration: none; "><tbody><tr><td valign="top" style="padding-left: 5px; padding-right: 0px; padding-top: 0px; "><div class="h1" align="center" style="font-family: verdana; color: black; text-decoration: none; font-size: 11px; font-weight: normal; "><div align="justify" style="font-family: verdana; color: black; text-decoration: none; font-size: 11px; font-weight: normal; padding-right: 15px; padding-left: 5px; "><b>The world economy grew 5.2% in 2007 powered by growth in China (11%), India (9%) and Russia (8%). The global economy faces a real risk of 1970s style stagflation however, with resource constraints tighter than ever before. </b><br /><br />Things could scarcely have looked rosier for the world economy at the start of 2007. The Emerging Markets, led by the giants of China, India, Russia and Brazil (the BRIC countries) had been posting 7%-10% grow rates for years. Property and <a href="http://www.economywatch.com/world_economy/#" class="kLink" target="undefined" id="KonaLink0" style="color: rgb(100, 0, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">stock </span><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">market</span></span></a> booms had brought consistent growth in North America and Europe. Investment was bringing economic development to much of the Middle East and Africa, and even Japan was recovering from its deflationary 'Lost Years'.<br /><br />Economic conditions within these countries play a major role in setting the economic atmosphere of less well-to-do nations and their economies. In many aspects, developing and less developed economies depend on the developed countries for their economic wellbeing.<br /><br />Theories were even circulating that thanks to the growth of the developing world, we might enjoy years of unfettered growth, as new markets would go through successive growth spurts and counter the effects of slowing growth elsewhere. It was suggested that Asia was 'decoupling' from the US and able to grow under its own steam thanks to its two 'Awakening Giants'.<br /><br />What a difference a year makes. </div><div align="justify" style="font-family: verdana; color: black; text-decoration: none; font-size: 11px; font-weight: normal; padding-right: 15px; padding-left: 5px; "><br /></div><div align="justify" style="font-family: verdana; color: black; text-decoration: none; font-size: 11px; font-weight: normal; padding-right: 15px; padding-left: 5px; "><div align="justify" class="runner" style="font-family: verdana; color: black; text-decoration: underline; font-size: 11px !important; font-weight: normal; padding-bottom: 10px; padding-left: 5px; padding-top: 5px; "><table cellpadding="0" cellspacing="0" width="100%" border="0" style="font-family: verdana; font-size: 11px; color: black; font-weight: normal; text-decoration: none; "><tbody><tr><td valign="top"><table cellpadding="0" cellspacing="0" width="100%" border="0" style="font-family: verdana; font-size: 11px; color: black; font-weight: normal; text-decoration: none; "><tbody><tr><td valign="top" style="padding-left: 5px; padding-right: 0px; padding-top: 0px; "><div class="h1" align="center" style="font-family: verdana; color: black; text-decoration: none; font-size: 11px; font-weight: normal; "><div align="justify" style="font-family: verdana; color: black; text-decoration: none; font-size: 11px; font-weight: normal; padding-right: 15px; padding-left: 5px; ">The global economy has been hit by a rapid one-two punch that may be setting the stage for stagflation to make a come-back.<br /><br />It started with the sub-prime crisis in the US, caused by <a href="http://www.economywatch.com/world_economy/#" class="kLink" target="undefined" id="KonaLink1" style="color: rgb(100, 0, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">loans</span></span></a> to risky or 'sub-prime' mortgagees who did not have strong credit histories. While house prices were rising there wasn't a problem. But as house prices slowed and then crashed to earth, default rates started to rise.<br /><br />To add fuel to the fire, sub-prime loans had been packaged and re-packaged in a range of <a href="http://www.economywatch.com/world_economy/#" class="kLink" target="undefined" id="KonaLink2" style="color: rgb(100, 0, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">derivative</span></span></a> financial instruments such as Collateralized Debt Obligations (CDOs). It was not always clear what the contents CDOs consisted of, as they were combined, sliced and re-sold between financial institutions and <a href="http://www.economywatch.com/world_economy/#" class="kLink" target="undefined" id="KonaLink3" style="color: rgb(100, 0, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">funds</span></span></a>, and which in some cases allowed risky debt such as sub-prime loans to be packaged as part of low-risk instruments.<br /><br />Vast swathes of CDO investments had to be written off, and <a href="http://www.economywatch.com/world_economy/#" class="kLink" target="undefined" id="KonaLink4" style="color: rgb(100, 0, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">banks</span></span></a>became suspicious of <a href="http://www.economywatch.com/world_economy/#" class="kLink" target="undefined" id="KonaLink10" style="color: rgb(100, 0, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: rgb(100, 0, 0); padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">investment</span></span><span id="preLoadWrap10" class="preLoadWrap" style="position: relative; "></span></a>, borrowing and lending, since it was not always clear what the underlying security was. Once banks stopped lending the Credit Crunch hit.<br /><br />We then witnessed extraordinary scenes of government regulators in US and UK having to help save collapsing banks in order to avert a meltdown of the financial system, and to Sovereign <a href="http://www.economywatch.com/world_economy/#" class="kLink" target="undefined" id="KonaLink5" style="color: rgb(100, 0, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">Wealth</span></span></a> Funds (SWFs) from the developing world taking large stakes in venerable western banks like Citibank and UBS in return for keeping them liquid.<br /><br />With house prices having fallen more than 20% in many areas of the United States, even prime mortgage holders now find themselves with negative <a href="http://www.economywatch.com/world_economy/#" class="kLink" target="undefined" id="KonaLink6" style="color: rgb(100, 0, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">equity</span></span></a>. The federal government has been forced to step in and assume responsibility for both Fannie Mae and Freddie Mac, who between them back over half of all American mortgages.<br /><br /><img src="http://www.economywatch.com/images-new/Gdp_nominal_and_ppp_2007_world_map.png" alt="World Map Showing Nominal and Purchasing Power Parity GDP, 2007 estimates from CIA World Factbook" style="border-top-style: none; border-right-style: none; border-bottom-style: none; border-left-style: none; border-width: initial; border-color: initial; " /><br /><br />The second part of the one-two punch has involved the rise of <a href="http://www.economywatch.com/world_economy/#" class="kLink" target="undefined" id="KonaLink7" style="color: rgb(100, 0, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">commodity </span><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">prices</span></span></a>. Just before the dawn of the 21st century, oil average $16 a barrel. By July 2008, less than 10 years later, oil hit a high of $146 a barrel - a stunning rise of more than 800%. From early 2007 to mid 2008 alone the price has risen more than threefold from the mid $40s.<br /><br />During the Oil Crisis of the 1970s, oil spiked at a nominal peak of $38. In today's prices (adjusted for inflation), that is $106, a figure that we blew past in early 2008.<br /><br />The price of food has also started spiraling. Rice and other grain prices have doubled from 2007 - 2008, leading to food riots in a score of developing markets. Most agricultural and farm produce prices have been going through the roof. In fact almost all<a href="http://www.economywatch.com/world_economy/#" class="kLink" target="undefined" id="KonaLink8" style="color: rgb(100, 0, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">commodities</span></span></a>, including those used for energy, construction and consumption, have been rising rapidly.<br /><br />Price rises have been fueled by the demands of the emerging markets, particularly the BRIC nations, who together account for nearly 3 billion people. In order to maintain their high rates of growth and help lift more of their populace out of poverty, they require more and more commodities.<br /><br />A bigger worry for economists, however, is whether the natural resources exist to meet these burgeoning demands.<br /><br />A similar crisis was faced in the 1970s. After a period of strong global economic growth, when the world economy was averaging 5% a year GDP increases, the world hit supply constraints in oil and food. For the next fifteen years, global GDP growth slowed to an average of 3.2% per year.<br /><br />This became known as the stagflation era. Growth opportunities were limited, but prices continued to rise with a continued lack of supply.<br /><br />A great debate ensued as to whether we had reached the limits of the earth's ability to support our growth. In 1972 the Club of Rome famously argued exactly that, saying that the global economy would collapse.<br /><br />And yet the opposite happened. According to Jeffrey D. Sachs, Director of the Earth Institute at Columbia University, world crude <a href="http://www.economywatch.com/world_economy/#" class="kLink" target="undefined" id="KonaLink9" style="color: rgb(100, 0, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">oil </span><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">production</span></span></a> grew from 21 million barrels per day in 1960 to 56 mbd in 1973, a growth of 166%. The stagflation crisis also brought about a 'Green Revolution' through fertilizer and irrigation development, and through the development of stronger seed strains. This led to much higher agricultural productivity levels.<br /><br />Since 1970 however, crude oil production has only grown 30% worldwide. More worrying still is that crude oil production in the Middle East has peaked at 21 mbd in 1974 and remained stagnant, while mature fields in the North Sea, Norway and Alaska are all in decline.<br /><br />In fact there is a growing school of thought known as 'Peak Oil' that believes we have - or will soon - reach peak oil production capabilities. In the 1950s Dr M. King Hubbert correctly predicted peak oil and decline rates for the mainland US oil industry. His model came to be known as The Hubbert Peak Theory. It predicts that world peak oil production will be reached sometime between 2000 and 2010, and will decline thereafter.<br /><br />This impending crisis has also helped to raise the price of food, since increasing amounts of land are being devoted to biodiesel crop development, and since higher oil prices raise the cost of fertilizer (for which petroleum is a key ingredient) and food transportation.<br /><br />It seems increasingly likely that a massive investment in renewable energy sources will be needed in order to avert another stagflationary period in the world economy, or even a global recession. The jury is still out as to how quickly oil supplies will decline or how fast alternative energy sources can be brought online.<br /><br /><b>World Economic Statistics at a Glance</b><br /><br />World GDP (PPP): $65 trillion<br />GDP Growth Rate: 5.2%<br />Growth Rate of Industrial Production: 5%<br />GDP By Sector: Services- 64% Industry- 32% Agriculture- 4%<br />GDP Per Capita (PPP): $9,774<br />Population: 6.65 billion<br />The Poor (<a href="http://www.economywatch.com/world_economy/#" class="kLink" target="undefined" id="KonaLink11" style="color: rgb(100, 0, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: verdana; font-weight: normal; font-size: 11px; position: static; background-position: initial initial; background-repeat: initial initial; ">Income</span></span></a> below $2 per day): 3.25 billion (approximately 50%)<br />Millionaires: 9 million (approximately 0.15%)<br />Labor Force: 3.13 billion<br />Exports: $13.87 trillion<br />Imports: $13.81 trillion<br />Inflation Rate - Developed Countries: 1% - 4%<br />Inflation Rate - Developing Countries: 5% - 20%<br />Unemployment - Developed Countries: 4% - 12%<br />Unemployment & Underemployment - Developing Countries: 20% - 40%<br /></div></div></td></tr></tbody></table></td></tr></tbody></table></div></div></div></td></tr></tbody></table></td></tr></tbody></table></div></span>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-20707948665829341272010-06-08T22:19:00.000-07:002010-06-08T22:20:55.083-07:00Current Indian Economy Overview<span class="Apple-style-span" style="font-family: Arial; line-height: 20px; "><p style="color: black; font-size: 12pt; "><br /></p><p style="color: black; font-size: 12pt; ">India, an emerging economy, has witnessed unprecedented levels of economic expansion, along with countries like China, Russia, Mexico and Brazil. India, being a cost effective and labor intensive economy, has benefited immensely from outsourcing of work from developed countries, and a strong manufacturing and export oriented industrial framework. With the economic pace picking up, global <a href="http://www.economywatch.com/indianeconomy/indian-economy-overview.html#" class="kLink" target="undefined" id="KonaLink1" style="color: rgb(102, 0, 0); text-decoration: underline !important; border-bottom-style: none !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; background-position: initial initial; background-repeat: initial initial; ">commodity </span><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; background-position: initial initial; background-repeat: initial initial; ">prices</span></span></a> have staged a comeback from their lows and global trade has also seen healthy growth over the last two years. </p><h2 style="color: black; font-size: 16pt; "><b>Economic Prospects for 2010</b></h2><p style="color: black; font-size: 12pt; ">The global economy seems to be recovering after the recent economic shock. The Indian economy, however, was hit in the latter part of the global recession and the real economic growth witnessed a sharp fall, followed by lower exports, lower capital outflow and corporate restructuring. It is expected that the global economies will continue to sustain in the short-term, as the effect of stimulus programs is yet to bear fruit and tax cuts are working their way through the system in 2010. Due to the strong position of liquidity in the market, large corporations now have access to capital in the <a href="http://www.economywatch.com/indianeconomy/indian-economy-overview.html#" class="kLink" target="undefined" id="KonaLink2" style="color: rgb(102, 0, 0); text-decoration: underline !important; border-bottom-style: none !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: rgb(100, 0, 0); padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; background-position: initial initial; background-repeat: initial initial; ">corporate </span><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: rgb(100, 0, 0); padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; background-position: initial initial; background-repeat: initial initial; ">credit</span></span><span id="preLoadWrap2" class="preLoadWrap" style="position: relative; "></span></a> markets.</p><p style="color: black; font-size: 12pt; "><br /></p><p style="color: black; font-size: 12pt; "><br /></p><p style="color: black; font-size: 12pt; "><table border="0" cellspacing="0" cellpadding="0" width="404" style="border-collapse: collapse; "><tbody style="border-top-width: 1px; border-top-style: none; border-top-color: rgb(204, 204, 204); border-right-style: none; border-bottom-style: none; border-left-style: none; border-width: initial; border-color: initial; "><tr><td width="315" colspan="5"><p style="color: black; font-size: 12pt; "><strong>India’s Economic Outlook Projection</strong></p></td></tr><tr><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td></tr><tr><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "><strong>2007</strong></p></td><td><p style="color: black; font-size: 12pt; "><strong>2008</strong></p></td><td><p style="color: black; font-size: 12pt; "><strong>2009</strong></p></td><td><p style="color: black; font-size: 12pt; "><strong>2010</strong></p></td></tr><tr><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td></tr><tr><td><p style="color: black; font-size: 12pt; ">GDP Growth </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; ">9.40%</p></td><td><p style="color: black; font-size: 12pt; ">7.30%</p></td><td><p style="color: black; font-size: 12pt; ">5.40%</p></td><td><p style="color: black; font-size: 12pt; ">7.20%</p></td></tr><tr><td><p style="color: black; font-size: 12pt; ">CPI</p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; ">6.40%</p></td><td><p style="color: black; font-size: 12pt; ">9.30%</p></td><td><p style="color: black; font-size: 12pt; ">5.50%</p></td><td><p style="color: black; font-size: 12pt; ">4.90%</p></td></tr></tbody></table></p><p style="color: black; font-size: 12pt; "> </p><h2 style="color: black; font-size: 16pt; "><b>Indian Economy 2010</b></h2><p style="color: black; font-size: 12pt; ">In order to sustain economic growth during the time of the worst recession, government authorities in India have announced the stimulus packages to prop up <a href="http://www.economywatch.com/indianeconomy/indian-economy-overview.html#" class="kLink" target="undefined" id="KonaLink3" style="color: rgb(102, 0, 0); text-decoration: underline !important; border-bottom-style: none !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; background-position: initial initial; background-repeat: initial initial; ">economic </span><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; background-position: initial initial; background-repeat: initial initial; ">growth</span></span></a>. To finance the stimulus packages, the Indian government has raised over $100 billion over the last four quarters in a way to finance the stimulus package. The country’s public debt, according to the RBI, has surged to over 50% of the total GDP and the RBI has started printing new <a href="http://www.economywatch.com/indianeconomy/indian-economy-overview.html#" class="kLink" target="undefined" id="KonaLink4" style="color: rgb(102, 0, 0); text-decoration: underline !important; border-bottom-style: none !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: rgb(100, 0, 0); padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; background-position: initial initial; background-repeat: initial initial; ">currency</span></span><span id="preLoadWrap4" class="preLoadWrap" style="position: relative; "></span></a> notes.</p><p style="color: black; font-size: 12pt; "> </p><table border="0" cellspacing="0" cellpadding="0" width="495" style="border-collapse: collapse; "><tbody style="border-top-width: 1px; border-top-style: none; border-top-color: rgb(204, 204, 204); border-right-style: none; border-bottom-style: none; border-left-style: none; border-width: initial; border-color: initial; "><tr><td width="495" colspan="4" rowspan="2"><p style="color: black; font-size: 12pt; ">Central Government <a href="http://www.economywatch.com/indianeconomy/indian-economy-overview.html#" class="kLink" target="undefined" id="KonaLink5" style="color: rgb(102, 0, 0); text-decoration: underline !important; border-bottom-style: none !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(100, 0, 0) !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; color:#640000;"><span class="kLink" style="border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(100, 0, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-family: Arial; font-weight: normal; font-size: 16px; position: static; background-position: initial initial; background-repeat: initial initial; ">Debt</span></span></a></p></td></tr><tr><td colspan="4"><p style="color: black; font-size: 12pt; "> </p></td></tr><tr><td><p style="color: black; font-size: 12pt; ">in Rs. Crores (10 Million)</p></td><td><p style="color: black; font-size: 12pt; ">Q3 2008</p></td><td><p style="color: black; font-size: 12pt; ">Q3 2009</p></td><td><p style="color: black; font-size: 12pt; ">% of GDP</p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td></tr><tr><td colspan="4"><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td></tr><tr><td><p style="color: black; font-size: 12pt; ">Public Debt (Sum of 1 and 2)</p></td><td><div align="right">2,099,286.23<p style="color: black; font-size: 12pt; "></p></div></td><td><div align="right">2,505,450.74<p style="color: black; font-size: 12pt; "></p></div></td><td><div align="right">50.71%<p style="color: black; font-size: 12pt; "></p></div></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td></tr><tr><td><p style="color: black; font-size: 12pt; ">1. External Debt</p></td><td><div align="right">237,351.77<p style="color: black; font-size: 12pt; "></p></div></td><td><div align="right">294,941.67<p style="color: black; font-size: 12pt; "></p></div></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td><td><p style="color: black; font-size: 12pt; "> </p></td></tr><tr><td><p style="color: black; font-size: 12pt; ">2. Internal Debt</p></td><td><div align="right">1,861,934.46<p style="color: black; font-size: 12pt; "></p></div></td><td><div align="right">2,210,509.07<p style="color: black; font-size: 12pt; "></p></div></td><td><p style="color: black; font-size: 12pt; "> </p></td></tr></tbody></table><p></p><p></p></span>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-28581015436439783912010-06-08T22:12:00.002-07:002010-06-08T22:19:05.635-07:00Need to Control that Capital<div style="text-align: center;"><span class="Apple-style-span" style="font-weight: bold; "><span class="Apple-style-span" style="font-family:arial;">It is time for the IMF and the United States to fully support capital controls, an easy way to help ease crises in developing economies.</span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: bold; "><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: bold; "><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;">In a new study, staff members of the International Monetary Fund (IMF) endorse an idea to help mitigate the impact of economic crises in developing countries: capital controls. Before the 1997 Asian economic crisis, IMF staff thought controls -- really a macroeconomic policy to smooth the amount of money coming into and leaving an economy -- should be banned. Now, and particularly since the Great Recession, the IMF has changed its tune. Capital controls are a good idea -- and now is the time for the IMF and the United States to back them.</span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;">Capital flows -- basically, investment from one country into another -- can help developing countries grow. Many developing economies lack the savings and financial institutions to help finance and kick-start business activity. Money and investment from abroad can help fill that gap.</span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;">The more capital coming in, the more the developing country benefits, one would think. But it is a bit more complicated than that. Cross-border capital flows tend to be "pro-cyclical": too much money comes in when times are good, and too much money evaporates during a downturn. In the run-up to the 2007-2008 crisis, for instance, wealthy countries poured too much money, too fast, into developing economies. This led to asset bubbles in real estate and stock prices, as well as currency appreciation. When the crisis hit, investors yanked their funds and retreated to the "safe" haven of the United States.</span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;">Capital controls help smooth the inflows and outflows of capital and protect developing economies. Most controls target highly short-term capital flows, usually conducted for speculation rather than longer-term investment. For instance, before the crisis hit, Colombia required that a certain percentage of short-term capital be parked in the central bank for a year. And last November, Brazil put a 2 percent tax on speculative inflows.</span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;">The new IMF study finds that such capital controls helped buffer against some of the worst effects of the financial crisis in some developing countries, such as Colombia, Brazil, India, Thailand, and China. It thus endorses capital controls as part of the macroeconomic policy tool kit.</span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;">This is a sea change. For decades, the IMF (and the U.S. Treasury) had advocated for the free flow of money and capital to and from countries, regardless of their level of development, without restriction. But now, many economists view the premature lifting of regulations on capital flows in Asia as one of the problems that triggered the Asian financial crisis in 1997, as well as why much of Central and Eastern Europe have been so hurt by the current crisis. These events have led to a slow but diligent rethinking of the role of capital controls within the economics profession in general and the IMF in particular. The IMF study is a result of that rethinking.</span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-weight: normal;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;">This new consensus has come just in time. As higher-income countries have maintained low interest rates, capital is rapidly leaving for developing countries offering better rates of return. Countries like Brazil and China are now concerned about bubbles. Capital controls can play a role in helping them maintain financial stability.</span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;">But getting the economics right is only half the battle. Two things must happen to fully take advantage of the new consensus. First, the IMF has to practice what it preaches. It is one thing to have research staff discover that capital controls work. It is another to have IMF country programs advocate for capital controls. The IMF should also play a role in designing effective controls, which investors often figure out how to evade. Bolstering regulators and watchdogs is necessary.</span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;">Second, the United States must follow suit. Since 2003, U.S. trade and investment treaties have outlawed capital controls by developing-country trading partners by mandating the free flow of capital to and from a country, regardless of its level of development -- for instance, in trade deals with Chile, Peru, and Singapore. (In Singapore's and Chile's cases, the countries protested the capital-control bans, but ultimately agreed to the treaties.) Pending deals with Colombia and South Korea would also ban capital controls. Other higher-income countries and trade partners -- such as Canada, Japan, and the European Union -- grant countries the right to use the macroeconomic tool, or at least grant exemptions to prevent or mitigate crises.</span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;">The good news is that the United States is renegotiating a number of trade agreements in the process of passing them through Congress and as part of a new Trans-Pacific Partnership trade agreement. Washington should correct these agreements and allow for at least the temporary use of capital controls to prevent and mitigate financial crises.</span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="font-family:arial;">The world has just learned the hard way that a crisis, no matter where it starts, can hurt everyone across the globe. To prevent another crisis, the United States and the IMF should ensure capital controls are part of every developing economy's tool kit.</span></span></div></span></div>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-24626500252698315532010-06-08T22:12:00.001-07:002010-06-08T22:16:46.576-07:00Control ThatCapitalIt is time for the IMF and the United States to fully support capital controls, an easy way to help ease crises in developing economies.foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-53035946322766968672010-06-08T22:12:00.000-07:002010-06-08T22:16:46.370-07:00Control ThatCapitalIt is time for the IMF and the United States to fully support capital controls, an easy way to help ease crises in developing economies.foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-20511380089220441272010-06-08T10:23:00.000-07:002010-06-08T10:25:10.137-07:00Future Prospects of the Indian EconomyThe Indian economy is growing at a fast pace. It is officially the world's second fastest growing economy. The Indian economy is likely to change a lot in the developing country.<br /><br /><br />Since the beginning of the economic reform in India in early 1990s, the country has gone through a lot of drastic changes. There have been lots of job creation in the country after the economic reforms. Young people are getting job opportunities like never before. New industries like information technology (IT) and business process outsourcing (BPO) have also offered more jobs for the educated youth. In fact now a days anyone with workable knowledge of computer and English speaking can find a job in India. All industries are growing at a fast pace. The auto industry has seen record growth in recent times. Even the manufacturing industry has posted a great rate of growth.<br /><br /><br />In coming years India is expected to go through some more drastic changes economy wise. The growth of the economy at double digit rate will make the country a developed nation in a couple of decades.<br /><br /><br />However, the path of economic progress is not easy. There are some problems in the country than can make the whole progress go for vein. Population explosion is one such problem. The fast growing population of the country ensures that majority of the work done for improving the life standard of the common people are going to the naught. The country has limited resources and it can sustain only a limited number of people living in the country. The basic need for supporting the additional population is urgent, which is bound to take more resources. The government of India is yet to come up with some policy to curb the growing population.<br /><br /><br />Another threat to the Indian economic growth story is terrorism. The threat of terror can derail the whole positive sentiments generated by the economic growth. As economic activities happen mostly in an environment of security, any act of terrorism in any major economic hub can be a major blue to foreign investment in the country, affecting the overall economic growth of the country. For example, bomb blasts in Mumbai had a negative impact on the economic scenario of the city.<br /><br /><br />Religious intolerance is growing in India. As some politicians can always play politics to garner votes in elections, they may divide people and cause communal riots. As seen in the case of Gujarat, some politicians are likely to exploit religious sentiments when pushed to the brink. Any major incident of religious riot can derail economic activities of a particular region. For example, after the communal violence in Gujarat, many industries of the state, especially of Ahmadabad, were affected.<br /><br /><br />Any other internal threat can also put a spanner in the economic growth story any time. As social unrest in the country is existing, it can be a bad omen for the overall economy. The rich-poor divide is also bad for the economic growth of the country. Keeping abreast with business news is good for keeping tabs on happenings in the economy.foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-46206425850025980522010-06-08T10:21:00.000-07:002010-06-08T10:22:51.911-07:00Fixing the economy GloballyThe reality cannot even be anymore as plain as day. The writing is on the wall. The USA really has two choices, which is to continue business as usual with never ending deficit spending leading to high taxation, which in turn of course hinders the economy by burdening all business and leaving the consumer with less or we can seriously have a look at where we are today to make drastic reforms in overall Government size to where we can adapt our current course of complete economic implosion and Government insolvency and just systematically reform a new lean and mean Federal Government to save Trillions of dollars and to pay down the National debt.<br /><br /><br />First and foremost, I want to make it clear that I do not have a desire to see current Federal employees unemployed, just as I would not want to be unemployed or anybody in the private sector to be unemployed either, which is why when Federal Government downsizing occurs, it needs to be performed in stages to ensure that employment transitions occur seamlessly for Federal employees who loses their jobs through out the down sizing process.<br /><br /><br />Why is it imperative that we down size the Federal Government? Well for starters we currently have about $108 Trillion dollars in unfunded liabilities, approximately $60 Trillion dollars in National debt and a $13 Trillion dollar (and growing) budget deficit as well as unemployment/underemployed U-6 of 22% (May 2010, Labor Department statistics) of the Nation and a weak private sector that is constantly shedding businesses every month in Bankruptcy while trying to sustain a $3.8 Trillion a year budget and only bringing in around $2-$2.2 Trillion a year at the Department Treasury and as unemployment rises and businesses continue to fold the revenue coming in will obviously like a total no brainer, decrease . In essence, the current course that we are on is leading us right towards a cliff at the Grand Canyon and the results are not going to be pretty if we fail to act and change course soon!<br /><br /><br />So obviously if we are to be a society with any brains we have to balance the Federal budget 1st and create budget surpluses to pay down debt and at the same time we need to limit Government interference in the Private sector to encourage small business start ups and to encourage existing companies to have the ability to grow. This can be easily achieved if we decided to reduce our Corporate tax rate from 36% to 15%. As a result of doing this, companies will gain an immediate ability to grow inventory, advertise more and as volume of business increases, these businesses will eventually generate new employment again. The Federal budget should be reduced to $2 Trillion dollars a year as well.<br /><br /><br />How do we shave $1.8 Trillion from the Federal budget? Well for starters, it will be essential to repeal and reform the recently forced health care reform bill that passed with 75% of the Nation opposing the ridiculous bill and was only able to pass with bribes, threats and arm twisting in Congress and of coarse nobody has forgotten at all just how anti American and Authoritarian the entire process truly was, not to mention the fact that the Nation had no money for it at ALL during the worst recession since the Great Depression. The HCR bill is just too expensive! Next it will be essential to eliminate the Department of Education, which wastes approximately $200 Billion dollars a year with virtually no improvement in over all National education for the Nation's children. Saved revenues and 100% authority should be returned to the States and tax payer, who we all know are highly interested in ensuring that Education is properly funded so that America's children receives the best primary Education possible. The only real change that would occur is that the parents would gain greater say in their child's Education at a more local level and through new taxation at the State level, less fraud waste and abuse will occur resulting in more bang for the buck in overall Education. After wards the Department of Defense should consider 2 outcomes in order to save serious money. Option 1 would be to assemble a plan to charge regional Nations to pay for DOD's deployment and contracting expenses should it be determined that US Military actions benefit regional Nations economically or Option 2 which would seek to save $75 Billion a year in down sizing non essential foreign military bases, which total at approximately 700. DOD could control 100% of the action, they could be permitted even to increase the size of certain bases as they deem necessary, but ultimately they will need to save $75 Billion a year. If they can save more in an intelligent manner without jeopardizing National Defense, then a pay raise for all E-1-O-9 service members in all branches should be issued at 10% over their annual salaries, so long as the savings covers the overall pay increases. DOD could also look at ways to increase the life expectancy of non combat equipment and machinery and if they achieve doing an outstanding job in saving more than the targeted $75 Billion a year reduction, then 1/2 the money saved every year will be returned to the Treasury in savings and the other 1/2 kicks into additional pay raises equally divided for all Military Service members. In effect every unit Commander will have the joy to announce to their service members that they have the ability every year as a team to increase their salaries, every year as a team. That is outstanding positive reinforcement to make efficiency become habit, because now it pays to be efficient and it pays to make everything stay in top notch shape and last longer. This concept will not be permissible on body armor, combat systems, weapons or critical technologies as determined by DOD's top command, because such things will have to stay on a schedule of new and the best at all times, but anything and everything else, play ball!<br /><br />A third area to save tremendous amounts of money will be to review thousands of agencies to determine which agencies should be down sized and or eliminated. A target of savings should be set at $75 Billion a year.<br /><br />A fourth area to save money should be a target of $10 Billion a year in the Department of Energy.<br /><br />A fifth area to save money should be in reforming Social Security which has never received proper funding in the 1st place.<br /><br />Social Security should become a new 21st Century individual controlled investment account with Federally backed Insurance that strictly protects the amount invested in by the individual and employer, but does not protect the amount of targeted gains. This would truly be a Republican/Democrat compromise. This would allow a choice of investments that the individual can make in US markets, but ensure that they don't lose it all if they retire during an economic downturn. In essence the Social Security individual will either at least have a savings for retirement to retire with just enough or if their investments were wise and good then they would have the ability to retire in style. This concept would perfectly balance between the Democrats strong desire of centralized control and the Republicans desire to allow individual liberty. Solving Social Security if it can ever happen will have to be a perfect compromise by both Party's otherwise the problem will never be resolved and as a result of not solving the Social Security problem, then more than likely it will go belly up and then nobody will have anything at all. A market control of age to retire should rise when times are bad and lower when times are good randomly due to uncontrolled market forces and the American people should be told that that is just how it goes to ensure that everybody has their Social Security protected. Markets are some times very good and some times markets are horrible.<br /><br /><br />A new fair flat tax system should be installed with abolishing the income tax and estate tax.<br /><br /><br />The new excise tax system will be as follows: (The way it is composed is again, trying to compromise the ideological differences that the left and right has, but no less the Treasury will gain more money than ever and every tax bracket of income earners will save too)<br /><br /><br />Subsistence items = No taxation what so ever. A huge list could determine what is essential to human life with no luxuries. Example: grocery food, non soda/alcohol drink, 1st home, diapers, clothing items under 2010 value of $100 per article of clothing, shoes, baby products such as cribs, rocking chairs, pacifiers, heating furnaces for homes, tooth brushes, tooth paste, soap, shampoo, toilet paper, coats, jackets, etc.<br /><br /><br />Common items = 7%. This could include: household goods, electronics, tires, cars, motor oil, tools, machinery, office supplies, lawn care products, lumber, ladders, industrial materials, cement, concrete, steel, copper, guns, ammunition, air conditioners, humidifiers, books, caskets, grave stones, bubble gum, perfume, cologne, cosmetics, news papers, and much, much more.<br /><br />Luxury items = 9%. This could include: expensive paintings, jewelry, boats & yachts, high end automobiles, ATVS, snow mobiles, fast food, candy, sweets, soda, sugar, private jets, hot tubs, pool tables, 2nd home& beyond on a private basis, sex toys, trains, Rec vehicles, fur coats, etc.<br /><br /><br />Vices of life items= 12%. This could include: Alcohol, tobacco products, marijuana, coffee, tea, slot machines, craps tables, black jack tables, roulette tables etc.<br /><br /><br />Surplus revenues should be utilized as follows: 65% pays down debt and 35% is utilized for small business grants and Nano technology research and development Grants for primarily medicinal purposes to create a new major US Industry to produce a new technology that will render Global demand. 60% of the 35% should be utilized in Nano Technology research and development Grants to companies that employ US citizens in the USA to work in that sector. 40% of the 35% should be utilized for small businesses who can expand and new start ups with excellent business plans. The SBA should employ Fortune 500 companies to produce a rotating staff of review teams from the Private sector to make the reviews. The Fortune 500 company should be compensated direct tax free $35,000 a year per person produced with an MBA to the SBA review board and then that individual who will only serve 1 year on the SBA review board will review and determine which small businesses are approved or denied Grants. The MBA will be compensated $65,000 for the year and will receive a 10% commission on the new start ups or expanding small business 1st profitable year net profit total. So with that being said, if the MBA approves a Grant to losers who can't ever profit, then the MBA earns no commission, but if the MBA picks winners who end up making huge profits then the MBA could make a killing. This will ensure that a positive impact occurs in the overall economy and will protect the tax payer against fraud, waste and abuse. The Fortune 500 companies will all produce people for SBA reviews and then the company that produces the biggest winners will win bragging rights where the President of the United States will spoil them at the White House for 5 days and nights where the CEO, COO, Chairman of the board, the largest share holder and the crowd of MBA's that served on the SBA's review board who produced the highest small business profit totals will stay and be wined and dined as a team award. Everybody will receive plaques, X3 photos individually with the President and X2 free advertising media blitzes, one at the beginning of their stay and one at the end of their stay will ensure that the entire world knows who has the top dogs in the business world, which will be great for the Fortune 500 company in free advertising! Under this scenario the Government provides the business promotion shell with the SBA and Americas finest Fortune 500 Companies fine tunes Americas new business all stars so that the economy can truly succeed. It's kind of like marrying the best of two different worlds!<br /><br />Now that a fair flat tax system is installed the entire IRS at a huge tax payer savings can be shut down. The average small business which spends approximately $183,000 a year to properly maintain their books can now save most of that money in accounting, which of coarse will have an immediate and positive impact on the overall economy. The Department of Treasury will be all that is needed to handle the 15% Corporate tax arena.<br /><br />We have now saved a minimum of $1.48 Trillion a year with real potential to save even more.<br /><br /><br />Once all of this has been done then multiple factors will occur. The Treasury will gain more money than ever before in American history so that we can really pay down the National debt, the Federal Government will remain strong and effective while being slightly smaller with a balanced budget producing budget surpluses, businesses will thrive, the unemployment rate will drop fast and individual earners will keep more of their money in their pockets where that money belongs. I have seen nobody in politics today from any Party produce such a winning plan!foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-87955421702826613052010-06-08T09:29:00.000-07:002010-06-08T09:33:11.314-07:00US recession : Its effect on Indian economy<span class="Apple-style-span" style="font-family: Verdana, Geneva, sans-serif; font-size: 11px; line-height: 14px; "><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; ">In economics, a <strong>recession</strong> is a general slowdown in economic activity over a sustained period of time, or a business cycle contraction. Production as measured by Gross Domestic Product(GDP), employment, investment spending, capacity utilisation, household incomes and business profits all fall during recessions. Now this is recession only by definition.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "> </p><p style="text-align: left;margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "> <strong><u>US</u></strong><strong><u> recession and its effect on Indian economy</u></strong></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "> The old saying “History doesn’t always repeat itself, but often rhymes”, is based more on fact than fiction. It’s been a lot of time we hear of “Recession” going on in US market. Everyone is talking about recession. We cling to newspapers, television news channels, and financial reports only to discover “what next” in recession. It would be naïve to imagine that a recession in the United States would have no impact on India. The United States accounts for one-fourth of the world GDP. The fears of a US recession led to panic in the Indian stock market.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "> </p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "> The effects of the recession 2008 on India were quite distinct from those of the past. Here are some areas worth following:</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; ">1) In terms of specific sectors, the <strong>IT Enabled Services sector </strong><strong>was the hit </strong>since a majority of Indian IT firms derive 75% or more of their revenues from the United States</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; ">2) The <strong>tourism sector</strong> was affected. Now is the time to <strong>aggressively promote health </strong><strong>tourism.</strong> Given the availability of talented professionals, and with a distinct cost advantage, India can be the destination of choice for health tourism.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; ">3) The <strong>manufacturing sector </strong><strong>ramped up scale economies.</strong></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><strong> </strong></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><strong><br /></strong></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "> Since the first quarter of 2008, the United States of America started experiencing an economic recession. But apart from US the global economy faces the possibility of recession in 2009. The IMF<strong> </strong>predicts slower growth and a likely 2009 world recession. Countries include the UK, Australia, India, Japan, Germany and Spain will experience slower growth in the next year and a possible recession.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; ">According to Governor of RBI, as India’s growth is mainly driven by domestic demand and consumption, the country would be less affected by the global financial turmoil, but it would not go completely unscathed. India’s growth will continue and even if there is some moderation, it will only be a modest moderation. But it will not be a recession and there will only be a slight deceleration. But India has to balance the concerns of maintaining price stability and sustaining growth. The word 'recession' is being frequently used in India in recent months despite the fact that the economy continues to grow and that even at 7 per cent in the current fiscal and perhaps 6 per cent in the next one, these will be amongst the better growth years for the Indian economy since independence.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><br /></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><br /></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><strong><u>Jobs in recession and Indian youth</u></strong></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; ">However, there is certainly a deep recession as far as jobs for the highly educated are concerned. Ironically, this may be the first time in India's history when it is more difficult for the professional graduates to find employment or appropriate employment, compared to the less educated millions. The present job recession has also hit the aspiration level of the Indian youth. The myth of IT and the glamour if private jobs are all history now. Now in an age of pink slips and mounting recession, the Indian Youth is once again looking in public sectors for jobs. Once shunned for its non glam image and boredom, the youngsters today are choosing security of the government jobs over <a href="http://www.articlesbase.com/news-and-society-articles/us-recession-and-its-effect-on-indian-economy-and-society-1082667.html#" class="kLink" target="undefined" id="KonaLink3" style="color: rgb(0, 153, 0) !important; border-bottom-style: none !important; text-decoration: underline !important; cursor: pointer; font-family: verdana; border-top-width: 0px !important; border-right-width: 0px !important; border-bottom-width: 0px !important; border-left-width: 0px !important; border-top-style: none !important; border-right-style: none !important; border-left-style: none !important; border-top-color: transparent !important; border-right-color: transparent !important; border-bottom-color: transparent !important; border-left-color: transparent !important; background-image: none !important; background-attachment: initial !important; background-origin: initial !important; background-clip: initial !important; background-color: transparent !important; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 0px !important; padding-left: 0px !important; text-transform: none !important; display: inline !important; font-variant: normal; top: 0px; right: 0px; bottom: 0px; left: 0px; outline-style: none; outline-width: initial; outline-color: initial; position: static; background-position: initial initial !important; background-repeat: initial initial !important; "><span style="color: rgb(0, 153, 0) !important; font-family: Verdana, Geneva, sans-serif; font-weight: normal; font-size: 12px; position: static; color:#009900;"><span class="kLink" style="font-family: Verdana, Geneva, sans-serif; border-top-width: 0px !important; border-top-style: none !important; border-top-color: initial !important; border-left-width: 0px !important; border-left-style: none !important; border-left-color: initial !important; border-right-width: 0px !important; border-right-style: none !important; border-right-color: initial !important; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: initial; padding-top: 0px !important; padding-right: 0px !important; padding-bottom: 1px !important; padding-left: 0px !important; color: rgb(0, 153, 0) !important; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; width: auto !important; float: none !important; display: inline !important; font-weight: normal; font-size: 12px; position: static; background-position: initial initial; background-repeat: initial initial; ">money</span></span></a> in corporate sectors. The global financial meltdown and the serious job cut in the private sectors are making youth nervous, jittery about the present private office scenario.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "> And finally, a trickle has already begun of professionals of Indian origin returning to India as job opportunities dry up in the US and other developed economies. What should the newly graduating (and their parents) do? They have to start with the acceptance of this new ground reality that merely a professional degree even if it is from a top-10 or a top-25 institute is not enough to guarantee them a job of their choice. It is important for those who are in the job market today to understand that India's economy is spread across India and not confined to the top eight or nine cities only. Hence, jobs are also spread across the entire urban and even rural India and, therefore, the employees must be willing to work from there.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "> </p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><br /></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><strong><u>Fiscal, monetary policies help India dodge recession, 'sprint'</u></strong></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; ">Fiscal and monetary policies have helped <u>India</u> in dodging the recession and sustaining the economy. India named as a 'sprinter', the downward trend in the country's industrial output seemed to have ended, with a pick-up likely due to new infrastructure development.<br /><br />Investor confidence in India had certainly improved, as reflected in the rapid increase in net capital inflows in the <span class="Apple-style-span" style="font-size:100%;"><span class="Apple-style-span" style="font-size: 12px;">stock market </span></span>during recent months. Sherman Chan, an economist, said in a note on the recovery of the Asia-Pacific region that amid increased sightings of green shoots, the bottom of the global downturn is now in sight China, India and Indonesia & have dodged recession and maintained strong growth despite the global turmoil.</p><br /><span style="font-family: Verdana, Geneva, sans-serif; "></span></span>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-74279058683338878602010-06-08T09:25:00.000-07:002010-06-08T09:29:36.891-07:00Impact of global recession on India<div><span class="Apple-style-span" style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; color: rgb(102, 102, 102); line-height: 18px; "><span class="Apple-style-span" style="color: rgb(0, 0, 0); line-height: 17px; "><div><span class="Apple-style-span" style="color:#666666;"><span class="Apple-style-span" style="line-height: 18px;"><p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: 15.9pt"><span style="font-size:12.0pt;mso-bidi-font-size:11.0pt;font-family: "Arial","sans-serif";mso-fareast-font-family:"Times New Roman"">America is the most effected country due to global recession, which comes as a bad news for India. India have most outsourcing deals from the US. Even our exports to US have increased over the years. Exports for January declined by 22 per cent.</span><span style="font-size:12.0pt;mso-bidi-font-size:10.5pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman""><o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;mso-line-height-alt: 15.9pt"><span style="font-size:16.0pt;mso-bidi-font-size:12.0pt;font-family: "Arial","sans-serif";mso-fareast-font-family:"Times New Roman""><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: 15.9pt"><span style="font-size:12.0pt;mso-bidi-font-size:11.0pt;font-family: "Arial","sans-serif";mso-fareast-font-family:"Times New Roman"">RECESSIONS ARE the result of reduction in the demand of products in the global market. Recession can also be associated with falling prices known as deflation due to lack of demand of products. Again, it could be the result of inflation or a combination of increasing prices and stagnant economic growth in the west.</span><span style="font-size:16.0pt;mso-bidi-font-size:12.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman""><o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: 15.9pt"><span style="font-size:12.0pt;mso-bidi-font-size:10.5pt;font-family: "Arial","sans-serif";mso-fareast-font-family:"Times New Roman""><br />Recession in the West, specially the United States, is a very bad news for our country. Our companies in India have most outsourcing deals from the US. Even our exports to US have increased over the years. Exports for January have declined by 22 per cent. There is a decline in the employment market due to the recession in the West. There has been a significant drop in the new hiring which is a cause of great concern for us. Some companies have laid off their employees and there have been cut in promotions, compensation and perks of the employees. Companies in the private sector and government sector are hesitant to take up new projects. And they are working on existing projects only. Projections indicate that up to one crore persons could lose their jobs in the correct fiscal ending March. The one crore figure has been compiled by Federation of Indian Export Organisations (FIEO), which says that it has carried out an intensive survey. The textile, garment and handicraft industry are worse effected. Together, they are going to lose four million jobs by April 2009, according to the FIEO survey. There has also been a decline in the tourist inflow lately. The real estate has also a problem of tight liquidity situations, where the developers are finding it hard to raise finances.</span><span style="font-size:16.0pt;mso-bidi-font-size:12.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman""><o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: 15.9pt"><span style="font-size:12.0pt;mso-bidi-font-size:10.5pt;font-family: "Arial","sans-serif";mso-fareast-font-family:"Times New Roman""><br />IT industries, financial sectors, real estate owners, car industry, investment banking and other industries as well are confronting heavy loss due to the fall down of global economy. Federation of Indian chambers of Commerce and Industry (FICCI) found that faced with the global recession, inventories industries like garment, gems, textiles, chemicals and jewellery had cut production by 10 per cent to 50 per cent.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: 15.9pt"><span style="font-size:12.0pt;mso-bidi-font-size:10.5pt;font-family: "Arial","sans-serif";mso-fareast-font-family:"Times New Roman""><br />How to tackle the global slump?<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: 15.9pt"><span style="font-size:12.0pt;mso-bidi-font-size:10.5pt;font-family: "Arial","sans-serif";mso-fareast-font-family:"Times New Roman""><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: 15.9pt"><span style="font-size:12.0pt;mso-bidi-font-size:10.5pt;font-family: "Arial","sans-serif";mso-fareast-font-family:"Times New Roman"">“Our economy is shrinking, unemployment rolls are growing, businesses and families can’t get credit and small businesses can’t secure the loans they need to create jobs and get their products to market,” Obama said.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-size:14.0pt;mso-bidi-font-size:11.0pt; line-height:115%;font-family:"Arial","sans-serif""><o:p> </o:p></span></p></span></span></div></span></span></div>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-79110123710977134012010-06-08T04:13:00.000-07:002010-06-08T04:32:02.631-07:00The “Inflation” in Inflation<span class="Apple-style-span" style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: -webkit-xxx-large; "><div id="ELtop3" style="margin-top: 60px; margin-right: 18px; margin-bottom: 36px; margin-left: 18px; padding-top: 0px; padding-right: 126px; padding-bottom: 0px; padding-left: 76px; "><p id="title" style="text-align: center; font-size: 11px; color: rgb(51, 51, 51); text-decoration: none; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 26px/normal Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;"><b>The “Inflation” in Inflation Targeting</b></span></p><p id="byline" style="font-size: 11px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 12px/16px Verdana, Helvetica, Arial, sans-serif; padding-top: 6px; "><span class="Apple-style-span" style="line-height: 20px; "><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></p><p id="byline" style="font-size: 11px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 12px/16px Verdana, Helvetica, Arial, sans-serif; padding-top: 6px; "><span class="Apple-style-span" style="line-height: 20px; "><span class="Apple-style-span" style="font-family:arial;">Many central banks conduct monetary policy according to an inflation targeting framework, which requires that some measure of inflation be chosen as the target. One approach would be to use an index of goods and services whose prices are market determined and not subject to frequent, idiosyncratic, and transitory changes. That could be an index based on the personal consumption expenditures prices of services and durable goods, excluding nondurable goods, similar to but distinct from the U.S. core personal consumption expenditures price index.</span></span></p></div><div id="EL" style="margin-top: 0px; margin-right: 18px; margin-bottom: 0px; margin-left: 18px; "><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">Many central banks conduct monetary policy according to an inflation-targeting framework. Central to such a framework is the principle that monetary policy decisions are formulated in the context of an explicitly announced numerical target or range for some measure of inflation. Obviously, if an inflation-targeting framework is to be operational, then the important question of what measure of inflation to target cannot be avoided. There is unlikely to be a single answer to the question of which measure is best. And, indeed, inflation-targeting countries have varied significantly in the measures they have selected. This</span><em><span class="Apple-style-span" style="font-family:arial;">Economic Letter</span></em><span class="Apple-style-span" style="font-family:arial;"> uses U.S. data to discuss some of the principles and issues involved in choosing an inflation measure to target.</span></p><p class="secTitle" style="font-size: 11px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; border-top-style: none; border-bottom-style: none; clear: both; border-right-style: none; border-left-style: none; border-width: initial; border-color: initial; font-weight: bold; "><span class="Apple-style-span" style="font-family:arial;">What is inflation targeting?</span></p><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">I start by reviewing some of the central elements of inflation targeting regimes. As Bernanke and Mishkin (1997) discuss, inflation targeting is a framework for conducting monetary policy. The framework emphasizes price stability as the medium- to long-term goal of monetary policy. And it dispenses with intermediate targets, such as money growth or a fixed exchange rate, in favor of an explicitly announced target for inflation. To insulate monetary policy from short-term political considerations, which could lead to higher inflation than desired, once an inflation-targeting framework is in place, the central bank is allowed to conduct monetary policy independently. Accordingly, in the terminology of Debelle and Fischer (1994), the central bank is granted “instrument independence”—the freedom to employ its tools to achieve its policy goals—but not “goal independence,” which is the freedom to choose those goals.</span></p><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">Although inflation targeting provides a general framework for conducting monetary policy, it does not offer a “one-size-fits-all” prescription. There is considerable variation among inflation-targeting central banks over important aspects of the framework (Bernanke et al. 1999). At the same time, all inflation-targeting central banks have some form of explicitly announced target for inflation. Hence, as noted earlier, a decision has to be made about what measure of inflation to target.</span></p><p class="secTitle" style="font-size: 11px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; border-top-style: none; border-bottom-style: none; clear: both; border-right-style: none; border-left-style: none; border-width: initial; border-color: initial; font-weight: bold; "><span class="Apple-style-span" style="font-family:arial;">What measure of inflation to target?</span></p><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">The United States does not practice inflation targeting. But some of the principles underlying this framework can be illustrated using U.S. data. It might seem natural that a series such as the consumer price index (CPI) would make a suitable target. In many regards, it would be. The CPI features prominently in the business press, it is released in a timely fashion, and it is not subject to historical revision. Moreover, it is constructed by the Labor Department’s Bureau of Labor Statistics, an institution that is independent of the Federal Reserve, which is important from an accountability perspective. However, the CPI was developed to measure the cost of living, that is, the cost of purchasing a particular basket of goods and services. It is not automatic that monetary policy should be directed at stabilizing changes in the cost of living. In a world with many goods and services whose prices do not change in unison or for the same reason, inflation is most usefully thought of as a generalized upward movement in prices, rather than simply an upward movement in one particular basket of goods and services. That’s true even if the price of that basket is intended to reflect the cost of living. Moreover, the CPI is a fixed-weight index and is known to overestimate changes in the cost of living. Lebow and Rudd (2003) calculate the overestimation to be about 0.9 percentage point per year. By contrast, the personal consumption expenditures price index (PCEPI) is thought to be less affected by this overestimation and is often favored as a measure of changes in consumer prices.</span></p><div class="chart1 Rchart" style="width: 420px; margin-top: 15px; margin-right: 26px; margin-bottom: 15px; margin-left: 15px; padding-top: 6px; padding-right: 6px; padding-bottom: 6px; padding-left: 6px; border-top-width: 4px; border-right-width: 4px; border-bottom-width: 4px; border-left-width: 4px; border-top-color: rgb(101, 149, 163); border-right-color: rgb(101, 149, 163); border-bottom-color: rgb(101, 149, 163); border-left-color: rgb(101, 149, 163); border-top-style: solid; border-right-style: solid; border-bottom-style: solid; border-left-style: solid; page-break-inside: avoid; float: right; "><p class="title" style="font-size: 12px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; line-height: 15px; page-break-inside: avoid; padding-bottom: 3px; font-weight: bold; "><span class="Apple-style-span" style="font-family:arial;">Figure 1<br />Headline and core PCEPI inflation</span></p><span class="Apple-style-span" style="font-family:arial;"><img src="http://www.frbsf.org/publications/economics/letter/2010/el2010-17-1.png" alt="Headline and core PCEPI inflation" title="Headline and core PCEPI inflation" style="page-break-inside: avoid; height: 280px; width: 420px; " /></span><p class="source" style="font-size: 11px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; line-height: 15px; page-break-inside: avoid; padding-top: 3px; "></p></div><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">Many individual goods prices enter the CPI and the PCEPI. The prices of some of these, such as tobacco and alcohol, are importantly influenced by taxes and excise duties and cannot reliably be viewed as market prices. For example, the increase in the excise duty on tobacco as part of the Children’s Health Insurance Program Reauthorization Act of 2009 affected the cost of living but did not represent a rise in inflation. Other prices are volatile and subject to large but transitory movements. Fresh produce prices are weather-related and can be seasonal. The prices of energy-related goods such as gasoline and natural gas jump up and down based on weather and geopolitical developments. For both fresh produce and energy-related goods, price changes might often represent relative price movements rather than true inflation. Recognizing these issues, inflation-targeting central banks are generally charged with targeting some measure of “core” inflation rather than “headline” inflation. In the United States, core measures are available for both CPI and PCEPI inflation, constructed by excluding all food and energy prices.</span></p><div class="chart1 Rchart" style="width: 420px; margin-top: 15px; margin-right: 26px; margin-bottom: 15px; margin-left: 15px; padding-top: 6px; padding-right: 6px; padding-bottom: 6px; padding-left: 6px; border-top-width: 4px; border-right-width: 4px; border-bottom-width: 4px; border-left-width: 4px; border-top-color: rgb(101, 149, 163); border-right-color: rgb(101, 149, 163); border-bottom-color: rgb(101, 149, 163); border-left-color: rgb(101, 149, 163); border-top-style: solid; border-right-style: solid; border-bottom-style: solid; border-left-style: solid; page-break-inside: avoid; float: right; "><p class="title" style="font-size: 12px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; line-height: 15px; page-break-inside: avoid; padding-bottom: 3px; font-weight: bold; "><span class="Apple-style-span" style="font-family:arial;">Figure 2<br />Components of PCEPI inflation</span></p><span class="Apple-style-span" style="font-family:arial;"><img src="http://www.frbsf.org/publications/economics/letter/2010/el2010-17-2.png" alt="Components of PCEPI inflation" title="Components of PCEPI inflation" style="page-break-inside: avoid; height: 280px; width: 420px; " /></span><p class="source" style="font-size: 11px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; line-height: 15px; page-break-inside: avoid; padding-top: 3px; "></p></div><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">Figure 1 displays the four-quarter change in U.S. headline and core PCEPI inflation from the first quarter of 1990 to the fourth quarter of 2009. The most striking difference between the two series is how much more volatile headline PCEPI inflation is compared with core PCEPI inflation. Much of the greater volatility of headline PCEPI inflation is due to energy prices. In 2007, the rise in energy prices drove headline PCEPI inflation well above core PCEPI inflation, while the huge decline in energy prices during 2008 similarly drove headline PCEPI inflation well below core PCEPI inflation. Figure 2, which displays four-quarter headline PCEPI inflation for durables, nondurables, and services, shows that much of the volatility in the headline series comes from its nondurables component. This makes sense because the nondurables component includes such items as food; fuel oil and other fuels; motor vehicle fuels, lubricants, and fluids; and tobacco.</span></p><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">Of course, the argument for excluding food and energy-related goods is not just that their price changes are volatile, but also that these changes are typically idiosyncratic and transitory. To illustrate this point, I perform a statistical exercise using regression methods to measure the persistence of price changes in the durables, nondurables, and services components of the PCEPI from the first quarter of 1995 to the fourth quarter of 2009. The measure of persistence for the durables and services components is much higher than the measure for persistence in the nondurables component, which is close to zero, implying that much of the variation in nondurables inflation is transitory.</span></p><p class="secTitle" style="font-size: 11px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; border-top-style: none; border-bottom-style: none; clear: both; border-right-style: none; border-left-style: none; border-width: initial; border-color: initial; font-weight: bold; "><span class="Apple-style-span" style="font-family:arial;">Should we care more about some goods prices than others?</span></p><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">The notion that an inflation-targeting central bank might care more about the prices of some goods than others is consistent with much New Keynesian literature emphasizing “sticky” prices. In many of these models, monetary policy can improve the allocation of productive resources by stabilizing inflation measured by a price index composed of goods whose prices are sticky. In practice, price stickiness is associated with how frequently price changes occur (Bils and Klenow 2004). Since gasoline prices, and many, but not all, food prices change frequently, this New Keynesian literature is consistent with a core inflation measure that excludes these goods. But this literature also suggests excluding the prices of certain other goods, such as airline tickets and such clothing products as boys’ sweaters and women’s tops. Interestingly, in their analysis of the price data used to construct the CPI, Bils and Klenow find that the prices of nondurable and durable goods adjust somewhat more frequently than the prices of services, with nondurable goods adjusting slightly more frequently than durable goods.</span></p><p class="secTitle" style="font-size: 11px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; border-top-style: none; border-bottom-style: none; clear: both; border-right-style: none; border-left-style: none; border-width: initial; border-color: initial; font-weight: bold; "><span class="Apple-style-span" style="font-family:arial;">A stability inflation index</span></p><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">Mankiw and Reis (2003) ask what measure of inflation an inflation-targeting central bank should stabilize. They take as their starting point the idea that an inflation-targeting framework has been adopted. They then ask what measure of prices (the stability price) would, if kept stable, impart the least volatility to economic activity. In the spirit of Mankiw and Reis, one can extend this reasoning to construct a stability inflation index. Clearly, a central issue in doing so would be determining the weights to be assigned to the constituent prices.</span></p><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">Although a wide range of prices could be included, for simplicity I focus on headline PCEPI inflation and its three components: durables, nondurables, and services. To design one possible index, I use a statistical model to relate PCEPI inflation of durables, nondurables, and services to lags of headline PCEPI inflation, the respective lags of each of the three PCEPI components, and the Congressional Budget Office measure of the unemployment gap, which is the difference between the unemployment rate and the natural rate of unemployment. This unemployment gap serves as the measure of economic activity. Based on these statistical relationships, I formulate the stability inflation index as a weighted average of four-quarter durables, nondurables, and services inflation. I then calculate for all possible weights the unemployment gap variation associated with keeping this index constant.</span></p><div class="chart1 Rchart" style="width: 420px; margin-top: 15px; margin-right: 26px; margin-bottom: 15px; margin-left: 15px; padding-top: 6px; padding-right: 6px; padding-bottom: 6px; padding-left: 6px; border-top-width: 4px; border-right-width: 4px; border-bottom-width: 4px; border-left-width: 4px; border-top-color: rgb(101, 149, 163); border-right-color: rgb(101, 149, 163); border-bottom-color: rgb(101, 149, 163); border-left-color: rgb(101, 149, 163); border-top-style: solid; border-right-style: solid; border-bottom-style: solid; border-left-style: solid; page-break-inside: avoid; float: right; "><p class="title" style="font-size: 12px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; line-height: 15px; page-break-inside: avoid; padding-bottom: 3px; font-weight: bold; "><span class="Apple-style-span" style="font-family:arial;">Figure 3<br />"Underlying" PCEPI inflation</span></p><span class="Apple-style-span" style="font-family:arial;"><img src="http://www.frbsf.org/publications/economics/letter/2010/el2010-17-3.png" alt="“Underlying” PCEPI inflation" title="“Underlying” PCEPI inflation" style="page-break-inside: avoid; height: 280px; width: 420px; " /></span><p class="source" style="font-size: 11px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; line-height: 15px; page-break-inside: avoid; padding-top: 3px; "></p></div><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">Using data from the first quarter of 1985 through the fourth quarter of 2009, the weights that produce the least volatility of economic activity are 0.24 for durables, 0.00 for nondurables, and 0.76 for services. In the headline PCEPI, the weights on these three components are approximately 0.13, 0.24, and 0.63 respectively. The stability inflation index essentially reassigns the weight for nondurables to durables and services. The inflation stability index discounts nondurables inflation and highlights services inflation because an index composed of durables inflation and services inflation is much less volatile than an index that includes nondurables inflation. By discounting nondurables in the index, monetary policy would avoid the disruption of economic activity caused by efforts to offset the transitory shocks produced by nondurables inflation.</span></p><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">Because this approach is a “back-of-the envelope” calculation, I have not actually constructed a stability inflation index. Instead, I take as a proxy for this index the PCEPI inflation series for durables and services, which is shown in Figure 3, together with core PCEPI inflation and the Dallas Federal Reserve Bank’s trimmed-mean PCEPI inflation (Dolmas 2005). Similar to trimmed-mean PCEPI inflation, inflation in durables and services has generally tended to be higher than core PCEPI inflation. However, in recent quarters, it is notable that inflation in durables and services has fallen rapidly. This suggests an absence of inflationary pressures, consistent with the current high unemployment rate and an economy operating with substantial slack.</span></p><p class="secTitle" style="font-size: 11px; color: rgb(58, 108, 125); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; border-top-style: none; border-bottom-style: none; clear: both; border-right-style: none; border-left-style: none; border-width: initial; border-color: initial; font-weight: bold; "><span class="Apple-style-span" style="font-family:arial;">Conclusion</span></p><p style="font-size: 11px; color: rgb(34, 34, 34); text-decoration: none; margin-top: 12px; margin-right: 126px; margin-bottom: 12px; margin-left: 76px; font: normal normal normal 14px/21px Georgia, 'Times New Roman', Times, serif; "><span class="Apple-style-span" style="font-family:arial;">For an inflation targeting regime to be operational, some measure of inflation must be chosen as the target. An important line of economic reasoning suggests that it is the generalized upward movement in an index of goods and services whose prices are market-determined and “sticky” that a central bank ought to be concerned about. One possibility would be to target changes in a PCE-based price index including durable goods and services and excluding nondurable goods. Such an index would be closely related to but distinct from the core PCEPI.</span></p></div></span>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-35822145303785725932010-06-08T03:48:00.001-07:002010-06-08T03:48:54.799-07:00Economy Of India<div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Post Independence</strong><br />The post independence period of economy of India was a litmus test for the economic planners. Having come out of the shadow of colonial rule, the nation had a huge challenge of undoing the exploitation of colonial era. The founding fathers had to use economic upliftment as a tool for nation building. The economy then was backward in nature.<br /><br />Industry was characterized by ill equipped technology and unscientific management. Agriculture was still feudal in nature and characterized by low productivity. Transport and communication systems were not properly developed, educational and health facilities insufficient and the complete absence of social security measures.<br /><br />Poverty was visible and unemployment widespread, resulting in a low standard of living. To guide the Indian economy towards a path of growth and development, the economic planners decided to adopt a course of mixed economy, assigning a vital role to public sector enterprises and economic planning. Private enterprise participation was negligible. A system of License Raj developed, by which entrepreneurs had to seek permission from government to set up manufacturing units. The government effectively controlled everything. During this period the banks were nationalized between late 1960's and early 1970's.<br /><br />India resorted to economic planning by the way of five year plans for economic development.<br /><br /><strong>Crisis In The Economy</strong><br />By the beginning of 1990’s, the Indian Economy was under great crisis and faced its stiffest challenge. India faced a serious balance of payment problem and foreign exchange reserves were at record low. That is when the government decided to alter the course of the Indian economy.<br /><br /><strong>Post Reforms</strong><br />The introduction of reforms in 1991 resulted in sweeping changes in the Indian Economy. The reforms process consisted of three processes, liberalization, privatization and globalization (LPG model). Under liberalization markets were deregulated, under privatization private participation was encouraged and many a public sector undertaking (PSU) were privatized and under globalization restrictions on foreign investments were removed. The Indian economy moved away from its isolation, to be integrated with the global economy and to competitively utilize its advantages to make rapid strides in terms of growth.<br /><br />In India today 60% of the population is dependent directly and indirectly on agriculture and agriculture contributes 17% of GDP.<br /><br />The Industrial sector has witnessed massive restructuring by the way of mergers and acquisitions, process reengineering, foreign joint ventures, technological up gradation. Certain sectors like cement, steel, aluminium, pharmaceuticals, and automobiles have been witnessing unprecedented growth.<br /><br />The service sector has been one of the major beneficiaries of the economic boom. The outsourcing industry comprising of IT and ITE’S became the new poster boy of the Indian economy. The huge pool of engineering talent was absorbed by the IT industry, while graduates could carve out a career in the ITE'S industry. The purchasing power of the booming middle class was enhanced, who went on a consumption spree, which in turn allowed the retail sector to flourish. The booming economy also created a wave of real estate boom across the country.<br /><br />The supply of money into the economy has increased steadily due to FDI’s. (Between April 2008 and January 2009, India received total foreign investments of US $ 15,545 million).The Foreign Institutional Investors (FII’s) have invested heavily in the stock market, resulting in a continual bull run for an extended period of time. The BSE indices scaled a new peak of 21,000 in January 2008.<br /><br /><strong>Summary</strong><br />To summarise, post liberalization the Indian economy is one of the fastest growing economies in the world. It can also be said that the Indian economy has coped well to the pressures of the global recession, far better than most other nations. The future looks positive for India and one can expect the nation to progress strongly in the path of development.</div><div><br /></div>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-31183152456804028872010-06-08T03:47:00.001-07:002010-06-08T03:47:24.612-07:00Poverty in India<div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Poverty in India: Current Situation</strong><br />Poverty is one of the main issues, attracting the attention of sociologists and economists. It indicates a condition in which a person fails to maintain a living standard adequate for a comfortable lifestyle.<br /><br />Though India boasts of a high economic growth, it is shameful that there is still large scale poverty in India. Poverty in India can be defined as a situation when a certain section of people are unable to fulfill their basic needs. India has the world's largest number of poor people living in a single country. Out of its total population of more than 1 billion, 350 to 400 million people are living below the poverty line. Nearly 75% of the poor people are in rural areas, most of them are daily wagers, landless laborers and self employed house holders. There are a number of reasons for poverty in India. Poverty in India can be classified into two categories namely rural poverty and urban poverty.<br /><br /><strong>Reasons for Rural Poverty</strong><br /><br /><strong>Some of the basic reasons of rural poverty in India are:</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>Unequal distribution of income.</li><li>High population growth.</li><li>Illiteracy.</li><li>Large families.</li><li>Caste system.</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Problems Of Rural Poverty</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>Presence of malnutrition, illiteracy, diseases and long term health problems.</li><li>Unhygienic living conditions, lack of proper housing, high infant mortality rate, injustice to women and social ill-treatment of certain sections of society.</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Steps Taken by Government to Reduce Rural Poverty</strong><br />The government of India has been trying its best to remove poverty. Some of the measures which the government has taken to remove rural poverty are:</div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>Small farmer’s development Programme.</li><li>Drought area development Programme.</li><li>Minimum needs Programme.</li><li>National rural employment Programme.</li><li>Assurance on employment.</li><li>Causes for Urban Poverty.</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Causes for Urban Poverty<br /><br />The causes of urban poverty in India are:</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>Improper training</li><li>Slow job growth.</li><li>Failure of PDS system</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Problems Of Urban Poverty</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>Restricted access to employment opportunities and income.</li><li>Lack of proper housing facilities</li><li>Unhygienic environments</li><li>No social security schemes</li><li>Lack of opportunity to quality health and educational services.</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>The steps taken by government to remove urban poverty are:</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>Nehru Rozgar Yojna.</li><li>Prime Minister Rozgar Yojna.</li><li>Urban Basic services for the poor Programme.</li><li>National social Assistance Programme.</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; ">But these processes can be helpful only if the policies go to those people for whom it is meant. The clash between the central government and the state government often results in the lack of implementation of these policies. So it is very important that the governments do not play power politics when it comes to a serious issue such as poverty.</div><span class="Apple-style-span" style="font-family: 'Times New Roman'; font-size: medium; "><br /></span><table width="95%" align="center" class="data-tbl" cellpadding="0" cellspacing="0" style="border-top-width: 1px; border-right-width: 1px; border-bottom-width: 1px; border-left-width: 1px; border-top-style: solid; border-right-style: solid; border-bottom-style: solid; border-left-style: solid; border-top-color: rgb(130, 66, 13); border-right-color: rgb(130, 66, 13); border-bottom-color: rgb(130, 66, 13); border-left-color: rgb(130, 66, 13); background-color: rgb(254, 243, 227); margin-left: 6px; font-family: arial; font-size: 12px; color: rgb(0, 0, 0); border-collapse: collapse; "><tbody><tr><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">Year</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">All India %</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">Rural %</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">Urban%</td></tr><tr><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">1973</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">54.9</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">56.4</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">49.0</td></tr><tr><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">1978</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">51.3</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">53.1</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">45.2</td></tr><tr><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">1983</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">44.5</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">45.7</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">40.8</td></tr><tr><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">1988</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">38.9</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">39.1</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">38.2</td></tr><tr><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">1994</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">36.0</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">37.3</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">32.4</td></tr><tr><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">1999</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">26.1</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">27.1</td><td valign="top" style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">23.6</td></tr></tbody></table>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-44415412861932366102010-06-08T03:46:00.001-07:002010-06-08T03:46:47.429-07:00Indian Economy : Planning Commission<div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; ">The Planning Commission in India was set up on March 1950 to promote a rapid rise in the standard of living of the people by utilizing the resources of the country, increasing production and offering employment opportunities to all. The Planning Commission has the responsibility for formulating plans as to how the resources can be used in the most effective way.<br /><br />The Planning Commission has to make periodic assessment of all resources in the country, boost up insufficient resources and formulate plans for the most efficient and judicious utilization of resources.<br /><br />Jawaharlal Nehru was the first <strong>chairman</strong> of the <strong>Planning Commission.</strong><br /><br /><strong>Structure of the Planning Commission:</strong><br />The Prime minister is the chairman of the Planning Commission. The Deputy Chairman and the full time members give advice and guidance for the formulation of Five Year Plan, Annual Plans, State Plans, Projects and Schemes etc. Currently the structure of the planning commission is like this:<br /><br />1. Chairman - Dr. Manmohan Singh<br />2. Deputy Chairman- Shri Montek Singh Ahluwalia<br />3 Minister of State- Shri M.V. Rajshekharan<br />4. Members - Dr. Kirit Parikh,Prof. Abhijit Sen ,Dr. V.L. Chopra ,Dr. Bhalchandra Mungekar ,Dr.(Ms.) Syeda Hameed ,Shri B.N. Yugandhar ,Shri Anwar-ul-Hoda, Shri B. K. Chaturvedi<br />5. Secretary- Dr. Subhas Pani<br /><br /><strong>Functions of the Planning Commission India: </strong><br /><br /><strong>Following are the functions of the Planning Commission of India:</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>To make an assessment of the resources of the country and to see which resources are deficient.</li><li>To formulate plans for the most effective and balanced utilization of country's resources.</li><li>To indicate the factors which are hampering economic development.</li><li>To determine the machinery, that would be necessary for the successful implementation of each stage of plan.</li><li>Periodical assessment of the progress of the plan.</li><li>With the changing times, the Planning commission is preparing itself for long term vision for the future. The commission is seeing to maximize the output with minimum resources.</li><li>From being a centralized planning system, the Indian economy is slowly progressing towards indicative planning wherein the Planning Commission has set the goal of constructing a long term strategic vision for the future.</li><li>It sets sectoral targets and provides the catalyst to the economy to grow in the right direction.</li><li>The Planning Commission plays an integrative role in the development of a holistic approach to the formulation of policies in critical areas of human and economic development.</li></ul>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-61202040668356591892010-06-08T03:45:00.002-07:002010-06-08T03:46:22.731-07:00Indian Economy : Per Capita Income<div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Meaning and Significance</strong><br />Per capita Income means how much an individual earns, of the yearly income that is generated in the country through productive activities. It means the share of each individual when the income from the productive activities is divided equally among the citizens. Per capita income is reported in units of currency. Per capita income reflects the gross national product of a country. Per capita income is also a measure of the wealth of a population of a nation when compared with other countries. It is expressed in terms of commonly used international currency such as Euro, Dollars because these currencies are widely known.<br /><br /><strong>Per Capita Income In India </strong><br />India's per capita income is found by the Atlas method and by employing official exchange rates for conversion. Further, this Atlas method of calculating the per capita income of India is not determined by using purchasing power parity, which essentially adjusts exchange rates for purchasing power of currencies.<br /><br />Economist have been giving considerable importance to the performance of states vis a vis each other in terms of per capita income. It has been observed that those states that were more open and better adapted to economic liberalization have overall shown faster rate of growth.<br /><br /><strong>Per Capita Income of Various Indian States</strong><br />The two backward states of the Indian republic Jharkhand and Orissa are growing at a rapid rate in terms of the per capita income because of rise of industrial activities in these two states. Karnataka is at the top of the chart with the fastest growing per capita income (nearly 9.28%) followed by Gujarat with 8.92%.The per capita income in 17 states is below the national average of 8.4%. Per capita income shows the purchasing power of the states and so it is very important for the states to increase the per capita income of each person.<br /><br /><strong>History of India Per Capita GDP</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>In 2002-03 the Per Capita Income in India was Rs 19040.</li><li>In2003-04 the Per Capita Income in India was Rs 20989.</li><li>In2004-05 the Per Capita Income in India was Rs 23241.</li><li>In2008-2009 the Per Capita Income in India was37490.</li><li>GDP at factor cost at constant (1999-2000) prices in the year 2008-2009 is likely to attain a level of Rs 3351653.India achieved a growth rate of 7.1 per cent in 2008-2009.</li><li>Agriculture, forestry and fishing had a combined growth rate of 2.6 per cent during 2008-2009</li><li>Industry had growth rate of 3.4 per cent during 2008-2009</li><li>Service sector had a growth rate of 10.3 per cent during 2008-2009</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; ">Inspite of the global meltdown, India has performed well in comparison to the rest of the world</div><div><br /></div>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-46857254024911908532010-06-08T03:45:00.001-07:002010-06-08T03:45:46.493-07:00Indian Economy : Pay Commission<span class="Apple-style-span" style="font-family: arial, tahoma, verdana; font-size: 12px; color: rgb(44, 44, 44); line-height: 16px; "><strong>Pay Commission of India: History</strong><br />Pay commission is a panel consisting of the members of the Union Cabinet of India for hiking the salaries of the government employees.<br /><br /><strong>First Pay Commission</strong><br />The first pay commission of India was constituted in May 1946, which submitted its report in a year.<br /><br /><strong>Second Pay Commission</strong><br />The second pay commission was set up in August 1957 and it gave its report after two years. The recommendations of the second pay commission had a financial impact of Rs 396 million.<br /><br /><strong>Third Pay Commission</strong><br />The third Pay Commission was set up in April 1970 and it gave its report in March 1973. The third pay commission created proposals cost the government Rs 1.44 billion.<br /><br /><strong>Fourth Pay Commission</strong><br />The fourth Pay Commission was constituted in June 1983, which gave its report in three phases within four years. The proposals of the fourth Pay Commission cost the government Rs 12.8 billion.<br /><br /><strong>Fifth Pay Commission</strong><br />The fifth Pay Commission was set up was set up in 1994 and its proposals were implemented in 1997, which cost the government about Rs 17,000 crores.<br /><br /><strong>Sixth Pay Commission</strong><br />In July 2006, the sixth pay commission was set and its proposals will cost the government about Rs 20,000 crores. The government employees had threatened to go on a strike if their salaries were not raised. The government employees want a hike in their salaries mainly because the Indian economy is facing a serious problem called inflation. The class 1 officers of the Indian government are not adequately paid and the salaries of IAS officers are also very stumpy.<br /><br /><strong>Members of the Sixth Pay Commission</strong><br /><br /><strong>Following are the members of the sixth Pay Commission:</strong><br />Chairman: Mr. Justice B.N.Srikrishna<br />Members: Prof. Ravindra Dholakia, Mr. J.S.Mathur<br />Member-Secretary: Smt. Sushama Nath</span>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-82191978101184226852010-06-08T03:44:00.002-07:002010-06-08T03:45:10.374-07:00Indian Economy : National Income<div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>The study of National Income is important because of the following reasons:</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>To see the economic development of the country.</li><li>To assess the developmental objectives.</li><li>To know the contribution of the various sectors to National Income.</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; ">Internationally some countries are wealthy, some countries are not wealthy and some countries are in-between. Under such circumstances, it would be difficult to evaluate the performance of an economy. Performance of an economy is directly proportionate to the amount of goods and services produced in an economy. Measuring national income is also important to chalk out the future course of the economy. It also broadly indicates people’s standard of living.<br /><br />Income can be measured by Gross National Product (GNP), Gross Domestic Product (GDP), Gross National Income (GNI), Net National Product (NNP) and Net National Income (NNI).<br /><br />In India the Central Statistical Organization has been formulating national income.<br /><br />However some economists have felt that GNP has a measure of national income has limitation, since they exclude poverty, literacy, public health, gender equity and other measures of human prosperity.<br /><br />Instead they formulated other measures of welfare like Human Development Index (HDI)<br /><br /><strong>Calculating National Income</strong><br />There are various methods for calculating the national income such as production method, income method, expenditure method etc.<br /><br /><strong>Production Method</strong><br />The production method gives us national income or national product based on the final value of the produce and the origin of the produce in terms of the industry.<br /><br /><strong>All producing units are classified sector wise.</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>Primary sector is divided into agriculture, fisheries, animal husbandry.</li><li>Secondary sector consists of manufacturing.</li><li>Tertiary sector is divided into trade, transport, communication, banking, insurance etc.</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Income Method: </strong><br />Different factors of production are paid for their productive services rendered to an organization. The various incomes that includes in these methods are wages, income of self employed, interest, profit, dividend, rents, and surplus of public sector and net flow of income from abroad.<br /><br /><strong>Expenditure Method:</strong><br />The various sectors – the household sector, the government sector, the business sector, either spend their income on consumer goods and services or they save a part of their income. These can be categorized as private consumption expenditure, private investment, public consumption, public investment etc.<br /><br /><strong>Calculation of National Income of India: A Brief History</strong><br />The first attempt to calculate National Income of India was made by Dadabhai Naroji in 1867 -68. This was followed by several other methods. The first scientific method was made by Prof. V.K.R Rao in 1931-32. But this was not very satisfactory. The first official attempt was made by Prof.P.C.Mahalnobis in 1948-49, who submitted his report in 1954.<br /><br /><strong>Difficulties in Calculation of National Income</strong><br />In India there are various difficulties in calculating the national incomes .The most severe one is the finding of reliable data. Most of the time, it is based on assumptions. Soon after independence the National Income Committee was formed to collect data and estimate National Income. The two major problems which remain in the calculation of National Income are:</div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>Most of the data is not from the current year.</li><li>Even if current data are available then values are underreported.</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Obstacles in High Growth of National Income of India</strong><br />Even if the Indian economy grows faster than the BRIC countries and G 6, the benefits of the growth would not be evenly distributed. India’s progress in education cannot be termed as satisfactory. In terms of higher education it has achieved tremendous success, but its unsatisfactory performance in primary education and secondary education has been a major obstacle to growth. Similarly India’s healthcare system is in a less than desirable state. Governments’ spending on public health has not been up to the required levels.<br /><br /><strong>Growth Of National Income In India</strong></div><span class="Apple-style-span" style="font-family: 'Times New Roman'; font-size: medium; "><br /></span><table width="95%" align="center" cellpadding="0" cellspacing="0" class="data-tbl" style="border-top-width: 1px; border-right-width: 1px; border-bottom-width: 1px; border-left-width: 1px; border-top-style: solid; border-right-style: solid; border-bottom-style: solid; border-left-style: solid; border-top-color: rgb(130, 66, 13); border-right-color: rgb(130, 66, 13); border-bottom-color: rgb(130, 66, 13); border-left-color: rgb(130, 66, 13); background-color: rgb(254, 243, 227); margin-left: 6px; font-family: arial; font-size: 12px; color: rgb(0, 0, 0); border-collapse: collapse; "><tbody><tr><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">Sector</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">1950-1980</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">1980-2005</td></tr><tr><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">GDP Total</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">3.5</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">5.6</td></tr><tr><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">GDP Per capita</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">1.4</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">3.6</td></tr></tbody></table><span class="Apple-style-span" style="font-family: 'Times New Roman'; font-size: medium; "><br /></span><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Sectoral Composition Of National Income (in percent)</strong></div><span class="Apple-style-span" style="font-family: 'Times New Roman'; font-size: medium; "><br /></span><table width="95%" align="center" cellpadding="0" cellspacing="0" class="data-tbl" style="border-top-width: 1px; border-right-width: 1px; border-bottom-width: 1px; border-left-width: 1px; border-top-style: solid; border-right-style: solid; border-bottom-style: solid; border-left-style: solid; border-top-color: rgb(130, 66, 13); border-right-color: rgb(130, 66, 13); border-bottom-color: rgb(130, 66, 13); border-left-color: rgb(130, 66, 13); background-color: rgb(254, 243, 227); margin-left: 6px; font-family: arial; font-size: 12px; color: rgb(0, 0, 0); border-collapse: collapse; "><tbody><tr><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">Year</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">Primary</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">Secondary</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">Tertiary</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">Total GDP</td></tr><tr><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">1950-51</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">59</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">13</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">28</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">100</td></tr><tr><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">1980-81</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">42</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">22</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">36</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">100</td></tr><tr><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">2002-03</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">24</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">24</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">52</td><td style="border-top-width: 3px; border-right-width: 3px; border-bottom-width: 3px; border-left-width: 3px; border-top-style: double; border-right-style: double; border-bottom-style: double; border-left-style: double; border-top-color: rgb(252, 215, 165); border-right-color: rgb(252, 215, 165); border-bottom-color: rgb(252, 215, 165); border-left-color: rgb(252, 215, 165); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 8px; vertical-align: top; ">100<br /><br /></td></tr></tbody></table>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-77635186005876722362010-06-08T03:44:00.001-07:002010-06-08T03:44:22.252-07:00Inflation in India<div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Inflation is caused due to several economic factors:</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>When the government of a country print money in excess, prices increase to keep up with the increase in currency, leading to inflation.</li><li>Increase in production and labor costs, have a direct impact on the price of the final product, resulting in inflation.</li><li>When countries borrow money, they have to cope with the interest burden. This interest burden results in inflation.</li><li>High taxes on consumer products, can also lead to inflation.</li><li>Demands pull inflation, wherein the economy demands more goods and services than what is produced.</li><li>Cost push inflation or supply shock inflation, wherein non availability of a commodity would lead to increase in prices.</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Problems<br /><br />The problems due to inflation would be:</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>When the balance between supply and demand goes out of control, consumers could change their buying habits, forcing manufacturers to cut down production.</li><li>The mortgage crisis of 2007 in USA could best illustrate the ill effects of inflation. Housing prices increases substantially from 2002 onwards, resulting in a dramatic decrease in demand.</li><li>Inflation can create major problems in the economy. Price increase can worsen the poverty affecting low income household,</li><li>Inflation creates economic uncertainty and is a dampener to the investment climate slowing growth and finally it reduce savings and thereby consumption.</li><li>The producers would not be able to control the cost of raw material and labor and hence the price of the final product. This could result in less profit or in some extreme case no profit, forcing them out of business.</li><li>Manufacturers would not have an incentive to invest in new equipment and new technology.</li><li>Uncertainty would force people to withdraw money from the bank and convert it into product with long lasting value like gold, artifacts.</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Inflation in India Economy</strong><br />India after independence has had a more stable record with respect to inflation than most other developing countries. Since 1950, the inflation in Indian economy has been in single digits for most of the years<br /><br /><strong>Between 1950-1960</strong><br />The inflation on an average was at 2.00%<br /><br /><strong>Between 1960-1970</strong><br />The inflation on an average was at 7.2%<br /><br /><strong>Between 1970-1980</strong><br />The inflation on an average was at 8.5%.<br /><br /><strong>Inflation At Present</strong><br />Inflation in India a menace a few years ago is at a 30 year low. The inflation ended at a low of 0.61% in the week ended May 9, 2009 this after reaching a 16 year high of 12.91 % in August 2008, bringing in a sigh of relief to policymakers.</div><div><br /></div>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-26641038205502168342010-06-08T03:43:00.001-07:002010-06-08T03:43:39.086-07:00India and WTO<div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; ">The World Trade Organization is an international organization which was created for the liberalization of international trade. The World Trade Organization came into existence on January 1st, 1995 and it is the successor to General Agreement on Trade and Tariffs (GATT). The World trade organization deals with the rules of trade between nations at a global level. WTO is responsible for implementing new trade agreements. All the member countries of WTO have to follow the trade agreement as decided by the WTO.<br /><br /><strong>Structure of the WTO:</strong><br /><br /><strong>Following is the structure of WTO.</strong><br /><br /><strong>Highest Level:</strong> Ministerial Conference<br />The Ministerial Conference is the top most body of the WTO, which meets in every two years. It brings together all the members of WTO.<br /><br /><strong>Second Level:</strong> General Council<br />The General Counsel of the WTO is the highest level decision making body in Geneva, which meets regularly to carry out the functions of WTO.<br /><br /><strong>Third Level:</strong> Councils for Trade<br />The Workings of GATT, which covers international trade in goods, are the responsibility of the Council of Trade.<br /><br /><strong>Fourth Level:</strong> Subsidiary Bodies<br />There are subsidiary bodies under the various councils dealing with specific subjects such as agriculture, subsidies, market access etc.<br /><br /><strong>Benefits Of WTO</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>It helps promote peace and prosperity across the globe.</li><li>Disputes are settled amicably.</li><li>Rules bring about greater discipline in trade negotiations, thereby reducing inequalities to a large extent.</li><li>Free trade reduces the cost of living and increases household income.</li><li>Companies have greater access to markets and consumers have wider range of products to choose from.</li><li>Good governance accelerates economic growth</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>India and WTO</strong><br />India is one of the founding members of WTO along with 134 other countries. India's participation in an increasingly rule based system in governance of International trade, would ultimately lead to better prosperity for the nation. Various trade disputes of India with other nations have been settled through WTO. India has also played an important part in the effective formulation of major trade policies. By being a member of WTO several countries are now trading with India, thus giving a boost to production, employment, standard of living and an opportunity to maximize the use of the world resources.</div>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-39364884052909900162010-06-08T03:42:00.002-07:002010-06-08T03:43:30.126-07:00India and WTO<div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; ">The World Trade Organization is an international organization which was created for the liberalization of international trade. The World Trade Organization came into existence on January 1st, 1995 and it is the successor to General Agreement on Trade and Tariffs (GATT). The World trade organization deals with the rules of trade between nations at a global level. WTO is responsible for implementing new trade agreements. All the member countries of WTO have to follow the trade agreement as decided by the WTO.<br /><br /><strong>Structure of the WTO:</strong><br /><br /><strong>Following is the structure of WTO.</strong><br /><br /><strong>Highest Level:</strong> Ministerial Conference<br />The Ministerial Conference is the top most body of the WTO, which meets in every two years. It brings together all the members of WTO.<br /><br /><strong>Second Level:</strong> General Council<br />The General Counsel of the WTO is the highest level decision making body in Geneva, which meets regularly to carry out the functions of WTO.<br /><br /><strong>Third Level:</strong> Councils for Trade<br />The Workings of GATT, which covers international trade in goods, are the responsibility of the Council of Trade.<br /><br /><strong>Fourth Level:</strong> Subsidiary Bodies<br />There are subsidiary bodies under the various councils dealing with specific subjects such as agriculture, subsidies, market access etc.<br /><br /><strong>Benefits Of WTO</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>It helps promote peace and prosperity across the globe.</li><li>Disputes are settled amicably.</li><li>Rules bring about greater discipline in trade negotiations, thereby reducing inequalities to a large extent.</li><li>Free trade reduces the cost of living and increases household income.</li><li>Companies have greater access to markets and consumers have wider range of products to choose from.</li><li>Good governance accelerates economic growth</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>India and WTO</strong><br />India is one of the founding members of WTO along with 134 other countries. India's participation in an increasingly rule based system in governance of International trade, would ultimately lead to better prosperity for the nation. Various trade disputes of India with other nations have been settled through WTO. India has also played an important part in the effective formulation of major trade policies. By being a member of WTO several countries are now trading with India, thus giving a boost to production, employment, standard of living and an opportunity to maximize the use of the world resources.</div>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-3253338769104941682010-06-08T03:42:00.001-07:002010-06-08T03:42:33.199-07:00India and WTO<div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; ">The World Trade Organization is an international organization which was created for the liberalization of international trade. The World Trade Organization came into existence on January 1st, 1995 and it is the successor to General Agreement on Trade and Tariffs (GATT). The World trade organization deals with the rules of trade between nations at a global level. WTO is responsible for implementing new trade agreements. All the member countries of WTO have to follow the trade agreement as decided by the WTO.<br /><br /><strong>Structure of the WTO:</strong><br /><br /><strong>Following is the structure of WTO.</strong><br /><br /><strong>Highest Level:</strong> Ministerial Conference<br />The Ministerial Conference is the top most body of the WTO, which meets in every two years. It brings together all the members of WTO.<br /><br /><strong>Second Level:</strong> General Council<br />The General Counsel of the WTO is the highest level decision making body in Geneva, which meets regularly to carry out the functions of WTO.<br /><br /><strong>Third Level:</strong> Councils for Trade<br />The Workings of GATT, which covers international trade in goods, are the responsibility of the Council of Trade.<br /><br /><strong>Fourth Level:</strong> Subsidiary Bodies<br />There are subsidiary bodies under the various councils dealing with specific subjects such as agriculture, subsidies, market access etc.<br /><br /><strong>Benefits Of WTO</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>It helps promote peace and prosperity across the globe.</li><li>Disputes are settled amicably.</li><li>Rules bring about greater discipline in trade negotiations, thereby reducing inequalities to a large extent.</li><li>Free trade reduces the cost of living and increases household income.</li><li>Companies have greater access to markets and consumers have wider range of products to choose from.</li><li>Good governance accelerates economic growth</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>India and WTO</strong><br />India is one of the founding members of WTO along with 134 other countries. India's participation in an increasingly rule based system in governance of International trade, would ultimately lead to better prosperity for the nation. Various trade disputes of India with other nations have been settled through WTO. India has also played an important part in the effective formulation of major trade policies. By being a member of WTO several countries are now trading with India, thus giving a boost to production, employment, standard of living and an opportunity to maximize the use of the world resources.</div>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0tag:blogger.com,1999:blog-6488799821199030221.post-76301916609598067842010-06-08T03:41:00.002-07:002010-06-08T03:42:00.379-07:00Globalization<div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; ">The human society around the world, over a period of time, has established greater contact, but the pace has increased rapidly since the mid 1980’s.The term globalization means international integration. It includes an array of social, political and economic changes. Unimaginable progress in modes of communications, transportation and computer technology have given the process a new lease of life.<br /><br />The world is more interdependent now than ever before .Multinational companies manufacture products across many countries and sell to consumers across the globe. Money, technology and raw materials have broken the International barriers. Not only products and finances, but also ideas and cultures have breached the national boundaries.<br /><br />Laws, economies and social movements have become international in nature and not only the Globalization of the Economy but also the Globalization of Politics, Culture and Law is the order of the day. The formation of General Agreement on Tariffs and Trade (GATT), International Monetary Fund and the concept of free trade has boosted globalization.<br /><br /><strong>Globalization in India</strong><br />In early 1990s the Indian economy had witnessed dramatic policy changes. The idea behind the new economic model known as Liberalization, Privatization and Globalization in India (LPG), was to make the Indian economy one of the fastest growing economies in the world. An array of reforms was initiated with regard to industrial, trade and social sector to make the economy more competitive. The economic changes initiated have had a dramatic effect on the overall growth of the economy. It also heralded the integration of the Indian economy into the global economy. The Indian economy was in major crisis in 1991 when foreign currency reserves went down to $1 billion and inflation was as high as 17%. Fiscal deficit was also high and NRI's were not interested in investing in India. Then the following measures were taken to liberalize and globalize the economy.<br /><br /><strong>Steps Taken to Globalize Indian Economy</strong><br /><br /><strong>Some of the steps taken to liberalize and globalize our economy were: </strong><br /><br />1. <strong>Devaluation:</strong> To solve the balance of payment problem Indian currency were devaluated by 18 to 19%.<br /><br />2. <strong>Disinvestment:</strong> To make the LPG model smooth many of the public sectors were sold to the private sector.<br /><br />3. <strong>Allowing Foreign Direct Investment (FDI):</strong> FDI was allowed in a wide range of sectors such as Insurance (26%), defense industries (26%) etc.<br /><br />4. <strong>NRI Scheme:</strong> The facilities which were available to foreign investors were also given to NRI's.<br /><br /><strong>Merits and Demerits of Globalization</strong><br /><br /><strong>The Merits of Globalization are as follows:</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>There is an International market for companies and for consumers there is a wider range of products to choose from.</li><li>Increase in flow of investments from developed countries to developing countries, which can be used for economic reconstruction.</li><li>Greater and faster flow of information between countries and greater cultural interaction has helped to overcome cultural barriers.</li><li>Technological development has resulted in reverse brain drain in developing countries.</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>The Demerits of Globalization are as follows:</strong></div><ul style="font-size: 12px; color: rgb(50, 50, 50); line-height: 20px; margin-right: 2px; font-family: Arial; list-style-type: disc; margin-top: 10px; margin-bottom: 10px; "><li>The outsourcing of jobs to developing countries has resulted in loss of jobs in developed countries.</li><li>There is a greater threat of spread of communicable diseases.</li><li>There is an underlying threat of multinational corporations with immense power ruling the globe.</li><li>For smaller developing nations at the receiving end, it could indirectly lead to a subtle form of colonization.</li></ul><div class="text" style="font-size: 12px; margin-left: 10px; color: rgb(44, 44, 44); line-height: 16px; margin-right: 10px; font-family: arial, tahoma, verdana; text-align: justify; "><strong>Summary</strong><br />India gained highly from the LPG model as its GDP increased to 9.7% in 2007-2008. In respect of market capitalization, India ranks fourth in the world. But even after globalization, condition of agriculture has not improved. The share of agriculture in the GDP is only 17%. The number of landless families has increased and farmers are still committing suicide. But seeing the positive effects of globalization, it can be said that very soon India will overcome these hurdles too and march strongly on its path of development.</div><div><br /></div>foramshttp://www.blogger.com/profile/06266713990913900832noreply@blogger.com0