Tuesday, January 28, 2020
Organizational culture and value of strategic leader
Organizational culture and value of strategic leader Sainsbury is one of the biggest organizations which have been selected to study and determined the management and leadership. Sainsbury was started in the year 1869and showed progress slowly with the passage of time and known to be the third largest supermarket in UK. It followed its career from its parent company J Sainsbury and then created number of different branches and the way of business namely Sainsburys Local, Bells Stores, Jacksons Stores and JB Beaumont, Sainsburys Online and Sainsburys Bank. The report is consists of three segments. The first part covered the Organizational culture and value of Strategic Leader. In second part consists of Leadership style and in third part the discussion is about organizational involvement and objectives obtained by leaders. The main objective of this report is to explain and express the useful skills of retail leadership at our own or any other different occupation. This report will keep a record of the type of personal leaderships used and established and to use them to resolve different critical circumstances. 1-Ethical and value based approach to leadership 1.1Organizational Culture and value of strategic leader In this section I have covers the detail on Organizational culture and value of Strategic Leader. It has been observed that the lives of organizational culture have been affected by the leaders and they are responsible for playing a dynamic role for organizational culture. There are many hurdles and problems, good and bad approach in an organization, things tends to follow suit down hill. An organizational culture is under the control of the leader and he has the authority responsibility to make changes and maintain the processes of the organization. And this is the very sensitive and chief task for him. The organizational culture is also affected by the working style of J Sainsbury as a supermarket and its campaigning through advertisements using media. Making Life Taste Better is the slogan of quality which expresses the culture of the J Sainsbury and what it is trying to do for its customers. Many of the loyal customers of J Sainsbury has a believe on the slogan and they support this organization because it gives product with a high quality standard, fresh and delicious taste with reasonable price as compared to other supermarkets and retailers. The team members of J Sainsbury are very cheerful helpful and devoting and they always ready to tell about the special offers in order to increase their sales and creating the interest of the customers. The team of Sainsbury gives a super customer service with a quick response. The store display contain an attractive look and a lots of leaflets that describes the types of services provided by other J Sainsbury stores like bank and initiating of the property agents. These advertisements help to encourage and attract the customers to think and take advantage of using the other services of J Sainsbury organization. This organization always work for the better quality services and there supermarket consists of a couple of Customer service desks where staff is available, that are always ready to help the customer who is in need, so that the customer dont need to look for the staff themselves without wasting of time. This is the way of J Sainsbury in providing the best services to their beloved customers keeping the family value and help to increase the research and development in the organization. This approach to customers gives a feeling love and care for them and the performance of J Sainsbury is different from the other retailers which showed a special feeling to their customers as they are treated as single individual in a supermarket. Leadership is always a hot topic for discussion like love, death, money and politics. While this topic remains under attention and its significant value in every business but it gives an unclear and puzzling theory. The definition of leadership is explained by countless numbers of different theories which explain the various aspects of leadership, but the problem is there is no full and common theory explaining the whole mission of leadership easily. One of the best ways in which We can enhance our understanding of leadership is to see how various students of the subject have defined leadership (Dessler 2001) In my opinion leaders influence plays a main role in an organizational culture. However it has been observed that the leaders are being controlled by the set and strong culture. But this type of culture could harm the leadership taking to a negative result. These driving forces may include for example, union behaviour. (Shivers-Blackwell, 2006, p. 1). So therefore the leader should not leave the organization while under the control of the pre-existing culture. For the new leader it is important to know and understand the main aim of an organizational culture this will help to prevent from being controlled by the culture. He should know the in and out of the organization and these factors are useful in maintaining the even flow of culture. To ensure an organization culture stays healthy I believe that the leader must take an active role. There are a number of ways in which a leader can accomplish this. Communication and planning is a key amongst all efforts to ensure a healthy culture. If these issues are left unrecognized, it can become too late for the leader to have an influence. 1.2 Legal, regulatory and ethical impact: The ethical and legal standings are regulated by the companies as they have been growing epidemically. The three separate entitles have been explained with backgrounds in different format including the process of regulation so that the organization could run smoothly. The J Sainsbury is known to be one of the leading retailers of UK should also take part in ethical business practices; this will help to achieve the belief and reliability of their customers. The establishment of Amazon .com has helped the consumers to shop online keeping their information in a privacy and confidentiality. Therefore the consumers can review and understand the process of using the information that J Sainsbury Plc uses. While considering the legal matters, the companys Terms of Use require the use spells out and what the consumers wants to use and expect from the organization website providers and in turn, and what will be the expectation gain from the consumers. There is an unstated approval for the Term of Use and other rules and guiding principles which could be seen in the website of company (such as the Privacy and the Security Policies. These Terms of Use include: Online conduct Privacy policy Trademarks Content (proprietary rights; distribution/uploading of third-party content; third-party content; and export) Age of Users Termination of Usage Password Security Disclaimers and Limitation of Liability Severability Jurisdiction Binding Arbitration Acknowledgement; and Modification Being the leader of online book industry, it is important that the company I chose should convene all legal requirements, ethical and regulatory guidelines and policies and make every attempt to certify the safety and privacy of its users/customers. . J Sainsbury Plc Terms of Use as well as its Privacy, Security and Copyright Policies, are the most effective policies which are reviewed and revised (and this is clearly stated in each of the policies) everyone deal with these matters and give guarantee to use the site under a legal and ethical manner. 1.3 Current and emerging social concerns and expectations : Bentley Hoffman of Honeywell the computer conglomerate, states that when companies are drafting codes of ethics they must strike a balance being sensitive to foreign cultures and their own internal sense of right and wrong. Those that do so will reap rewards (Davids, 1999). The need for a comprehensive, cohesive, and universal code of conduct for multinational corporations doing business internationally is paramount as it can help foster business contacts around the world, resulting in a facilitation of trade and an increase in profit (Payne, Raiborn and Askuik, 1997). Levi Strauss have set standards for working conditions in their foreign manufacturing facilities. Richard Woo a Levi company spokesman stated that in so doing it would help them meet their overall mission, which is to achieve responsible commercial success (Cottrill, 1996). Social capital is important for multinational corporations especially in Asian countries like China (guangxi) and Japan (kankei). Multi nationals which develop this social structure will gain potential competitive advantages in global markets (Hitt, Ho-uk, and Yucel, 2002). In terms of business ethics, Richard Bay Minerals (RBM), a Rio Tinto subsidiary are pro active by sending out a team of community development workers each day to support community development projects in the adjacent Mnonambi community so fostering good community relations (Kapelus, 2002). (Richter, and Buttery, 2002), argue that the gap between the haves, and the have nots, is widening therefore global firms are obliged to deal with ethics in cultural diverse areas. One of the personal factors shows a vital role which is social characteristic in every person. This factor help to create a link with others.The characteristics and communication plays a main role. The whole work and social exchange depend on communication. It also describes the giving out of ideas sharing with others, there feeling and resources.The result of misunderstanding and disagreement takes place when communication breaks. The listening and speaking are the main elements of communication. These two words make an equal part in the establishment of communally skilled information exchange. 2 Leadership styles 2.1- Strategic management and leadership: According to Useem (2001, p 297), Leadership is a matter of making a difference. It entails changing an organisation and making active choices among plausible alternatives, and depends on the development of others and mobilising them to get the job done. Warren Bennis states Managers are people who do things right and leaders are people who do the right thing. (Bennis, 1997). Similarly, a proverb says that leadership is doing the right thing; management is doing things right. The difference between the two is not as sharp as the saying would suggest, and both are required for effective corporate growth: leadership risk creates opportunities while management strictness turns them into tangible results. (www.1000ventures.com)  There are many arguments which suggest that managers and leaders are essentially one in the same thing, but I feel that an important distinction should be made between the two Leaders decide where to go, managers are the ones who facilitate the following.  This is supported by the likes of Bennis and Nanus (1985) and Kotter (1990) Kotter produced a useful table to highlight the differences between the two Management                                                                 Leadership Planning and Budgeting                                                          Establishing direction   Making detailed steps and timetables                              Developing a vision for the future   for achieving results                                                       and plans for achieving the vision Organising and staffing                                                          Aligning people   The allocation of tasks and staffing                                 Communicating the vision so that   To carry them out; also delegating                                   others understand it and agree with it   responsibility Controlling and Problem-solving                                 Motivating and inspiring   Monitoring the results of a plan,                                      Energizing people towards the vision   Identifying problems and solving them                             so that they overcome barrier Outcomes: order and predictability                             Outcomes: Change   Produces predictability so that others                              Produces definite changes such as   can rely on consistent results                                          new products, or new directions This is an important distinction to make as it helps us understand what sort of person is required to be an effective leader and following on from that, what then are the different traits of leader and what impact do different leaders with different styles have on different situations? 2.2 -Leadership styles and strategic decisions Features Autocratic Consultative Democratic Description Senior managers take the decisions with little involvement of junior employees Dictatorial, but decisions are taken in the best interests of the employees Running a business on the basis of majority decisions Key Features Set objectives Allocate tasks Leader retains control throughout Explain decisions Ensure employees social and leisure needs are met Encourages employees to take part in decision making Uses delegation Communication used One-way communication downwards from leader to subordinate Generally form leader downwards though some feedback takes place Extensive two-way-communication between senior and junior employees Circumstances in which style may be appropriate Useful when quick decisions are required or when large numbers of unskilled employees are involved Can appear democratic, but is really autocratic leadership with a human face Useful when complex decisions are made requiring a range of specialist skills There are three main styles of leadership. These are: Autocratic Democratic Lassez-faire. The autocratic style of leadership is the first style which gives approach in a controlled process means the leader is under the control and there is no thought of the students to run anything. This type of leadership style has its own ups and downs. The good of this is if you have a good strength of young and difficult students; then have to give a brief lesson to them or if the students wont reply to any type of leadership styles. The drawback of this style is if the student become stressed and scared with your style. It is useful if your level of confidence is less because if this is the remaining thing then they would not get down if they are already in this position. The other style of leadership is the democratic approach and this includes the involvement of the students in making of plans and decision and how their lesson could be run.  The positive point of democratic approach is that it always involves students and the leader will see what they like to be done and how to be done and whether the student has the ability to become a better leader. But on the other hand democratic approach is not suitable for it there are a number of students in one class or the time of lesson is really short. Therefore if the lesson is short then you have to extend the time of it. If you asked for the students contribution then you would not be able to start. The third style of leadership is the Lassez-faire approach. The Lassez-faire approach is not really leading. In this approach the students basically get to do what they want to do. They get little direction from the leader. This is an effective style to use when you are working with very good students (ability), when the students really want to do well for themselves and if you can trust the students. It should not be used if there are people in the class with limited experience, a big group or if there is difficult people in the group. 2.3 Adapting leadership styles: All these styles of leadership work in different situations and as a leader you have to change your style to suit the group that you are leading. For example if you are leading a group with limited experience you use the autocratic style, but if you have a really experienced group then the Lassez-faire style is the best. Now I will look at how you have to change your style of leadership when involved in different activities like racket, team and individual activities. When you are leading a racket sport you are really only working one on one. This allows you to use a democratic approach because the person you are leading is going to want to succeed. This allows you to let them look at what they want to do in the training session, and then you can put your own input into the session saying what you believe they should look at. If you are leading a team activity on the other hand you need to use the autocratic approach the reason that you will use this approach is because you need to get the whole team doing the same thing. This is important because you have to get the team working as a team at all times. Also if you are in charge of a whole group of people you need to be respected and maybe even feared. The best way to do this is to use the autocratic style of leading. Finally if you are leading someone in an individual sport that you can use the Lassez-faire approach because in an individual sport they will know what they have done wrong. They may need a little input from you as the leader but ultimately they will know how to improve their own performance. I think that all of the leadership styles are effective in different situations, but I would choose the autocratic style over the others if I had a choice. The reason that I would choose this is because an autocratic leader gets things done quickly and efficiently. If you are using the autocratic style you will get more things done. The reason for this is that everyone will be doing the same thing, so you will be able to get through more drills or exercises without people with the group. 3.1 Professionalism, mutual trust, respect and support In order to meet the service users needs, you need to establish  open, accurate and responsive communication with the service users and the staff as well as reviewing service delivery with continuous focus on improved communication, effectively and efficiently, which I believe I have become quite good at. Whilst on my article ship I have learnt to act in a professional, prompt, caring and respectful manner, basing my relationships with service users on trust and mutual respect. I believe in aggressively striving to identify and meet the individual needs of all of the service users. By working together for the common good to accomplish tasks and deliver the services to the client, while striving to make every individual within the department part of my team. You also really need to respect and embrace human differences, be non-judgemental and respect the clients wishes and beliefs. Whilst on my placement I have also learnt to take the clients needs very seriously and paying attention to the details that build a strong relationship between student and client. You always have to be available for any questions, respect the departments concerns and seek sensible practical solutions to any problems that arise. As a student you need to learn to be responsible for making sure phone calls are returned promptly, updating service users on the progress of their query or problem, and anticipate upcoming needs and issues. You have to evaluate any risks, and then devise strategies to deal with them in a manner which is consistent with the service users exposure and risk tolerance. This approach ensures that the service users operate from a position of confidence rather than one of anxiety. The size and organisational structure easily accommodates the service users specific needs and all of the staff are knowledgeable in many fields and can collaborate with other agencies as part of the team. The departments approach is straightforward, as they examine the objectives of each service user and allocate the necessary skills and resources to manage the matter effectively. Over the years, the department has demonstrated exceptional depth and skills in responding both individually and collectively to the changing and complex needs of the client. 3.2 -Leader focus and the achievement of objectives: Where there is no vision, the people perish Proverbs 29:12   The strategic vision is the heart of an organization. The strategic vision gives focus, meaning, direction and power to everyone within in the organization. The strategic vision tells the members of the organization where we are going The strategic vision gives life to the organization as the members walk in the vision. Without a strategic vision there is no direction, no purpose, no motivation and the members within the organization perish and die because the welfare of the organization becomes unfocused. The strategic vision provides a glimpse of possibilities and it is the capacity to look beyond the moment into the vast potential of tomorrow. It evokes deeper meaning and deeper commitment than the goals. The vision and the mission statements are the critical elements of a successful business.  The vision and mission are linked together.  The vision addresses the where the mission is.  The vision is a goal and the mission is a strategy. The vision and the mission are the guiding principles and values of the organization.  The values that the members have give direction to the organization and define the spirit in which things in the organization should be accomplished.  A commitment flows from the values because of the organizations commitment to the members, the members in turn, become committed to the organization. An organization can reach the future by focusing on where the organization is headed. Every organization must have an end to which they are headed.  To be an effective organization there must be a strategic vision because Where there is no vision, the people perish. 3.3 -Developing support and understanding: Being one of the most predominant styles of leadership, democratic style of leadership is more likely to produce effective group performance. However, there is no one best style of leadership. Different types of leadership may also be needed at different stages of business. Effective leaders use a collection of distinct styles, in the right measure, at the right time. National culture may also influence choice of leadership style. There are many variables which underlie the effectiveness of leadership in work organisations. The most effective form of leadership behaviour is a product of the total leadership situation. Leadership development should be long term issue for any business organisation. Now that we know leadership is a crucial ingredient through which people in all the companys relationship are inspired. It takes good leaders to set a direction for the company. It takes good leaders to stimulate the whole organisation to understand what success looks like and how it will be achieved and measured. Leaders set the tone, by their deeds as much as by their words. They ensure that the organisation behaves in line with its purpose and values. However, if leaders lack the confidence to achieve and carry out these approaches it will ultimately result in poor leadership. Employee job performance and satisfaction are heavily influenced by the levels of direction and support employees receive on a day-to-day basis. Poor leadership does not just hold employees back from reaching their full potential within an organisation; it sends them in the wrong direction and seriously impacts morale, employee retention, and financial performance in the process. 3.4 -Adapting strategic leadership styles to meet change: If an organization allows for a learning environment, the future competency potential of the employees and capacity for adapting to change will be unlimited. The Leadership-Participation Model states that open participation and a specific set of guidelines helps employees become a part of the corporate decision-making process. The Path-Goal theory states that leaders assist their workers to reach their own personal goals, as well as those of the company. By using the path-goal concept as a framework, managers can achieve many tasks, and their self-esteem needs will be satisfied. One of the leadership challenges faced by many managers is transactional leadership, which involves having to identify what are the employees needs and how to help them achieve the level of performance that results in satisfactory rewards (Robbins, 2003, 325-326). Transformational leadership is how managers encourage employees to earn self-actualization by providing individual attention and logical incentives. Efficient managers create dynamic leadership policies to gain employee commitment and loyalty. Managers who use interpersonal communication skills are more sensitive to employee needs, and provide ways for them to voice their opinions. Transformational leadership motivates employees to achieve results greater than originally planned for internal rewards like achievement and self-actualization (Bolton, 1996, 34-37). According to Fiedlers psychological reasoning, most employees focus on task completion and have a sense of accomplishment, so they follow task-oriented leadership. However, some employees also value supportive associations with managers, so they follow relationship-oriented leadership. Managers who use corporate task structure allow jobs to be structured according to problem-solving and feedback on success The most successful leaders care about employees personal advancement, growth and achievements, so they use an initiating structure where the manager defines the relationships, keeps the channels of communication open, focuses on goals, and explains how to do the jobs (DuBrin, 2000, 142-148). The five disciplines that Peter Senge (1990) says are the core disciplines in building the learning organization: personal mastery, mental models, team learning, shared vision, and systems thinking. Personal mastery is what Peter Senge describes as one of the core disciplines needed to build a learning organization. Personal mastery applies to individual learning, and Senge says that organizations cannot learn until their members begin to learn. Personal Mastery has two components. First, one must define what one is trying to achieve (a goal). Second, one must have a true measure of how close one is to the goal. (Senge, 1990) Mental models are the second of Senges five disciplines a mental model is ones way of looking at the world. It is a framework for the cognitive processes of our mind. In other words, it determines how we think and act. Team Learning Starts with dialogue, the capacity of members of a team to suspend assumptions and enter into a genuine thinking together. Shared Vision As people talk, the vision grows clearer. As it gets clearer, enthusiasm for its benefits grow. System Thinking System thinking is useful because, among other reasons, it can be diagrammed.  There are three simple system processes that can be easily defined and understood. Reinforcing Feedback Loop, Balancing Feedback Loop, Delays. Conclusion: Summing up all discussion I conclude that the pattern in which leadership and management react with each other is like leadership being centre of management and management being its circle. It is the obligation of every manager to be at the same time an inspiring leader. Being an efficient manager has actually proved to bring successful for the organization results whereas being an inspiring leader has not yet proved its importance. So an organization can progress if its manager is efficient but cannot progress, if its manager only relies to leadership characteristics. Leadership is an art that can be obtained and learned via experience. It is the difficulties via the years that one would face that will transform him into a leadership figure. In addition I consider leadership as nominal obligation of each and every manager. This is why in my conclusion I differentiate the term managers from administrators. A manager should be a leader. Should be able to inspire and motivate withou t using his power. He should be visionary whereas at the same time very detailed oriented.        I would suggest that a word like Management ship or Leadership should describe the actions of the 21st century manager, because our time calls for managers to be leaders.
Sunday, January 19, 2020
The Search for Happiness in Jane Eyre, by Charlotte Brontë :: Jane Eyre Essays
Jane spends her first 10 years of her life at Gateshead Hall, a lavish mansion. She lived with her Aunt, Mrs Reed, and three cousins, Eliza, Georgina and John. During her time in the mansion she wouldn't dare argue with the mistress, and fulfilled every duty. Jane is deprived of love, joy and acceptance. She is very much unwanted and isolated. "Eliza, John and Georgiana were now clustered round their mama in the drawing-room... Me, she had dispensed from joining the group" (chapter) Mrs Reed keeps Jane only because of a promise she made to her husband on his deathbed. This abuse and neglect from her relatives forces Jane to be resentful and full of hatred. Later on Jane begins to stand up for herself. Once Jane begins to rebel to the abuse done by John and Mrs Reed, it is as if an uncontrollable beast had been unleashed inside of her. "Something spoke out of me over which I had no control" (chap) She rebelled because she was long deprived of freedom, and her imprisonment. From this isolation Jane manages to learn independence and learns to really only on herself for much needed comfort and entertainment. The most important lesson Jane learns at Gateshead is self independence. Jane is soon sent away to Lowood school. Lowood school has high walls and strict rules which holds the freedom of students. Lowood eats away at her body (inedible food, bad conditions), but Gateshead ate away at her soul (isolation). Life at Lowood is extremely harsh, the pupils are very often given inedible meals, horrific clothing, and extremely cold conditions. It is through miss Temple and Helen that Jane receives her first taste of love and acceptance. Helen is Jane's best friend at Lowood. Helen is a religious role (angelic, and talks about God), in shaping her character. Helen believes everyone should love their enemies. Although Jane does not take to Helens good heart and good nature, with her wie word, Jane respects her for them and listens very passionately to what Helen has to say. Mr Brockleurst is the head teacher of the school. He is another extremely religious figure that Jane comes across. He talks about the deadly sins Jane has commited, yet he does not see his own actions are far worse. Mr Brocklehurts is a harsh and dishonest man, forcing the school to live in squallid conditions, so he can support his own lavish lifestyle. "My plan is bringing up these girls is, not to accustom them to habits of luxuary and indulgence, but to render them hardy, patient, self-denying.
Saturday, January 11, 2020
Indian Economic Scenario
GLOBSYN BUSINESS SCHOOL STUDY OF THE INDIAN AND CHINA ECONOMY PRESENTED BY: Learning Group 6 (PGPM-11B) – Vasundhara Kedia – Sourabh Soni – Sudeshna Chowdhary – Niloy Biswas – Sauryadipta Basu – Mandeep Pradhan ACKNOWLEDGMENT The time spent in the making of this project, as a part of our curriculum requirement of PGPM course, is invaluable in terms of learning. The application of concepts to the project added more depth and meaning to the knowledge gained in the classroom. We wish to extend our gratitude to our faculty guide Prof.S Chatterjee, for guiding us through the project with ample patience and understanding. We would also like to thank him for reminding us of the core objectives of the project every time we diverted from it. TABLE OF CONTENTS Abstract PAGE NO. 1. Introduction 4-6 THE INDIAN ECONOMY 2. Pre colonial, colonial and post-colonial India 7- 15 3. Indian Planning Commission & Liberalisation 16-20 4. India’s Economic Re forms and Currency Devaluation 21- 29 5.The Five Year Plans In India 30- 56 6. Fiscal Policy of India 57- 63 7. Monetary Policy of India 64- 65 8. Impact of Financial Crisis on Indian Economy 66-68 THE ECONOMY OF CHINA 9. Overview of the China Economy 69 10. Fiscal policy, Monetary policy, Inflation 70-73 11. Contrast between India and China’s Economy 74-80 ANNEXURE 1. INTRODUCTION Indian Economy Overview | | | | | |[pic] | | | | | |Indian economy is growing, despite the economic crisis that engulfed the world, stated Mr Anand Sharma, Union Minister for Commerce, | |Industry and Textiles, Government of India, while addressing a session at the 11thPravasi Bharatiya Divas 2013. Mr Sharma further | |highlighted that the national investment rate is around 33-34 per cent, and is expected to increase to 36 per cent by the end of | |12th Five Year Plan (2012-17). |India has been adjourned the fifth best country in the world for dynamic growing businesses, as per the Grant Thorn ton Global Dynamism| |Index. The index gives a reflection of how suitable an environment the country offers for dynamic businesses. | |Indian tax climate was also considered to be reasonably favourable and India continued to be an attractive investment destination, | |according to a survey conducted by Deloitte Touche Tohmatsu Ltd (Deloitte). | |Moreover, India was ranked fourth on Ernst & Young's (E) renewable attractiveness index, second on the solar index, and third on the| |wind index, as per the latest study by E and UBM India Pvt Ltd. | | |The Economic Scenario | |India is expected to be the second largest manufacturing country in the next five years, followed by Brazil as the third ranked | |country, according to Deloitte. | |Some of the other important economic developments in the country are as follows: | |The HSBC's Services Purchasing Managers' Index (PMI) touched a 12 month high at 57. 5 points in January 2013 as compared to 55. 6 in | |December 2012 | |The net d irect tax collections in India rose by 13. 70 per cent to record Rs 368,322 crore (US$ 67. 6 billion) during April-December | |2012, as compared to Rs 323,956 crore (US$ 59. 77 billion) during the corresponding months in 2011 | |Indian companies have raised US$ 4. 29 billion, through external commercial borrowings (ECBs) and foreign currency convertible bonds | |(FCCBs) in October 2012, to fund modernisation, foreign acquisitions, import of capital goods and onward lending | |The total value of private equity (PE) and mergers & acquisitions (M) deals in November 2012 increased five-fold to US$ 10. 1 | |billion, as per a study by Grant Thornton India. The total value of PE deals in November 2012 rose to US$ 39 billion from US$ 0. | |billion in November 2011, indicating that PE players preferred concentrated exposure to their value investments | |The cumulative amount of foreign direct investments (FDI) equity inflows into India were worth US$ 187,804 million between April 2000 | |to December 2012, while FDI equity inflow during April 2012 to December 2012 was recorded as US$ 16,946 million, according to the | |latest data published by Department of Industrial Policy and Promotion (DIPP) | |Foreign institutional investors (FIIs) made a net investment of US$ 68. 46 million in the equity market and US$ 14. 2 million in the | |debt market upto February 18, 2013, according to data released by the Securities and Exchange Board of India (SEBI) | | | |Growth Potential Story | |The pharmaceutical market of India is expected to grow at a compound annual growth rate (CAGR) of 14-17 per cent over 2012-16 and is | |now ranked among the top five pharmaceutical emerging markets globally | |The ready-to-drink tea and coffee market in India is estimated to touch Rs 2,200 crore (US$ 405. 90 million) in next four years, | |according to estimates arrived at the World Tea and Coffee Expo 2013 | |India's IT and business process outsourcing (BPO) sector exports are expected to incr ease by 12-14 per cent in FY14 to touch US$ 84 | |billion – US$ 87 billion, as per National Association of Software and Services Companies (Nasscom) | |Indian manufacturing and natural resources industry plans to spend Rs 40,800 crore (US$ 7. 53 billion) on IT products and services in | |2013, a growth of 9. per cent over 2012, according to Gartner. The telecommunications category remains the biggest spending category | |and it is forecast to reach Rs 13,200 crore (US$ 2. 43 billion) in 2013 | |The semiconductor market is expected to grow from US$ 6. 03 billion in 2011 to US$ 9. 7 billion by 2015. In addition, the local demand | |and sourcing is estimated to record US$ 3. 6 billion by 2015 | |The electronic system design and manufacturing (ESDM) sector of India is projected to reach US$ 94. 2 billion by 2015 from US$ 64. | |billion in 2011, according to a report by the India Semiconductor Association (ISA) and Frost & Sullivan | |The luxury car market of India is set for gro wth over the medium and long term, according to Mr Philipp Von Sahr, President, BMW Group| |India. The market is about 30,000 cars a year and is rising steadily, Mr Sahr added | |The FM radio sector in India is expected to touch the Rs 2,300 crore (US$ 424. 35 million) mark within three years of the Phase III | |licences' roll-out, as per estimates by Confederation of Indian Industry (CII) and Ernst & Young.The sector is expected to reach Rs | |1,400 crore (US$ 258. 30 million) with 245 private FM stations during 2012-13 | |The US$ 12 billion Indian foundry industry has lined up investments worth Rs 600 crore (US$ 110. 70 million) over the next few years as| |it expands and adapts environment-friendly measures to garner global market share | |Indian infrastructure landscape would attract investments worth Rs 49,000 billion (US$ 904. 05 billion) during the 12th Five Year Plan | |period (2012-17), with at least 50 per cent funding from the private sector, as per Government's projec tions. | | |Road Ahead | |The Indian economy is estimated to grow at a higher rate of 6. 7 per cent in 2013-14 due to revival in consumption, according to a | |report by CRISIL. â€Å"India's GDP growth in 2013-14 will be supported by the revival of private sector consumption growth aided by higher| |growth in agriculture, high government spending and lower interest rates,†said Ms Roopa Kudva, Managing Director and CEO, CRISIL. | |†The Indian financial markets have witnessed favouritism among the investing diaspora compared to its Asian counterparts such as South| |Korea, Taiwan, Thailand and Indonesia,†according to a report by Mecklai Financial. | |Exchange Rate: INR 1 = 0. 1845 as on February 19, 2013 | | | |References: Ministry of Finance, Press Information Bureau (PIB), Media Report, Department of Industrial Policy and Promotion (DIPP) | | | | | | | | | | | | | | | | | |Indian Economy before Colonial Period | | | |The earliest known evident civilizati on which flourished on the Indian soil was the Indus Valley Civilization. Historians believed | |that this civilization would have flourished between the time frame of 2800 BC and 1800 BC.It is evident from the excavated cities | |and structures that the inhabitants of the Indus Valley practiced agriculture, domesticated animals and had developed trade | |relationships between different cities. They are also known to have developed a uniform system of weights and measures. Also, the | |inhabitants of Indus Valley were one amongst the very first of people to have developed a network of well planned cities with their | |application of urban planning. These planned cities were equipped with the world’s first urban sanitation systems. | |India had been successful to develop international trade since as early as the first century BC.Historical evidences suggest that the| |Coromandel, the Malabar, the Saurashtra and the Bengal coasts were excessively used for the transportation of goods via sea roots from| |and towards India. In the ancient times, India conducted international trade mainly with parts of Middle East, Southeast Asia, Europe | |and Africa. Overland international trade, conducted via Khyber Pass, was also prevalent in ancient India. | |Later, in medieval times, the Mughal Empire gave way to a centrally administered uniform revenue policy and political stability | |in India which in turn lead to the further development of trade and unified the nation. During this era, India was primarily an | |agrarian self-sufficient economy which primarily depended on the primitive methods of agriculture.After the downfall of the Mughal | |Empire, the economy of India was primarily governed by the Maratha Empire which then ruled over most parts of India. Later, the | |Maratha defeat in the third battle of Panipat disintegrated India into several Maratha confederate states which raised a w idespread | |political turmoil in the country. The economy of India turned highly disturbed in most parts of the country during this phase, but | |some areas gained a local prosperity too. Later, by the end of eighteenth century, the British East India Company was successful in | |being a part of the Indian political machinery, following which there was a drastic change in the country’s economic activities and | |the trade conducted from the Indian soil. | | | | | | | | | | | | |Indian Economy during Colonial Period | | | |During the reign of the British East India Company, there was a drastic shift in the economic activities conducted across the country. | |More stress was laid on commercialization of agriculture. This led to a change in the agricultural pattern across the nation.During | |this phase of the Indian economy, there was a constant decline in the production of food grains in the country which resulted to the | |mass impoverishment and destitution of farmers. Also, in a short span after this shift of pattern, there were numerous famines raised | |in the country. | |Though, after and during this phase, there was a sharp decline in the economic structure of the country, but this was also the phase | |during which some major and economically important developments took place. These developments include the establishment of railways, | |telegraphs, common law and adversarial legal system. Also, it was during this era that a civil service which essentially aimed to be | |free from the political interference was established. | | |Post-Colonialism: Definition, Development and Examples from India | | | |1. Post-colonialism in general | |1. 1 Definition | |Post-colonialism is an intellectual direction (sometimes also called an â€Å"era†or the â€Å"post-colonial theory†) that exists since around | |the middle of the 20th century. It developed from and mainly refers to the time after col onialism. The post-colonial direction was | |created as colonial countries became independent.Nowadays, aspects of post-colonialism can be found not only in sciences concerning | |history, literature and politics, but also in approach to culture and identity of both the countries that were colonised and the | |former colonial powers. However, post-colonialism can take the colonial time as well as the time after colonialism into consideration. | |1. 2 Development | |The term â€Å"decolonisation†seems to be of particular importance while talking about post-colonialism. In this case it means an | |intellectual process that persistently transfers the independence of former-colonial countries into people’s minds.The basic idea of | |this process is the deconstruction of old-fashioned perceptions and attitudes of power and oppression that were adopted during the | |time of colonialism. | |First attempts to put this long-term policy of â€Å"decolonising the mindsâ⠂¬ into practice could be regarded in the Indian population after| |India became independent from the British Empire in 1947. | |However, post-colonialism has increasingly become an object of scientific examination since 1950 when Western intellectuals began to | |get interested in the â€Å"Third World countries†. In the seventies, this interest lead to an integration of discussions about | |post-colonialism in various study courses at American Universities. Nowadays it also plays a remarkable role at European Universities. |A major aspect of post-colonialism is the rather violent-like, unbuffered contact or clash of cultures as an inevitable result of | |former colonial times; the relationship of the colonial power to the (formerly) colonised country, its population and culture and vice| |versa seems extremely ambiguous and contradictory. | |This contradiction of two clashing cultures and the wide scale of problems resulting from it must be regarded as a major theme in | |post-colonialism: For centuries the colonial suppressor often had been forcing his civilised values on the natives. But when the | |native population finally gained independence, the colonial relicts were still omnipresent, deeply integrated in the natives’ minds | |and were supposed to be removed. | |So decolonisation is a process of change, destruction and, in the first place, an attempt to regain and lose power.While natives had | |to learn how to put independence into practice, colonial powers had to accept the loss of power over foreign countries. However, both | |sides have to deal with their past as suppressor and suppressed. | |This complicated relationship mainly developed from the Eurocentric perspective from which the former colonial powers saw themselves: | |Their colonial policy was often criticised as arrogant, ignorant, brutal and simply naive. Their final colonial failure and the total | |independence of the once suppressed made the process of decolonisation rather tense and emotional. | |Post-colonialism also deals with conflicts of identity and cultural belonging.Colonial powers came to foreign states and destroyed | |main parts of native tradition and culture; furthermore, they continuously replaced them with their own ones. This often lead to | |conflicts when countries became independent and suddenly faced the challenge of developing a new nationwide identity and | |self-confidence. | |As generations had lived under the power of colonial rulers, they had more or less adopted their Western tradition and culture. The | |challenge for these countries was to find an individual way of proceeding to call their own. They could not get rid of the Western way| |of life from one day to the other; they could not manage to create a completely new one either. | |On the other hand, former colonial powers had to change their self-assessment.This paradox identification process seems to be what | |decolonisation is all about, while post-colonialism is the intellectual direction that deals with it and maintains a steady analysis | |from both points of view. | |So how is this difficult process of decolonisation being done? By the power of language, even more than by the use of military | |violence. Language is the intellectual means by which post-colonial communication and reflection takes place. This is particularly | |important as most colonial powers tried to integrate their language, the major aspect of their civilised culture, in foreign | |societies. | |A lot of Indian books that can be attached to the era of post-colonialism, for instance, are written in English.The cross-border | |exchange of thoughts from both parties of the post-colonial conflict is supported by the use of a shared language. | |To give a conclusion of it all, one might say that post-colonialism is a vivid discussion about what happened with the colonial | |thinking at the end of the colonial era. What legacy arouse from this era? What social, cultural and economical consequences could be | |seen and are still visible today? In these contexts, one examines alternating experiences of suppression, resistance, gender, | |migration and so forth. While doing so, both the colonising and colonised side are taken into consideration and related to each other. |The main target of post-colonialism remains the same: To review and to deconstruct one-sided, worn-out attitudes in a lively | |discussion of colonisation. | | | |2. The post-colonial experience in India | |2. 1 History of Indian colonialism | |In the 16th century, European powers began to conquer small outposts along the Indian coast. Portugal, the Netherlands and France | |ruled different regions in India before the â€Å"British East India Company†was founded in 1756. |The British colonialists managed to control most parts of India while ruling the key cities Calcutta, Madras and Bombay as the main | |British bases. However, there still remained a few independent reg ions (Kashmir among others) whose lords were loyal to the British | |Empire. | |In 1857, the first big rebellion took place in the north of India. The incident is also named â€Å"First war of Indian Independence†, the | |â€Å"Sepoy Rebellion†or the â€Å"Indian Mutiny†, depending on the individual perspective. This was the first time Indians rebelled in massive| |numbers against the presence and the rule of the British in South Asia. The rebellion failed and the British colonialists continued | |their rule. |In 1885, the â€Å"National Indian Congress†(popularly called â€Å"Congress†) was founded. It demanded that the Indians should have their | |proper legitimate share in the government. From then on, the Congress developed into the main body of opposition against British | |colonial rule. Besides, a Muslim anti-colonial organisation was founded in 1906, called the â€Å"Muslim League†. | |While most parts of the Indian population rema ined loyal to the British colonial power during the First World War, more and more | |Muslim people joined the Indian independence movement since they were angry about the division of the Ottoman Empire by the British. |The non-violent resistance against British colonial rule, mainly initiated and organised by Mahatma Gandhi and Jawaharlal Nehru, | |finally lead to independence in 1947. | |At the same time, the huge British colony was split into two nations: The secular Indian Union and the smaller Muslim state of | |Pakistan. The Muslim League had demanded for an independent Muslim state with a majority of Muslims. | |India became a member of the British Commonwealth after 1947. | | | |2. 2 Post-colonial development in India | |The Partition of India (also called the â€Å"Great Divide†) lead to huge movements and an ethnic conflict across the Indian-Pakistani | |border.While around 10 million Hindus und Sikhs were expelled from Pakistan, about 7 million Muslims crossed the border to from India| |to Pakistan. Hundreds of thousands of people died in this conflict. Ever since these incidents, there have been tensions between India| |and Pakistan which lead to different wars particularly in the Kashmir region. | |For decades the Congress Party ruled the democratic country which had become a republic with its own constitution in 1950. In 1977 the| |opposition gained the majority of votes. In 1984, after the Congress Party had regained the majority, conflicts with the cultural | |minority of the Sikhs lead to the assassination of the Indian prime minister Indira Ghandi. |Today, apart from the significant economic progress, India is still facing its old problems: Poverty, overpopulation, environmental | |pollution as well as ethnic and religious conflicts between Hindus and Muslims. Additionally, the Kashmir conflict has not come to an | |end yet, while both Pakistan and Indian are threatening each other with their arsenals of atomic weapons. | |Concerning p ost-colonial literature, Edward Said’s book â€Å"Orientalism†(published in 1978) is regarded as the beginning of | |post-colonial studies. In this book the author analyses how European states initiated colonialism as a result of what they called | |their own racial superiority. | |The religious-ethnic conflicts between different groups of people play an important role in the early years of post-colonialism. |Eye-witnesses from both sides of the Indian-Pakistani conflict wrote about their feelings and experience during genocide, being | |confronted to blind and irrational violence and hatred. The Partition is often described as an Indian trauma. | |One example for a post-colonial scriptwriter who wrote about this conflict is Saddat Hasan Manto (1912 – 1955). He was forced to leave| |Bombay and to settle in Lahore, Pakistan. He published a collection of stories and sketches (â€Å"Mottled Dawn†) that deal with this dark | |era of Indian history and its im mense social consequences and uncountable tragedies. | |Furthermore, there are many different approaches to the topic of intercultural exchange between the British and the Indian population. |Uncountable essays and novels deal with the ambiguous relationship between these two nations. One particularly interesting phenomenon | |is that authors from both sides try to write from different angles and perspectives and in that way to show empathy with their | |cultural counterpart. | |The most famous novelist who wrote about these social and cultural exchanges is Salman Rushdie. Rushdie, who won the booker prize | |among various others, was born in India, but studied in England and started writing books about India and the British in the early | |eighties. His funny, brave, metaphoric and sometimes even ironical way of writing offers a multi-perspective approach to the | |post-colonial complex.This can be also seen in his book â€Å"Midnight’s Children†. In the past, Salman Rushdie was also repeatedly | |threatened by Irani fundamentalists because of his critical writing about Muslim extremism in the Middle East. | |Another famous post-colonial novel is â€Å"Heat and Dust†(published in 1975) by Ruth Prawer Jhabvala that contains two plot set in | |different times: One about a British lady starting an affair with a local Indian prince in the 1920s, the other one set in the 1970s, | |featuring young Europeans on a â€Å"hippie trail†who claim they have left behind Western civilisation and are trying to some spiritual | |home among Indian gurus. |â€Å"Bollywood†has become a notorious synonym for the uprising Indian film industry in recent years. Young Indian scriptwriters have | |discovered post-colonial issues as themes for their movies and as a way of dealing with the changeful past of their country. | |Concerning the integration of Western values in the Indian population and culture, one can say that the British influence is s till | |omnipresent in the Asian subcontinent. The reason for this can be also found in the persistence of the English language. | |Many Indians are conversant with the English language, because the British colonialists intended to export their values and culture by| |teaching the Indian population their language.This was regarded as the basic fundament for further education. | |What about the relationship between India and the United Kingdom today? It is a special one, and of course still not without tensions | |between these two nations that refer to the time of colonialism which from our retro perspective is not at all so far away. | |India has managed to become an independent state with its own political system and is still working to find its own identity. The | |longer the process of decolonisation lasts, the more we get the impression that only a middle course between the acceptance of British| |legacies and the creation of a new unique Indian self-confidence will be the righ t way to go for India. | | | | | | | | | | | | | | | | | | |Indian Economy before Liberalization | | | |After independence, till 1991, the economic policies of India were primarily inspired by the Soviet economic planning under which a | |strong emphasis was laid on increasing the domestic self-sufficiency and reducing the reliance on imports. The economic policies of | |India during this phase were primarily protectionist and marked by excessive economic interventions and business regulations. Also, | |during this era the major concern of the government was to develop large and heavy public sector industries. |The economic planning process during this phase was mainly conducted centrally through the Five Year Planning process of the Planning | |commission. This structure of economic planning, through Five Year Plans, was analogous to the planning process of the Soviet Union. | |Industries like mining, steel, machine tools, insur ance, telecommunications and power plants were effectively nationalized during this| |era. | |The Government of India, under the leadership of India’s first Prime Minister, Jawaharlal Nehru, along with statistician Prasanta | |Chandra Mahalanobis formulated an economic policy which laid a prime focus on the development of heavy industry in country by both the| |public and the private sector.However, despite all its efforts, the economy of India was unsuccessful to grow at pace with other | |Asian countries for the first three decades after independence. | |Later, in 1965, the advent of Green Revolution in country, triggered by the improved irrigation facilities, increased use of | |fertilizers and the introduction of high-yielding varieties of seeds improved the economic conditions of the country and enabled a | |better link between industry and agriculture in India. | | | |The economic policies of the colonial rulers were at the centre of a controversy i n the late 19th century India.Whereas the colonial | |administration sought to project its policies as beneficial to the country, the nationalist writers and sympathetic British | |commentators attacked these policies as exploitative and oppressive. | |Dadabhai Naoroji, R. C. Dutt and William Digby were some of the famous critics of government policies. The economic history of India, | |as we know it, may be said to have begun during this period. D. R. Gadgil, Vera Anstey and D. H. Buchanan followed in their footsteps in| |taking up the economic history of the colonial period. Jaduanth Sarkar and W. H. Moreland wrote about the Mughal economy. | |In the post-independence period, economic history became an established field of study and several studies were undertaken on various | |periods of Indian history covering several aspects of economy.The emergence of economics as a discipline in the eighteenth century | |led in due course to the development of a new branch in history called e conomic history. | |The progenitors of economics were Adam Smith and other classical economists. India was very much in the vision of the classical | |economists, a group of thinkers in England during the Industrial Revolution. They advocated lays faire and minimizing of state | |intervention in the economy. Adam Smith, the foremost classical economist, condemned the East India Company in its new role as the | |ruling power in India. In his view, the Company's trading monopoly ran counter to the principle of the freedom of the market. |Economics underwent a theoretical transformation in the early twentieth century under the influence of John Maynard Keynes, who | |advocated strategic economic intervention by the government for promoting welfare and employment. Keynes, too, thought deeply about | |India while developing his new economic theories, and his earliest major work. | |Indian Currency and Finance (London 1913), illustrated his notions of good monetary management of the ec onomy. It is also noteworthy | |that the early classical economists, such as Ricardo, influenced the thinking of a group of Utilitarian administrators who set about | |reforming the administration of India in the nineteenth century. | |Above all, the influence of Adam Smith is noticeable in the end of the Company's monopoly by the Charter Acts of 1813 and 1833.Not | |surprisingly, therefore, historians have paid close attention to the connection between the evolution of economic thought in England | |and the question of reform of the colonial administration in India. | |Classical political economy in England laid the foundations for the laissez faire economics of the Raj in the nineteenth century. | |Keynesian economics, on the other hand, contained the germs of the development economics of the mid-twentieth century both types of | |economics affected the state and the economy in India, and stimulated debates in the economic history of India. | |For the colonial period, R. C. Dutt's Economic History was followed by a series of works: D. R.Gadgil, The Industrial Evolution of | |India in Recent Times (1924); Vera Anstey, The Economic Development of India (1929); and D. H. Buchanan, and The Development of | |Capitalistic Enterprise in India (New York 1934). More recently, there has been a collective two-volume survey; Tapan Raychaudhuri and| |Irfan Habib (eds. ). | |The Cambridge Economic History of India, Vol 1, C. 1200 – C. 1750 (Cambridge 1982); and Dharma Kumar, The Cambridge Economic History of | |India, vol. 2 C. 1757 – C. 1970 (Cambridge, 1983). Daniel Houston Buchanan, an American author, was of the opinion that other worldly | |values and the caste system inhibited economic development in India. D. R.Gadgil, who updated his near classic work several times, | |emphasized, on the contrary, more strictly economic factors: the difficulties of capital mobilization on account of the absolute | |smallness of capital resources in respect to the siz e of the population, the late development of organized banking, and the seasonal | |fluctuations of a monsoon economy. | |A dispassionate economist, he did not blame either foreign rule or the Indian social structure for the absence of an industrial | |revolution in India; some of the Western contributors to the second volume of The Cambridge Economic History, on the other hand, | |showed a disposition to challenge R. C.Dutt's vision of the negative impact of colonialism, and they dwelt instead on the | |technological backwardness of the Indian economy. This, in their view, inhibited industrial development and capitalist enterprise | |during the colonial period. | | | THE INDIAN PLANNING COMMISSION HISTORY The Planning Commission was set up by a Resolution of the Government of India in March 1950 in pursuance of declared objectives of the Government to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing p roduction and offering opportunities to all for employment in the service of the community.The Planning Commission was charged with the responsibility of making assessment of all resources of the country, augmenting deficient resources, formulating plans for the most effective and balanced utilisation of resources and determining priorities. Jawaharlal Nehru was the first Chairman of the Planning Commission. The first Five-year Plan was launched in 1951 and two subsequent five-year plans were formulated till 1965, when there was a break because of the Indo-Pakistan Conflict. Two successive years of drought, devaluation of the currency, a general rise in prices and erosion of resources disrupted the planning process and after three Annual Plans between 1966 and 1969, the fourth Five-year plan was started in 1969.The Eighth Plan could not take off in 1990 due to the fast changing political situation at the Centre and the years 1990-91 and 1991-92 were treated as Annual Plans. Th e Eighth Plan was finally launched in 1992 after the initiation of structural adjustment policies. For the first eight Plans the emphasis was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced and the current thinking on planning in the country, in general, is that it should increasingly be of an indicative nature. FUNCTIONS The 1950 resolution setting up the Planning Commission outlined its functions as to: a.Make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation’s requirement; b. Formulate a Plan for the most effective and balanced utilisation of country's resources; c. On a determination of priorities, define the stages in which the Plan should be c arried out and propose the allocation of resources for the due completion of each stage; d. Indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the Plan; e.Determine the nature of the machinery which will be necessary for securing the successful implementation of each stage of the Plan in all its aspects; f. Appraise from time to time the progress achieved in the execution of each stage of the Plan and recommend the adjustments of policy and measures that such appraisal may show to be necessary; and g. Make such interim or ancillary recommendations as appear to it to be appropriate either for facilitating the discharge of the duties assigned to it, or on a consideration of prevailing economic conditions, current policies, measures and development programmes or on an examination of such specific problems as may be referred to it for advice by Central or State Governments. EVOLVING FUNCTIONSFrom a highly centralised planning system, the Indian economy is gradually moving towards indicative planning where Planning Commission concerns itself with the building of a long term strategic vision of the future and decide on priorities of nation. It works out sectoral targets and provides promotional stimulus to the economy to grow in the desired direction. Planning Commission plays an integrative role in the development of a holistic approach to the policy formulation in critical areas of human and economic development. In the social sector, schemes which require coordination and synthesis like rural health, drinking water, rural energy needs, literacy and environment protection have yet to be subjected to coordinated policy formulation. It has led to multiplicity of agencies. An integrated approach can lead to better results at much lower costs.The emphasis of the Commission is on maximising the output by using our limited resources optimally. Instead of looking for mere increase in the plan outlays, the effort is to look for increases in the efficiency of utilisation of the allocations being made. With the emergence of severe constraints on available budgetary resources, the resource allocation system between the States and Ministries of the Central Government is under strain. This requires the Planning Commission to play a mediatory and facilitating role, keeping in view the best interest of all concerned. It has to ensure smooth management of the change and help in creating a culture of high productivity and efficiency in the Government.The key to efficient utilisation of resources lies in the creation of appropriate self-managed organisations at all levels. In this area, Planning Commission attempts to play a systems change role and provide consultancy within the Government for developing better systems. In order to spread the gains of experience more widely, Planning Commission  also plays an information dissemination role. India-Liberalization in the Early 1990s Growth since 1980 Increased borrowing from foreign sources in the late 1980s, which helped fuel economic growth, led to pressure on the balance of payments. The problem came to a head in August 1990 when Iraq invaded Kuwait, and the price of oil soon doubled.In addition, many Indian workers resident in Persian Gulf states either lost their jobs or returned home out of fear for their safety, thus reducing the flow of remittances (see Size and Composition of the Work Force, this ch. ). The direct economic impact of the Persian Gulf conflict was exacerbated by domestic social and political developments. In the early 1990s, there was violence over two domestic issues: the reservation of a proportion of public-sector jobs for members of Scheduled Castes (see Glossary) and the Hindu-Muslim conflict at Ayodhya (see Public Worship, ch. 3; Political Issues, ch. 8). The central government fell in Novemb er 1990 and was succeeded by a minority government. The cumulative impact of these events shook international confidence in India's economic viability, and the country found it increasingly difficult to borrow internationally.As a result, India made various agreements with the International Monetary Fund (IMF–see Glossary) and other organizations that included commitments to speed up liberalization (see United Nations, ch. 9). In the early 1990s, considerable progress was made in loosening government regulations, especially in the area of foreign trade. Many restrictions on private companies were lifted, and new areas were opened to private capital. However, India remains one of the world's most tightly regulated major economies. Many powerful vested interests, including private firms that have benefited from protectionism, labor unions, and much of the bureaucracy, oppose liberalization.There is also considerable concern that liberalization will reinforce class and regional economic disparities. The balance of payments crisis of 1990 and subsequent policy changes led to a temporary decline in the GDP growth rate, which fell from 6. 9 percent in FY 1989 to 4. 9 percent in FY 1990 to 1. 1 percent in FY 1991. In March 1995, the estimated growth rate for FY 1994 was 5. 3 percent. Inflation peaked at 17 percent in FY 1991, fell to 9. 5 percent in FY 1993, and then accelerated again, reaching 11 percent in late FY 1994. This increase was attributed to a sharp increase in prices and a shortfall in such critical sectors as sugar, cotton, and oilseeds.Many analysts agree that the poor suffer most from the increased inflation rate and reduced growth rate. Data as of September 1995 The rate of growth improved in the 1980s. From FY 1980 to FY 1989, the economy grew at an annual rate of 5. 5 percent, or 3. 3 percent on a per capita basis. Industry grew at an annual rate of 6. 6 percent and agriculture at a rate of 3. 6 percent. A high rate of investment was a major factor in improved economic growth. Investment went from about 19 percent of GDP in the early 1970s to nearly 25 percent in the early 1980s. India, however, required a higher rate of investment to attain comparable economic growth than did most other low-income developing countries, indicating a lower rate of return on investments.Part of the adverse Indian experience was explained by investment in large, long-gestating, capital-intensive projects, such as electric power, irrigation, and infrastructure. However, delayed completions, cost overruns, and under-use of capacity were contributing factors. Private savings financed most of India's investment, but by the mid-1980s further growth in private savings was difficult because they were already at quite a high level. As a result, during the late 1980s India relied increasingly on borrowing from foreign sources (see Aid, this ch. ). This trend led to a balance of payments crisis in 1990; in order to receive new loans, the government had no choice but to agree to further measures of economic liberalization.This commitment to economic reform was reaffirmed by the government that came to power in June 1991. India's primary sector, including agriculture, forestry, fishing, mining, and quarrying, accounted for 32. 8 percent of GDP in FY 1991 (see table 17, Appendix). The size of the agricultural sector and its vulnerability to the vagaries of the monsoon cause relatively large fluctuations in the sector's contribution to GDP from one year to another (see Crop Output, ch. 7). In FY 1991, the contribution to GDP of industry, including manufacturing, construction, and utilities, was 27. 4 percent; services, including trade, transportation, communications, real estate and finance, and public- and private-sector services, contributed 39. 8 percent.The steady increase in the proportion of services in the national economy reflects increased market-determined processes, such as the spread of rural banking, and government a ctivities, such as defense spending (see Agricultural Credit, ch. 7; Defense Spending, ch. 10). Despite a sometimes disappointing rate of growth, the Indian economy was transformed between 1947 and the early 1990s. The number of kilowatt-hours of electricity generated, for example, increased more than fiftyfold. Steel production rose from 1. 5 million tons a year to 14. 7 million tons a year. The country produced space satellites and nuclear-power plants, and its scientists and engineers produced an atomic explosive device (see Major Research Organizations, this ch. ; Space and Nuclear Programs, ch. 10).Life expectancy increased from twenty-seven years to fifty-nine years. Although the population increased by 485 million between 1951 and 1991, the availability of food grains per capita rose from 395 grams per day in FY 1950 to 466 grams in FY 1992 (see Structure and Dynamics, ch. 2). However, considerable dualism remains in the Indian economy. Officials and economists make an import ant distinction between the formal and informal sectors of the economy. The informal, or unorganized, economy is largely rural and encompasses farming, fishing, forestry, and cottage industries. It also includes petty vendors and some small-scale mechanized industry in both rural and urban areas.The bulk of the population is employed in the informal economy, which contributes more than 50 percent of GDP. The formal economy consists of large units in the modern sector for which statistical data are relatively good. The modern sector includes large-scale manufacturing and mining, major financial and commercial businesses, and such public-sector enterprises as railroads, telecommunications, utilities, and government itself. The greatest disappointment of economic development is the failure to reduce more substantially India's widespread poverty. Studies have suggested that income distribution changed little between independence and the early 1990s, although it is possible that the poor er half of the population improved its position slightly.Official estimates of the proportion of the population that lives below the poverty line tend to vary sharply from year to year because adverse economic conditions, especially rises in food prices, are capable of lowering the standard of living of many families who normally live just above the subsistence level. The Indian government's poverty line is based on an income sufficient to ensure access to minimum nutritional standards, and even most persons above the poverty line have low levels of consumption compared with much of the world. Estimates in the late 1970s put the number of people who lived in poverty at 300 million, or nearly 50 percent of the population at the time. Poverty was reduced during the 1980s, and in FY 1989 it was estimated that about 26 percent of the population, or 220 million people, lived below the poverty line. Slower economic growth and higher inflation in FY 1990 and FY 1991 reversed this trend.In FY 1991, it was estimated that 332 million people, or 38 percent of the population, lived below the poverty line. Farmers and other rural residents make up the large majority of India's poor. Some own very small amounts of land while others are field hands, seminomadic shepherds, or migrant workers. The urban poor include many construction workers and petty vendors. The bulk of the poor work, but low productivity and intermittent employment keep incomes low. Poverty is most prevalent in the states of Orissa, Bihar, Uttar Pradesh, and Madhya Pradesh, and least prevalent in Haryana, Punjab, Himachal Pradesh, and Jammu and Kashmir. By the early 1990s, economic changes led to the growth in the number of Indians with significant economic resources.About 10 million Indians are considered upper class, and roughly 300 million are part of the rapidly increasing middle class. Typical middle-class occupations include owning a small business or being a corporate executive, lawyer, physician, wh ite-collar worker, or land-owning farmer. In the 1980s, the growth of the middle class was reflected in the increased consumption of consumer durables, such as televisions, refrigerators, motorcycles, and automobiles. In the early 1990s, domestic and foreign businesses hoped to take advantage of India's economic liberalization to increase the range of consumer products offered to this market. Housing and the ancillary utilities of sewer and water systems lag considerably behind the population's needs.India's cities have large shantytowns built of scrap or readily available natural materials erected on whatever space is available, including sidewalks. Such dwellings lack piped water, sewerage, and electricity. The government has attempted to build housing facilities and utilities for urban development, but the efforts have fallen far short of demand. Administrative controls and other aspects of government policy have discouraged many private investors from constructing housing units. Liberalization in the Early 1990s Increased borrowing from foreign sources in the late 1980s, which helped fuel economic growth, led to pressure on the balance of payments. The problem came to a head in August 1990 when Iraq invaded Kuwait, and the price of oil soon doubled.In addition, many Indian workers resident in Persian Gulf states either lost their jobs or returned home out of fear for their safety, thus reducing the flow of remittances (see Size and Composition of the Work Force, this ch. ). The direct economic impact of the Persian Gulf conflict was exacerbated by domestic social and political developments. In the early 1990s, there was violence over two domestic issues: the reservation of a proportion of public-sector jobs for members of Scheduled Castes (see Glossary) and the Hindu-Muslim conflict at Ayodhya (see Public Worship, ch. 3; Political Issues, ch. 8). The central government fell in November 1990 and was succeeded by a minority government. The cumulative impact of these events shook international confidence in India's economic viability, and the country found it increasingly difficult to borrow internationally.As a result, India made various agreements with the International Monetary Fund (IMF–see Glossary) and other organizations that included commitments to speed up liberalization (see United Nations, ch. 9). In the early 1990s, considerable progress was made in loosening government regulations, especially in the area of foreign trade. Many restrictions on private companies were lifted, and new areas were opened to private capital. However, India remains one of the world's most tightly regulated major economies. Many powerful vested interests, including private firms that have benefited from protectionism, labor unions, and much of the bureaucracy, oppose liberalization. There is also considerable concern that liberalization will reinforce class and regional economic disparities.The balance of payments crisis of 1990 and subsequen t policy changes led to a temporary decline in the GDP growth rate, which fell from 6. 9 percent in FY 1989 to 4. 9 percent in FY 1990 to 1. 1 percent in FY 1991. In March 1995, the estimated growth rate for FY 1994 was 5. 3 percent. Inflation peaked at 17 percent in FY 1991, fell to 9. 5 percent in FY 1993, and then accelerated again, reaching 11 percent in late FY 1994. This increase was attributed to a sharp increase in prices and a shortfall in such critical sectors as sugar, cotton, and oilseeds. Many analysts agree that the poor suffer most from the increased inflation rate and reduced growth rateINDIA'S ECONOMIC REFORMS The reform process in India was initiated with the aim of accelerating the pace of economic growth and eradication of poverty. The process of economic liberalization in India can be traced back to the late 1970s. However, the reform process began in earnest only in July 1991. It was only in 1991 that the Government signaled a systemic shift to a more open econ omy with greater reliance upon market forces, a larger role for the private sector including foreign investment, and a restructuring of the role of Government. The reforms of the last decade and a half have gone a long way in freeing the domestic economy from the control regime.An important feature of India's reform programme is that it has emphasized gradualism and evolutionary transition rather than rapid restructuring or â€Å"shock therapy†. This approach was adopted since the reforms were introduced in June 1991 in the wake a balance of payments crisis that was certainly severe. However, it was not a prolonged crisis with a long period of non-performance. The economic reforms initiated in 1991 introduced far-reaching measures, which changed the working and machinery of the economy. These changes were pertinent to the following: †¢ Dominance of the public sector in the industrial activity †¢ Discretionary controls on industrial investment and capacity expansion †¢ Trade and exchange controls †¢ Limited access to foreign investment Public ownership and regulation of the financial sector The reforms have unlocked India's enormous growth potential and unleashed powerful entrepreneurial forces. Since 1991, successive governments, across political parties, have successfully carried forward the country's economic reform agenda. Reforms in Industrial Policy Industrial policy was restructured to a great extent and most of the central government industrial controls were dismantled. Massive deregulation of the industrial sector was done in order to bring in the element of competition and increase efficiency. Industrial licensing by the central government was almost abolished except for a few hazardous and environmentally sensitive industries.The list of industries reserved solely for the public sector  which used to cover 18 industries, including iron and steel, heavy plant and machinery, telecommunications and telecom equipment, m inerals, oil, mining, air transport services and electricity generation and distribution was drastically reduced to three: defense aircrafts and warships, atomic energy generation, and railway transport. Further, restrictions that existed on the import of foreign technology were withdrawn. Reforms in Trade Policy It was realized that the import substituting inward looking development policy was no longer suitable in the modern globalising world. Before the reforms, trade policy was characterized by high tariffs and pervasive import restrictions. Imports of manufactured consumer goods were completely banned. For capital goods, raw materials and intermediates, certain lists of goods were freely importable, but for most items where domestic substitutes were being produced, imports were only possible with import licenses.The criteria for issue of licenses were non-transparent, delays were endemic and corruption unavoidable. The economic reforms sought to phase out import licensing and a lso to reduce import duties. Import licensing was abolished relatively early for capital goods and intermediates which became freely importable in 1993, simultaneously with the switch to a flexible exchange rate regime. Quantitative restrictions on imports of manufactured consumer goods and agricultural products were finally removed on April 1, 2001, almost exactly ten years after the reforms began, and that in part because of a ruling by a World Trade Organization dispute panel on a complaint brought by the United States. Financial sector reformsFinancial sector reforms have long been regarded as an integral part of the overall policy reforms in India. India has recognized that these reforms are imperative for increasing the efficiency of resource mobilization and allocation in the real economy and for the overall macroeconomic stability. The reforms have been driven by a thrust towards liberalization and several initiatives such as liberalization in the interest rate and reserve r equirements have been taken on this front. At the same time, the government has emphasized on stronger regulation aimed at strengthening prudential norms, transparency and supervision to mitigate the prospects of systemic risks.Today the Indian financial structure is inherently strong, functionally diverse, efficient and globally competitive. During the last fifteen years, the Indian financial system has been incrementally deregulated and exposed to international financial markets along with the introduction of new instruments and products. Devaluation of the Rupee: Tale of Two Years, 1966 and 1991 Since its Independence in 1947, India has faced two major financial crises and two consequent devaluations of the rupee. These crises were in 1966 and 1991 and, as we plan to show in this paper, they had similar causes. Foreign exchange reserves are an extremely critical aspect of any country’s ability to engage in commerce with other countries.A large stock of foreign currency res erves facilitates trade with other nations and lowers transaction costs associated with international commerce. If a nation depletes its foreign currency reserves and finds that its own currency is not accepted abroad, the only option left to the country is to borrow from abroad. However, borrowing in foreign currency is built upon the obligation of the borrowing nation to pay back the loan in the lender’s own currency or in some other â€Å"hard†currency. If the debtor nation is not credit-worthy enough to borrow from a private bank or from an institution such as the IMF, then the nation has no way of paying for imports and a financial crisis accompanied by devaluation and capital flight results.The destabilising effects of a financial crisis are such that any country feels strong pressure from internal political forces to avoid the risk of such a crisis, even if the policies adopted come at large economic cost. To avert a financial crisis, a nation will typically ad opt policies to maintain a stable exchange rate to lessen exchange rate risk and increase international confidence and to safeguard its foreign currency (or gold) reserves. The restrictions that a country will put in place come in two forms: trade barriers and financial restrictions. Protectionist policies, particularly restrictions on imports of goods and services, belong to the former category and restrictions on the flow of financial assets or money across international borders are in the latter category.Furthermore, these restrictions on international economic activity are often accompanied by a policy of fixed or managed exchange rates. When the flow of goods, services, and financial capital is regulated tightly enough, the government or central bank becomes strong enough, at least in theory, to dictate the exchange rate. However, despite these policies, if the market for a nation’s currency is too weak to justify the given exchange rate, that nation will be forced to de value its currency. That is, the price the market is willing to pay for the currency is less than the price dictated by the government. The 1966 Devaluation As a developing economy, it is to be expected that India would import more than it exports.Despite government attempts to obtain a positive trade balance, India has had consistent balance of payments deficits since the 1950s. The 1966 devaluation was the result of the first major financial crisis the government faced. As in 1991, there was significant downward pressure on the value of the rupee from the international market and India was faced with depleting foreign reserves that necessitated devaluation. There is a general agreement among economists that by 1966, inflation had caused Indian prices to become much higher than world prices at the pre-devaluation exchange rate. When the exchange rate is fixed and a country experiences high inflation relative to other countries, that country’s goods become more expensive and foreign goods become cheaper.Therefore, inflation tends to increase imports and decrease exports. Since 1950, India ran continued trade deficits that increased in magnitude in the 1960s. Furthermore, the Government of India had a budget deficit problem and could not borrow money from abroad or from the private corporate sector, due to that sector’s negative savings rate. As a result, the government issued bonds to the RBI, which increased the money supply. In the long run,
Friday, January 3, 2020
The Recession Of A Recession - 1035 Words
Economical term ‘recession’ means a significant decrease in activity across the economy, which last longer than few months. This phenomenon is visible in employment, wholesale-retail trade, and others. The recession is considered a normal part of the business cycle. Nevertheless, a one-time crisis can trigger the onset of a recession. The global recession through 2007 to 2009 resulted in significant breakdowns to practically all the developed and developing countries. In order to prevent a future financial crisis, numerous government policies were enforced. A recession usually last 6 to 18 months and interest rate fall to stimulate the economy. During a recession, people tend not to spend, borrow, but to save money because of a fall in confidence. The government initiates an expansionary fiscal policy which involves increasing stimulus government spending and cutting taxes. However, the question is can increased stimulus spending help end the recession. The first article , â€Å"Increased Stimulus Spending Can Help End the Recession†by Lawrence H. Summers, argues that â€Å"for a successful economic recovery, the US government must pursue measures that increase confidence, borrowing, and spending†(Summers 1). Summers alleges that the reason why recession keeps on is because of lack of demand. An increase in spending to increase demand is the cure, even though too much spending was part of a cause in recession. Summers defined a recession as: Recessions are times when there is tooShow MoreRelatedThe Recession Of The Great Recession1525 Words  | 7 Pagesexperienced a financial crisis known as the Great Recession, which affected much of the world. It officially lasted from December 2007 to June 2009 and all began with the bursting of an 8 trillion dollar housing bubble. 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