Be Assignment.docx

NCRD's Sterling Institute of Management Studies

Topic

:- Assignement

Class

:- FYMMS

Div

:- B

Subject

:- Business Environment

Submitted to :- Prof. Sonu Khetre Submitted by :- MEET PATEL (73)

Q1. State human development index of India? Ans. The Human Development Index (HDI) is a statistical tool used to measure a country's overall achievement in its social and economic dimensions. The social and economic dimensions of a country are based on the health of people, their level of education attainment and their standard of living. Human development is both an outcome and a process of enlarging people’s choices to lead lives they value. Economic growth is only a means, though an important one, for human development. 7th Largest Country by area and 2nd by population. 12th largest Economy at Market Exchange, Rate and 4th largest by PPP. INDIA’s Rank is 119th In the HDI table.

The human development index examines three important criteria of economic development 1) Life expectancy 2) Education 3) Income levels Create an overall score between 0 and 1. 1 - indicates a high level of economic development. 0- a very low level.

HDI ASPECTS OF INDIA 

India ranks (2014) – 135

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HDI – 0.586

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Gain of 0.003 HDI from previous year .

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Comes under medium human development countries.

Indicators: 

Life expectancy at birth(by UN). Overall – 64.19 years(Rank 147). male – 62.80 years. Female – 65.73 years.

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Education index : 0.473 .

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Mean years of schooling : 5.1(rank 65).

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GNI(Gross National Income)per capita at PPP : $5350 (rank 127) .

Preparation of not only national report, but also sub-national human development reports (HDR). 

Decentralized and integrated the human development concept into its development agenda at national, state, as well as district level .

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More HDRs have been produced in India than the total number of global HDRs.

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Plan is made by the Planning Commission –United Nations Development Programme(UNDP) partnership through the preparation of State Human Development Reports (SHDR) and District Human Development Reports (DHDR).

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Human development programme started in 8th five year plan(1992-1997).

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First state - Madhya Pradesh.

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The world’s first state HDR was published in Madhya Pradesh in 1995 .

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Computation of the state’s HDI as well as HDI for all the districts in the state made by state govt.

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So far 21 states have prepared HDRs.

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State governments have initiated the work on district HDRs for 80 districts of which 23 HDRs have been released till date,

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2009 -The first city HDR (Mumbai) was launched.

INDIA IS LAGGING IN HDI 

Large number of population in India lives in slums that is around 158 .4 million.

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42 % children below 5 years age are underweight and 59 % stunted.

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Low spending on education by the government.

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Lack of schemes for urban poor like NRHMetc.

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India treats its environment poorly . Ranks 125 out of 132 countries in a study done by Yale university.

Q2. Explain green revolution? Ans. Green Revolution means revolutionary change in agriculture in order to make a massive production. Green revolution has been effected not only in India but also in many other countries where food production is not at par with the size of population The Green Revolution in India refers to a period of time when agriculture in India improved due to the adoption of modern methods and technology such as high yielding variety seeds (HYV seeds), tractors, pump sets,etc in agriculture. The key leadership role played by the Indian agricultural scientist Vehla Swaminathan Banda together with many others including GS Kalkat, earned him the popularly used title 'Father of Green Revolution of India'. The Green Revolution allowed developing countries, like India, to overcome poor agricultural productivity. Within India, this started in the early 1960s and led to an increase in food grain production, especially in Punjab, Haryana and Uttar Pradesh during the early phase. The main development was higher-yielding varieties of wheat for developing rust resistant strains of wheat. History of green revolution: The beginnings of the Green Revolution are often attributed to Norman Borlaug, an American scientist interested in agriculture. In the 1940s, he began conducting research in Mexico and developed new disease resistance highyield varieties of wheat. Due to the success of the Green Revolution in Mexico, its technologies spread worldwide in the 1950s and 1960s. The introduction of high-yielding varieties of seeds after 1965 and the increased use of fertilizers and irrigation provided the increase in production which improved agriculture in India.

Methods used in green revolution: 

Double/ Multiple Cropping system

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Seeds with superior genetics

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Proper irrigation system

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High Yielding Variety (HYV) of seeds

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Use of pesticides and fertilizers

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Use of modern machinery (Tractor,

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Harvester, Thrasher)

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Expansion of farming areas

Causes of green revolution:  High Yielding Varieties of Seed. 

Chemical Fertilizers.

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Irrigation.

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Multiple Cropping.

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Modern Agricultural Machinery.

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Credit Facilities.

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Agricultural Research.

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Plant Protection.

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Rural Electrification.

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Soil Testing and Soil Conservation.

Advantages of green revolution:  Yields increased three times. 

Multiple cropping.

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Other crops grown which varied the diet.Surplus to sell in cities creating a profitimproving the standard of living.

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Allows purchase of fertilizers, machinery etc.

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India becomes self sufficient in food grains.

Limitation of green revolution:  The Green Revolution, howsoever impressive, but NOT a 100% success. Only Punjab and Haryana states showed best results of Green Revolution. 

The new farming techniques, has given birth to the serious pollution of drinking water causing cancer and other diseases.

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A recent Punjabi University study found a high rate of genetic damage among farmers, which was attributed to pesticide use.

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The new organic fertilizer, pesticides and chemicals are ruining the soil.

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Lead to unemployment and Rural-Urban Immigration.

Throughout history there have been many revolutions that have occurred and changed human lives, such as the American Revolution and the Industrial Revolution. In the mid- and late-20th century a revolution occurred that dramatically changed the field of agriculture, and this revolution was known as the Green Revolution. The Green Revolution was a period when the productivity of global agriculture increased drastically as a result of new advances. During this time period, new chemical fertilizers and synthetic herbicides and pesticides were created. The chemical fertilizers made it possible to supply crops with extra nutrients and, therefore, increase yield. The newly developed synthetic herbicides and pesticides controlled weeds, deterred or kill insects, and prevented diseases, which also resulted in higher productivity.

Q3. Explain importance and effects of green revolution? Ans. Importance of green revolution (1) Population Growth: During fifties and early sixties due to population growth the real per capita income and per capita food availability has reduced. When the food production hardly increased while population increased. This has deteriorated the standard of living. Thus to feed extra mouths there was a need to introduce technical progress in agriculture.

(2) Agricultural Development: With limited land, fast growing labor force, slow rate of labor utilization and lack of serious policies for enough investment in agriculture by the govts. the food crises rose in some UDCs. Moreover, in LDCs, the heavy emphasis is laid on industrialization for which there is the need for foreign exchange. Hence, they did not have enough foreign exchange for the food imports. Moreover, the natural calamities like droughts etc. often created large troubles for LDCs. Therefore, the govts. of LDCs should think of increasing productivity in agricultural sector. This could be possible by inventing miracle seeds for wheat and rice. The miracle seeds were first used in Mexico and are known as Mexican seeds. The use of these seeds resulted in increasing agri. production much higher than traditional varieties.

(3) Double and Multiple Cropping: The invention of new seeds had the effect of increasing the cropic intensity. Earlier in many LDCs the system of double cropping was uncommon. The arrival of new dwarf varieties of seeds will open up the possibility of double and multiple cropping in large scale. This rise in cropic intensity will increase per acre yield substantially. Thus farm income will begin to rise in the areas covered by HYV (High Yielding Veriety) projects. Farmers attitude towards risk will change when their production will go above MCN.

(4) Increase in Use of Fertilizers: The other factor which greatly increased the food production and per acre yield is a rise in the use of fertilizers. There exists a positive relationship between fertilizers use and crop response. It has been observed that nitrogen fertilizers along with HYV of wheat and rice have increased the production three times more as compared with the traditional variety. Thus through the effect of fertilizers on yields and increasing multiple cropic the fertilizers play a vital role in promoting GR in LDCs. To increase the use of fertilizers the subsidies have been given to farmers in so many UDCs. But it has been also observed that there exists an inverse relationship between the use of fertilizers and their prices. Despite this problem with GR, fertilizers have played an important role, particularly in raising agri. surplus.

(5) Increase in Irrigational Facilities: The other important element which spread GR is the availability of irrigation facilities. The use of fertilizers and other complementary inputs will not give the desirable result if the regular and timely water is not supplied. The case of Punjab in Pakistan where the yield of wheat rose most dramatically because of good irrigation facilities. The average yield from irrigated lands is 30 to 100 % higher than un-irrigated lands. Therefore, in the presence of better irrigational facilities GR can play an important role.

(6) Increase in Agricultural Credit: Because of GR the availability of loans to the farmers becomes possible. Moreover, the farmers are in a position to get consultancy services. They attain storage facilities. Moreover, govts. will also declare clear cut price support policy for the agri. goods. In this way, the uncertainty in the prices of farm products will come down and the incomes of the farmers will be stabilized.

(7) Increase in Use of Machinery: The use of machines in agriculture will increase which will have the effect of raising the yield per unit of labor and land. This will increase wages and payments. The domestic production will also increase through mechanization. But the use of tractors is labor displacing. This will depress the real wages and income distribution will become unequal. Thus GR will ultimately result in Red Revolution It is thus important to analyze the relationship between GR and farm income distribution.

(8) Unequal Income Distribution: It is the public policy which has played an important role regarding the use of modern technology in agri. sector. The farmers were given subsidies on the use of fertilizers. The duties were reduced or the imports of tractors and agri. machinery and the loans were provided to the farmers at the concessionary rates. Thus these measures helped in providing the complementary inputs at lower prices. But in so many poor countries the peasants are unable to purchase them even at reduced prices. Therefore, it is the class of big land owners and feudals which gets benefits of such public measures. The land lords are in a position to get electricity, loans, superior seeds and irrigational facilities through political links. In this way, their productions and incomes increase, while those of peasants remain low. Thus GR becomes responsible for unequal income distribution.

(9) Social Revolution: Because of GR the socio-economic life of villages will change. The education will spread and the life style of the people will change. The death and birth rates will decline. The distances between rural and urban centers will come down. The self-sufficient life of villages will come to an end. The agro-based industries will be set-up.

Effects of Green Revolution:

(i) Increase in Production and Productivity: As a result of new agricultural strategy, food grains output substantially increased from 81.0 million tonnes in the Third Plan (annual average) to 203 million tonnes in the Ninth Plan (annual average) and further to 212. 0 million tonnes in 2003-04. HYVP was restricted to only five crops – wheat, rice jowar, bajra and maize. Therefore, nonfood grains were excluded from the ambit of the new strategy. Wheat has made rapid strides with its production increasing from 11.1 million tonnes (Third Five Year Plan) to 71.3 million tonnes in the Ninth Plan. The production of wheat touched a high level of 72.1 million tonnes in 2003-04,

the overall contribution of wheat to total food grains has increased from 13 per cent in 1950 – 51 to 34 per cent in 2003-04. The average annual production of rice rose from 35. 1 million tonnes in the Third Plan to 87.3 million tonnes in the Ninth Plan. It stood at 87.0 million tonnes in 2003-04. (ii) Scientific Cultivation: A very important effect of Green Revolution is that traditional agricultural inputs and practices have given way to new and scientific practices. Instead of farm seeds, farmers are now using HYV seeds. Traditional fertilizers are replaced by chemical fertilizers. Consequently under HYV seeds increased sharply from 1.66 million hectares in 1966-67 (when green revolution came to India) to about 78.4 million hectares in 1998-99. (iii) Change in Cropping Pattern: Two changes are significant. First, the proportion of cereals in the food grains output has increased and the proportion of pulses has declined. Second, the proportion of wheat cereals has increased while that of coarse grains has declined. (iv) Development of Industries: Green revolution has benefited the industrial development. Many industries producing agriculture, machinery, chemical fertilizers, pesticides, insecticides etc., have come up to meet the growing demand for these commodities. (vi) Change in Attitudes: A healthy contribution of green revolution is the change in the attitudes of farmers. Our farmers have now begun to think that they can change their misfortunes by adopting new technology. Unlike past, they are now giving up traditional agricultural practices for scientific practices.

Q4. What is capitalist economy and its features? Ans. Meaning: It is one of the oldest economic systems and its origin is at the time of mid-eighteenth century in England in the wake of Industrial Revolution. It is that system, where means of production are owned by private individuals, profit is the main motive and there is no interference by the government in the economic activities of the economy. Hence, it is known as free market economy. According to Karl Marx, in his ‘Das Kapital’, the capitalist on an average takes twelve hours work from the worker and pays him wages equal to six hours work. According to Ferguson, “Capitalism is a free-market form or capitalistic economy may be characterised as an automatic self-regulating system motivated by self-interest of individuals and regulated by competitions.”

Capitalist economy has following main features: (i) Private Property: In this economy private property is allowed. All means of production like machines, implements, mines and factories etc. come under private property. (ii) Price Mechanism: Capitalist economy is gained by price mechanism. Here prices are determined by the interaction of demand and supply without the interference of any kind by the government or any other external forces. (iii) Freedom of Enterprise: In this system every individual is independent to his means of production in any occupation that one likes. (iv) Sovereignty of that consumer: Under this system, consumer plays the most vital role. The entire production pattern is based on the desires, wishes and the demand of the consumer. (v) Profit Motive: The maximisation of profit is the main motive of the producer. Profit guides the production in this type of economy. (vi) No Government Interference: Under capitalistic system, government does not interfere in day-to-day economic activities. This means producers and consumers are free to take decisions. (vii) Democratic: The capitalistic system is more democratic in comparison to other economic systems as there are more changes to chancel according to new environments of the economy. (viii) Self-Interest: The inspiring force in this system is self-interest. It leads to hard work and to earn maximum income by satisfying their consumers.

Q5. What is a socialist economy and its features? Ans. Meaning: Socialist means the system under which economic system is controlled and regulated by the government so as to ensure welfare and equal opportunity to the people in a society. The idea of socialism is first introduced by Karl Marx and Fredric Engles in their book, ‘The Communist Manifesto’. The word socialism means ‘all things to all men’. According to Samuelson, “Socialism refers to the government ownership of the means of production, planning by the government and income distribution”. The main features of socialist economy are as follows: (i) Collective Ownership: In socialism, all means of production are owned by the community, i.e., Government, and no individual can hold private property beyond certain limit. Therefore, it is government who utilises these resources in the interest of social welfare. (ii) Economic, Social and Political Equality: Under socialism, there is almost equality between rich and poor. There is no problem of class struggle. (iii) Economic Planning: Under socialism, government fixes certain objectives. In order to achieve these objectives, government adopts economic planning. All types of decisions regarding the central problems of an economy are taken in the economic plans. There is a Central Planning Authority, who plans for the economy. (iv) No Competition: Unlike capitalistic economy, there is no cut throat competition. It means lack of competition as state is the sole entrepreneur. (v) Positive Role of Government: In socialism, government plays significant role in decision making. Thus, government has complete control over economic activities like distribution, exchange, consumption, investment and foreign trade etc. (vi) Work and Wages According to Ability and Needs: In socialistic economy, work is according to ability and wage according to need. It is said that under socialism “from each according to his ability to each according to his needs, is socialism.” (vi) Maximum Social Welfare: The sole objective of socialism is the maximum social welfare of the society. It means that there is no scope of exploitation of labour class. Government keeps a close eye on the needs of the poor masses while formulating plans.

Q6. What is mixed economy and its features? Ans. Meaning: It is a golden mixture of capitalism and socialism. Under this system there is freedom of economic activities and government interferences for the social welfare. Hence it is a blend of both the economies. The concept of mixed economy is of recent origin. The developing countries like India have adopted mixed economy to accelerate the pace of economic development. Even the developed countries like UK, USA, etc. have also adopted ‘Mixed Capitalist System’. According to Prof. Samuelson, “Mixed economy is that economy in which both public and private sectors cooperate.” According to Murad, “Mixed economy is that economy in which both government and private individuals exercise economic control.” Main Features of Mixed Economy: Mixed economy has following main features: (i) Co-existence of Private and Public Sector: Under this system there is co-existence of public and private sectors. In public sector, industries like defence, power, energy, basic industries etc., are set up. On the other hand, in private sector all the consumer goods industries, agriculture, small-scale industries are developed. The government encourages both the sectors to develop simultaneously. (ii) Personal Freedom: Under mixed economy, there is full freedom of choice of occupation, although consumer does not get complete liberty but at the same time government can regulate prices in public interest through public distribution system. (iii) Private Property is allowed: In mixed economy, private property is allowed. However, here it must be remembered that there must be equal distribution of wealth and income. It must be ensured that the profit and property may not concentrate in a few pockets. (iv) Economic Planning: In a mixed economy, government always tries to promote economic development of the country. For this purpose, economic planning is adopted. Thus, economic planning is very essential under this system. (v) Price Mechanism and Controlled Price: Under this system, price mechanism and regulated price operate simultaneously. In consumer goods industries price mechanism is generally followed. However, at the time of big shortages or during national emergencies prices are controlled and public distribution system has to be made effective. (vi) Profit Motive and Social Welfare: In mixed economy system, there are both profit motive like capitalism and social welfare as in socialist economy. (vii) Check on Economic Inequalities:

In this system, government takes several measures to reduce the gap between rich and poor through progressive taxation on income and wealth. The subsidies are given to the poor people and also job opportunities are provided to them. Other steps like concessions, old age pension, free medical facilities and free education are also taken to improve the standard of poor people. Hence, all these help to reduce economic inequalities. (viii) Control of Monopoly Power: Under this system, government takes huge initiatives to control monopoly practices among the private entrepreneurs through effective legislative measures. Besides, government can also fake over these services in the public interest.

Q7. Explain role of banks in Indian economy? Ans. Banking system plays a very significant role in the economy of a country. It is central to a nation’s economy as it caters to the needs of credit for all the sections of the society. Money-lending in one form or the other has evolved along with the history of mankind. Even in the ancient times, there are references to the money-lenders, in the form of sahukars and zamindars who lend money by mortgaging the land property of the borrowers. 

Banking has emerged as a resurgent sector inthe Indian economy.

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The banking sector index has grown at acompounded annual rate of over 51 per centsince the year 2001.

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Three types of sectors in Banking : public, privateand foreign. Public sector banks hold over 75% of totalassets, private sector banks hold 18.2% andforeign hold 6.5%.

History •

PHASE 1 : Pre - nationalization (prior 1955)

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PHASE 2 : Era of nationalization and consolidation (1955 to 1990)

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PHASE 3 : Introduction of Indian Financial and Banking sector. (1990 to 2004)

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PHASE 4 : Increased liberalization (2004 onwards)

In India , as in many developing countries , the commercial banking sector has been the dominant element in the country‟s financial system . The sector has performed the key functions of providing liquidity and payment services to the real sector and has accounted for the Bulk of the financial intermediation process . Besides institutionalizing savings , the banking sector hascontributed to the process of economic development by serving as a major source of credit tohouseholds , government , business and to weaker sectors of the economy like village and smallscale industries and agriculture. Over the years, over 30-40% of gross household savings , havebeen in the form of bank deposits and around 60% of the assets of all financial institutionsaccounted for by commercial banks. An important landmark in the development of banking sector in recent years has been theinitiation if reforms following the recommendations of the first Narasimham Committee onFinancial System. In reviewing the strengths and weaknesses of these banks , the Committeesuggested several measures to transform the Indian banking sector from a highly regulated to amore market oriented system and to enable it to compete effectively in an increasingly globalisedenvironment . Many of the recommendations of the Committee especially those pertaining toInterest rate , an institution of prudential regulation and transparent accounting norms were in line with banking policy reforms implemented by a host of developing countries since 1970‟s .

Q8. What is central bank? Explain the role of central bank? Ans. A central bank is an independent national authority that conducts monetary policy, regulates banks, and provides financial services including economic research. Its goals are to stabilize the nation's currency, keep unemployment low, and preventinflation. Most central banks are governed by a board consisting of its member banks. The country's chief elected official appoints the director. The national legislative body approves him or her. That keeps the central bank aligned with the nation's long-term policy goals. At the same time, it's free of political influence in its day-to-day operations. The Bank of England first established that model. Conspiracy theories to the contrary, that's also who owns the U.S. Federal Reserve. Central banks regulate their members. They require enough reserves to cover potential loan losses. They are responsible for ensuring financial stability and protecting depositors' funds. Central banks serve as the bank for private banks and the nation's government. That means they process checks and lend money to their members. Central banks store currency in their foreign exchange reserves. They use these reserves to change exchange rates. They add foreign currency, usually the dollar or euro, to keep their own currency in alignment. That's called a peg, and it helps exporters keep their prices competitive.

The main objectives for the establishment of the Central Bank were as follows : •

To manage the monetary and credit system of the country.

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To stabilizes internal and external value of rupee.

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For balanced and systematic development of banking in the country.

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For the development of organized in the money market in the country .

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For proper arrangement of agriculture finance.

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For proper arrangement of Industrial Finance .

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To establish monetary relations with other countries of the world & internationalfinancial institutions.

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For proper management of public debts .

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For centralization of cash reserves of commercial banks .

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To maintain balance between the demand and supply of currency .

Q9. What is commercial bank? Explain the role of commercial bank?

Ans. A commercial bank is a financial institution which performs the functions of accepting deposits from the general public and giving loans for investment with the aim of earning profit. In fact, commercial banks, as their name suggests, axe profit-seeking institutions, i.e., they do banking business to earn profit. They generally finance trade and commerce with short-term loans. They charge high rate of interest from the borrowers but pay much less rate of Interest to their depositors with the result that the difference between the two rates of interest becomes the main source of profit of the banks. Most of the Indian joint stock Banks are Commercial Banks such as Punjab National Bank, Allahabad Bank, Canara Bank, Andhra Bank, Bank of Baroda, etc.

The role of a commercial is discussed as under. 1. Mobilising Saving for Capital Formation: The commercial banks help in mobilising savings through network of branch banking. People in developing countries have low incomes but the banks induce them to save by introducing variety of deposit schemes to suit the needs of individual depositors. They also mobilise idle savings of the few rich. By mobilising savings, the banks channelise them into productive investments. Thus they help in the capital formation of a developing country. 2. Financing Industry: The commercial banks finance the industrial sector in a number of ways. They provide short-term, medium-term and long-term loans to industry. In India they provide short-term loans. Income of the Latin American countries like Guatemala, they advance medium-term loans for one to three years. But in Korea, the commercial banks also advance long-term loans to industry. In India, the commercial banks undertake short-term and medium-term financing of small scale industries, and also provide hire- purchase finance. Besides, they underwrite the shares and debentures of large scale industries. Thus they not only provide finance for industry but also help in developing the capital market which is undeveloped in such countries. 3. Financing Trade: The commercial banks help in financing both internal and external trade. The banks provide loans to retailers and wholesalers to stock goods in which they deal. They also help in the movement of goods from one place to another by providing all types of facilities such as discounting and accepting bills of exchange, providing overdraft facilities, issuing drafts, etc. Moreover, they finance both exports and imports of developing countries by providing foreign exchange facilities to importers and exporters of goods. 4. Financing Agriculture: The commercial banks help the large agricultural sector in developing countries in a number of ways. They provide loans to traders in agricultural commodities. They open a network of branches in rural areas to provide agricultural credit. They provide finance directly to agriculturists for the marketing of their produce, for the modernisation and mechanisation of their farms, for providing irrigation facilities, for developing land, etc.

They also provide financial assistance for animal husbandry, dairy farming, sheep breeding, poultry farming, pisciculture and horticulture. The small and marginal farmers and landless agricultural workers, artisans and petty shopkeepers in rural areas are provided financial assistance through the regional rural banks in India. These regional rural banks operate under a commercial bank. Thus the commercial banks meet the credit requirements of all types of rural people. 5. Financing Consumer Activities: People in underdeveloped countries being poor and having low incomes do not possess sufficient financial resources to buy durable consumer goods. The commercial banks advance loans to consumers for the purchase of such items as houses, scooters, fans, refrigerators, etc. In this way, they also help in raising the standard of living of the people in developing countries by providing loans for consumptive activities. 6. Financing Employment Generating Activities: The commercial banks finance employment generating activities in developing countries. They provide loans for the education of young person’s studying in engineering, medical and other vocational institutes of higher learning. They advance loans to young entrepreneurs, medical and engineering graduates, and other technically trained persons in establishing their own business. Such loan facilities are being provided by a number of commercial banks in India. Thus the banks not only help inhuman capital formation but also in increasing entrepreneurial activities in developing countries. 7. Help in Monetary Policy: The commercial banks help the economic development of a country by faithfully following the monetary policy of the central bank. In fact, the central bank depends upon the commercial banks for the success of its policy of monetary management in keeping with requirements of a developing economy. Thus the commercial banks contribute much to the growth of a developing economy by granting loans to agriculture, trade and industry, by helping in physical and human capital formation and by following the monetary policy of the country.

Q10. What is agricultural bank? Explain the role of agricultural bank?

Ans. National Bank for Agriculture and Rural Development (NABARD) is an apex development financial institution in India, headquartered at Mumbai with branches all over India.[2] The Bank has been entrusted with "matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India". NABARD is active in developing financial inclusion policy and is a member of the Alliance for Financial Inclusion. NABARD was established on the recommendations of B.Sivaraman Committee, (by Act 61, 1981 of Parliament) on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC). It is one of the premier agencies providing developmental credit in rural areas. NABARD is India's specialised bank for Agriculture and Rural Development in India. The initial corpus of NABARD was Rs.100 crores. Consequent to the revision in the composition of share capital between Government of India and RBI, the paid up capital as on 31 May 2017, stood at Rs.6,700 crore with Government of India holding Rs.6,700 crore (100% share). The authorized share capital is Rs.30,000 crore. International associates of NABARD include World Bank-affiliated organizations and global developmental agencies working in the field of agriculture and rural development. These organizations help NABARD by advising and giving monetary aid for the upliftment of the people in the rural areas and optimizing the agricultural process.

NABARD has been instrumental in grounding rural, social innovations and social enterprises in the rural hinterlands. It has in the process partnered with about 4000 partner organisations in grounding many of the interventions be it, SHG-Bank Linkage programme, tree-based tribal communities’ livelihoods initiative, watershed approach in soil and water conservation, increasing crop productivity initiatives through lead crop initiative or dissemination of information flow to agrarian communities through Farmer clubs. Despite all this, it pays huge taxes too, to the exchequer – figuring in the top 50 tax payers consistently. NABARD virtually ploughs back all the profits for development spending, in their unending search for solutions and answers. Thus the organisation had developed a huge amount of trust capital in its 3 decades of work with rural communities.[7]

1.NABARD is the most important institution in the country which looks after the development of the cottage industry, small scale industry and village industry, and other rural industries.

2.NABARD also reaches out to allied economies and supports and promotes integrated development.

The role of a NARBAD is discussed as under •

Serves as an apex financing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas

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Takes measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel, etc.

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Co-ordinates the rural financing activities of all institutions engaged in developmental work at the field level and maintains liaison with Government of India, state governments, Reserve Bank of India (RBI) and other national level institutions concerned with policy formulation

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Undertakes monitoring and evaluation of projects refinanced by it.

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NABARD refinances the financial institutions which finances the rural sector.

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NABARD partakes in development of institutions which help the rural economy.

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NABARD also keeps a check on its client institutes.

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It regulates the institutions which provide financial help to the rural economy.

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It provides training facilities to the institutions working in the field of rural upliftment.

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It regulates the cooperative banks and the RRB’s, and manages talent acquisition through IBPS CWE

Q11. What is exchange bank? Explain the role of exchange bank in india?

Ans. Government or semi-government agency which commonly provides insurance cover to exporters against losses from non-payment by the importers, as a means to promote the country's foreign trade. Other services offered by EXIM banks may include (1) marine insurance, (2) post-shipment discounting of invoices, (3) pre-shipment advances against confirmed orders, and (4) help in finding new markets.

Export–Import Bank of India is the premier export finance institution in India, established in 1982 under ExportImport Bank of India Act 1981. Since its inception, Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment. Commencing operations as a purveyor of export credit, like other export credit agencies in the world, Exim Bank India has, over the period, evolved into an institution that plays a major role in partnering Indian industries, particularly the Small and Medium Enterprises, in their globalisation efforts, through a wide range of products and services offered at all stages of the business cycle, starting from import of technology and export product development to export production, export marketing, preshipment and post-shipment and overseas investment. Exim Bank is managed by a Board of Directors, which has representatives from the Government, Reserve Bank of India, Export Credit Guarantee Corporation of India, a financial institution, public sector banks, and the business community.

The Role of the EXIM Bank are as follows:

(i) Financing of exports and imports of goods and services, not only of India but also of the third world countries; (ii) Financing of exports and imports of machinery and equipment on lease basis; (iii) Financing of joint ventures in foreign countries; (iv) Providing loans to Indian parties to enable them to contribute to the share capital of joint ventures in foreign countries; (v) to undertake limited merchant banking functions such as underwriting of stocks, shares, bonds or debentures of Indian companies engaged in export or import; and (vi) To provide technical, administrative and financial assistance to parties in connection with export and import.

Q12. What is globalization? State its advantages and disadvantages?

Ans. We often hear the word globalization in many contexts and repeated frequently as a concept to denote more trade, foreign companies and even the ongoing economic crisis. Before we launch into a full-fledged review of the term and its various manifestations, it is important to consider what exactly we mean when we say globalization. Globalization is the free movement of goods, services and people across the world in a seamless and integrated manner. Globalization can be thought of to be the result of the opening up of the global economy and the concomitant increase in trade between nations. In other words, when countries that were hitherto closed to trade and foreign investment open up their economies and go global, the result is an increasing interconnectedness and integration of the economies of the world. This is a brief introduction to globalization.

The advantages or merits of Globalization is discussed below in points: •

Globalization broadens our minds. We feel that we belong to one world and we are a part of one nation, namely, humankind.

•

Closer contact with foreign people make us quite familiar with their manners, habits, and customs. The cultures become richer as they come into contact with each other.

•

Globalization help us shake off narrowness. We get the chance of comparing our country with other countries. In this way, we enrich our manners, customs, and habits.

•

Globalization help us fight illiteracy and promotes education. It gives us clear knowledge of facts and things.

•

Globalization help us shed or combat the burning social issues such as child-labor, dowry, etc.

•

Globalization has helped the global community to fight against poverty. Large non-profit and charitable organizations have launched massive campaigns to fight hunger and poverty. They have successfully done huge fund-raising in this regard.

•

The benefits of science and technology have reached every corner of the world. People around the world are connected through mobile phones and internet technology.

•

Globalization has enhanced our knowledge of the world. A merchant can gather valuable information about different commodities in different countries. Firsthand knowledge of people and things is of great importance in international business.

•

Due to globalization, a political leader can gather much useful knowledge of the people, forms of government around the world.

•

Globalization contribute in improving international relations and friendliness among different nations.

•

we can communicate with people all over the world. The human life becomes global. We have a global outlook on life.

•

Students can study anywhere in the world.

The disadvantages of demerits of Globalization is discussed below in points:

•

In a way, globalization has contributed towards increasing the gap between the rich and the poor. Rich and wealthy people are able to exercise more control over the national resources through the application of science and technology.

•

The environment has suffered greatly due of globalization. On one hand, the increase in traffic between countries has polluted the tourist destinations. On the other hand, the poisonous gases released into the air by large industries have caused environmental pollution.

•

Globalized business have exploited the natural resources of the earth beyond the tolerable limit. Some places on earth, which was once rich in minerals and forests can no longer claim their richness.

•

Globalization tends to make the world a more homogeneous place. As a result, many communities failed to preserve their old tradition, custom, and culture. Being attracted by the culture of developed nations, many people in under-developed nations have shed their traditional dress, food, and rituals. This is yet another disadvantage of Globalization.

•

Local businesses, hand-loom industry, Cottage and small-scale industry suffered a lot due to globalization. The highly specialized and efficient multi-national companies take advantages of large-scale production and put products at throwaway prices. The local industries could not compete with their global counterpart.

•

The global economy is now inter-connected. The economic downfall of one major economic nation adversely affects the entire global community.

•

Globalization has caused specialization of labor. On one hand, there is an increase in demand for skilled labors. However, it has caused enough disadvantages for the unskilled labor group. There are few employment opportunity for unskilled labors in a global environment.

•

The more technologically advanced countries are able to sell their products to less-developed countries. Hence, the less developed countries become dependent upon the superior nations.

•

The adverse effect of globalization is not restricted to financial and economical imbalance. Last century has witness spread of diseases from one country to another country. Diseases spread to local places when a diseased person from a foreign country comes in contact with local inhabitants.

•

Globalization is responsible for the emergence of large number of multi-national companies. Very often, it is found that they do not provide good working condition to the workers. Further, forests have been cut for setting up large industries. The industrial discharges have widely contributed towards environmental degradation.

•

Globalization can pressure us to act in a certain way.

Q13. Explain Consumer Protection Act 1986?

Ans. An Act to provide for better protection of the interests of consumers and for that purpose to make provision for the establishment of consumer councils and other authorities for the settlement of consumers' disputes and for matters connected therewith. Consumer Protection Act, 1986 is an act of Parliament of India enacted in 1986 to protect interests of consumers in India. It extends to the whole of India except themState of Jammu and Kashmir. This Act is applied to all goods and services. It shall come enforce through central govt.mby notifications for different provisions ofmthis act Objectives of the act 1. Better protection of interests of consumers. 2. Protection of the rights of the consumers: 

The right to be protected against marketing of goods which are hazardous to life and property;



the right to be informed about the quality, quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade practices



The right to be assured, wherever possible, access to an authority of goods at competitive prices



The right to be heard and to be assured that consumers interests will receive due consideration at appropriate forums



The right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers; and



Right to consumer education.

3. Protection by the Consumer Protection Council. 4. Quasi-judicial machinery for speedy redressal of consumer disputes.

Definitions 

CONSUMER:

(i)buys any goods for a consideration which has been paid or promised or partly paid and partly promised, (ii) or under any system of deferred payment and includes any user of such goods other than (iii) the person who buys such goods for consideration paid or promised or partly paid or partly promised, (iv) or under any system of deferred payment when such use is made with the approval of such person, (v) BUT does not include a person who obtains such goods for resale or for any commercial purpose. Second definition of Consumer: (i)hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, (ii)or under any system of deferred payment and includes any beneficiary of such services other than the person (iii) who 'hires or avails of the services for consideration paid or promised, (iv) or partly paid and partly promised, or under any system of deferred payment,

(v) when such services are availed of with the approval of the first mentioned person. 

Appropriate laboratory [sec.2 (1)a]

It means a laboratory or organisation1) Recognised by the central government 2)Recognised by a state government 3)Any laboratory or organisation established by or under any law for the time being in force ,which is maintained, financed or aided by the central government or state government. 

COMPLAINANT

1) A consumer 2)Any voluntary consumer association registered under the companies act,1956, or under any other law for the time being in force 3)The central government or any state government, who or which makes a complaint 4) One or more consumers, where there are numerous consumers having the same intrest. 5) In case of death of a consumer, his legal heir or representative. (this clause has been introduced by the CPA amendment act, 2002) 

Complaint

It means any allegation in writing made by a complainant with a view to obtaining any relief provided by or under this act. This allegation in writing must be that1) an unfair trade practice or a restrictive trade practice has been adopted by any trader or service provider. 2) the goods bought by him or agreed to be bought by him suffer from one or more defects 3) the services hired or availed of or agreed to be hired or availed by him suffer from deficiency in any respect. 4) A trader or the service provider as the case may be, has changed for the goods or for the services mentioned in the complaint, a price in excess of the price a)Fixed by or under any law for the time being in force. b)Displayed on the goods or any package containing such goods. c)Displayed on the price list exhibited by him by or under any law for the time being in force. d)Agreed between the parties. 5) Goods which will be hazardous to life and safety when used are being offered for sale to the public a) In contravention of any standards relating to safety of such goods as required to be complied with, by or under any law for the time being in force. b) If the trader could have known with due diligence that the goods so offered are unsafe to the public. 6) Services which are hazardous or likely to be hazardous to life and safety of the public when used, are being offered by the service provider which such person could have known with due diligence to be injurious to life and safety. 

DEFECT

It means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law for the time being in force under any contract, express or implied or as is claimed by the trader in any manner whatsoever in relation to any goods. 

DEFICIENCY Means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.



DISTRICT FORUM It means a Consumer Disputes Redressal Forum established under clauseof section 9(a)



GOODS Goods as defined in the Sale of Goods Act, 1930“every kind of movable property other than actionable claims and money, and includes stocks and shares, growing crops, grass and things attached to or forming part of land which are agreed to be served before sale or under the contract of sale”



NATIONAL COMMISSION It means the National Consumer Disputes Redressal Commission established under clause (c) of section 9



MANUFACTURER



It means a person who— (i) makes or manufactures any goods or part thereof; or (ii) does not make or manufacture any goods but assembles parts thereof made or manufactured by others; or (iii) puts or causes to be put his own mark on any goods made or manufactured by any other manufacturer.



PERSON It includes(i) a firm whether registered or not; (ii) a Hindu undivided family; (iii) a co-operative society; (iv) every other association of persons whether registered under the Societies Registration act 1860.



RESTRICTIVE TRADE PRACTICE A trade practice which tends to bring about manipulation of price or conditions of delivery or to affect flow of supplies in the market relating to goods or services in such a manner as to impose on the consumers unjustified costs or restrictions and shall include— (a) delay beyond the period agreed to by a trader in supply of such goods or in providing the services which has led or is likely to lead to rise in the price; (b) any trade practice which requires a consumer to buy, hire or avail of any goods or, as the case may be, services as condition precedent to buying, hiring or availing of other goods or services.



SERVICE means service of any description which is made available to potential users and includes provisions of facilities in connections with:•Banking •Financing insurance• Transport Processing Supply of electrical or other energy Board or lodging or both Housing construction Entertainment Amusement or the purveying of news or

other information but does not include the rendering of any service free of charge or under a contract of personal service. 

SPURIOUS GOODS AND SERVICE means such goods and services which are claimed to be genuine but they are actually not so.



STATE COMMISSION means a Consumer Disputes Redressal Commission established in a State under clause (b) of section 9



TRADER in relation to any goods means a person who sells or distributes any goods for sale and includes the manufacturer thereof, and where such goods are sold or distributed in package form, includes the packer thereof.



CONSUMER DISPUTE means a dispute where the person against whom a complaint has been made, denies or disputes the allegations contained in the complaint.

ACT NOT IN DEROGATION OF ANY OTHER LAW THE PROVISIONS OF THIS ACT SHALL BE IN ADDITION TO AND NOT IN DEROGATION OF THE PROVISIONS OF ANY LAW FOR BEING IN FORCE

Q14. Explain regulations and deregulations? Ans. Regulation refers to controlling business through laws passed by the government. To protect the interests of consumers, government institutes regulatory laws. Conversely, deregulation deals with the elimination of government laws and rules. These laws, or removal of them, impact consumer and business activities such as obtaining loans, importing supplies and selling products. So, understanding the meaning of regulation and deregulation is crucial. Regulation Regulation can be distinguished as economic and social. Economic regulation deals with quality of service, energy and entry conditions in specific sectors, such as transportation or communications. Social regulations deal with issues associated with risks to health, safety, and the environment. Some regulations promote safety and quality standards while others restrict commodity supplies and set tariffs to control or limit competition. Highly regulated industries include agriculture, food and fisheries, pharmaceuticals and manufacturing. Deregulation When the government deregulated industries such as airlines, trucking, railroads, natural gas and banking in the 1970s, the intent was to give these industries more power to build the economy and reduce the cost of government subsidies, and ultimately give consumers more benefits through competitive pricing and better quality products and services. Deregulation is sometimes confused with privatization, but the two are not the same. Each reduces government involvement, but from a different angle. Privatization transfers ownership to private companies and deregulation removes government involvement, or eliminates regulations, from private industries. Effects of Regulation Regulations help protect consumer interests from dishonest business practices and promote fair competition. The Fair Packaging and Labeling Act of 1966, for instance, mandates that businesses label their products and provide consumers with accurate information, including manufacturer, distributor and the net quantity of the content. Regulations also help employees through the various labor laws related to issues such as minimum wages, privacy of medical information, and workplace health and safety. Additionally, regulations help protect the environment from pollution and carbon footprints caused by industries. Although the intent of regulations is to protect, these laws and rules can impede economic growth, and, through subsidies, pose a burden to the government. Effects of Deregulation As an early example of deregulation, the termination of the Interstate Commerce Commission Act led to a substantial drop in the cost of shipping goods around the country. Similarly, the deregulation of the airline industry in the 1970s was meant to increase competition in the industry. Customer-centric operations increased flight frequency, quality of food and cabin-crew service. The telecommunication industry also benefited from deregulation as consumers saw a drop in long-distance telephone rates, and businesses began to cross-sell cable television and Internet services.

Q15. What is world bank and activities under world bank? Ans. The World Bank is an international financial institution that provides loans to countries of the world for capital projects. It comprises two institutions: the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA). The World Bank is a component of the World Bank Group. The World Bank's stated goal is the reduction of poverty. However, according to its Articles of Agreement, all its decisions must be guided by a commitment to the promotion of foreign investment and international trade and to the facilitation of capital investment. The World Bank was created at the 1944 Bretton Woods Conference along with the International Monetary Fund (IMF). The president of the World Bank is, traditionally, an American. The World Bank and the IMF are both based in Washington, D.C., and work closely with each other.

Activities of World Bank Important activities of World Bank are financial assistance, technical assistance, Inter organizational cooperation, training, assisting in research and studies, Evaluation of projects, Settlement of investment disputes, assisting in Urban development, population planning and tourism etc. They are briefly explained below. 1. Financial assistance The World Bank extends financial assistance for reconstruction and development of member countries. It facilitates capital investments for productive purposes. The bank finances its operations primarily from borrowings in the World capital market. Funds are also mobilized from governments, commercial banks, export credit agencies and other multilateral institutions. These funds are paired with World Bank funds to co-finance projects. The World Bank provides loans to help developing countries in the face of structural problems that threaten continuing development. To extend concessional loans to developing countries whose repayment capacity is limited, the World Bank established the IDA in 1960 and its has 162 members. The IDA provides concessional loans to the developing countries, largely from resources provided by its wealthier members. 2. Technical assistance The World Bank provides technical assistance to its member countries. The technical assistance is related to feasibility studies, engineering designs, construction, supervision, execution, engineering services, energy, transportation, industry, etc. In 1975, the bank introduced project preparation facility to help the prospective buyers fill up gaps in project preparation and creation of necessary institutional structure for it. The World Bank executes the projects financed by the United Nations Development Programme (UNDP). The bank advises its members on development planning. It also deputes its staff members to render technical advice to the member countries. It transfers technology service on evaluation and monitoring panels. 3. Inter organizational cooperation The World Bank promotes cooperation among several international organizations such as Food and Agricultural Organization (FAO), World Health Organization (WHO), the United Nations Educational Social and Cultural Organization (UNESCO), United Nations Conference on Trade and Development (UNCTAD), General Agreement on

Trade and Tariffs (GATT), the International Fund for Agriculture Development (IFAD), the Asian Development Bank (ADB), International Labour Organization (ILO), etc. 4. Training In 1958, the World Bank established a staff training college to provide training to the senior officials of the member countries. This institution is referred to as Economic Development Institute (EDI) which has a network of several regional institutes. EDI organizes seminars in Washington in collaboration with regional training institutes. 5. Research and Studies In 1971, the World Bank started undertaking research studies in social and other fields. About 3 percent of its budget is allotted for economic and social research. In 1983, the World Bank constituted the Research Policy Council (RPC) to provide leadership in the guidance, coordination and evaluation of all research work undertaken by the bank. The Bank Research Advisory Group advises the Research policy council. World Bank’s own research personnel are engaged in the research activities. Also the less developed countries are able to strengthen their indigenous research potential. 6. Evaluation of projects The World Bank assists the borrowing countries in the post evaluation of bank-assisted projects. The World Bank’s Operations Evaluation Department (OED) gives such assistance to the members. The department also audits various projects in collaboration with officials of member countries. The staff of the borrowing countries are given training in monitoring and evaluation of projects. 7. Settlement of investment disputes The World Bank settles disputes related to investments which arise between the member nations and foreign investors. In 1966, the World Bank started “convention on the settlement of Disputes” . The convention on the settlement of Disputes is also known as International Centre for Settlement of Investment Disputes (ICSID). Disputes between India and Pakistan; and between Egypt and United kingdom on Suez canal were some of the disputes settled with the help of this machinery. 8. Urban development, population planning and tourism A population project development and a population studies division were set up by the World Bank. They concentrate on urban development and population planning. In 1976-77, the World Bank’s first population mission visited Jamaica to help its government in formulating family planning programmes. Further, the bank established a department for tourism projects to provide technical advice to the international finance corporation in the matter of tourist investment. Thus, the World Bank plays an active role in promoting global development and welfare of all people.

Q16. Explain internal and external factors of business environment? Ans. Internal Environment: The important internal factors which have a bearing on the strategy and other decision are outlined below. 

Value system:

The value system of the founders and those at the helm of the affairs has important bearing on the choice of business, the mission and objectives of the organisation, business policies and practices. It is a widely accepted fact that theextent to which the value system is shared by all in the organisation is an important factor contributing to success. After theEID Parry group was taken over by the Murugappa group, one of the most profitable businesses (liquor) of the ailing Parrygroup was sold off as the liquor business did not fit into the value system of the Murugappa group. The value system andethical standards are also among the factors evaluated by many companies in the selection of the suppliers, distributors,collaborators etc. 

Mission and Objectives:

The business domain of the company, priorities, directions of development, business philosophy, business policy etc., are guided by the mission and objectives of the company. Ranbaxy’s thrust in to the foreign markets anddevelopment have been driven by its mission “to become a research based international pharmaceutical company.” ArvindMills’ mission- “ to achieve global dominance in select businesses built around our core competencies through continuous product and technical innovation, customer orientation and focus on cost effectiveness” – has driven its future developmentstrategy including the portfolio strategy, and indicated the thrusts required in the functional areas to help achieve the mission. 

Management structure and Nature:

The organizational structure, the composition of the Board of Directors, professionalisation of management etc., are important factors influencing business decisions. Some management structuresand styles delay decision making while some others facilitate quick decision-making. The Board of Directors being thehighest decision making body which sets the direction for the development of the organisation and which oversees the performance of the organisation, so the quality of the board is very critical factor for the development and performance of thecompany. 

Internal power relationship:

Factors like the amount if support the top management enjoys from different levels of employees, shareholders and Board of Directors have important influence on the decisions and their implementation. Therelationship between the members of Board of Directors and between the chief executives is also a critical factor. 

Human resources:

The characteristics of the human resource like skill, quality, morale, commitment, attitude etc.,could contribute to the strength and weaknesses of an organisation. Some organisations find it difficult to carry outrestructuring or modernization because of resistance by employees whereas they are smoothly done in some others. 

Company image and Brand equity:

The image of the company matters while raising finance, forming jointventures or the other alliances, soliciting marketing intermediaries, entering purchase or sale contracts, launching new products etc. Brand equity is also relevant in several of these cases. 

Miscellaneous Factors:

There are a number of other internal factors which contribute to the business success/failures or influence the decision-making. They include the following.

External environment

All the forces and condition that cannot be controlled by the business is called external environment. . It is also known as uncontrollable factors because business can’t control them. It is located outside the business. It affects on organizational performance. It includes: Economic environment. It indicates the condition of economy in which business organization operates. It has continuous and great impact on business. It includes national income, production, inflation, savings, investment, price, government activities. Business person must have constant watch on this factor.

Political or legal environment It is defined as rules and regulations determined by the government. Business must fulfill demand of government. There should be non violation of rules and regulation of government. Business should avoid unfair trade and should provide essential information to the government. Social environment. Business must have good environment where a business can be established neatly. Business also helps in employment opportunities generation. There should be socio cultural understanding and application of anti pollution measures. Technological environment: It defines about the methods available for converting resources into product or services. It transforms inputs into output. Inputs means material, capital, man, machine. It affects on business. It helps to change the level of job, skill, and product and so on. There can be innovation, development of scientific techniques which encouraged mass production and distribution.

Q17. Explain in detail Economic Indicators? Ans. An economic indicator is a general term used for any statistic about an economic activity. An economic indicator allows for the analysis of economic performances and attempts to give a prediction of future performances in the economy. Some of the major indices that are used are the unemployment rate, housing statistics, and the consumer price index. All of these indicators measure a specific economic sector or movement, but also give an overall look at economic behavior and growth in a nation.

Economic indicators can be divided into two main categories: leading indicators and lagging indicators.

Leading Indicators Because leading indicators have the potential to forecast where an economy is headed, fiscal policymakers and governments make use of them to implement or alter programs in order to ward off a recession or other negative economic events. The top leading indicators follow below: 1. Stock Market Though the stock market is not the most important indicator, it’s the one that most people look to first. Because stock prices are based in part on what companies are expected to earn, the market can indicate the economy’s direction if earnings estimates are accurate. 2. Manufacturing Activity Manufacturing activity is another indicator of the state of the economy. This influences the GDP (gross domestic product) strongly; an increase in which suggests more demand for consumer goods and, in turn, a healthy economy. Moreover, since workers are required to manufacture new goods, increases in manufacturing activity also boost employment and possibly wages as well. 3. Inventory Levels High inventory levels can reflect two very different things: either that demand for inventory is expected to increase or that there is a current lack of demand. 4. Retail Sales Retail sales are particularly important metrics and function hand in hand with inventory levels and manufacturing activity. Most importantly, strong retail sales directly increase GDP, which also strengthens the home currency. When sales improve, companies can hire more employees to sell and manufacture more product, which in turn puts more money back in the pockets of consumers. 5. Building Permits Building permits offer foresight into future real estate supply levels. A high volume indicates the construction industry will be active, which forecasts more jobs and, again, an increase in GDP.

6. Housing Market A decline in housing prices can suggest that supply exceeds demand, that existing prices are unaffordable, and/or that housing prices are inflated and need to correct as a result of a housing bubble. 7. Level of New Business Startups The number of new businesses entering the economy is another indicator of economic health. In fact, some have claimed that small businesses hire more employees than larger corporations and, thereby, contribute more to addressing unemployment. Lagging Indicators Unlike leading indicators, lagging indicators shift after the economy changes. Although they do not typically tell us where the economy is headed, they indicate how the economy changes over time and can help identify long-term trends. 1. Changes in the Gross Domestic Product (GDP) GDP is typically considered by economists to be the most important measure of the economy’s current health. When GDP increases, it’s a sign the economy is strong. In fact, businesses will adjust their expenditures on inventory, payroll, and other investments based on GDP output. 2. Income and Wages If the economy is operating efficiently, earnings should increase regularly to keep up with the average cost of living. When incomes decline, however, it is a sign that employers are either cutting pay rates, laying workers off, or reducing their hours. Declining incomes can also reflect an environment where investments are not performing as well. 3. Unemployment Rate The unemployment rate is very important and measures the number of people looking for work as a percentage of the total labor force. In a healthy economy, the unemployment rate will be anywhere from 3% to 5%. 4. Consumer Price Index (Inflation) The consumer price index (CPI) reflects the increased cost of living, or inflation. The CPI is calculated by measuring the costs of essential goods and services, including vehicles, medical care, professional services, shelter, clothing, transportation, and electronics. Inflation is then determined by the average increased cost of the total basket of goods over a period of time. 5. Currency Strength A strong currency increases a country’s purchasing and selling power with other nations. The country with the stronger currency can sell its products overseas at higher foreign prices and import products more cheaply. 6. Interest Rates Interest rates are another important lagging indicator of economic growth. They represent the cost of borrowing money and are based around the federal funds rate, which represents the rate at which money is lent from one

bank to another and is determined by the Federal Open Market Committee (FOMC). These rates change as a result of economic and market events. 7. Corporate Profits Strong corporate profits are correlated with a rise in GDP because they reflect an increase in sales and therefore encourage job growth. They also increase stock market performance as investors look for places to invest income. That said, growth in profits does not always reflect a healthy economy. 8. Balance of Trade The balance of trade is the net difference between the value of exports and imports and shows whether there is a trade surplus (more money coming into the country) or a trade deficit (more money going out of the country). 9. Value of Commodity Substitutes to U.S. Dollar Gold and silver are often viewed as substitutes to the U.S. dollar. When the economy suffers or the value of the U.S. dollar declines, these commodities increase in price because more people buy them as a measure of protection. They are viewed to have inherent value that does not decline.

Q18. Explain in brief different aspect of WTO? Ans. The World Trade Organization (WTO) establishes rules of trade among its member nations. To this end, the WTO also handles trade disputes, monitors trade policies, provides technical assistance for developing countries and cooperates with other international trade organizations. The WTO was created on January 1, 1995, and is headquartered in Geneva, Switzerland. The WTO replaced the General Agreement on Tariffs and Trade (GATT), which was created in 1948. GATT primarily regulated the trade of goods; the WTO regulates the trade of services and intellectual property as well. GATT still exists as the WTO's umbrella treaty for trade in goods. More than 140 countries belong to the WTO, and membership is voluntary. Some countries hold observer status with the WTO, which enables the country to follow discussions and matters of particular interest. Some WTO committees are for members only, however, and do not allow observers. WTO decisions are made by consensus rather than by delegation to a board of directors or leader. The WTO's highest authority is the Ministerial Conference, whose members meet at least once every two years. The WTO General Council, with the Dispute Settlement Body and the Trade Policy Review Body, handles the WTO's day-today duties. These day-to-day entities, which are collectively referred to as the General Council, act on behalf of the Ministerial Conference and are composed of several subcouncils, including the Council for Trade in Goods, the Council for Trade in Services and the Council for Trade-Related Aspects of Intellectual Property Rights. Each subcouncil has several committees.

HOW DOES WTO HELPS The system helps to keep the peace This sounds like an exaggerated claim, and it would be wrong to make too much of it. Nevertheless, the system does contribute to international peace, and if we understand why, we have a clearer picture of what the system actually does. The system allows disputes to be handled constructively As trade expands in volume, in the numbers of products traded, and in the numbers of countries and companies trading, there is a greater chance that disputes will arise. The WTO system helps resolve these disputes peacefully and constructively A system based on rules rather than power makes life easier for all The WTO cannot claim to make all countries equal. But it does reduce some inequalities, giving smaller countries more voice, and at the same time freeing the major powers from the complexity of having to negotiate trade agreements with each of their numerous trading partners. Freer trade cuts the cost of living We are all consumers. The prices we pay for our food and clothing, our necessities and luxuries, and everything else in between, are affected by trade policies.

It gives consumers more choice, and a broader range of qualities to choose from Think of all the things we can now have because we can import them: fruits and vegetables out of season, foods, clothing and other products that used to be considered exotic, cut flowers from any part of the world, all sorts of household goods, books, music, movies, and so on. Trade raises incomes Lowering trade barriers allows trade to increase, which adds to incomes— national incomes and personal incomes. But some adjustment is necessary Trade stimulates economic growth, and that can be good news for employment Trade clearly has the potential to create jobs. In practice there is often factual evidence that lower trade barriers have been good for employment. But the picture is complicated by a number of factors. Nevertheless, the alternative —protectionism—is not the way to tackle employment problems. The basic principles make the system economically more efficient, and they cut costs Many of the benefits of the trading system are more difficult to summarize in numbers, but they are still important. They are the result of essential principles at the heart of the system, and they make life simpler for the enterprises directly involved in trade and for the producers of goods and services. The system shields governments from narrow interests The GATT-WTO system which evolved in the second half of the 20th Century helps governments take a more balanced view of trade policy. Governments are betterplaced to defend themselves against lobbying from narrow interest groups by focusing on trade-offs that are made in the interests of everyone in the economy The system encourages good government Under WTO rules, once a commitment has been made to liberalize a sector of trade, it is difficult to reverse. The rules also discourage a range of unwise policies. For businesses, that means greater certainty and clarity about trading conditions. For governments it can often mean good discipline.