UNIT III
Problems of Growth
Preface:
Economic growth and its causes have been the focus of research by economists for centuries. Growth has the potential to reduce or eliminate poverty, improve living standards, achieve social goals such as education and health care, and significantly improve quality of life. people. Adam Smith's treatise on The Wealth of Nations focused on economic growth. The term economic growth in economic literature is distinguished from economic development. Economic growth means an increase in per capita income or an increase in gross national product (GNP).
Economic development, on the other hand, refers to the process by which the real national income and per capita income of the economy increase over the long term. In addition, economic development affects changes in resource supply, capital formation, demographics, technology, skills, efficiency, institutional and organizational settings. In short, economic development is a process consisting of a long chain of interrelated changes in the basic factors of supply and the structure of demand, leading to an increase in the country's net domestic products in the long run.
In the context of developing countries like India, both economic growth and development are needed. Therefore, in this study, the term economic growth is used interchangeably with economic development. The process of economic growth is a very complex phenomenon and is affected by a number of diverse economic and non-economic factors. Economic factors consist of natural resources, capital formation, technological progress, human resources, population growth, social overheads and organizations.
In addition to economic factors, there are many non-economic factors that also play an important role in the process of economic growth. Significant non-economic factors include political, social, educational, urbanization and religious factors. In the modern economic system, it is the entrepreneur who fulfills the obligations of the organizer and bears all the risks and uncertainties. Entrepreneurs are aware of the economic and non-economic business environment and decide whether to risk investing and organizing the resources to produce goods and services. This leads to increased economic production, which in turn leads to economic growth.
Unemployment:
I'm willing to work, but I can't find a qualified job. Our country faces many problems, but one of the serious problems is unemployment. The International Labour Organization carefully mentions the unemployment rate and its consequences in its report. In particular, it depends on productivity and low productivity. The slowdown in the global economy has called on the Government of India to reduce previously offered financial incentives. India is expected to win a demographic dividend and become a superpower by 2050 as demographic swelling evolves in the age group of 15 to 35 years.
Types of unemployment in India-
Seasonal unemployment:
Usually when we talk about people we are hired; we mean people who work all year round. But this may not be possible for everyone. In agriculture, agricultural activities are carried out all year round, but work is seasonal. During the peak season of agriculture (when the crops are ready for harvest), more people are needed for work. Similarly, sowing, weeding, and transplanting periods require more effort. Therefore, employment will increase at this point. In fact, we find that there is little unemployment in rural areas during these peak agricultural seasons. However, at the end of these seasons, agricultural workers, especially those who did not own land or whose land was not sufficient to meet basic requirements (landless workers and marginal farmers, respectively) were unemployed. It remains. This type of unemployment is known as seasonal unemployment.
Voluntary unemployment:
Those who do not want to work on real wages or who do not need to continue to earn income from property or other sources of income are voluntarily unemployed.
Friction unemployment:
Unemployment due to the time required to match production activities with qualified resources. Friction unemployment essentially arises because resources, especially the workforce, are in the process of transitioning from one production activity to another. Employers are looking for workers, and workers are looking for employment, but they are not the same. Therefore, the unemployment of friction diversity increases. This discrepancy is primarily the result of limited information and is often exacerbated by the geographical separation between producers and resources.
Causal unemployment:
Circular unemployment is based on the availability of workers rather than the work of workers. It is usually directly related to the state of the economy. Decreased demand for products due to lack of consumer confidence, indifference, or reduced personal consumption leads to reduced labour production. As production declines, companies retailing such products can also reduce their workforce and create more cyclical unemployment.
Disguised unemployment:
You may find that too many people are working when not too many are needed. In agriculture, you may find that the whole family is working. You may be able to work with 3-4 people on the farm, but you can see that the whole family has 10 people working. This may be because an excess of people can't find a job elsewhere and prefer to work with others rather than stay unemployed. This is known as camouflaged unemployment. This happens when more people are hired for the specified work. Disguised unemployment is seen in agriculture due to lack of employment opportunities elsewhere. Similarly, disguised unemployment is also found in industry and offices.
Causes and consequences of unemployment in India:
The main cause of unemployment in India is the slow pace of development. Even after independence in 1965, GDP growth is still slow. The main causes of widespread unemployment can be explained as follows:
This is a major cause of unemployment in rural India. Population is growing rapidly in India, especially in rural areas. It adversely affected unemployment in two main ways. In the first place, population growth directly contributed to unemployment by significantly increasing the labour force. That's because employment growth could never be as high as it needed to grow. Second, rapid population growth has indirectly affected unemployment by reducing resources for capital formation. If the absolute base is large, as in India, the absolute number will increase as the population grows.
That means a lot of extra spending on their upbringing, maintenance and education. As a result, public consumption such as drinking water, electrical medicine and educational facilities consumes more resources for personal consumption such as food, clothing, shelters and sons. This has reduced the opportunity to devote most of its income to savings and investment.
2. Limited land:
Land is a gift of nature. It is always constant and cannot grow like population growth. Therefore, India's population is growing rapidly and land is not enough for population growth. As a result, there is a great deal of pressure on the land. In rural areas, most people rely directly on land for their livelihoods. The land is very limited compared to the population. It creates unemployment for many people who depend on agriculture in rural areas.
3. Seasonal agriculture:
Agriculture is the only means of employment in rural societies. However, most rural people are engaged in farming, both directly and indirectly. But agriculture in India is basically a seasonal issue. It provides employment facilities to local people only during certain seasons of the year. For example, during sowing and harvesting, people are fully employed and remain unemployed during the post-harvest period until the next sowing. It had a negative impact on their standard of living.
4. Land fragmentation:
In India, strong pressure on populous lands is causing land fragmentation. It creates a major obstacle to some parts of agriculture. People who depend on agriculture continue to be unemployed because the land is divided and agriculture is hindered. This has a negative impact on employment conditions. It also leads to villager poverty.
5. Backward Agricultural Law:
India's agricultural methods are very late. Until now, rural farmers have followed old farming practices. As a result, farmers are unable to adequately feed many people with their farm produce, provide adequate education for their children, and engage them in their profession. That leads to unemployment problems.
6. Decline of cottage industry:
In rural India, villages and cottage industries are the only employers of people who do not have land in particular. They rely directly on various cottage industries for their livelihoods. But today, these are being adversely affected by the industrialization process. In fact, they know they can't compete with modern factories in material and production. As a result, the village's industry suffered serious losses and was gradually shut down. As a result, the people who work there are unemployed and unable to sustain their livelihoods.
7. Defective education:
Routine education is very flawed and is only confirmed in the classroom. Its main purpose is to get only the certificate. The current education system is not work-oriented, but bachelor-oriented. It has more general ground flaws than occupations. Therefore, people with general education cannot work. They should be called useless because they can't work here, they can find a way of self-employment. It leads to unemployment and underemployment.
8. Lack of transportation and communication:
In India, especially in rural areas, there are no suitable facilities for transportation and communications. For this reason, villagers who are not engaged in farm work are unemployed. That's because they can't start a business to make a living and are trapped only within the limited boundaries of the village. Keep in mind that modern transportation and communication methods are the only means of trade and commerce. As a result, lack of transportation and communication in rural areas has led to unemployment problems for villagers.
Inadequate employment planning:
Government employment plans are not appropriate compared to population growth. In India, about 20,000 people are added to the existing population each year. However, employment opportunities did not increase in proportion to the rate of population growth. As a result, there is a big difference between employment opportunities and population growth. On the other hand, providing the right employment facilities for all is a daunting task on the part of the government. In addition to this, the government has not taken appropriate steps in this direction. The government's misguided employment plans greatly accelerate this issue. As a result, the problem of unemployment is increasing day by day.
Poverty:
Preface
Poverty is a shortage or shortage of a certain (variable) amount of physical property or money. Poverty is a multifaceted concept that can include social, economic and political factors. Absolute poverty, extreme poverty, or poverty is the complete lack of the means necessary to meet basic personal needs such as food, clothing, and shelter. The thresholds at which absolute poverty is defined are considered to be about the same regardless of the person's permanent location or age. Relative poverty, on the other hand, occurs when people living in a country do not enjoy a certain lowest standard of living compared to the rest of the country. Therefore, the thresholds at which relative poverty is defined vary from country to country or from society to society.
After the Industrial Revolution, mass production in factories made the production of goods cheaper and more accessible. More importantly, modernizing agriculture, such as fertilizers, to provide sufficient yields to feed the population. Providing basic needs can be limited by restrictions on the government's ability to provide services such as corruption, tax avoidance, debt and loan terms, and the brain drain of healthcare and education professionals. Income-increasing strategies to make basic needs more affordable usually include the provision of welfare, financial freedom, and financial services.
Poverty reduction remains a major issue (or goal) for many international organizations such as the United Nations and the World Bank.
In today's world, especially in developing countries like Tanzania, poverty is a complex and difficult task. There are many aspects to poverty, which certainly involve a shortage of human and physical wealth and inadequate material means to obtain food and other necessities. But it also means vulnerabilities to unhealth, drought, unemployment, economic decline, violence and social conflict.
And that often means a deep state of incapacity, even humiliation (World Bank, 1990).
Some people describe poverty as a lack of essential items such as food, clothing, water and shelter for a proper life. Poverty is a condition characterized by a serious deprivation of basic human needs such as food, safe drinking water, sanitation, health, shelter, education and information (World Social Development Summit, 2005).
Definition of poverty:
"Poverty is a condition in which people's basic needs for food, clothing and housing are not met."
"Poverty" means a condition or condition in which an individual or community lacks the financial resources and necessities to enjoy the minimum standard of living and well-being that is considered acceptable to society. "
Group Perspective; Poverty in situations by individuals, groups, or communities tends to lack access to basic human needs such as food, housing, clothing, and other self-satisfaction essentials.
Types of poverty-
Absolute poverty:
Absolute or extreme poverty is when people lack the basic necessities of survival. For example, they may be hungry, lacking clean water, adequate housing, sufficient clothing and medicine, and struggling to stay alive. This is the most common in developing countries. Absolute poverty is defined as a situation in which the basic needs of an individual are not covered, that is, there is a lack of basic goods and services (usually related to food, housing and clothing). This concept of poverty is strongly linked to poverty and is applicable to all countries and societies. Those who are considered poor under this standard are similarly classified around the world.
Relative poverty:
Relative poverty is when some people's lifestyles and incomes are much worse than the standard of living in the country or region in which they live, leading a normal life, normal economic and social. , If you are having a hard time participating in cultural activities. Relative poverty varies from country to country, depending on the standard of living that the majority enjoy. Although not as extreme as absolute poverty, relative poverty remains very serious and harmful. Relative poverty identifies the phenomenon of poverty in the society under investigation. From this point of view, a person is considered poor if he or she is in a clear financial or social disadvantage with respect to other people in the environment. This idea of poverty is closely related to the concept of inequality.
Relative poverty occurs when people do not enjoy a certain minimum standard of living determined by the government (and enjoyed by most of the population), country by country, sometimes within the same country. Relative poverty is said to be ubiquitous and increasing and may never be eradicated.
Conclusion:
In general, poverty has always been perceived in a negative way, as it has a significant negative impact on individuals and communities. Poverty does not provide access to basic needs such as food and shelter for the vast majority of rural and urban people in developing countries. Despite the great negative impact on community poverty, it plays a major role in driving socio-economic development by working hard on people, effectively using available resources and facilitating technological discoveries. I am.
3.2 Regional imbalance:
Although remarkable growth has been achieved by some regions and sectors of India, some locations and sectors have been developing since independence. The reasons for the imbalances in these regions are rooted in historical processes and the bounty of different levels of natural resources in different parts of the country. During the period of British rule, the level and size of surplus creation and absorption differed from region to region due to differences in production relationships between regions and differences in production levels due to differences in efforts in each region. The type of urbanization at that time was based on the strategy of exporting primary products and consuming mechanically imported products. As a result, some port towns such as Kolkata, Mumbai and Chennai, as well as the capitals of some princely states, got off to a better start than the rest of the world.
The capitals of these princely states emerged as centres of consumer goods and created afferent developments around them. The port cities of Kolkata, Mumbai and Chennai also served as the growth centres of West Bengal, Maharashtra and Tamil Nadu, respectively. After the first favourable start, a class of merchant capitalists with the ability to invest in industry slowly emerged, and the two processes of industrialization and urbanization moved closely together. Gradually, educational opportunities were created to support business and management through clerical and junior staff classes. Western education began soon after the contact between the hinterland and the metropolis of Europe.
Gradually, a middle class of lawyers, doctors, intellectuals and skilled personnel emerged. These areas have experienced development on modern routes, while others have fallen behind due to the decline of handicrafts and other non-agricultural professions due to the advent of mechanical imports. I did. When the region starts early, the infrastructure is deployed and the development cycle begins. Employment opportunities are created. These conditions attract migration from poor areas. Immigrants generally include healthy, dynamic and enterprising sections, and they also save money. Mostly women, children and the elderly are left behind. As a result, the demographic structure of undeveloped areas is distorted.
In contrast to the developed regions, the poor regions begin the reverse cycle of underdevelopment. At the time of independence, there were large regional disparities between different regions in terms of per capita income, per capita consumer education and medical facilities, infrastructure and employment. Due to early political unrest, this disparity had a serious impact. Therefore, it was felt that the nation played a major role in closing the gap. This commitment was reflected in the Constitution and planning goals, but there were deviations from these goals due to the strategic position of the ruling class and the macro and sector models of development adopted by the planners.
Reasons for disparity
There are many factors that contribute to relative regional disparities. Some of the root causes of inequality are:
Governments (central and state) have been politically weakened due to asylum politics, government collapse or collapse, and voting politics. Therefore, the government's priority was to please the rich minority to make it happen. To relieve resentment and dissatisfaction among the general public, it had to play a fake role to bail out the poor masses through various failed employment and poor welfare programs. Therefore, rich minorities and regions or regions associated with rich minorities were rather developed by gaining most of the overall outcome of national development. In addition, regions and communities associated with educated and politically conscious people have also gained a greater share of economic development due to increased political pressure on government.
2. Administrative cause:
People in the management group either belong to a thriving group of societies or are under pressure from politicians and socio-economic elites to discriminately direct development interests to these politicians and elites. The elite and politicians seduced and seduced executives by not only putting pressure on them freely, but also by bribing the government sector for corruption. This corruption began with these high-level managers and later spread to the lowest levels of society, becoming the current state of corruption in India. In addition, these managers have made early profits by supporting investment and development projects in more developed areas to demonstrate high performance and good work.
3. Unequal distribution of natural resources: -
The distribution of natural resources is not equal across different regions of the country. Since then, industrialization has been rapidly brought about in regions and areas blessed with natural resources. This has accelerated the development of education and employment levels in these regions and regions compared to regions and regions where natural resources are not available.
4. Caste system:
The Indian masses, especially Hindus, are divided into different castes under a strong social class-based caste system. Government and non-governmental organizations have made considerable efforts for social reform to eradicate malignant traditions and unruly social evils, although a powerful stratification curse of society, many parts, especially those in the lower segments (caste) of remote societies, are still hampered by equal rights to education, employment, professions and institutions. This makes them economically weak.
Even in the general election, upper-level (caste) people cannot forcibly cast votes. What a hell! Help these societies stop slapping human faces, although limited in today's region. There is a gap between scheduled castes and members of the designated tribe and others regarding the availability of basic civil facilities such as electricity, housing, water supply and toilet facilities. Access to public health systems and their benefits are heterogeneous between the general public and those in the SC / ST category. The resources allocated to the welfare of SC and ST are not proportional to their needs. Policies and programs specifically designed for these categories of population are not being effectively implemented. Therefore, discrimination against the population of SC and ST continues even after more than 60 years of independence.
Policy measures to close economic disparities:
The planning committee has three measures-
(I) Transfer of financial resources from the centre to developing countries.
(II) Special regional development program for the rear region. And
(III) Measures to encourage private investment in underdeveloped areas.
The government offers the following incentives:
(A) Income tax concessions
(B) Central investment subsidy system and
(C) Transportation subsidy system.
The state government also offers several measures such as providing water and electricity on a profit-free and loss-free basis, sales tax-free loans, octroi tax exemptions, and property tax exemptions. In addition, major financial institutions such as IDBI, IFCI and ICICI, provide concessional financing for industrial projects.
3.3 Social justice
Definition:
According to the definition of social justice, it is a situation of unfair practices in society. What is wrong is usually against the law and may not be considered a moral practice. Basically, social justice occurs when equality is treated as unequal and inequality is treated as equal.
Social justice issues
The situation of social justice in the world has improved, but there are still many examples where people have to face difficult situations and cannot hear their sorrows. Social inequality was brought about in the 18th century through the writing of several philosophers. It was when people realized how social differences were spreading to society.
There are many issues of social justice, but here we have discussed three of the most common ones.
Discrimination:
It's a single term, but it includes a lot of cultural, political, religious, and even ethnic-based social inequality.
Homophobia:
It is a fraud against sexual minorities and shows a hatred of bisexuals and transgender. There is a lot of diversity in America, but sexual minorities are still suffering. American social justice for these people is still in the development stage.
Ageism:
This is a form of fraud in which people or certain groups of people discriminate on the basis of their age. When applied at the institutional level, it involves limiting the rights of older people or treating them in a disadvantageous way.
Examples of social justice
There are many examples of social justice today, even though people's conservative thinking has changed. The United States is a country full of educational progress, but unfortunately, recent estimates indicate that women in the United States make up only 82% of men. The wage gap between men and women is large depending on race and education level. Women's income is low because they are only given the opportunity to participate in areas of low income. Even if men and women are in the same field, women are 7% less than men. This is a significant fraud based on gender equality.
The world may be making progress in providing social justice, and many laws and authorities may be employed for this purpose. Indeed, there is one thing that fraud is still widespread. But that doesn't mean there's nothing you can do about it. As it is said, even the slightest injustice somewhere will be a threat to justice everywhere. There is no doubt that this discrimination needs to be eradicated for sustainable human development and cannot be achieved without mutual reconciliation.
Inflation is the rate at which the general price level of goods and services rises, resulting in a decline in the purchasing power of the currency. Central banks are trying to limit inflation and avoid deflation in order to keep the economy running smoothly.
Inflation is the continuous rise in the general price level of goods and services in the economy over a period of time. As price levels rise, less goods and services are purchased by each unit of currency. As a result, inflation reflects a decline in purchasing power per unit amount. This is a loss of real value in exchange media and unit accounts within the economy. The main indicator of price inflation is the inflation rate. This is the annual rate of change of the general price index (usually the consumer price index). The opposite of inflation is deflation.
Inflation affects the economy in a variety of positive and negative ways. The negative effects of inflation include increased opportunity costs for holding money and uncertainty about future inflation that can discourage investment and savings. If inflation is fast enough, consumers are in the future. The positive effects are reducing the real burden of public and private debt, keeping the nominal interest rate above zero so that the central bank can adjust interest rates to stabilize the economy, and unemployment due to nominal wage rigidity. Includes reductions. Economists generally believe that high inflation and hyperinflation are caused by the overgrowth of the money supply. There are more diverse views on the factors that determine low to moderate inflation. Low or moderate inflation can result from fluctuations in the actual demand for goods and services, or changes in available supplies such as shortages. However, the consensus is that the long-term duration of inflation is driven by the money supply, which grows faster than economic growth.
Causes of inflation:
This is a general explanation given by the Keynesians. Inflation occurs when the aggregate demand for goods and services in the economy rises faster than the economy's capacity. Inflation, in the opinion of monetarists, is simply caused by the money supply, which controls all other factors that determine inflation. The economy is such a big theme that there is no absolute explanation for how inflation is being injected into the world economy. I've read an article about Forbes and I think the author has a very good explanation for this topic.
How to calculate inflation:
Due to the different price indexes, different inflation indicators are used. A simple formula to calculate inflation is to use the Consumer Price Index (CPI). It simply measures nominal consumer prices.
There are platforms that can calculate the value of money. I'm playing with a calculator and it's based on the Indian CPI: -
"The cost of 1000rs in 2004 is the cost of 1239.91rs in 2014, and if you buy the exact same product in 2014 and 2004, it will cost 1000rs and 793.24rs, respectively."
From here, you can see that inflation is devalued your money if you do nothing about it.
How to overcome inflation:
If we just live and do nothing about it, our purchasing power declines every day. Below are some suggestions on how to overcome inflation.
1) Low standard of living.
First, we need to lower our standard of living by buying less expensive ones.
2) Invest for better returns.
Simply put, in order to overcome inflation, you need to learn how to work harder and get higher returns. Inflation is a silent killer that eats us every day. We need to be prepared for it, or you will see your standard of living fall down, and it will be too late to take action.
3) Be careful about holding cash.
Nevertheless, putting money in a bank account that earns a 5% interest rate is worth 5% less at the end of the year.
4) Do not take long-term fixed interest rate loans.
Do not buy bonds until the end of the inflation period. High inflation completely destroys the value of long-term bonds. Of course, some people apply for a bank loan with a good fixed rate of 4% and are retained as the interest rate rises to 14% over time. Be careful before applying for a bank loan, check interest rates and choose a good long-term loan that will not cause a big loss.
5) Invest in gold, silver, etc.
In some countries, real estate may be ideal for investment, but not all. Please check before creating.
6) Online business
Looking at the size of the Internet economy, it is important and the world is moving towards the digital world. That's why more and more online shopping platforms are a way for business people to reach out to consumers.
7) Parallel economy:
A parallel economy based on loan sharks or unaccounted money poses a major threat to the Indian economy. It is also the cause of the large loss of government tax revenue. Therefore, it is necessary to suppress it. Its elimination benefits the economy in multiple ways.
India's loan sharks, parallel economies, unexplained economies, underground economies, or unreported economies are barriers to smooth functioning. There is no unified or accepted definition of black money. In a broader sense, it includes money from corruption and other illegal methods, including trafficking, counterfeit currency, smuggling, and trafficking in weapons. The following reasons-
a) To avoid tax payments.
b) To avoid payment of other statutory contributions.
c) To avoid minimum wages, working hours, safety standards, etc. And
d) To avoid compliance with laws and administrative procedures.
Causes of black money
1. Management and licensing system:
Regulations, permit assignments and licenses are some of the reasons for making a profit in India.
2. Higher tax rate:
Tax evasion is common in income tax, corporate tax, corporate tax, coalition tax, customs duty, consumption tax, etc.
3. Problems in enforcing tax law:
The enforcement of tax laws on income tax, consumption tax, excise tax, excise tax, stamp duty, etc. is very weak.
4. Funding for political parties:
There is a growing tendency to support political parties with the help of black money. Large corporations provide huge amounts of money to political parties, especially the ruling party, and as a result seek to use relationships for their benefit by manipulating rules and regulations.
5. Inflation:
Increased prices and obligations lead to speculation and generate black money.
6. Agricultural income:
Large corporate players hide their money in the name of agricultural income, and the same is exempt from Indian income tax.
7. Privatization:
Privatization paved the way for bureaucrats to make money, and even for ministers. Other reasons include transactions in urban real estate, smuggling, real estate transactions, bribes, and artist concealment of income.
Effects of black income on the Indian economy:
The generation and existence of black gold causes the following problems in the Indian economy.
1. It will lead to an underestimation of India's GDP.
2. Loss of income to the national and state exchequer.
3. It will bring about channelization of resources for the purchase of real estate and luxury homes.
4. Black money brings the transfer of funds from our economy to other countries.
5. Black money provides a path to social inequality.
6. Excess liquidity of cash and bullions is the result of black gold in the economy.
Key takeaways:
Meaning:
One of the unfavourable trends that can be observed in the Indian business and private sector is an increase in the incidence of illness. It raises considerable concerns for planners and policy makers. It also puts a serious burden on the economic system, especially banks. There are various criteria for illness. According to standards approved by the Reserve Bank of India, "a sick unit is a unit that reports a cash loss for the business year, and at the discretion of the lending bank, it is possible that a cash loss will occur this year as well. The main symptom of is a steady decline in the debt equity ratio and an imbalance in the unit's financial position. Simply put, the sick unit supports itself by manipulating internal resources (i.e., plowback of revenue). It is a unit that cannot be. As a general rule, sick units continue to operate below the profit-and-loss turning point (total income = total cost), forcing them to rely on external sources of funding for long-term survival.
Industrial illnesses cause a variety of socio-economic problems. When an industrial unit becomes ill, those who depend on it must face an uncertain future. They are afraid of unemployment. Even if you don't lose your job, your wages and compensation aren't in time and you're forced to live in extreme hardship. Of course, illness is not a special problem in India. It's definitely a global phenomenon. Even in industrialized countries, there are many cases of bankruptcy and liquidation. These illness units are returned to health through mergers, mergers, acquisitions, asset purchases, or full nationalization. Units are allowed to die of natural causes when the problem becomes truly alarming or unmanageable.
Cause:
Industrial illness has become a major problem in the private sector of India. Recently, it envisions a serious rate. If you look closely, there are at least five main causes of industrial illness. That is, promotion, management, technology, finances, politics.
Industrial units can get sick in their early stages or after working for quite some time. For example, India's two major traditional industries, cotton fabric and sugar, have become ill mainly due to short-sighted monetary and depreciation policies. The significant rise in cost of capital due to price inflation highlights the problem. The historical method of cost depreciation is very inadequate if assets are exchanged at current costs during inflation. In addition, depreciation is often used to meet working capital needs and is not readily available for replacement of worn-out plants and equipment.
As a result, industrial units are constrained to work with older, outdated equipment, their profitability is compromised, and sooner or later the units are driven out of the market by competitive forces.
External and internal causes:
Factors leading to illness can be due to financial reasons, technical problems, mismanagement, availability of raw materials, power or natural disasters, disasters such as fires and earthquakes, or a combination of these factors.
The causes of industrial illness can be broadly divided into two categories.
(I) External and
(II) Inside.
External causes are beyond the control of their control and appear to be relatively more important than internal causes.
The causes identified so far are:
a) Delays in land acquisition and building construction.
b) Delay in obtaining financial assistance from public financial institutions
c) Delay in machine supply by the manufacturer
d) Issues related to hiring technical and administrative staff
e) Government delays in sanctions such as licenses and permits.
f) Lack of basic inputs such as electricity and coal. Other causes are:
g) Excessive costs due to factors beyond management control
h) Lack of product demand or shift in demand for rival products due to delays in project implementation.
i) Inadequate collaborator performance — financial and technical
j) In the long run, major changes in operational scale and optimal product mix, and last but not least, are important.
k) Changes in government policy regarding the movement of goods from one location in the country to another
The internal causes are as follows.
References:
1) https://gsdrc.org/document-library/social-exclusion-poverty-and-unemployment/
2) https://asutoshcollege.in/Study_Material/regional_imbalance_debasmrity_05042020.pdf
5) https://corporatefinanceinstitute.com/resources/knowledge/other/social-justice/
