UNIT III

Problems of Growth

Q1) Define Poverty. What are the reasons of poverty?

A1)

 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.

Reasons of poverty

This is the first reason many thinks. You are not earning a good income when you are not doing a good job. In many countries, traditional jobs like agriculture are disappearing. The Democratic Republic of the Congo is a good example, with most of the population living in rural areas deprived of natural resources from long-standing colonialism. Half of the Democratic Republic of the Congo lives below the poverty line. Even in countries like the United States, where many people work, those jobs aren't paying enough. According to the Institute of Economic Policy, a large group of workers who are employed full-time all year round is still below federal poverty guidelines.

2.                 Lack of good education

The second root cause of poverty is lack of education. Poverty is a cycle, and without education people cannot improve their situation. According to UNESCO, with basic reading skills, more than 170 million people could be free from extreme poverty. But in many parts of the world, people are uneducated. There are various reasons. Often families need children to work, there is no school nearby, or girls are not educated due to sexism or discrimination.

3.                 War / Conflict

Conflict has a great impact on poverty. At the time of war, everything stops. Not only the country's GDP, but also productivity will decline. It is very difficult to resume the situation because foreign companies and countries do not want to invest. For families and individuals, wars and conflicts can make it impossible to stay in one place. It is also very common for women to be the main earners, addressing many barriers such as sexual violence and discrimination.

4.                 Weather / Climate Change

According to the World Bank, climate change has the power to put 100 million people in poverty in the next decade or so. We know that climate change can cause droughts, floods and heavy storms, which can defeat successful countries and further reduce poor ones. Recovery is very difficult. Especially for the agricultural community, where there are few enough to feed on their own, let alone prepare for the next harvest year.

5.                 Social justice

Whether it's sexism, racism, or other social injustice, poverty continues. Victims of social justice struggle to gain good education, adequate work opportunities, and access to resources that can save them from poverty. The United Nations Social Policy Development Division has identified "income distribution and access to productive resources, basic social services, inequality of opportunity" as causes of poverty. Groups such as women, religious minorities, and racial minorities are the most vulnerable.

6.                 Lack of food and water

Without access to basic necessities such as food and water, it is impossible to get out of the cycle of poverty. All a person does is get food and water. You can't save money because everything goes to your everyday needs. When they don't have enough nutrition, they don't have the energy to work. They are also much more likely to get sick, which further exacerbates their financial situation.

7.                 Lack of infrastructure

Infrastructure includes roads, bridges, the internet, public transport and more. When communities and families are isolated, they have to spend a lot of money, time, and energy to get to the place. Without good roads, travel will take forever. Without public transport, getting a good job may be nearly impossible, or even going to a store. Infrastructure connects people with the services and resources they need to improve their economic and living conditions. Without infrastructure, things wouldn't improve.

8.                 Lack of government support

Governments need to be involved in order to combat many of the issues we have described. However, many governments are unable or unwilling to serve the poor. This can mean failure to provide (or reduce) social welfare programs, redirect funds from people in need, failure to build good infrastructure, or aggressive persecution of the population. If the government cannot meet the needs of the poor, the poor will probably stay that way.

9.                 Lack of good medical care

Poor people are more likely to be in poor health, and poor health people are more likely to be poor. This is because health care is often too expensive or inaccessible to those who need it. Without money for medicine and treatment, poor people have to make really difficult decisions, and necessities like food are usually prioritized. A sick person gets sick, can't work, and the situation gets even worse. When people seek treatment, the cost often ruins their finances. It's a vicious circle.

10.             High cost

The final source of poverty is simple. Prices are too high. Even the basic ones can be too expensive. According to World Food Program statistics, the poorest households in the world spend 60-80% of their income on food. Food prices are also very unpredictable in certain areas, so if food prices rise, the poor will have to keep cutting down on other necessities. Housing is another integral part of the rise. According to the International Monetary Fund, the global housing market is rising. But income growth is not.

Q2) What steps have been taken by the Government of remove poverty in our country?

A2)

Nine important steps to take to reduce poverty in India are: 1. Acceleration of economic growth 2. Agricultural growth and poverty alleviation 3. Rapid development of infrastructure 4. Acceleration of human resource development 5. Growth of non-agricultural employment 6. Access to assets 7. Access to credits 8. Public distribution system (PDS) 9. Direct Attack on Poverty: A special employment plan for the poor.

1. Acceleration of economic growth:

From the 1950s to the 1960s, it was generally believed that poverty in India could be significantly reduced by accelerating economic growth. In this view, the benefits of economic growth permeate the poor in the form of increased employment opportunities, increased productivity and higher wages. This was expected to raise the poor beyond the poverty line.

2. Agricultural growth and poverty alleviation:

Agricultural growth is recognized as an important factor contributing to the significant reduction of poverty. A study conducted by former planning committee member Montek Ahuluwalia found that agricultural growth and poverty are inversely related. Higher agricultural growth leads to lower poverty rates. The experiences of Punjab and Haryana in the late 1960s and 1970s confirmed the opposite relationship between agricultural growth and poverty.

3. Rapid infrastructure development:

An important way to create employment opportunities for the poor and increase productivity is the rapid development of infrastructure. Private sector companies are not attracted to proper investment in infrastructure and need to step up public investment for its development. Infrastructure development consists of the construction of roads, highways, ports, telecommunications, electricity and irrigation. They mainly involve labour-intensive construction work.

In addition, the availability of infrastructure such as electricity and irrigation can significantly improve labour productivity. CH Hanumansa Lao, in a study of East and Southeast Asian countries, the reduction in rural poverty achieved by economic growth is due to the fact that the physical infrastructure of those countries is already highly developed. Discovered what happened to.

4. Acceleration of human resource development:

In addition to physical infrastructure development, poverty can be reduced through human resource development. To develop human resources, it is necessary to increase investment in educational facilities such as schools, technical training institutions, and vocational schools to improve literacy rates, and to import skills into people. In addition, human resource development requires medical care through public investment in primary health centers, clinics and hospitals.

5. Growth of non-agricultural employment:

It is especially important to reduce poverty growth in non-farm employment in rural areas. Non-farm jobs are created in marketing (ie, trivial trade), transportation, handicrafts, dairy, forestry, food and other produce processing, and repair shops.

A study of poverty alleviation in Haryana reveals that despite the decline in employment opportunities in agriculture, the significant reduction in rural poverty in Haryana is due to a significant increase in non-agricultural employment. Similarly, a study in Andhra Pradesh shows that a significant increase in non-farm payrolls has reduced poverty in the area adjacent to Hyderabad more rapidly.

6. Access to assets:

The rapid growth of the post-independence population has led to greater fragmentation and fragmentation of agricultural ownership, and the lack of employment opportunities in industry and other non-agricultural sectors is a condition for agricultural workers and self-employed smallholders. Worse.

Without land, or with little land, they cannot be self-employed to earn enough income to meet their basic needs. Land redistribution through effective redistribution, land lease reforms to secure ownership, and fair rent fixation will be important means of reducing rural poverty. No land reform has been implemented to reduce rural poverty, except in West Bengal and Kerala.

7. Access to credits:

Being able to give credit to the poor on simple terms can create conditions for smallholders to access productive resources such as HYV seed fertilizers and the construction of small irrigations such as wells and tube wells. I will. This allows smallholders to adopt high yielding technology to increase their productivity.

The new technology is size-neutral. In other words, it can be adopted for small-scale farmers as well. However, the adoption of new technology requires financial resources that smallholders lack. Moreover, poor non-farmers need credit for the development of marketing, food processing, dairy, forestry and handicrafts that can provide them with beneficial jobs.

8. Public Distribution System (PDS):

Poor households spend nearly 80% of their income on food. Therefore, an effective way to increase rural income and ensure food security for poor households is to ensure that adequate food grains and other necessities are supplied at subsidy prices, or lower than market prices. Is to do.

A well-functioning public distribution system for poor households is an important element of poverty reduction strategies. The central government agency, the Food Corporation of India, procures grains from farmers at the lowest support price (MSP) and stores them in warehouses nationwide.

9. Direct Attack on Poverty: Special Employment Plans for the Poor:

In the early 1970s, it was found that economic growth would take a very long time to create enough employment opportunities to provide productive employment to all unemployed and poor people in the country. Therefore, a strategy to provide employment to the poor in the short term, a special plan to hire the poor to local public works, was proposed by Dandekar and Russ in their now famous work "Poverty in India".

The special employment scheme for local governments, launched by the government in the Fifth Five-Year Plan, constitutes a direct attack on poverty because it does not rely on the trickle-down effect of economic growth on the poor. There are two main types of such special poverty alleviation that the government is launching from time to time.

First, there are some special plans to provide wage employment to the poor. These include Jawahar Rozgar Yojana (JRY). It was named Jawahar Gram Stimridhi Yojana after the rebuild. This is a central support scheme implemented by Gram Panchayat to create wage jobs for the poor in rural areas.

Q3) “Regional Imbalance” is the major causes of slow growth in India. Comment and justifies your answer?

A3)

 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.

Q4) “Unemployment seems to be the main impediments in Indian growth trajectory”. Explain its causes.

A4)

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.

9.                 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.

Q5) What are the bases of various policy to alleviate poverty?

A5)

In summary, government policies may include the following to reduce poverty:

1. Sustainable economic growth

The argument is that promoting economic growth will increase the total income of society and create more jobs and income that can be redistributed. For the past 100 years, economic growth has been a major factor in reducing the level of poverty seen in pre-war Britain and the United States. However, income and wealth do not necessarily permeate the poorest. There is concern that economic growth may increase relative poverty as it benefits the wealthiest and more skilled than the bottom. See also: inequality and economic growth

2. Reduce unemployment

Unemployment is a major cause of poverty, as the unemployed depend on national benefits and have low incomes. Unemployment can be reduced through both supply-side policies, including free training programs for people who are structurally unemployed.

Poverty and unemployment are often geographical issues, with higher levels of poverty in depressed areas. Policies to overcome geographical poverty may include government subsidies for businesses to set up in depressed areas. Also, building better infrastructure (transportation and telecommunications) in depressed areas can provide financial incentives to create new jobs.

3. Progressive taxation

Increasing progressive taxation, such as raising the income tax rate from 40% to 50%, will earn more income from high-income earners. This will allow us to reduce regressive taxes (VAT / sales tax, etc.) and increase welfare benefits, increasing the income of the poor. This is an effective way to reduce relative poverty.

However, critics argue that higher income taxes discourage work and reduce production. This is because higher taxes make work less attractive and reduce the opportunity cost of leisure. Therefore, people have less work and can enjoy more leisure time. This is known as the replacement effect. Similarly, higher corporate taxes may discourage investment in the UK

However, this has been controversial by other economists, pointing out that higher taxes may reduce income and allow people to work harder to maintain their income. (This is known as the income effect)

Evidence suggests that higher income taxes have little incentive for the supply of labour, suggesting that the supply of labour is relatively inflexible. However, it also depends on the income tax setting level. Certainly, higher income taxes have a lower level of incentives to work.

Other issues related to income tax increases include tax evasion, and the fact that companies may adjust their wages to compensate for higher taxes.

4. Increased profits for the poor

Means-tested benefits include increased welfare benefits for low-income earners. For example, universal tax credits, food stamps, children's allowances, etc.

Benefits of Means Test Benefits:

They allow money to be directed to those who need it most. Example: Family tax credit or pension credit.

It is cheaper than universal profit and reduces the burden on taxpayers.

However, the problems with using benefits to reduce poverty are:

Means-tested profits are often unpopular because people are accused of being poor.

Also, getting a high-paying job can discourage you from earning higher wages, as you will lose at least some of your allowances and pay more taxes. This is known as the "profit trap" or "poverty trap". Poverty traps occur when low-income people discourage extra hours of work or high-paying jobs. Because the extra income they earn is robbed of lost profits and higher taxes. To avoid poverty traps, governments can rate profits so that there are no immediate cutoff points.

Some relatively poor people may slightly exceed their eligibility limits.

Also, not everyone who is eligible for the Means test benefits will collect them due to ignorance or difficulty in applying.

The government preferred universal benefits because it avoided the above problems. People feel that contributing to taxes is worth the benefits, regardless of wealth.

However, in recent years, the welfare state has faced an increase in demand due to demographic factors, and the demand for benefits from the Means test is increasing.

5. National Minimum Wage: The government can raise the national minimum wage. This is an effective way to increase low-wage income and reduce wage inequality. A related concept is voluntary living wages. This is an attempt to encourage businesses to pay higher wages.

In recent years, minimum wages have become more important in tackling impaid work in both the United Kingdom and the United States.

In the UK, the number of workers benefiting from the minimum wage increased from 830,000 in 1999 to 2 million in 2018.

In the United States, there is a proposal to raise the federal minimum wage to $ 15 by 2024. This could bring 33.5 million US workers and 6.2 million poor workers to see an increase in the minimum wage.

The potential problem with raising the minimum wage is that companies may not be able to afford workers, which may lead to unemployment. If it causes unemployment, poverty can be exacerbated. But if the company has a monopoly, they will be able to pay higher wages. Empirical evidence suggests that the minimum wage can be raised significantly before lower employment and higher prices outweigh the benefits of higher wages and higher productivity. Learn more about raising the minimum wage

6.                  In-kind benefits.

These are important public services and are provided (or subsidized) free of charge when used. They are mainly related to education and medicine. Free education gives people in low-income households the skills and qualifications that will lead to better jobs and higher incomes in the future.

7.                 Basic Income (UBI)

 Basic income or citizens' income includes giving weekly benefits to all citizens, regardless of circumstances or income. The idea is to ensure that everyone has a minimum income guarantee, but there is no impediment to losing means-tested profits from working harder. See details on Basic Income (UBI)

Policies to reduce poverty in developing countries

The focus may be on different policies to reduce poverty in developing economies.

Q6) What is parallel Economy? Discuss its impact on Indian economy and suggest measures to minimise its impact?

A6)

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-

 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.

Q7) What is Industrial Sickness? What are its symptoms?

A7)

 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:

The internal causes are as follows.

Q8) Discuss the steps taken by Government of India to India to cope up with industrial sickness?

A8)

The increasing incidence of disease by size, region and industry and the subsequent widespread socio-economic adverse effects bring a strong awareness of the urgency of solving the problems of India's disease industry.

1. Industrial illness does not occur overnight, but it progresses gradually over 5 to 7 years, beyond cure and damaging the unit's health. Therefore, disease identification and detection in the early stages is the first and most important means of detecting and mitigating industrial diseases.

There is no doubt that the particular delay in illness may have been the main cause of such a high proportion of non-viable units among the identified illness units. Appropriate criteria need to be evolved and developed to identify the disease early.

2. Considering the limited resources available, many sick units may have to be allowed to close / clear. You can reduce the number of sick units you pick up for revival / rehabilitation and increase the number of weak units to prevent illness.

It's time to replace the old saying, "What you can't cure must endure," with "What you can't cure must end." However, the merger of multiple wards would be a welcome proposal only if the full social security of workers evacuated due to the closure of troops is widespread in society.

3. Currently, the attitudes of three different sets of unit management, financial institutions, and labour are not converging because they see the problem of industrial illness quite differently. For example, management wants the freedom to close a unit if it feels it is no longer viable. Financial institutions believe that whatever can be collected should be collected.

In the workers' view, if a unit is closed, they will lose jobs, reserve funds, and other profits, and the unit will need to continue production. Therefore, drag all three in different directions. However, if these diverse perspectives can be properly integrated, their approaches can be integrated, and their interests can be converged, the unit can recover for the best interests of all three.

4. It is fortunate that the sick small industry is now under the jurisdiction of the Industrial Finance Reconstruction Commission (BIFR). Small industries are characterized by a different set of problems and outlooks than medium and large industries, so it would be better to set up a separate department in BIFR to address the diseases of small industries.

5. Rehabilitation programs for small sick units are often carried out in an ad hoc and hazard manner. The rehab package offered to the ward consists solely of financial measures such as debt reschedules, additional term loan sanctions for the installation of new machines, and tightening of working capital restrictions.

However, other issues such as management, marketing, power, and raw materials are just as important and remain unattended in rehab programs. Therefore, rehabilitation programs need to provide management efficiency, product marketability, and adequate availability of electricity and raw materials.

6. Since we have decided to rehabilitate the sick unit, the program should end quickly and be implemented quickly. There are many examples suggesting that delays in these two problems exacerbate the location of the disease and make revival a distant goal. At the same time, the rehabilitation program needs to be fully implemented, as partial dietary practices often endanger efforts to rehabilitate the unit.

For example, if needs-based funding is not fully released, the unit may not be sufficient to operate beyond the break-even point. As a result, the unit may continue to suffer losses and additional work capital may be wiped out to cover such losses.

7. To prevent illness, banks and financial institutions need to regularly review the borrower's account of small industries in the early stages to identify sick or vulnerable units. There is.

The Government of India and the Reserve Bank of India should be urged to instruct commercial banks and financial institutions to provide information about their illness to institutions such as BIFR, which have rehabilitation programs to take appropriate action.

8.                  Last but not least. Experience has shown that many industrial sectors are ill due to improper opportunity scanning by entrepreneurs themselves. They start industrial units primarily to take advantage of government subsidies, concessions and incentives. We know that small industry entrepreneurs are like a band. He / she may have one, two or three materials / requirements, but not all.

Q9) What are the types of unemployment?

A9)

Types of unemployment in India are:

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.

Q10) Explain the types of poverty.

A10)

 Types of poverty are:

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.