Open Economy - A Progressive Economic System

 Open-Economy - A Progressive Economic System

Free Trade and Capitalism:

Around the world, most of the economies are following capitalism i.e. no restrictions on the promotion of trade and use of ‘ease of doing business'. As the demand for goods and services is growing, capitalism is the best way to fulfill the demand and provide opportunities to traders, contractors, service providers in the economic growth of the economy. The world of today is best known for its ‘Free Trade’, also known as ‘Globalization’. India with its new industrial policy open trade for the whole world in 1991 and it nurtured technological innovations and today Indians are known around the world for their technological skills. No doubt, capitalism is the best way to ensure a high rate of economic growth. In ‘Free Trade’, the economies or markets balance the demand and supply of goods and services and as per the demand, the entrepreneurs are motivated to use the resources.

The era of Globalization promoted Privatization and fixed the inefficiencies of the public sector by incorporating the Public-Private Partnerships (PPPs). However, the major drawback, capitalism, and globalization brought, is the domination of economically powerful nations upon weaker countries of the world.

Why ‘Free Trade’ is best for Economic Growth?

It is fact that money is a great tool for motivating people for doing more work, due to greed the workers, laborers, entrepreneurs, executives work more and earn rewards or bonuses from the increase in revenues. The competition is increased and the people performing well are awarded high-paying jobs and assignments. The same had happened during the last three decades in India. However, the biggest concerns which are coming today, are environmental concerns. Due to the over-exploitation of economic resources, the developing economies are facing environmental concerns with the rising levels of various types of pollution.

Development of India:

India meets its capital and technology transfer requirements from developed nations including America, Russia, Japan, etc. Every year most Indian citizens get employment opportunities from these developed nations. Due to the support of these nations, India stays protected from terrorism and uplifts its standards of defense on the national boundaries. The Prime Minister of India visits the developed nations to strengthen the relationships and further seek the support of these nations for the upliftment of Indian citizens. The industrial policy was implemented in 1991 to increase liberalization and opened the Indian market to Multinational companies. The policy was implemented due to the pressure of sustaining good relationships with the developed nations. Due to plenty of resources, India is still growing instead of being exploited by foreign companies.

Development of China:

China is the second-largest economy in the world and is known for its competitiveness in offering products and services around the world. The political stability in China and promotion to socialism than capitalism made the nation stand separate from the other nations of the world. The major economic problem of China is poverty and with the help of reforms, it is continuously targeting the economic problem. The poverty alleviation programs of China are helping people to uplift themselves and get rid of the vicious circle of poverty.

By improving the exports of the nation, China is providing opportunities to the rural poor people to generate opportunities for self-employment. The high-quality and cost-efficient products are prepared and exported by China. The second critical problem is the large population of China. Around one-fifth of the world’s population resides in China. Instead of such critical problems of population and poverty, China is doing remarkable work in ensuring the rate of economic growth by taking necessary initiatives.

Trade War by the United States of America:

The book ‘The Wealth of Nations' which was written by a great economist, ‘Adam Smith’ explains that encouraging export and discouraging imports can reduce the current account deficit and the industries are automatically motivated to perform well in the country. Honorable President of United States, Sh. Donald Trump just after taking the charge started to do the same. The United States started a trade war by imposing higher import duties for the importers of the United States and also warned the countries not to restrict exporters to export commodities in the United States. The signal of making the United States restrict and improve the financial cash flows in the United States through raising taxes on imports. However, there is a threat that may create problems for the United States that the BRICS countries may decide to restrict trade with the United States. China being a powerful economy started to oppose the policies of the United States by restricting its trade. The foreign minister of China in March 2018 asked India to shake hands in trade. He asked if India and China known as Elephant and Dragon respectively be clubbed for trade then the countries can fight with the United States in the trade war and the power of united India-China will be Eleven instead of Two. 

Threat to open economies:

An open economy doesn't restrict its producers and traders to import and export products and services. The Chinese President Xi Jinping supports an open economy and China has emerged as a nation with maximum liberalization in trade. But there are a few initiatives that have been taken recently but are against the concept of the open economy like shutting down access to Google and Facebook in Beijing, restrictions, and removal of foreign TV shows on online portals in China, new rules for online news websites, etc. The control over online media in China and India; is really a new concern. The developing nations sometimes find disruptions from online media like in India, during the 'Jat stir' in North India, Whatsapp had been deactivated by restricting Internet connectivity for a few days. 

Role of open economies in economic progress:

Controlling online media and restricting foreign investments with targeting nations cannot be considered fair for the countries that opted to remain open economy. India and China both are leading to success due to liberalization and openness to the whole world i.e. globalization. Both economies are actively maintaining stock markets and attracting foreign investment by creating a comfort zone for the investors. The Punjab National Bank Scam through misusing SWIFT by Nirav Modi and Scam by Rotomac's Vikram Kothari again raised the concerns of corruption in the Indian economy. 

China's progress in other countries:

The claim of China's Ministry of Industry and Information Technology to clean up domestic internet, the introduction of new cyber security law, shutting down online services of video services, are the steps that are moving Facebook and Google to invest more money in India, and indirectly the benefits are coming to Indian citizens. 

India's initiatives for economic growth:

The Note-Ban, implementation of GST, and controlling inflation through increasing foreign investment, made India stand firm for getting more growth rate in coming years. The countries are competing to survive and grow faster in coming years and the concept of the open economy can be added advantage in it. It's required to utilize the technologies with safety and security because misuse of technologies can also add to corruption.

Capitalism and Trade War by the United States is a threat for the whole world:

Being an economist and expert in Financial Matters, I can predict the consequences of the present policy of the United States, on the whole world. The developing nations and underdeveloped nations would be facing great economic problems due to the trade war of the United States. The professionals, talented people, experts, of developing and underdeveloped nations are being offered lucrative packages to work in the United States and other developed nations of the world. The scientists who are great researchers and innovators are flying to developed nations to serve them and poverty is taking place with more speed in the developing and underdeveloped nations. Today, more than 40% of the doctors of developed nations like the United States, United Kingdom; are from overseas and the percentage will rise further in the coming years because it will become hard to afford the cost of medical services, professional services, and the services relating to professionals. The Asian Countries, Eastern Europe, and African countries are facing the problem of talent crunch and it will grow further. The result will be adverse for the poor countries.

What can poor countries do to defend the trade war of the United States and other Developed Nations?

It is fact that the United States and other Developed Nations are ruling poor countries through their policies and the poor countries which had adopted capitalism like India, are facing critical problems. The current account deficit and devaluation of currency are the results of it. The major point is, how such nations like India can defend the trade war of the United States and grow on their own?

The answer is to develop their own industries, their own talent to work in their countries, giving lucrative packages at par with the developed nations to the professionals by linking with their performances. The poor countries should enrich the entrepreneurship skills and give incentives to the individuals coming ahead for optimum use of resources and the taxes should be imposed on Multi-National Companies (MNCs) related to developed nations for working in the poor countries. However, it is very difficult but the only resort to defend the trade war from the United States and other developed nations are to adopt such policies. In case, the employment opportunities are increased in poor countries and it is ensured that the talented people should not escape to the rich countries; definitely, the economies will proceed on the path of prosperity and can easily ensure a higher rate of economic growth.

*Copyright © 2021 Dr. Lalit Kumar. All rights reserved.

This content is written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was published in 2019 and last updated on 18th November 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

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Social Influence and Popularity

 Social Influence and Popularity

Money comes from Popularity:

In this era of technology and social media, everyone wants to be famous in very little time. There are three most lucrative ways, kids dream to use for instant popularity and making money i.e. Become an Actor / Actress in Movies, Become a Politician, Become a Cricket Player. Earlier, the most lucrative way was to become an IAS or Doctor or Engineer. 

Money Money and Money

The idea of "Three Idiots" movie is not being used in real life even today. People are still crazy to make money even with choosing beyond the interest of their children. The annual income of IAS or Doctor or Engineer is on an average between 10 lacs to 1 Crore but the incomes of Celebrities of Cricket, Bollywood, and Politicians are in Crores. 

No doubt, their contribution is really great in uplifting the economy and the new generation also take dreams to become a celebrity for gaining prestige. But do you think, becoming celebrity for gaining prestige will uplift our nation?

Would you say unbecoming of IAS or Doctor or Engineer will help nation to get more progress if youth put efforts in becoming celebrities? Obviously No.

Then what to do to get rid of the culture making children attract to play or to participate in talent shows or to try becoming politician without being passionate for it. Let's take the time of crisis from Covid-19, the doctors come ahead as warriors to safeguard the citizens of whole nation. Take example of earthquakes, the engineers come ahead to safeguard and rebuild the nation. Take the example of corruption, the IAS community come ahead to ensure Good Governance and e-governance. The economic growth depends upon fair conduct of all economic activities, corruption-free nation however, it has become a dream for most of the countries of world. It's true if a country not get progress Socially, intellectually, culturally then strategically, it always become backward in future. Due to rise in unproductive areas of becoming celebrities,   soon the corruption will increase and honest people will not have any place in society.

Today's need of the hour is to appreciate and honor the professionals contributing in building nation including Doctors and Engineers. The spirit of nationality should be inculcated in children.

Mahatma Gandhi – An Exceptional Personality:

Everyone knows Mahatma Gandhi for Non-violence but before his social influence, he was an ordinary person who believed use of non-violence to get rid of problems of a common man. He is known for peace today due to his great contribution in making India independent from England with movements in 1947. He brought Human Rights for common man and eliminated injustice which was involved due to caste system in the societies. He influenced the social in very different ways, let us have a light upon the same:

(a) Visionary Leader:

At the time of Salt Movement, nobody imagined that a simple movement can change the perspective of British Government ruling India at that time. Indians learned a lot and proceeded to fight for freedom from the British Rule using non-violence ways and ultimately success was achieved due to entire vision of great leader Mahatma Gandhi.

(b) Simplicity in Life:

Instead of being too rich to defeat British people with only ideas of non-violence, Mahatma Gandhi was too simple to wear only clothes made from spinning yarn. The servant leadership style was used as he was serving each common man in touch with him with full devotion. Before coming to India for freedom movements, he was known for his work in South Africa. It was proved by him that with the spirit of sacrifice for others, and movements, anybody can influence the rulers.

(c) Ethics and Values in Life:

The principles of Mahatma Gandhi even today inspire the Ministers, Bureaucrats and no doubt all common men to adopt ethics and values in life. He makes the people learn not to disobey the inner voice, in the face of pressure from outside. Due to his principles, ethics and values are still in the behaviour of Indian as well as the great personalities of the world being influenced from him.

(d) Never Forget the Tenets of Mahatma Gandhi:

If anybody wants to be great social influencer, then it is must to adopt the tenets of Mahatma Gandhi in life i.e. 1. Truth, 2. Non-violence, 3. Right Means and Right Ends, 4. Primacy of Duties over Right, 5. The Deed, not the Doer, 6. True Religion, 7. Non-possession, 8. Sacrifice and Service, and 9. Nonviolent Conflict Resolution

(e) Patriotism and Nationalism:

Each child in childhood in India, is taught the lessons of Patriotism and Nationalism with the stories of Mahatma Gandhi. His exclusive contribution in fighting movements during the British rule, cannot be forgotten and he is known today with his exceptional Gandhian Thinking on which basis, Bollywood even telecast a lot of movies.

No doubt, Today India is leading to establish true democracy with following his principles in life.

Hashtag #SushantWasMurdered:

It is true that everyone wants to be famous enough to influence others in this world. After the death of Sushant Rajput, a renowned Bollywood star, a hashtag trended on Twitter #SushantWasMurdered and people came on social media to demand justice in the case of Sushant. Various renowned personalities claim that there may be mastermind behind the death of Sushant. But the same personalities have lack of courage to come in the court and say something in front of all to disclose the mystery. Noone can easily challenge the judiciary in Democratic country not due to lack of freedom but due to presence of crime.

Whether everything is to gain popularity?

Even there are people who tweeted that the case of Sushant is being promoted to gain recognition, love, and make him popular enough. Will such popularity can work for someone? Yes, it can gain sentiments of people to come ahead for proper enforcement of law and it worked well in many earlier cases.

Alarming Problems affected Economy:

The new alarming problems affecting India are Politics, Drugs, Mafia, Nepotism, and Biasness in decisions on the basis of Social Influence. More popular the personality, more the social influence is created with the help of media including Social Media platforms. The CBI Police, Court interventions, Debates on Television Channels, and most important consuming valuable time of Bollywood personalities to solve this matter; lead to huge economic loss which cannot be measured easily.

Justice Matters a lot:

Can justice be so costly in a democratic country. How to expose a mastermind behind such deaths? The role of Mafia sometimes become more influential than the fair people’s role. Identifying the right one is very critical and also difficult. No one can imagine the growth of nexus of worst people in such cases. It is rightly said, “Our Lives Begin to End the Day We Become Silent About Things That Matter”. But it is also true that we cannot raise voice in every case for every one for supporting him to get justice. Isn’t it?

Who detect what and how?

The cases of money laundering are detected by Enforcement Directorate of concerned nation. The cases of murders or crimes are investigated by Police Authorities may be CBI or FBI. The Drugs related activities are exposed by different authorities like NCB in India. The decisions are made by Judiciary and implemented by Executives. The twist is that everyone is suspected even after successful decision after consuming months in the case. And the things led to social influence on social platforms and gaining of popularity by people involved in it.

Thanks for reading my article. I hope you like it and share it with someone near to you.

*Copyright © 2020 Mrs. Rashmi. All rights reserved.

Can GST bring stability

Can GST bring economic stability 

Goods and Services Tax:

The Goods and Services Tax (GST) was implemented from 1st July 2017 and the aim of the tax was to streamline the tax collection of government by reducing the tax evasion. The traders, businessmen and people faced a lot of difficulties at the time of its implementation, but now it is bringing good results in the form of great collection of taxes. In starting, the GST had been opposed by the traders and even criticized by the experts but soon it started showing its benefits.  In October 2018, the GST collections become more than Rs. 1 Lac Crore including CGST, SGST, and IGST. The increase in collections is being seen due to festival season during the quarter. However, the number of GST return filers also increased from 60 lacs to 70 lacs during March to October 2018. The GST council tried to simplify the processes of collecting GST by arranging meetings and taking several measures during the whole year of 2018; however, cutting down the number of different rate slabs of GST can further improve the tax collections.

GST as an indicator of economic stability

Such collection of GST is a positive mark for the economic development of India. India is still dependent on foreign investments to meet its capital requirements. The collection of taxes in large amount can make it self-dependent to finance its development expenditures but that can be possible in long term because at present the economy is suffering with huge interest on debt payments everyyear. The average monthly revenue generated from GST collections during the year 2017-18 was Rs. 89885 crores. In case, the GST collections improved further, it is possible that GST bring economic stability and the nation may require to raise less loans; which will definitely improve the overall image of India. The rupee will appreciate and the investors will prefer to invest in rupee. The future of India seems bright only due to high collections of Goods and Services Tax (GST).

Challenge to deal Fake Bills

In GST, there is provision to provide input tax credit and the officials of Central GST Commissionerate and State Taxation Departments detected a lot of cases relating to "issue of fake invoices without supply of goods". There are firm's who are associated with only bill trading and are being detected by the officers. How it is possible, let us understand the concept. 

Firm A showed that it sold goods to Firm B without supplying the goods only in invoice. The firm A issued the billed to firm B with imposing GST and firm B made the payment. The tax amount in bill is availed as input tax credit. After payment, the firm B which purchased the goods (without getting any supply) returned the goods back to the firm A. These transactions are not fully in bank accounts and the cash transactions are mixed to evade the tax.

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved. 

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