The Indian economy.

Q&A session : Students from all degrees have asked me some important questions which I would like to share my views on.

1. Sir, your mind seems to be disturbed while you teach us, is it something which we should know?

Ans. Honestly, there are things which have happened and I'm more worried about it. In the recent past, the country has changed it's way of working. The exit of prominent economists and some great people who have resigned, makes me think why they have they done it. May be their voices weren't heard or may be they were undermined of their authority.

2. Sir, we would like to take a class off today, and discuss such matters.  We have some questions as well regarding certain things that are currently going on in our country. We would be happy if you could shed some light on it.

Ans. Yes, sure.

3. Sir, what is going on with this Ram Mandir and Babri Masjid case?

Ans. It's all-in-all a strategy which is being played by some cruel politicians, I refrain from naming them, so as to draw your attention to more important issues such as poverty and unemployment. You see we humans unlike economists (both are different people in the way they think), are fickle minded. We get attracted to more masala-news instead of serious economic issues. For example, if you see a virat-anushka question answer on their love-life in a certain magazine, you'll read that first instead of reading something on tax-evasion, or say, death of a farmer due to loans. You see how they are playing with our minds. I don't know whether Ram Mandir was there or Babri masjid, but after it's demolition, they are reviving the age old conflict. I don't know since how many years, they have been and will be palying with our minds. I believe that there are more important issues to deal with instead of such things. And it really is a disappointment why some economists aren't speaking about these topics.

4. Sir, you said something about farmer dying due to loans, what about the loan waiver policies which has been implemented?

Ans. See, as per my example, which I had given earlier as well, this policy is going to be a short run solution to the farmer's distress. And this short-term solution is less in magnitude to the losses incurred in the long-run. The example goes as follows, Say a poor farmer needs to buy a tractor which costs say Rs. 4 lakhs. Now, you must be knowing that even in the case of farmers there are divisions such as rich and poor. So, if the waiver is given out, then say it would cost Rs. 2 lakhs (suppose), now this 2 lakh rupees is still a huge amount for a poor farmer, and then who will get the benefit? The rich one. See, this is my own personal view, which I think. And moreover, I had read an article by Mr. Raghuram Rajan, even he is against this waiver policy, so I think my view regarding this is somewhat similar to his.

5. Sir, what do you think about the political turmoil going on between parties, and whether our financial status is good?

Ans. I generally don't mix politics with economics. But we can still talk about it. It happens every time whenever there is a change in the government. Every 5-year things change, perceptions change, every party wants to sit on the throne. While fighting for the throne with which comes power and responsibility, they have forgotten the basic idea as to why in the first place they are wanting to sit. They have forgotten to provide authentic service to the nation. They have forgotten that it is to help those in need with utmost sincerity, and to try to eradicate poverty and unemployment, and along with trying to increase the standard of living in our country. They are so much engrossed and obsessed with having authority that they have forgotten that the inequality in our economy is huge which needs help.
For the next part of the question, I have been saying this since a year or so, that our fiscal balance is going on a negative side, which is likely to get even more, because the govt is wholly depending on the loan from RBI which has led to fiscal deficit on a large scale. Currently the ministry of finance hasn't given out the data for it, so I am unable to quote the exact data, but I know that there is a huge fiscal deficit which needs to be reduced.

6. Sir, one last question on your article on growth and development which you have published. I have seen people unable to understand what you are trying to say, and may be that's why they have commented negatively implying a dislike to your thinking, do you have something to say?

Ans. I would like to quote a saying from a renowned professor. “When almost all the gains from growth go to the top, the middle class doesn’t have the purchasing power necessary for buoyant growth, which means high unemployment. Slow growth and high unemployment hit the poor especially hard because they’re the first to be fired, last to be hired, and most likely to bear the brunt of declining wages and benefits.” Robert Reich, Berkeley prof, former Secretary of Labor. And if you notice, this is exactly the case going on. You belong to a middle class family, and you don't know anything about a poor man's life. When you go to a shop to buy sugar, or mustard oil, it costs say Rs. 40 and Rs. 110 respectively. You just whine that the price has increased, but you still buy it. Why? Because you have the purchasing power to buy it, you have got the income to buy it. Think about this from the perspective of a group of potential buyers having a very low real income. As a matter of fact, there are still some who are unable to acquire even the basic necessityne of life. Trust me, I was on a trip to Amarkantak and I happened to be eating Lays (American style) chips, when a boy asked me what is this thing that I'm eating and I was taken aback for it was a thing that we consume almost everyday. This is the situation of our country, and people would still criticize my views because they are unable to understand what I'm talking about. They would one day realize when they will experience it first hand. This is the harsh truth which we need to accept and try to change things for the betterment of our nation as a whole..

Modi as an economist! (Beware: Sarcasm used)

Let me start off with a concept popularly known as " there is nothing called free lunch in economics." The modi government and all it's people under his " Modi-Raj " lack the basic knowledge about economics. If they had, they would know that students of class 11 have a chapter called " Growth and Development."

I teach all my students that development is a more wider term than growth. Modi talks about " aankda " ( growth rates, as per economic theory ). He speaks a lot about growth rates, basically growths in GDP. I have a question to ask the government, and as per my right to speak and ask questions, I ask the ruling party, to give me the basic definition of GDP and why GDP is more important as a measure of economic well-being ?

Again, I teach my students from 12th standard that GDP is not a good measure of economic well-being. Then this means that according to Mr.Modi, whatever economic theory explains and teaches us are worthless and swiftly goes down the gutter!

Now let me give some basic points on what is important. Let me teach the ruling party some basics of economics because I feel that they lack the knowledge about what economics actually is!

Let's first talk about that chapter Growth and Development, and later I'll discuss about the economic well-being of the society as a whole.

Firstly, let me be truthful to you unlike the government, you can have growth without development. Yes! You heard it right. You can grow without developing the country. And growth is nothing but the concept of GDP itself. So, basically when you talk about growth, you can say GDP, hence, Growth=GDP. This is why people talk about GDP and only GDP. Now what is GDP? It is the total value of all the final goods and services produced in an economy during a certain period of time, generally a year. Now this boils down to a question produced by whom? And the answer is produced by the 3 sectors in any economy namely, Agricultural sector (the Primary sector), Manufacturing sector (the secondary sector), and the Service sector (the tertiary sector). So, basically, if all the 3 sectors produce more and more worth of G&S (Goods & Services), your country is growing, and this is what Mr. Modi wants to prove to the nation. Growth takes place when there is an improvement in technology, improvement in tools and capitals, etc.

Now, secondly, let us come to what is not present in the above concept. DEVELOPMENT ! This term is bigger in size and alphabets and as well as wider and is much more important than Growth. Development takes into account improvement in education, literacy rates, health and environmental standards, building of hospitals, schools, bridges, etc. Increased life expectancy, and GDP as well. So, basically if you pay more heed on development your " aankda- growth rates " will automatically increase. And this would further lead to a reduction in poverty, unemployment and slum dwellers. Hence, clearly, DEVELOPMENT is a better measure of economic well-being rather than Growth.
This answers our second question on well-being of an economy.

You'll see him speaking about the Indian army, the URI attacks, surgical strikes, demonetization, and everything else, but he has never spoken about how to alleviate poverty, how to make the lives of the people better. He speaks about Ram mandir, and never ever spoke anything on employment, on peace!

I am not against the modi government, I'm against their way of doing things. I don't care about the government. Whoever rules, whether it's Rahul Gandhi or Modi. I just care about my country. I don't want anything negative happening in our economy.

You spent 3000 Crore of the currency just to make a statue. What kind of economics are you playing, Sir?! Is this the way people will get employment? Is this the way poverty would be tackled and possibly alleviated? Is this the way you'll make our lives better?

Note : The article written is entirely the author's view on his nation. And he has all the right to speak as equally as everyone else in the country. Peace!

Any comment is heartily accepted, but kindly don't deviate from the topic. You don't have to bring other things, like GST and demonetization! Those are different topics to deal with. Please talk about growths and development.