Labour, Income And Growth In The Global Economy: Fill & Download for Free

The opposition is partially right when it calls the state of the Indian economy as “worst”, but it exaggerates when it says it is “ruined”.India’s economy is doing poorly on several fronts. The data bears it out:Overall growth rates: Over the last 20 years, India’s annual growth was 6.6%. During the first quarters in this financial year, annual growth was 5.7 % and 6% respectively. Even if growth picks up in the next two quarters India’s growth is unlikely to exceed 6.5%. Worrying ? You bet!Exports have dragged: For the period April-Nov 2017, our exports grew up by 12.3% while many emerging economies like Indonesia and Vietnam grew by 16 and 24%. Now even with 12%, growth , the total annual exports as of April 2018 will be lower with corresponding figures in April 2014. The total increment in exports between April 2014 and April 2018 is NEGATIVE. India’s exports have not responded to improvements in global economy adequatelyTrade deficit with China: The trade deficit with China is growing rapidly. India's trade deficit with China stood at USD 36.73 billion during the first seven months of the current fiscal (April-October) compared to USD 51.11 billion in the financial year 2016-17 . While it has reduced marginally, the fact of the matter is that Chinese exports to India rely strongly on manufactured items for use in fast expanding sectors like telecom and power, while India's exports to China are characterised by primary and intermediate products [1].Farm distress: The rural distress is worsening. There is only so much farm loan waivers possible and the BJP has avoided any structural reform here. In the case of rural wages, while the growth is higher than the growth of 5% and 3.1% seen in the previous years (October 2016 and 2015, respectively), it is well below the growth of 17% and 17.6% growth in nominal wages witnessed in October 2014 and 2013, respectively, implying stressed farm incomes and sluggish labour demand. This is despite the ballooning agricultural credit budget.Source: AGRICOOP Annual Reports, India Budget.PSB recapitalisation: The govt is all set to infuse Rs. 2.1 trillion into the public sector banks. It is 1.3% of India’s GDP. The norms followed for such a large capital infusion is not clear.SENSEX touching new heights:Though the current conditions seem to indicate that the bull market is still on, but the valuations are very stretched. Many savvy analysts have given a melt-down a distinct possibility.Footnotes[1] http:////economictimes.indiatimes.com/articleshow/62124469.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Globalization and colonization are the reasons “The West” is thriving.When you talk about the West, I assume you are referring to North America and Europe; both of which were built on colonial wars and imperialism, as well as prioritizing their competitive advantages in the manufacturing industries, and exporting to the rest of the world, thus, creating the early manufacturing powerhouse known as Europe and the United States.Globalization hasn’t backfired for the West, but with recent developments in the global economy, there are definitely some new obstacles that must be overcome in order for North America to remain competitive.Obstacles To Effective Globalization In 2017Since its emergence in the 1870’s the industrial revolution mainly benefited the West. Colonial powers in Europe had more capital to work with than anywhere else on the planet, other than the US. These two regions emerged as world leaders in economic and military development. Since the Industrial revolution began, it is to no surprise that the only global ‘Superpowers’ have been that of the United Kingdom, the US, Russia, and even Germany perhaps for a short-lived period.Asia failed to implement the benefits of the industrial revolution and took much longer to develop than the West due to political instability, widespread poverty, and a lacklustre labour force due to the over-supply of labour because the region has been overpopulated for hundreds of years.However, a shift in the global economy is happening before our eyes.The West’s competitive advantage, even in hi-tech industries such as pharmaceuticals and technology, is quickly withering away. The welfare and health entitlements to which we have become accustomed look ever more unaffordable, while the final-salary pensions that workers could once expect as reward for a lifetime of service are now confined to the public sector – and those too will surely be gone within 10 years. It is small wonder that the benefits of free trade are now so widely questioned.Americans are on average no better off than they were 30 years ago; in Britain, real disposable incomes are in the midst of a 14-year freeze. Vast tracts of gainful employment in textiles, potteries, shoe-making, machine tools and many other industries have disappeared, to be replaced by the languishing financial services industry, the housing market, and the emerging technology industry.Here’s where I see globalization potentially backfiring for the West. By opening up the global economy to Asia, Latin America and Eastern Europe, the West seems to have surrendered some of its competitive advantage in the global economy, which has hampered our living standards. After a brief number of years in which globalization made everything seemingly cheaper, the terms of trade have moved badly against the West.Sure, the world as a whole is getting richer. But most of the economic growth and subsequent benefits have gone to the developing world and in the already rich, West, where the highly educated and talented can reap the benefits of globalization. The wealth divide has widened to record levels across the globe, but is expected to narrow.The system of globalization only works if everyone plays by a common set of rules and standards. Individuals help company’s produce goods and services so that they can pay their own bills. While company’s help entire economies stay competitive by specializing in what they are most productive in, and producing those goods and services for the rest of the world.Where did Globalization Go Wrong?Many countries have just copied from the West’s impeccable model of capitalism and used cheap labour for competitive advantage.The Chinese have managed to make their mark on the international economy by exploiting cheap labour and lobbying the world’s largest manufacturer hub for textiles to be exported across the globe. But China isn’t going to get serious about labour rights and intellectual property rights until they are inventing more things than they steal, and that isn’t going to happen for quite some time, or at least when they can eradicate more of their immense poverty.You could say globalization has backfired for the West due to the outsourcing of jobs, but this is merely what happens when capitalism is performing the way its meant to; company’s exploit their comparative advantages, and try to find the cheapest, and most efficient means of producing their goods and services. Consequently, the very thing that got the West rich, is now tearing down their economic fabric through the outsourcing of labour and emerging economies in Asia.Ceteris Paribus, the world needs urgently to embrace new forms of multi-lateralism and co-operation if it is not to slip back into an age of protectionist infighting.Unsustainable trade imbalances are the major underlying cause of today’s rolling series of debt crises in advanced economies.In the long run, all nations must become better balanced and self-reliant. It was madness to outsource so much of what we used to do to foreign climes, just as it is unsustainable for China and other surplus nations to rely on ever-growing exports.Where are the jobs going to come from, it is often despairingly asked, in Western economies? There’s a simple, if challenging answer: by returning to the way we were and doing more things locally.Thanks for reading! If you want to read more about economics, make sure to visit my website, The Global Millennial.

The whole world is in a synchronised lockdown. Both advanced and developing economies are grappling with recession precipitated by the Covid-19 crisis.The IMF World Economic Outlook growth projections present a grim reality in terms of the annual percentage change in the real GDP. The Eurozone leading the projected de-growth estimates in the year 2020 at minus 7.5 per cent and modest projected growth of 4.7 per cent next year, assuming that global recovery starts in the second half of the year 2020.In India’s context, there is some light at the end of the tunnel with growth projected at 1.9 per cent in 2020 and 7.4 per cent in 2021, as against a contraction of the global economy projected at least minus 3 per cent in 2020 and 5.8 per cent growth in 2021.While there is hope for a quick recovery in India, we have to make concerted efforts to realise this including an integrated multi-pronged approach through public policy support, private sector participation and citizens’ support.RBI has already stepped up announcing measures to infuse much-needed liquidity apart from incentivising banks to encourage credit flows via NBFCs, HFCs and MFIs to the MSME and consumer segments (auto and housing) to counter the severe impact on MSME cash flows and sustainability.In addition, the government needs to step in decisively and lead the turnaround through focused public policy and public spending.Unlike the 2008 financial crisis, this time the crisis has hit harder as the lockdown has jammed all production and operational activities, in particular the Business to Company (B2C) channel with severe impact on labour, employment, supply chain, capacity utilisation, overheads and cost of capital.Moratorium on loans provided relief to some extent, but much more will be needed to preserve the production capacities, which can help kickstart the economy post lockdown.The developed countries are pumping in enormous amounts of money in shoring up the household incomes and such measures need to be evaluated by the Indian government.There is an urgent need to support not only lives but livelihoods as well. Preservation of livelihood requires us to resume production and operations as soon as possible.Restarting economyThe government should consider the resumption of work on infrastructure and construction projects all over the country that was abruptly halted due to the lockdown. This will have the immediate effect of creating employment and ensure wages to labourers.Supply chain disruption globally has driven multinational companies to look at diversifying their supply chains. Japan recently announced setting up of a $2.2-billion fund to help its manufacturers shift production out of China. US, too, has indicated a strong intent to diversify manufacturing away from China. IIndia needs to step up as a viable alternative. For manufacturing a strong infrastructure base is crucial. The government should consider:1. A task force to provide single clearance window as a point of approval, common application and approval forms for licenses, warehousing and easy compliances.2. Easy availability of land and power through land acquisition reforms and impetus to renewable energy capacity building.3. Fiscal incentives could be linked to job creation like income tax relief to companies employing more than 1,000 labourers in the manufacturing sector.4. Robust dispute resolution mechanism that exhibits a strong commitment to align with International arbitration decisions.However, the entire value chain should be scrutinised to be mindful of the possible impact of both the upstream and downstream activities with particular emphasis on diversification of the supply chain.This will prevent over-dependence on any one source or distribution channel to subsequently reduce piling up of inventories in the near term on account of the serious slowdown in exports.Opportunity for IndiaThis anti-China sentiment should be viewed as an opportunity for India that could be monetised by positioning India as an able contender to service the value chains and attract FDI.This will bring about a global realignment depending on how the geopolitics plays out in the post-Covid world.The job losses due to the economic fallout originating from Covid-19 pandemic also presents a unique opportunity for India — the availability of skilled and trained labour to anyone looking to manufacture in India.The government and Indian companies could partner to ensure that the people that lose their jobs are available to MNCs looking to shift base into India and thus provide Indian companies and labour immediately relief.To emerge as a leader in the global supply chain in the post-Covid-19 era, India needs to act fast, as here too China has the first-mover advantage; its economy is up and running and the rest of the world is still reeling under the impact of Covid-19.While China may retain a chunk of the market share in the global supply space, India is well-positioned to step in as an alternative global manufacturing hub for the world, given its emergence as a credible economy and the support it has provided to the global community during the pandemic. Will we step up?