It is an Introductory macroeconomic concept, Related to Money And Inflation.

Every Government Spends Money as Their Expenditure, Some of these Spending is to buy goods and Services, And some of this is to provide transfer Payments such as pension to the citizen of Country.

As Every Expenditure needs Revenue to finance it, A Government can Finance its Spending in three ways. First, It can raise revenue through Taxes, Such as Personal and Commercial Income Taxes. Second, It can Borrow from the public by Selling Government Bonds. Third It can print Money. The Revenue by printing money is called seigniorage.

Now, How seigniorage works and It’s Implications…

When Government prints money to finance Expenditure, It Increases the Money Supply. The Increase in Money Supply, Thus increases the Inflation. Printing money to raise revenue is like imposing a Inflation Tax.

Initially inflation may not be reviewed as a Tax. As prices Rise, The Real Value of Money falls. Thus, inflation is like a tax on holding Money.

The Another Implication is Hyperinflation.

Hyperinflation is often defined as inflation that exceeds 50% per month, i.e; Inflation more than 1% daily. In hyperinflation prices Explodes. Hyperinflation causes the Sheer inconvenience of living with hyperinflation, when prices changes rapidly by large amounts, it ishard for customers to shop around for the best Prices.

Seigniorage as tax….

Issuing New Currency , rather than collecting taxes paid out of existing money sock, is then considered in effect a tax that falls on those who hold money, thus inflation of the money supply in the long run , will reduce the purchasing power of the currency.

An increase in nominal money growth leads to small reduction in real money balances. Thus, higher money growth leads to an increase in seigniorage, When nominal money growth is very high. However the reduction in real money balances induced by higher nominal money growth becomes larger and larger. Thus Seignoriage firstly increases with increase in money supply then after an optimum level decreases with increase in money supply. This phenomenon will be the replica of Laffer curve.

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We need a reform in our traffic rules, we need it? Fairly speaking no, we don’t need a bit of reform in our traffic rules what rules we have they are standardized well enough.

What we need is we have to make those people who don’t follow it make them to follow it, this is not the one man’s task. We all have to be united for the task. Not only the residents who not follow the traffic rules. We have had seen many police officials sitting in car without a seat belt, many traffic policemen and policemen on their two wheeler without wearing helmets. We can make other realize for traffic rules but what for those who are accountable for this.

Frankly speaking we don’t even require a reform in traffic rules for the normal residents of nation what we require it is for the officials who are there to make it right. Not only law can make them realize that they are also bounded to the traffic rules, We individually also have to go and ask them to wear a seat belt or helmet if we see any such thing happening near by us.

But it doesn’t mean that some traffic policemen and other policemen are not doing their job by wearing helmets and wearing seat belts we also do the same. We are here to realize them to do so and others to do the same.

But the irony in India is, We the residents of India are afraid of our police rather to feel safe from them. To do these things we have to feel safe from them. To make us feel safe We need government to make some amendments in laws which will do the need full in this regards. Further we also need some amendments in our traffic rules which includes some strict actions on the policemen who are not following the rules as well as we also need those policemen whoa re following rules to be strict on their colleagues who are not following the traffic rules.

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We Indians always used to say that our education system has nothing in it on one side and on the other side if someone makes changes in the education pattern, we are the one’s who protest against these reforms and want them to be roll backed.

It’s not the first time DU i.e; Delhi University tried to reform our higher education system. 2 years back DU came with the system of four year undergraduate program, under which students who took admission under it will have to submit two projects to the university in their final years, if it is not good for all courses but not even bad for some courses like Economics hons. If an economics hons student get a chance to write dissertations in their graduation years, their would be nothing like that.

It’s not only the the one, DU while rolling back this system also asked to give the degree of Bachelors with honors and research for those students who will pursue the degree for 4 years and for those who are not willing to pursue the degree for 4 years but for 3 will get the bachelors with honors degree. But this formula is also not excepted.

Now, Delhi University came with the new reform in the education system in DU, Which is known as Choice Based Credit System (CBCS) under which students seeking admissions in this year will be tough the modules of other courses as well as they have to prepare a dissertations in 3 years of their undergraduate which too not a bad thing for some courses, But as the same case of the 4YUP formula this system is also facing the protest of the different students council, Like NSUI and AISA.

They are willing to roll back the system as it is not good for some subjects, they might be true but the another face of coin says that it is not even bad for some courses. If they want to welfare those courses which will not be beneficial form this system the should see that this won’t will effect the courses which will be beneficial with it. The should ask faculty to roll back this system for those courses only which will not be beneficial.

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FDI i.e; Foreign Direct Investment. Any time a vital topic to be discuss on. India has many sectors facing the FDI, for example, METALLURGICAL INDUSTRIES, AUTOMOBILE INDUSTRY, POWER, DRUGS, etc.

Coming to the topic of attraction FDI in Insurance, the question came to mind is does India needs the FDI in insurance sector. The government of 2014 initiated the FDI in insurance sector, The sudden change in the approach of NDA government on the stand of Insurance Bill passed, which had been presented by the UPA government in the year 2008, which makes the resident of India to think does India really need FDI in Insurance Sector? If we do why NDA had opposed it in 2008? Not the only policy facing the such circumstances..

The answer to the question depends on the pros and cons of FDI in insurance sector…

Pros…
1, By today we have about 10 companies in insurance sector, some are ventures of Indian companies with foreign companies, FDI in Insurance sector will provide additional source of finance for insurance companies.
2, As other FDIs this will promote development of insurance sector by bringing in more products & features in this sector.
3, This FDI will enhance the performance of domestic players as the sharing of the knowledge among the foreign investors is possible.
3, Those Companies which will be funded by the foreign player in our country will have more funds in their hands as well as may have the lower cost of capital, Thus efficiency results in cheaper and better cover to end consumers/ final consumers.
4, FDI in insurance as other global policies will introduce more competition in market and make market tending towards the idle form of market, which may decrease the price of the policies as well as will enhance the service of existing domestic players.
5, As past teaches us, the competition among the players teaches came with new strategies which will fruitful in betterment of management and will increase the focus of companies on consumer satisfaction. So, ultimately the ultimate consumer will be benefitted.

cons…
1, As most of FDI policy came with the majority percentage of stake holding with the foreign Investors, this would mean the higher control by the foreign investors over the Insurance companies, Which may come with some decisions which may not be in the favour of consumer of interest.
2., FDI is the Investment that is injected in our Economy by the foreign Financial institutions or Individuals, thus some or most of the amount earned in terms of profit may move out of our economy and may be invested over the other economy or in their own country.
3, As India has its own regulatory policies over the insurance sector, thus every other country has their owns, This may be possibility that we must provide the investors with some relief on the regulations in order to encourage the foreign investors to invest in our economy.
4, As mentioned above we already had many firms into Insurance sector, which means the competition already exist in our economy, we should see it that in way to increase the competition we came over a policy which discourage the domestic players in our economy.

In last, government should see to it that ECONOMY, DOMESTIC PLAYERS & CUSTOMERS all should attain welfare, It should make the policies and terms stronger to ensure the customers do get their deserved and promised benefits, as well as domestic players will not be discouraged and economy will enhance to next level.

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The most controversial policy of UPA government which was represented in 2012 by the Finance Minister of that time P. Chidambaram. The government now had opposed this policy that time but now is supporting the as it is policy of UPA government.

Vice-Chairperson of DIPP the regulatory board for FDI in India said that from last few months India become one of the most open economy leaving only some policies like FDI in multi-brand retail.

Without opening it’s pros and cons, I would like to say that this policy was opposed by the opposition of that time BJP by saying it will be against the local confectionery stores owners. As this policy frame-work consist that the foreign investors has to produce about 70% of product they are use to sell in India.

Without Being pro UPA or pro NDA, Opposition will always oppose the policies of government.

Taking that the FDI in multi brand is not been passed as for this government decided to increase the the multi-brand outlets ran by the Indian companies for Example Big Bazaar, Shubhiksha, Reliance fresh, etc. Is these are beneficial for the local Confectionery stores?

It’s true that 100% of these companies will add to our GDP itself as compared to FDI policy, But if like other Policies of FDIs, The FDI in multi-brand retail will increase the competition among the foreigner players as well as the Domestic players which may increase our GDP and Manufacturing Sector as efficiently as the above mentioned way. It may be possible the outlets are not that easily available to the consumers as the confectionery shops are.
For instance, In Delhi-NCR region it can be possible that one foreign outlet is at Gurgaon one at Noida or one at CP, It can be possible that the local confectionery shops form a merger and compete with the foreign brands.

In last, Government should see that the investors, Local Confectionery shop owners as well as the main priority the consumer must attain the welfare, It should make such that Local Confectionery shop will flexible can form a merger if the want to make so.

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India today is one of the widest emerging market for the in e-commerce either it may B2B or B2C, we have many e-commerce companies to full-fill our daily needs. For instance, if we need cloths there are many websites from which we can order from, as FLIPKART, AMAZON and many more, thus being a good sector to be think about for enhancing it by taking out a economic Reform, FDI in e-commerce.

DIPP the regulatory board for FDI in India make some questions for the policies which are as follows….
1, Should the FDI be allowed in B2C e-commerce?
2, Should it be open for all products or only for the non-food products?
3, Should there be a minimum capitalism limit?
4, Should there be a domestic sourcing limit or if yes then how much?
5, How will retail sale under MBRT be restricted to states that have agreed to open fronted stores?
6, What should be the the routes and Caps be in FDI in B2C commerce companies? Should it be automatic up to 50%?
7, What are the likely benefits to Indian Economy?
8, What should B2C e-commerce encompass: goods, services or intellectual property?

The Answer for the question is India needs this policy of FDI is always depends on the pros and cons of the policy on our econnomy.

Pros…
1, It will provide the capital for developing the infrastructure.
2, It will promote the manufacturing sector as well, as these players took the goods directly from the manufacturers.
3, It will increase the outreach of the global best practices.
4, It will increase the competition among the domestic players, which in turn improves the consumer services

cons…
1, If government also came with the policy of Multi-brand retail it will contradict the policy, and will make other policy a futile.
2, Policy may impact small-time brick and mortar stores.
3, It may have the adverse effect on the domestic industry.’
4, Foreign players may dump their cheaper quality product in the market.

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Monetary derives from the the word Money, In every economy the monetary policies is controlled by the central bank of the country. As in US there is Federal Bank, In India we have RBI (Reserve bank of India).

All the monetary policies is directly controlled by the RBI, The common monetary policy is OPEN MARKET OPERATIONS, In open market operations RBI or any central bank buys or sell s the government bonds to control Money Supply.

When there is a need to decrease Money Supply, central banks sell the government bonds in open market, Where as if Central bank want to increase the money supply in the economy it buys the government bonds by printing the currency notes.

In this way RBI or any other central bank regulates the money supply in the economy. In economics, We study this money supply under the concept of LM.

We lastly explored that RBI is doing operation in order to make the foreign exchange rate stagnant, It is by this policy it is making it. When central bank prints money it depreciate the value of home currency as compared to the foreign currency.

Not only to increase money supply central bank prints currency even to finance the government for its deficit or to finance the fiscal deficit, central bank use to print currency notes. As central bank is the countries biggest financial institution therefore any transaction that occurs in other currency than the countries own currency, central banks always have it’s eye on it. All the payments made in foreign currency is looked after by the central bank. Central bank is the custodian of foreign reserves. Moreover Central bank also have the gold reserve in its custody to support the economy in the extreme conditions as we had observed in 1991.

In Short, Central bank acts as the backbone to any economy.

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Since, establishment of 2014 government under the leadership of Shri Modi the new phase of dealing with foreign economies to develop Indian Economy through foreign trade took place. There may be many criticism on government regarding PM’s Tour to foreign countries by the opposition but all the foreign tours end up with great news of Increasing Trade.

Before these government the tours are done by the Foreign minister often, whereas PM goes to tour rarely. The way Shri Modi addresses the foreigners by taking out the relation between the countries is so, Knowledgeable and attractive to the Foreigners that the show their interest to give financial help to India.

According, to regulatory body on FDI in india, Our economy became the one of the most globally open economy, we have most of the FDI programmes for our economy leaving FDI in multi-brand retail.

Not, Only increasing FDI is the main focus of our government the main focus is towards increasing the manufacturing sector of the nation. The program initiated by the government “Make in India” initiative is the first step towards it. The logo of this program i.e; a lion made up of machine shows the interest of nation towards it’s manufacturing sector.

Not only there is only positive side to this, as every thing has its negative sides too.

After too much policies and agreement with foreign economies our FDI input is being Decreasing. Due to which our rupee is depreciating and inflation is increasing in terms of INR, But we see that our currency is stagnant arround rs. 63 for 1 USD, for this stagnancy the credits goes to RBI. They are doing this by open market operations.

Not only, this government making the business relation with foreign countries the are also developing the friendship relation. For instance, thanking the foreign countries Higher official by tweeting it. They are also making relation with Switzerland to bring back the Black money deposited in Swiz banks.

At last, government should see to the issue of foreign exchange rate, and through increasing the FDI’s they must commute to their resident and extract the fear of being enslaved from the foreign companies, as East India Company did that time. They have to ensure that we are now way more powerful nation and having the good relation which bigger powers.

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Not being pro UPA or pro NDA, Our Economy had Faced many ups and downs in last 2-3 decades. One of the biggest fall was the 1991 crises, we all knew about the 91 crises, we were remained with only 2-3 week gold reserve to run our economy, But the policy came out from that time started the new phase of economy, That policy came out of Finance minister of that time Dr. Manmohan Singh’s Brief case is famously Known as LPG policy of 1991, Which reformed our economy from public sector economy to private sector economy, from closed economy to an Open Economy.

As this is fact that making a move like this is not a simple task for any one and this LPG policies were being excepted by our neighbors much before we did. The point here is was this a success to those, This was a success for china but wasn’t for Pakistan.

In previous decades we faced high GDP’s. GDP Of 10% for year 2008 is an example to this. Not only this Increasing GDP we had encountered, we also encountered with the depreciating INR.

Not, Going on figures, our economy had faced many policies in addition to it. We had made many policies to make both economy and social welfare such as MNERGA and many other poverty alleviation programmes, But after all this what we had seen that rich is becoming more rich and poor is becoming more poor. The gap between rich and poor is increasing day by day. The government should focus towards this.

The achievements we achieved in these years are:-
We are the worlds no. 2 in emerging economies right now in terms of GDP, we are 3rd largest economy. Not only this we were around 534 billion USD worth economy in year 2004 and in 2014 we are now around 2 trillion worth economy according to the report of world’s biggest economic institute WORLD BANK. Having average GDP of 6.3%.

At last, i wanted to end up by saying we had achieved much but much more is left to be achieved right now, For instance, we have to reduce the rich poor inequality from our Society, Corruption the biggest enemy from our society.

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Without pointing out any government about their taxing policies I just going to elaborate that what are the basic consequences of Taxation.

There are the basic terms in taxation theory which are Tax burden, Death-weight loss and laffer curve.

Tax Burden this tells whom so ever the tax is being imposed either on supplier or on consumer the tax burden will be shared by the both consumer as well as producer (except the extreme cases). It can be any ratio but it’s can’t be the whole burden on consumer or all on producer (in case of normal goods). The tax burden sharing ratio depends on the elasticity/ responsiveness of demand and supply respectively.

Now, before exploring the concepts of death-weight loss and the laffer curve, we must be knowing about the tax revenue. Tax revenue is revenue earned by the government on imposition of tax this is equal to the tax percentage imposed times the quantity of good or service being traded, In simpler words tax revenue is the income of government by which tax is being imposed.

Death-weight loss One of the main effect of government imposing the tax is Death-weight loss. Now what is death-weight loss, when government imposes tax on a good or service market is unable to trade on the it’s optimum Level or we can say at the equilibrium level of quantity, Because of the response of the member it is imposed on.

By Response of member it is imposed on, I mean

Consumer, If the tax have been initially imposed on Consumer it will raise the burden on the pocket of consumer so he will demand less on the same price levels.

Producer, If the tax have been initially imposed on Producer it will raise it cost of good or service being produced so he will supply less on the given price level.

Because of these reasons Market is not being able to trade on the optimum level hence facing death-weight loss. This loss is equal to the tax imposed times the quantity loosed out of trade.

An increase in tax rate will increase the death-weight loss. Now, some people thinks the subsidy will not cause the Death-weight loss but it will do something opposite to it, But we forget a basic rule that subsidy how and so will be financed by some kind of Tax and as we know Tax causes Death-weight loss.

Now Laffer Curve, it has been introduced by the Economist Arthur Laffer, This curve shows the relation between the tax rate and the tax revenue earned by the Government. Taking Tax rate on x-axis and tax revenue at y-axis firstly the tax revenue increases with the increase in tax rate but after some stage it declines. So that doesn’t means a government imposing tax on a good or service will increase it’s tax revenue it can show a decrease too.

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