Chsbp's Blog

Money- Quintessential Description

chsbp — Sun, 04 Oct 2009 04:36:16 +0000

We all want money. We work for it. We think about it. If you do not know what money is, then you should be hibernating throughout this phase of opportunistic economy. However, the task of defining what money is, where it comes from and what it’s worth belongs to only those who dedicate themselves towards the discipline of economics. Now let us take a look at the evolution of money and its multifaceted characteristics.

Firstly, before the development of a medium of exchange, people followed the barter system to obtain the goods and services they needed. It only worked when people possessed a commodity which satisfied both the parties by coming to an agreement to trade their commodities. Therefore this method lacked transferability and divisibility that makes this trade more inefficient because, you cannot divide a cow for a banana. Second stepped in what is known as commodity money. This time, people experimented with various commodities starting from dried corn to gold. The Colonialist people were known to have used beaver pelts and dried corn as their currency.

Then, after the World War II, at the Bretton Woods Conference, various countries fixed their currency to the US dollar. The US dollar was in turn fixed to gold. In 1971 the US government suspended this system as gold turned out to become very expensive. After 1971, came the fiat money, where the money is distributed by a country’s respective central bank. Reserve Bank of India (RBI) is the central bank of our country. The central bank forecasts the demand for money in its country depending upon their citizens’ demand and then prints the currency accordingly. This is a brief introduction about the evolution of money.

Now let us have a glimpse about money’s multifaceted characteristics. Money functions as a medium of exchange, a unit of account, a standard of deferred payment, and as a store of value. Money as a medium of exchange, money is used to intermediate the exchange of goods and services. As a unit of account, money is a “measure” or “standard” of relative worth used for measurement of market value of goods, services and other transactions. Store of value, money is a form, a commodity or financial capital which must be able to be reliably saved, stored, and retrieved- and be predictably useful when it is so retrieved. Finally, money as standard of deferred payment; it can be accepted to settle a debt.

Now since we had discussed what money was in the past and how money is now at present, it is important to note that money is not only essential for exchange, but also to be venerated in the society. Therefore money has to be respected, worshipped and desired, but without greed.

Indian Economy- An Overview

chsbp — Fri, 02 Oct 2009 12:50:31 +0000

Economy is defined as the state of a country in terms of production and consumption of goods and services and the supply of money. The economy in India is the 12^th largest economy in the world by market exchange reserves and the 4^th largest by purchasing power parity (PPP) basis. In India, the economy is a diverse economy encompassing traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Agriculture contributes 17.6% of the GDP while industries and services account for 29% and 53.4% of the GDP respectively.
India which was under socialist based economy became a liberal economy in 1991 during the tenure of then former Prime Minister PV Narasimha Rao. Liberalization of economy which is a market-based economy welcomes and encourages the inflows of Foreign Institutional Investor’s investment under the country’s economic norms. The UPA comeback to power in 2004 saw the economy in new hopes for all Indians. It witnessed the economy growing at the growth rate of 9.6% in 2006 and 9.2% in 2007. This growth was propelled by market reforms, huge inflows of Foreign Direct Investment, rising foreign exchange reserves, both an IT and real estate boom and a flourishing capital inflows and also contributed to high inflation which saw the prices of basic commodities at an unaffordable price. The inception of the recent global recession, during the 4^th quarters of 2007 downturned the growth to 6.6% in 2008.
Foreign Exchange Reserves is the difference between a country’s imports and exports. Foreign Exchange Reserves are essential for the stabilization of the Rupee against the Dollar so as to keep the investors intact to the Indian markets. India’s foreign exchange reserves have increased from a mere $19,553 million in March 1994 to $309,723 million in March 2008 and then fell to $253,000 million in March 2009 due to the recent recession. With more investments in the nation, the GDP per capita income increases which proportionally increases the flow of trade.
Goldman Sachs predicted that over the next 50 years, India combined with China, Russia and Brazil (BRIC nations) could become a much larger force in the world economy. India is said to dominate along with China in terms of manufacturing goods and services. This predicted growth will be mostly contributed to the presence of chunk of population in India between 15 to 35 years of age, who will dominate the world in terms of quality services and good entrepreneurship qualities. If the Indian Government maintains a persistent growth-rate of more than 6.6% in the next two decades, then India will become one of the three largest economies in the world also increasing the per capita income by 35 times the current levels. Let’s hope for the best.

HELLO READERS

chsbp — Fri, 02 Oct 2009 12:46:21 +0000

Welcome to my new and permanent blog. I have been publishing various blogs in the past but this is going to remain permanent irrespective of the topic.

Please do enjoy reading the contents of my blog and I assure you all the contents will not be fake.

Thank you.

Hello world!

chsbp — Tue, 17 Feb 2009 14:26:29 +0000

Welcome to WordPress.com. This is your first post. Edit or delete it and start blogging!