Vision for Introducing this Course

Courses have been designed for the students willing to embark on to an illustrious journey to the World of Commerce. Subjects like Accountancy, Business Studies, Commerce & Economics have been explained by qualified professionals Academician.Optional subjects like mathematics and entrepreneurship are also taught by professionals

Subjects Offered: Compulsory Subjects : Accountancy, Business Studies, English, Economics Optional Subjects : Mathematics and Enterpreneurship.

Subjects Offered: Accountancy, Business Studies, Commerce, Economics, English, Mathematics and Entrepreneurship

  • Professional Faculty
  • Practical Approach
  • Dedicated App



    • Subjects Teachers
    Accounts CA Gayatri Sethy
    Business Studies CMA Ajay Deep Wadhwa
    Economics CMA Gour Bandhu Gupta
    English Anjana Gupta (M.A English) (B.ED)
    Mathematics CMA Gour Bandhu Gupta
    Enterpreneurship CMA Gour Bandhu Gupta
    Co-ordinator CMA Tapan Banerjee

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    Syllabus

      Section A Reading Skills

      Reading Comprehension through Unseen Passage – 20 Marks
      a)One unseen passage to assess comprehension, interpretation and inference. Vocabulary and inference of meaning will also be assessed. The passage may be factual, descriptive or literary.
      b)One unseen case-based passage with verbal/visual inputs like statistical data, charts etc.

      Section B Creative Writing Skills – 20 Marks The section has Short and Long writing tasks.

      The section has Short and Long writing tasks.
      a)Notice up to 50 words. One out of the two given questions is to be answered. (5 Marks: Format: 1 / Organisation of Ideas: 1/Content: 2 / Accuracy of Spelling and Grammar: 1 ).
      b)Formal/Informal Invitation and Reply up to 50 words. One out of the two given questions is to be answered.
      c)Letters based on verbal/visual input are to be answered in approximately 120-150 words. Letter types include an application for a job with bio-data or a resume. Letters to the editor (giving suggestions or opinions on issues of public interest). One out of the two given questions is to be answered.
      d)Article/ Report Writing, descriptive and analytical in nature, based on verbal inputs, to be answered in 120-150 words. One out of the two given questions to be.
      Reference to the Context
      a)One Poetry extracts out of two from the book Flamingo to assess comprehension, interpretation, analysis and appreciation.
      b)One Prose extract out of two from the book Vistas to assess comprehension, interpretation, analysis and appreciation.
      c)One prose extracts out of two from the book Flamingo to assess comprehension, interpretation and analysis.

      Flamingo: English Reader published by National Council of Education Research and training, New Delhi

      Prose
      The Last Lesson
      Lost Spring
      Deep Water
      The Rattrap
      Indigo
      Poets and Pancakes
      The Interview
      Going Places
      Poetry
      My Mother at Sixty-Six
      Keeping Quiet
      A Thing of Beauty
      A Roadside Stand
      Aunt Jennifer’s Tigers
      Vistas:
      The Third Level
      The Tiger King
      Journey to the end of the Earth
      The Enemy
      On the Face of It
      Memories of Childhood
      The Cutting of My Long Hair
      We Too Are Human Beings

      Part A – Accounting for Partnership Firms and Companies

      Unit 1: Accounting for Partnership Firms
      Partnership: features, Partnership Deed.
      Provisions of the Indian Partnership Act 1932 in the absence of partnership deed.
      Fixed v/s fluctuating capital accounts. Preparation of Profit and Loss Appropriation account- division of profit among partners, guarantee of profits.Past adjustments (relating to interest on capital, interest on drawing, salary and profit sharing ratio).
      Goodwill: nature, factors affecting and methods of valuation – average profit, super profit and capitalization.
      Accounting for Partnership firms – Reconstitution and Dissolution
      Change in the Profit Sharing Ratio among the existing partners – sacrificing ratio, gaining ratio, accounting for revaluation of assets and reassessment of liabilities and treatment of reserves, accumulated profits and losses. Preparation of revaluation account and balance sheet.
      Admission of a partner – effect of admission of a partner on change in the profit sharing ratio, treatment of goodwill (as per AS 26), treatment for revaluation of assets and reassessment of liabilities, treatment of reserves, accumulated profits and losses, adjustment of capital accounts and preparation of capital, current account and balance sheet.
      Retirement and death of a partner: effect of retirement / death of a partner on change in profit sharing ratio, treatment of goodwill (as per AS 26), treatment for revaluation of assets and reassessment of liabilities,
      adjustment of accumulated profits, losses and reserves, adjustment of capital accounts and preparation of capital, current account and balance sheet. Preparation of loan account of the retiring partner.
      Calculation of deceased partner’s share of profit till the date of death. Preparation of deceased partner’s capital account and his executor’s account
      Dissolution of a partnership firm: meaning of dissolution of partnership and partnership firm, types of dissolution of a firm. Settlement of accounts – preparation of realization account, and other related accounts: capital accounts of partners and cash/bank a/c (excluding piecemeal distribution, sale to a company and insolvency of partner(s)).
      Note: (i) If the realized value of tangible assets is not given it should be considered as realized at book value itself.
      (ii) If the realized value of intangible assets is not given it should be considered as nil (zero value).
      (ii) In case, the realization expenses are borne by a partner, clear indication should be given regarding the payment thereof.
      Unit-3 Accounting for Companies
      Accounting for Share Capital
      Features and types of companies
      Share and share capital: nature and types.
      Accounting for share capital: issue and allotment of equity and preferences shares. Public subscription of shares – over subscription and under subscription of shares; issue at par and at premium, calls in advance and arrears (excluding interest), issue of shares for consideration other than cash.
      Concept of Private Placement and Employee Stock Option Plan (ESOP).
      Accounting treatment of forfeiture and reissue of shares.
      Disclosure of share capital in the Balance Sheet of a company.
      Accounting for Debentures
      Debentures: Meaning, types, Issue of debentures at par, at a premium and at a discount. Issue of debentures for consideration other than cash; Issue of debentures with terms of redemption; debentures as collateral security-concept, interest on debentures. Writing off discount / loss on issue of debentures.
      Note: Discount or loss on issue of debentures to be written off in the year debentures are allotted from Security Premium Reserve (if it exists) and then from Statement of Profit and Loss as Financial Cost (AS 16)

      Part B: Financial Statement Analysis

      Unit 4: Analysis of Financial Statements
      Financial statements of a Company: Meaning, Nature, Uses and importance of financial Statement
      Statement of Profit and Loss and Balance Sheet in prescribed form with major headings and sub headings (as per Schedule III to the Companies Act, 2013)
      Note: Exceptional items, extraordinary items and profit (loss) from discontinued operations are excluded
      Financial Statement Analysis: Meaning, Significance Objectives, importance and limitations.
      Tools for Financial Statement Analysis: Cash flow analysis, ratio analysis.
      Accounting Ratios: Meaning, Objectives, Advantages, classification and computation.
      Liquidity Ratios: Current ratio and Quick ratio.
      Solvency Ratios: Debt to Equity Ratio, Total Asset to Debt Ratio, Proprietary Ratio and Interest Coverage Ratio. Debt to Capital Employed Ratio.
      Activity Ratios: Inventory Turnover Ratio, Trade Receivables Turnover Ratio, Trade Payables Turnover Ratio, Fixed Asset Turnover Ratio, Net Asset Turnover Ratio and Working Capital Turnover Ratio.
      Profitability Ratios: Gross Profit Ratio, Operating Ratio, Operating Profit Ratio, Net Profit Ratio and Return on Investment.
      Unit 5: Cash Flow Statement
      Meaning, objectives Benefits, Cash and CashEquivalents, Classification of Activities and preparation (as per AS 3 (Revised) (Indirect Method only)
      Note:
      (i) Adjustments relating to depreciation and amortization, profit or loss on sale of assets including investments, dividend (both final and interim) and tax.
      (ii) Bank overdraft and cash credit to be treated as short term borrowings.
      (iii) Current Investments to be taken as Marketable securities unless otherwise specified.

      OR

        Part B: Computerised Accounting

        Unit 4: Computerised Accounting
        Overview of Computerised Accounting System
        Introduction: Application in Accounting.
        Features of Computerised Accounting System.
        Structure of CAS.
        Software Packages: Generic; Specific; Tailored.
        Accounting Application of Electronic Spreadsheet
        Concept of electronic spreadsheet.
        Features offered by electronic spreadsheet.
        Application in generating accounting information – bank reconciliation statement; asset accounting; loan repayment of loan schedule, ratio analysis
        Data representation- graphs, charts and diagrams.
        Using Computerized Accounting System.
        Steps in installation of CAS, codification and Hierarchy of account heads, creation of accounts.
        Data: Entry, validation and verification.
        Adjusting entries, preparation of balance sheet, profit and loss account with closing entries and opening entries.
        Need and security features of the system.

      Part A – Accounting for Partnership Firms and Companies

      1. Relations and Functions
      Types of relations: reflexive, symmetric, transitive and equivalence relations. One to one and onto functions
      2. Inverse Trigonometric Functions
      Definition, range, domain, principal value branch. Graphs of inverse trigonometric functions.
      Unit-II: Algebra
      1. Matrices
      Concept, notation, order, equality, types of matrices, zero and identity matrix, transpose of a matrix, symmetric and skew symmetric matrices. Operation on matrices: Addition and multiplication and multiplication with a scalar. Simple properties of addition, multiplication and scalar multiplication. Oncommutativity of multiplication of matrices and existence of non-zero matrices whose product is the zero matrix (restrict to square matrices of order 2). Invertible matrices and proof of the uniqueness of inverse, if it exists; (Here all matrices will have real entries).
      2. Determinants
      Determinant of a square matrix (up to 3 x 3 matrices), minors, co-factors and applications of determinants in finding the area of a triangle. Adjoint and inverse of a square matrix. Consistency, inconsistency and number of solutions of system of linear equations by examples, solving system of linear equations in two or three variables (having unique solution) using inverse of a matrix.
      Unit-III: Calculus
      1. Continuity and Differentiability
      Continuity and differentiability, derivative of composite functions, chain rule, derivative of inverse trigonometric functions, derivative of implicit functions. Concept of exponential and logarithmic functions. Derivatives of logarithmic and exponential functions. Logarithmic differentiation, derivative of functions expressed in parametric forms. Second order derivatives.
      2. Applications of Derivatives
      Applications of derivatives: rate of change of bodies, increasing/decreasing functions, maxima and minima (first derivative test motivated geometrically and second derivative test given as a provable tool). Simple problems (that illustrate basic principles and understanding of the subject as well as real life situations).
      3. Integrals
      Integration as inverse process of differentiation. Integration of a variety of functions by substitution, by partial fractions and by parts, Evaluation of simple integrals of the following types and problems based on them. Fundamental Theorem of Calculus (without proof). Basic properties of definite integrals and evaluation of definite integrals.
      4. Applications of the Integrals
      Applications in finding the area under simple curves, especially lines, circles/ parabolas/ellipses (in standard form only).
      5. Differential Equations
      Definition, order and degree, general and particular solutions of a differential equation. Solution of differential equations by method of separation of variables, solutions of homogeneous differential equations of first order and first degree. Solutions of linear differential equation.
      Unit-IV: Vectors and Three-Dimensional Geometry
      1. Vectors
      Vectors and scalars, magnitude and direction of a vector. Direction cosines and direction ratios of a vector. Types of vectors (equal, unit, zero, parallel and collinear vectors), position vector of a point, negative of a vector, components of a vector, addition of vectors, multiplication of a vector by a scalar, position vector of a point dividing a line segment in a given ratio. Definition, Geometrical Interpretation, properties and application of scalar (dot) product of vectors, vector (cross) product of vectors.
      2. Three – dimensional Geometry
      Direction cosines and direction ratios of a line joining two points. Cartesian equation and vector equation of a line, skew lines, shortest distance between two lines. Angle between two lines.
      Unit-V: Linear Programming
      Introduction, related terminology such as constraints, objective function, optimization, different types of linear programming (L.P.) problems. graphical method of solution for problems in two variables, feasible and infeasible regions (bounded), feasible and infeasible solutions, optimal feasible solutions (up to three non-trivial constraints).
      Unit-VI: Probability
      1. Probability
      Conditional probability, multiplication theorem on probability, independent events, total probability, Bayes’ theorem, Random variable and its probability distribution, mean of random variable.

      Part A: Principles and Functions of Management

      Unit 1: Nature and Significance of Management
      Management – concept, objectives, and importance
      Management as Science, Art and Profession
      Levels of Management
      Management functions-planning, organising, staffing, directing and controlling
      Coordination- concept and importance
      Unit 2: Principles of Management
      Principles of Management- concept and significance
      Fayol’s principles of management
      Taylor’s Scientific management- principles and techniques
      Unit 3: Business Environment
      Business Environment- concept and importance
      Dimensions of Business Environment,Economic, Social, Technological, Political and Legal
      Demonetization – concept and features
      Unit 4: Planning
      Concept, importance and limitation
      Planning process
      Single use and standing plans. Objectives, Strategy, Policy, Procedure, method Rule, budget and Programme
      Unit 5: Organising
      Concept and importance
      Organising Process
      Structure of organisation- functional and divisional concept. Formal and informal organisation- concept
      Delegation: concept, elements and importance
      Decentralisation: concept and importance
      Unit 6: Staffing
      Concept and importance of staffing
      Staffing as a part of Human Resource Management concept
      Staffing process
      Recruitment process
      Selection – process
      Training and Development – Concept and importance, Methods of training – on the job and off the job – vestibule training, apprenticeship training and internship training
      Unit 7: Directing
      Concept and importance
      Elements of Directing
      Motivation – concept, Maslow’s hierarchy of needs, Financial and non-financial incentives
      Leadership – concept, styles – authoritative, democratic and laissez faire
      Communication – concept, formal and informal communication; barriers to effective communication, how to overcome the barriers
      Unit 8: Controlling
      Concept:
      Controlling – Concept and importance
      Relationship between planning and controlling
      Steps in process of control

      Unit 9: Financial Management
      Concept:
      Concept, role and objectives of Financial Management
      Financial decisions: investment, financing and dividend- Meaning and factors affecting
      Financial Planning – concept and importance
      Capital Structure – concept and factors affecting capital structure
      Fixed and Working Capital – Concept and factors affecting their requirements
      Unit 10: Financial Markets
      Financial Markets: Concept
      Money market: Concept
      Capital market and its types (primary and secondary)
      Stock Exchange – Functions and trading procedure
      Securities and Exchange Board of India (SEBI) – objectives and functions
      Unit 11: Marketing
      Concepts:
      Marketing – Concept, functions and philosophies
      Marketing Mix – Concept and elements
      Product – branding, labelling and packaging – Concept
      Price – Concept, Factors determining price
      Physical Distribution – concept, components and channels of distribution
      Promotion – Concept and elements; Advertising, Personal Selling, Sales Promotion and Public Relations
      Unit 12: Consumer Protection
      Concept:
      Concept and importance of consumer protection
      Consumer Protection Act 2019:
      Meaning of consumer
      Rights and responsibilities of consumers
      Who can file a complaint?
      Redressal machinery
      Remedies available
      Consumer awareness – Role of consumer organizations and Non-Governmental Organizations (NGOs)

      Part A: Introductory Macroeconomics

      Unit 1: National Income and Related Aggregates
      What is Macroeconomics?
      Basic concepts in macroeconomics: consumption goods, capital goods, final goods, intermediate goods; stocks and flows; gross investment and depreciation.
      Circular flow of income (two sector model); Methods of calculating National Income – Value Added or Product method, Expenditure method, Income method.
      Aggregates related to National Income:
      Gross National Product (GNP), Net National Product (NNP), Gross Domestic Product (GDP) and Net Domestic Product (NDP) – at market price, at factor cost; Real and Nominal GDP.
      GDP and Welfare
      Unit 2: Money and Banking
      Money – meaning and functions, supply of money – Currency held by the public and net demand deposits held by commercial banks.
      Money creation by the commercial banking system.
      Central bank and its functions (example of the Reserve Bank of India): Bank of issue, Govt. Bank, Banker’s Bank, Control of Credit through Bank Rate, CRR, SLR, Repo Rate and Reverse Repo Rate, Open Market Operations, Margin requirement.
      Unit 3: Determination of Income and Employment
      Aggregate demand and its components.
      Propensity to consume and propensity to save (average and marginal).
      Short-run equilibrium output; investment multiplier and its mechanism.
      Meaning of full employment and involuntary unemployment.
      Problems of excess demand and deficient demand; measures to correct them – changes in government spending, taxes and money supply.
      Unit 4: Government Budget and the Economy
      Government budget – meaning, objectives and components.
      Classification of receipts – revenue receipts and capital receipts;
      Classification of expenditure – revenue expenditure and capital expenditure.
      Balanced, Surplus and Deficit Budget – measures of government deficit.
      Unit 5: Balance of Payments
      Balance of payments account – meaning and components;
      Balance of payments – Surplus and Deficit
      Foreign exchange rate – meaning of fixed and flexible rates and managed floating.
      Determination of exchange rate in a free market, Merits and demerits of flexible and fixed exchange rate.
      Managed Floating exchange rate system

      Part B: Indian Economic Development

      Unit 6: Development Experience (1947-90) and Economic Reforms since 1991
      A brief introduction of the state of Indian economy on the eve of independence.
      Indian economic system and common goals of Five Year Plans.
      Main features, problems and policies of agriculture (institutional aspects and new agricultural strategy), industry (IPR 1956; SSI – role & importance) and foreign trade.
      Economic Reforms since 1991:
      Features and appraisals of liberalisation, globalisation and privatisation (LPG policy);
      Concepts of demonetization and GS
      Unit 7: Current challenges facing Indian Economy
      Human Capital Formation: How people become resource; Role of human capital in economic development; Growth of Education Sector in India
      Rural development: Key issues – credit and marketing – role of cooperatives; agricultural diversification; alternative farming – organic farming
      Employment: Growth and changes in work force participation rate in formal and informal sectors; problems and policies
      Sustainable Economic Development: Meaning, Effects of Economic Development on Resources and Environment, including global warming
      Unit 8: Development Experience of India
      A comparison with neighbours
      India and Pakistan
      India and China
      Issues: economic growth, population, sectoral development and other Human Development Indicators

      COURSE CONTENT

      Unit 1: Entrepreneurial Opportunity
      Conteompetencies- Scanning the environment; Analytical and logical thinking; Innovation and creativity; Decision making; self-confidence.
      Contents
      Sensing Entrepreneurial Opportunities
      Environment Scanning
      Problem Identification
      Idea fields
      Spotting Trends
      Creativity and Innovation
      Selecting the Right Opportunity
      Unit 2: Entrepreneur Planning
      Competencies: Analytical and critical thinking; personal responsibility; determination; Resourceful; collaboration Contents
      Contents
      Forms of business organization- Sole proprietorship, Partnership, Company
      Business Plan: concept, format.
      Components:
      Organisational plan;
      Operational plan;
      Production plan;
      Financial plan;
      Marketing plan;
      Human Resource planning
      Unit 3: Enterprise Marketing
      Competencies: Persistence, Negotiation, Collaboration, Ethical behavior, team spirit;
      Contents
      Marketing and Sales Strategy
      Branding, Logo, Tagline
      Promotion Strategy
      Unit 4: Enterprise Growth Strategies
      Competencies: Need for achievement, Initiative, Analytical thinking, risk vs reward, collaboration, synergy, leadership,
      Contents
      Franchising: Concept and types
      Franchising: Advantages and limitations to franchisor and franchisee.
      Mergers and Acquisition: Concept, reasons and types.
      Reasons for mergers and acquisitions
      Unit 5: Business Arithmetic
      Competencies: Arithmetic skills, critical analysis, decision making, self-confidence, problem solving.
      Contents
      Unit of Sale, Unit Cost for multiple products or services
      Break even Analysis for multiple products or services
      Computation of Working Capital
      Inventory Control and EOQ
      Return on Investment (ROI) and Return on Equity (ROE)
      Unit 6: Resource Mobilization
      Competencies: Risk taking, Communication, Persuasion, Networking, Ethical behavior
      Contents
      Capital Market: Concept
      Primary market: Concept, methods of issue
      Angel Investor: Features
      Venture Capital: Features, funding.

    Study Material

      LESSON PLAN:-01

      Management – concept:
      i) Traditional Concept Management is the art of getting things done through others.
      (ii) Modern Concept Management is defined as the process (refers to the basic steps) to get the things done with the aim of achieving goals effectively and efficiently (effectiveness refers to achievement of task on time and efficiently implies optimum use of resources).
      DEFINITIONS: Management According to Marrie and Douglas,
      “Management is the process by which a co-operative group directs actions of others toward common goals.”
      Management is defined as the process of planning, organising and controlling an organisation’s operations in order to achieve the target efficiently and effectively. It is essential for all organisations.
      Objectives:Objectives can be classified into organisational, social or personal
      (i) Organisational Objectives
      (a) Survival It exists for a long time in the competition market.
      (b) Profit It provides a vital incentive for the continued successful operations.
      (c) Growth Success of an organisation is measured by growth and expansion of activities.
      (ii) Social Objectives Involves creation of benefit for society.
      (iii) Personal Objectives Objectives of employees like good salary, promotion, social recognition, healthy working conditions.
      Importance:
      (i) Management Helps Achieving Group Goals It integrates the objective of individual along with organisational goal.
      (ii) Management Increases Efficiency It increases productivity through better planning, organising, directing the activities of the organisation.
      (iii) Management Creates a Dynamic Organisation Organisation have to survive in dynamic environment thus manager keep changes in the organisation to match environmental changes.
      (iv) Management Helps in Achieving Personal Objectives Through motivation and leadership, management helps in achieving the personal objectives.
      (v) Management Helps in the Development of Society It provides good quality products and services, creates employment, generate new technology in that sense it helps in the development of the society.
      Management as Science, Art and Profession:
      Management as an Art
      Management as an art because it satisfies following points
      (i) It is based on practice and creativity.
      (ii) Lots of literature is present which gives the existence of theoretical knowledge. Management as a Science
      Management as a science because
      (i) It is a systematised body of knowledge.
      (ii) Its principles are based on experimentation.
      Management as a Profession It does not meet the exact criterion of a profession, it does have some features of a profession.
      Levels of Management
      i) Top Management It consists of senior most executives who are usually referred to as the Chairman, Chief Executive Officer, President and Vice President.
      (ii) Middle Management They are usually division heads who are the link between top and lower level of management.
      (iii) Operational Management They are usually the foremen and supervisors who actually carry on the work or perform the activities.
      Management functions-planning, organising, staffing, directing and controlling
      Functions of Management
      (i) Planning It refers to deciding in advance what to do, how to do and developing a may of achieving goal efficiently and effectively.
      (ii) Organising It refers to the assigning of duties, grouping tasks, establishing authority and allocating of resources required to carry out a specific plan.
      (iii) Staffing It implies right people for the right job.
      (iv) Directing It involves leading, influencing, motivating employees to perform the task assigned to them.
      (v) Controlling It refers to the performance measurement and follow up actions that keep the actual performance on the path of plan.
      Coordination- concept: Co-ordination means binding together all the activities such as purchase, production, sales, finance to ensure continuity in the working of the organisation. It is considered as a separate function of management, in order to achieve harmony among individual, efforts towards the accomplishment of goods.
      Importance:
      (i) Growth in Size When there is a growth in size, the number of people employed by the organisation also increases. Thus to integrate the efforts, co-ordination is needed.
      (ii) Functional Differentiation In an organisation, there are separate department and different goals. The process of linking these activities is achieved by co-ordination.
      (iii) Specialisation Modern organisation is characterised by a high degree of specialisation. Co-ordination is required among different specialists because of their different approaches, judgement etc.

      LESSON PLAN:-02

      Principles of Management- concept : These are the statements of fundamental truth, they serve as a guide to thought and actions for managerial decision actions and their execution.
      Significance:
      (i) Providing managers with useful insight in to reality
      (ii) Optimum utilisation of the resources
      (iii) Scientific decisions
      (iv) Meeting changing environment requirements
      (v) Fulfilling social responsibility
      (vi) Management training, education and research
      Fayol’s principles of management:
      (i) Principle of division of work
      (ii) Principle of authority and responsibility
      (iii) Principle of discipline
      (iv) Principle of unity of command
      (v) Unity of direction
      (vi) Subordination of individual interest to general interest
      (vii) Remuneration of employees
      (viii) Centralisation and decentralisation
      (ix) Scalar chain
      (x) Order
      (xi) Equity
      (xii) Stability of personal
      (xiii) Initiative
      (xiv) Espirit de Corps
      Taylor’s Scientific management- According to Taylor, “Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and cheapest way.”
      Principles:(i) Science, not rule of thumb
      (ii) Harmony, not discord
      (iii) Co-operation, not individualism
      (iv) Development of workers to their greatest efficiency and prosperity
      Techniques:
      (i) Functional Foremanship In this technique, Taylor suggested the division of factory in two departments
      (a) Planning Department
      ¦ Route clerk
      ¦ Instruction card clerk
      ¦Time and cost clerk
      ¦ Disciplinarian
      (b) Operational Department
      ¦ Gang boss & Speed boss
      ¦ Repair boss
      ¦ Inspector
      (ii) Standardisation and Simplification of Work
      Standardisation output possible if standard is maintained right from selection of tools, equipment and machine to use.
      Simplification emphasises on elimination of unnecessary diversity of product, size and type.
      (iii) Fatigue Study This technique of scientific management is conducted to find out
      (a) The frequency of rest intervals
      (b) The duration of rest intervals
      (c) The number of rest intervals
      (iv) Method Study This technique find out the one best method or way of performing the job.
      (v) Time Study The objectives of time study are
      (a) The standard time required to perform a job.
      (b) Setting up the standard target of the workers.
      (c) Determining the number of workers required to perform a job.
      (d) Categorising the workers into efficient and inefficient employees.
      (vi) Motion Study To conduct motion study, Taylor suggested to observe an average worker when he is performing the job and note down all the movements he is doing.
      (vii) Differential Piece Wage System This technique emphasis on paying different rate of wage for efficient and inefficient employees.
      (viii) Mental Revolution The objectives of mental revolution are
      (a) Co-operation between workers and management.
      (b) Change in mental attitudes of workers and management towards each other.
      Business Environment- concept: Business environment as such is the total of all external forces which affect the organisation and operation of business.
      Importance:
      (i) Environment Provides Numerous Opportunities for Business Success It enables the firm to identify opportunities and getting the first mover advantage.
      (ii) Threats and Early Warning Signals Environmental awareness can help managers to identify various threats on time and serve as an early warning signal.
      (iii) It Helps in Tapping Useful Resources Environment is a source of various resources for running a business. Like as finance, machines, raw materials etc.
      (iv) It Helps in Copying with Rapid Changes Knowledge of environmental changes sensitises the management to make new strategy to copy with the emerging problems of changes.
      (v) It Helps in Assisting in Planning and Policy Formulation Its understanding and analysis can be the basis for deciding the future course of action or training guidelines for decision making.
      (vi) It helps in Improving Performance With continuous scan of business environment, companies can easily improve their performance.
      Dimensions of Business Environment:
      i) Economic Environment It consists of Gross Domestic product, Income at National level and per capita level. Profit earning rate, monetary and fiscal policy of the government etc.
      (ii) Social Environment It consists of the customs and traditions of the society in which business is existing. It includes the standard of living, taste, preferences etc.
      (iii) Political Environment It constitutes all the factors related to government affairs such as type of government, power, attitude of government towards different groups of societies etc.
      (iv) Legal Environment It constitutes the laws and various legislations passed in the parliament. Like as Trade Mark Act, Essential Commodity Act, Weights and Measures Act etc.
      (v) Technological Environment It refers to changes taking place in the method of production, use of equipments and machineries to improves the quality of product.
      Demonetization – concept: When a currency is stripped of its legal status and replaced with a new currency, it is known as demonetization. It is also interpreted as a shift on the part of the government indicating that tax evasion will no longer be tolerated or accepted. The government of India, announced the demonetization on November 8, 2016, with profound implications for the Indian economy. The government decided that the two largest denomination notes, Rs. 500 and Rs. 1000 were ‘demonetized’ with immediate effect, ceasing to be legal tender except for a few specified purposes such as paying utility bills. This led to eight-six percent of the money in circulation bills. The people of India had to deposit the invalid currency in the banks, which came along with the restrictions placed on cash withdrawals. The aim of demonetization was to control corruption, counterfeiting the use of high denomination notes for illegal activities, and especially the increase of black money generated by income that has not been paid to the tax authorities.
      The reasons behind taking the step of demonetization are as follows:
      To curb the circulation of fake currency in the economy
      To tackle corruption due to currency upholds
      To make idle money productive and help in reducing corruption crime
      To promote a cashless society and bring transparency to financial transactions
      Features:
      1.Demonetization is seen as a tax administration measure. Cash that was there with the people from their income by performing legal activities, was instantly deposited in the bank in order to exchange against the new notes. But people with the money earned through illegal activities, i.e. the black money had to pay taxes with the penalty rate as their money was unaccountable. It was also made clear by the government that demonetization was a change on their part, showing that tax evasion will no longer be tolerated or accepted.
      2.Demonetization led to the withdrawal of nearly 86% of currency in circulation. As per the report of the income tax department, an undisclosed income over Rs. 9,334 crore between November 9, 2016 to February 2017 was reported.
      3.It promoted the variable service of launching a mass awareness campaign against black money. It reduced the informal transactions in the economy.
      4.Demonetization facilitates channelizing savings into the formal financial system. As a result, some of the new deposit schemes offered by the banks continued to provide base loans at the lower interest that can be used for launching new profitable schemes.
      5.Demonetization also helped in creating a less-cash economy by bringing an understanding within the general people, i.e., channeling more savings through the formal financial system and improving tax compliance that would improve more chances of a cash-lite economy. This would help in introducing a formal economy in our country.

      LESSON PLAN:-03

      Planning Concept: Planning can be defined as “thinking in advance what is to be done, when it is to be done, how it is to be done and by whom it should be done.”
      According to Fayol, “Planning is chalking out plan of action, i.e., the result envisaged in the line of action to be followed, the stages to go through the methods to use.”
      Importance:
      (i) Planning Provides Directions Planning provides the directions to the efforts of employees. Planning makes clear what employees have to do, how to do etc.
      (ii) Planning Reduces the Risk Uncertainty Planning helps the manager to face the uncertainty because planners try to force the future by making some assumptions. The plans are made to over come uncertainties.
      (iii) Planning Reduces Over Lapping and Wasteful Activities Planning evaluates the alternatives uses of the available and prospective resources of the business and makes their must appropriate use.
      (iv) Planning Promotes Innovative Ideas Planning requires high thinking and it is an intellectual process. So it makes the managers innovative and creative.
      (v) Planning Facilitates Decision Making Planning helps the managers to look in to the future and make a choice from amongst various alternative courses of action.
      (vi) Planning Establishes Standards for Controlling It has predetermined goal with which the actual performances are compared to find out deviation and suggest remedial measures.
      Limitation:
      (i) Planning Leads to Rigidity Once plans are made to decide the future course of action the manager may not be in a position to change them.
      (ii) Planning May Not Work in a Dynamic Environment Business environment is very dynamic as there are continuously changes. It becomes very difficult to forecast these future changes. Plans may fail if the changes are very frequent.
      (iii) Planning Reduces Creativity With the planning the managers of the organisation start working rigidly and they become the blind followers of the plan only.
      (iv) Planning Involves Huge Costs Planning process involves lot of cost because it is an intellectual process and companies need to hire the professional experts to carry on this process.
      (v) Planning is a Time Consuming Success Lot of time is needed in developing planning premises.
      (vi) Planning does not Guarantee Success Planning only provides a base for analysing future. It is not a solution for future course of action.
      Planning process:
      (i) Setting Objectives In planning function manager begin with setting up of objectives because all the policies, procedures and methods are framed for achieving objectives only.
      (ii) Developing Premises Premises refers to making assumptions regarding future. The assumptions are made on the basis of forecasting. Forecast is the technique of gathering information.
      (iii) Identifying Alternative Courses of Action After setting up of objectives the managers make a list of alternatives through which the organisation can achieve its objectives.
      (iv) Evaluating Alternative Courses After making the list of various alternatives along with the assumptions supporting them the manager starts evaluating each and every alternative.
      (v) Selecting an Alternative The best alternative is selected but as such there is no mathematical formula to select the best alternative. Some times instead of selecting one alternative a combination of different alternatives can also be selected.
      (vi) Implementing the Plan This is the step where other managerial functions also come in to the picture. The step is concerned with putting the plan into action i.e., doing what is required.
      (vii) Follow-up Action Planning is a continuous process so the manager’s job does not get over simply by putting the plan into action. The manager monitor the plan carefully while it is implemented.
      Single use and standing plans:Standing Plans are plans which are made for activities or events which occur regularly. Single-Use Plans are plans which are made for activities or events which do not occur regularly.
      Objectives: Objectives are the ends towards which the activities are directed. They are the end result of every activity, e.g., increase in sale by 10%.
      Strategy: A strategy is a comprehensive plan to achieve the organisational objectives.
      Policy: A strategy is a comprehensive plan to achieve the organisational objectives.
      Procedure: Procedures are required steps established in advance to handle future conditions. The procedure can be defined as the exact manner in which an activity has to be accomplished.
      Method: Methods provide the prescribed ways or manner in which a task has to be performed considering the objective.
      Rule: Rules are specific statements that inform what is to be done. They do not allow for any flexibility or discreation.
      Budget: A budget is a statement of expected results expressed in numerical terms.
      Programme: Programme are detailed statements about a project which outlines the objectives, policies, procedures, rules.
      Organising Concept: Identifying and grouping different activities in the organisation and bringing together the physical, financial and human resources to establish most productive relations for the achievement of specific goal of organisation.
      According to Henry Fayol, “To organise a business is to provide it with everything useful to its functioning; raw materials, machines and tools, capital and personnel.”
      Importance:
      (i) Benefits of specialisation
      (ii) Clarity in working relationships
      (iii) Optimum utilisation of resources
      (iv) Adaptation to change
      (v) Effective administration
      (vi) Development of personnel
      (vii) Expansion and growth
      Organising Process:Organising refers to a process consisting of a series of steps to identify and group various activities, collect or assemble various resources and establish authority relationships with responsibility amongst job positions.
      Structure of organisation- It can be defined as “Network of job positions, responsibilities and authority at different levels.”
      The considerations to be kept in mind while farming the organisational structure are
      (i) Job design
      (ii) Departmentation
      The considerations to be kept in mind while farming the organisational structure are
      (i) Job design
      (ii) Departmentation
      (iii) Span of management
      (iv) Delegation of authority
      Functional structure:
      (i) Functional structure It is an organisational structure which is formed by grouping of jobs of similar nature under various functional departments.
      Advantages of functio>nal structure are:
      i)It promotes control and coordination within a department.
      ii)It is the most logical, time proven form of organisation structure.
      iii)It leads to minimal duplication of effort, which results in economies of sacle and this lowers cost.
      iv)It ensures that different functions get due attention.
      Disadvantages of functional structure are:
      (a) It becomes difficult to hold a particular department responsible for any problem.
      It may lead to inflexibility as people with same skills and knowledge may develop a narrow perspective.
      A functional structure places less emphasis on overall enterprise objectives than the objectives pursued by a functional head.
      Divisional structure:Divisional structure Under the divisional structure an organisation is divided into different divisions or units on the basis of products or geographical area.
      Advantages of divisional structure are:
      Decisions are taken much faster in divisional structure.
      It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.
      It leads to specialisation of physical facilities and human talent.
      Disadvantages of divisional structure are:
      There is a duplication of physical facilities and functions.
      It suffers from the under utillisation of plan capacity.
      Conflict may arise between different divisions on allocation of funds and other resources.
      Formal and informal organisation- concept:
      An organisation created by the management in the form of structure of authority is called formal organisation. An organisation born out of mutual relations is called informal organisation and it emerges automatically.
      Delegation: concept: “A process of entrusting responsibility and authority to the subordinates and creating accountability on those employees who are entrusted responsibility and authority.”
      Elements:
      (i) Responsibility It means the work assigned to an individual. It includes all the physical and mental activities to be performed by the employees at a particular job position.
      (ii) Authority It means power to take decision. To carry on the responsibility every employee need to have some authority.
      (iii) Accountability It means subordinates will be answerable for the non-completion of the task.
      Importance:
      Delegation is important in an organisation due to the following reasons
      . Delegation of authority allows more time for managers to concentrate on the tasks that are of higher importance for the organisation. Also, delegation allows for changing of the routine work which brings a sense of freedom.
      2. When authority is delegated by a superior to a subordinate, the subordinate gets to learn new work which helps in the growth of the employee and provides an opportunity to develop new skills that can improve the chances of promotion.
      3.When superiors delegate any function to the subordinates, it motivates the subordinates as they feel trusted and appreciated in the organisation. The direct benefit of this is improvement in employee morale and productivity.
      Decentralisation: concept: Decentralisation explains the manner in which decision making responsibilities are divided among hierarchical level.
      Importance: (i) Develops initiative among subordinate
      (ii) Develops managerial talent for the future
      (iii) Quick decision making
      (iv) Relief to top management
      (v) Facilitates growth
      (vi)Better Control

      LESSON PLAN:-04

      Staffing Concept: It consists of manpower planning, recruitment, selection, training, compensation, promotion and maintenance of managerial personnel.
      According to Dale Yoder, “Staffing is that phase of the management which deals with the effective control and use of manpower or human resources.”
      Importance of staffing:
      (i) Filling the roles by obtaining competent personal
      (ii) Placing right person at the right job
      (iii) Growth of enterprise
      (iv) Optimum utilisation of human resources
      (v) Helps in competing
      (vi) Improves job satisfaction and morale of employees
      (vii) Key to effectiveness of other functions
      Staffing as a part of Human Resource Management concept: When staffing function is carried on at a large scale, it becomes human resource management.
      Activities of Human Resource Management
      (i) Human resource planning
      (ii) Recruitment, selection and placement
      (iii) Career growth
      (iv) Performance appraisal
      (v) Motivation
      (vi) Compensation
      (vii) Social security
      Staffing process: The steps involved in the staffing process are
      (i) Estimating the manpower requirements
      (ii) Recruitment
      (iii) Selection
      (iv) Placement and orientation
      (v) Training and development
      (vi) Performance appraisal
      (vii) Promotion and career planning (viii) Compensation
      Recruitment process:
      Selection – It can be defined as discovering most promising and most suitable candidate to fill up the vacant job position in the organisation.
      Selection process: (i) Preliminary screening
      (ii) Selection test
      (a) Intelligence test
      (b) Aptitude test
      (c) Personality test
      (d) Trade test
      (e) Interest test
      (iii) Employment interview
      (iv) Reference and background cheeks
      (v) Selection decision
      (vi) Medical examination
      (vii) Job offer
      (viii) Contract of employment
      Training and Development – Concept: Training means equipping the employees with the required skill to perform the job.
      (ii) Development: It refers to overall growth of the employee. It focuses on personal growth and successful employees development.
      Importance:
      (i) Reduced learning time
      (ii) Better performance
      (iii) Attitude formation
      (iv) Aids in or help in solving operational problems
      (v) Managing manpower need
      Methods of training – on the job:
      (a) Apprenticeship programmes (b) Coaching
      (c) Internship training (d) Job rotation Off the Job Methods
      (a) Classroom lectures
      (b) Films
      (c) Case study
      (d) Computer modelling
      (e) Vestibule training
      (f) Programmed instruction
      Vestibule training:Vestibule training is on-the-job training in which technical personnel are taught how to utilise tools and machines in a simulated environment. This type of training is often known as 'near the job training' because it involves the creation of a simulated work environment near the primary production plant.
      Apprenticeship training: It is a type of programme, in which people seeking to become plumbers, electricians etc are required to work under the supervision of an experienced guide for the prescribed amount of time under his guidance. The period of training may often vary from two to five years.
      Internship training:A joint programme of training in which educational institutes and business firms impart training to selected candidates to gain practical work experience. Job rotation The trainee is systematically transferred from one job/rotation to another so that he may get varied experience.
      DirectingConcept: Directing function of management is concerned with instructing, guiding, inspiring and motivating the employees in the organisation so that their efforts result in achievement of organisational goal.
      According to Ernest Dale, “Directing is telling people what to do and seeing that they do it to the best of their ability.”
      Characteristics of Directing
      (i) It initiates action.
      (ii) Continuing function.
      (iii) It takes place at every level.
      (iv) It flow from top to bottom.
      (v) It is performance oriented.
      (vi) It is human element.
      Importance:
      (i) To initiate action
      (ii) To integrate employees efforts
      (iii) Means of motivation
      (iv) Balance in the organisation
      (v) To facilitate change
      Elements of Directing: There are four main elements of directing
      (i) Supervision (ii) Motivation
      (iii) Leadership (iv) Communication
      Supervision :The supervision means instructing, guiding, monitoring and observing the employees while they are performing jobs in the organisation.
      (i) Role of Supervisor
      (a) Role of mediator or linking pin
      (b) Role of a guide
      Motivation – concept:
      Motivation can be defined as stimulating, inspiring and inducing the employees to perform to their best capacity. Motivation is a psychological term which means it can not be forced on employees.
      Maslow’s hierarchy of needs:Maslow’s Need Hierarchy theory Need or the desire is a very important elements in motivation because the employees get motivated only for their needs.
      Maslow has given a sequence or hierarchy of needs in the follows way
      (i) Physiological needs
      (ii) Safety and security needs
      (iii) Social or belonging needs
      (iv) Esteem needs
      (v) Self-actualisation needs
      Financial incentives: Incentive means all measures which are used to motivate people to improve performance. These incentives may be broadly classified
      (i) Financial Incentives The reward or incentive which can be calculated in terms of money is known as monetary incentive.
      The common monetary incentives are
      (a) Pay and allowances
      (b) Profit sharing
      (c) Co-Partnership/stock option
      (d) Bonus
      (e) Commission
      (f) Suggestion system
      (g) Productivity linked with wage incentives
      (h) Retirement benefits
      (i) Perks/Fringe benefits/perquisites
      Non-financial incentives: The incentives which cannot be calculated in terms of money are known as non-financial incentives.
      The common non-financial incentives are
      (a) Status
      (b) Organisational climate
      (c) Career advancement
      (d) Job enrichment
      (e) Employees recognition
      (f) Job security
      (g) Employee’s participation
      (h) Autonomy/Employee empowerment
      Leadership – concept: It is a process of influencing the behaviour of people at work towards the achievement of specified goal.
      (i) Features of Leadership
      (a) It indicates the ability of an individual to influence others.
      (b) It tries to bring change in behaviour.
      (c) It shows interpersonal relationship between leader and followers.
      (d) It is to achieve common goal.
      (e) It is a continuous process.
      Styles –
      Authoritative: The autocratic style of leadership is also known as authoritative style or directive style of leadership, in which the autocratic leader retains most of the authority for himself/herself. An autocratic leader gives orders to his/her subordinates and expects that subordinates should give complete obedience to the orders issued. In this type, the decisions are taken by the leader without consulting others.
      Democratic: This style of leadership is also known as participative style of leadership. In this style, the subordinates are also involved in decision making. The democratic style of leadership can be further categorized into three types:
      Consensus: A consensus leader makes a decision only after consulting the group members. A decision is not made final until all the members agree with the decisions
      Consultative: A consultative leader takes the opinion of the employees before making a decision
      Democratic: In the democratic style, the final authority of making decisions rests with the subordinates.
      Laissez faire: The Laissez-Faire leadership is also known as free-reign leadership. In this style of leadership, the decision making power is completely left with the subordinates. The leader’s involvement in making decision is minimized and the people are allowed to make their own decisions.
      Communication – concept: Communication is a process that is an essential part of directing process that means the exchange of ideas, thoughts, views, facts, knowledge, figures, etc. This transfer of information of any kind and getting a response for the same is known as the process of communication.
      Elements of Communication:
      1. Sender: Who conveys his thoughts or ideas.
      2. Message: Ideas, feelings, suggestions, order etc.
      3. Encoding: Converting the message into communication symbols such as words/pictures etc.
      4. Media: Path/Channel through which encoded message is transmitted to receiver e.g., face to face, phone call, internet etc.
      5. Decoding: Converting encoded symbols of the sender.
      6. Receiver: Who receives communication of the sender.
      7. Feedback: All those actions of receiver indicating that he has received and understood the message of the sender.
      8. Noise: Some obstruction or hindrance to communication like poor telephone connection, inattentive receiver.
      Barriers to effective communication:
      Semantic Barriers: Concerned with problems and obstructions in the process of encoding or decoding of message into words or impressions. Semantic barriers are as follows:
      1. Badly expressed message: Sometimes intended meaning may not be conveyed.
      2. Words with different meanings confuses the receiver.
      3. Faulty translations may transfer wrong messages.
      4. Unclarified assumption: Different interpretations may result in confusion.
      5. Technical Jargon: Technical words may not be understood by the workers.
      Psychological/Emotional barriers
      1. Premature evaluation- judgement before listening leads to misunderstanding.
      2. Lack of attention/poor listening may disappoint the employees.
      3. Loss by transmission and poor retention: When oral communication passes through various levels it destroys the structure of the message or leads to transmission of inaccurate message.
      4. Distrust: If the parties do not believe each other. They cannot understand each other’s message in its original sense.
      Organizational Barriers
      Factors related to organization structure:
      1. If organizational policy does not support free flow of information it creates problem.
      2. Rules and regulations: Rigid rules and regulations may lead to red tapism and delay of action.
      3. Status conscious managers may not allow subordinates to express their feelings freely.
      4. Complexity in organization structure results in delay and distortion.
      Personal Barriers: of superiors and subordinates.
      1. Fear of challenge to authority may withhold or suppress a particular communication.
      2. Lack of confidence of superior in his subordinates.
      3. Unwillingness to communicate. e.g., fear of punishment/demotion.
      4. Lack of proper incentives stops the subordinates to offer useful suggestions.
      How to overcome the barriers:
      1. Clarify the ideas before communication.
      2. Communicate according to the needs of receiver.
      3. Consult others before communicating.
      4. Be aware of language, tone and content of message.
      5. Ensure proper feedback. Feedback provides opportunity for suggestions and criticism.
      6. Follow up communication helps to remove hurdles, misunderstanding of information given by managers to subordination.
      7. Be a good listener.
      Controlling – Concept: It can be defined as comparison of actual performance with the planned performance.
      According to Ricky W Griffin, “Controlling function leads to goal achievement, an organisation without effective control is not likely to reach its goals.”
      Importance:
      (i) Helps in achieving organisational goods
      (ii) Judging accuracy of standards
      (iii) Making efficient use of resources
      (iv) Improving employee motivation
      (v) Ensures order and discipline
      (vi) Facilitate co-ordination in action
      (vii) Controlling help in minimising the errors
      Relationship between planning and controlling:
      (i) Planning and controlling are interdependent and interlinked activities.
      (ii) Planning and controlling both are forward looking function.
      Steps in process of control:
      (i) Setting performance standards: The first step in the controlling process is to set the performance standards.
      Standards are those criteria, on which the actual performances are measured. These standards serve as a benchmark towards which an organisation strives to work.
      (ii) Measurement of actual performance: After the establishment of standards, the next step is measuring the actual performance with the set standards. This can be done by opting several methods like personal observation, sample checking, performance reports, etc.
      (iii) Comparison of actual performance with standards: In this step, the actual performances are compared with the established standards. Such comparisons reveal the deviation between planned and actual results.
      (iv) Analysing deviations: At this stage, acceptable and non-acceptable deviations are analysed.
      Two methods are generally used:
      (a) Critical point control: It means keeping the focus on key result areas where deviations are not acceptable and they should be attended on a priority basis.
      (b) Management by exception: It means that if a manager tries to control everything, he may end up in controlling nothing. Thus, he should first handle the significant deviations, which require his priority.
      (v) Taking corrective action: The most important step in the controlling process is taking corrective actions. After the deviations and their causes are analysed, the task is to remove the hurdles from the actual work plan. The purpose of this step is to bring the actual performance up to the level of expectations by taking corrective measures.

      LESSON PLAN:-05

      Financial Management Concept: It refers to efficient acquisition of finance, efficient utilisation of finance and efficient distributing and disposal of surplus for smooth working of company.
      According to Howard and Upton, “Financial management involves the application of general management principles to a particular financial operation.
      Role and objectives of Financial Management:
      Role of Financial Management
      (i) Size and composition of fixed assets
      (ii) Amount and composition of current assets
      (iii) The amount of long term and short financing
      (iv) Fixing debt equity ratio in capital
      (v) All items in Profit and Loss account
      Objective of Financial Management
      i)Profit maximization: This was the primary objective of firms which are concerned with the increasing earning per share (EPS) of the company. It is also the traditional objectives of the financial management that focuses on the fact that all the financial efforts should be made to increase the overall profit of the company,
      ii)Wealth maximization: Financial management mainly aims to maximize shareholders' wealth which is also referred to as wealth-maximization. This objective focuses on increasing the overall shareholder wealth of the company, by directing the financing efforts on increasing the share price of the company. Higher the share price, higher is the wealth of the shareholders. The goal of financial management in this is to optimize the current value of the company's equity shares. The market price of the shares of the company are highly influenced by the financial decisions of the company.
      Other objectives: There can be other objectives such as optimum utilisation of financial resources, choosing the most appropriate source, ensuring easy availability of funds at reasonable costs etc.
      Financial decisions: The financial functions relate to three major decisions which every finance manager has to take
      (i) Investment decision
      (ii) Financing decision
      (iii) Dividend decision
      Investment Decision (Capital Budgeting Decision)
      This decision relates to careful selection of assets in which funds will be invested by the firms.
      Factors affecting investment/capital budgeting decisions are
      (i) Cash flow of the project (ii) Return on investment
      (iii) Risk involved (iv) Investment criteria
      Factors affecting Capital budgeting decisions.
      There are a huge number of ventures and businesses available in the market for the purpose of investment. It is important to evaluate each and every venture carefully to assess the profitability and return on investment. The factors affecting the decisions are:
      1.Cash flow of the project: It is important to analyse the pattern of cash flows in terms of inflows and outflows over a period of time.
      2.Rate of return: This is one of the most important factors to be considered before investing in any venture. These are based on expected returns and the risk involved in each proposal.
      3.The investment criteria involved: It is important to evaluate various investment proposals by considering factors like interest rate, cash flows, etc.
      Financing Decision This relates to composition of various securities in the capital structure of the company. Mainly sources of finance can be divided in to two categories
      (i) Owners fund
      (ii) Borrowed fund
      Factors affecting financing decisions are
      (i) Cost (ii) Risk
      (iii) Cash flow position (iv) Control consideration (v) Floatation cost (vi) Fixed operating cost
      (vii) State of capital market
      Factors affecting Financing Decision
      1.Cost: Cost of raising funds influences the financing decisions. A prudent financial manager selects the cheapest source of finance.
      2.Risk: Each source of finance has a different degree of risk. For example, borrowed funds have high financial risk as compared to equity capital.
      3.Floatation cost: A finance manager estimates the flotation cost of various sources and selects the source with least flotation cost.
      4.Cash Flow position of the company: A business with a strong cash flow position prefers to raise funds from debts as it can easily pay interest and the principal.
      5.Fixed operating costs: For a business with high operating cost, funds must be raised from equity and lower debt financing would be better.
      6.Control consideration: A company would prefer debt financing if it wants to retain complete control of the business with the existing shareholders. On the other hand if a company is ready to lose control, it can raise funds from equity.
      Dividend Decision This relates to distribution of profit earned. The major alternatives are to retain the earnings or to distribute to the shareholders.
      Factors affecting dividend decisions are
      (i) Earning
      (ii) Stability of earning
      (iii) Cash flow position
      (iv) Growth opportunities
      (v) Stability of dividend
      (vi) Preference of shareholders
      (vii) Taxation policy
      (viii) Access to capital market consideration
      (ix) Legal restrictions
      (x) Contractual constraints
      (xi) Stock market reaction
      Factors affecting dividend decision
      1.Amount of earning: Dividend represents the share of profits distributed amongst shareholders. Thus, earning is a major determinant of dividend decisions.
      2.Stability Earnings: A company with stable earnings is not only in a position to declare higher dividend but also maintain the rate of dividend in the long run.
      3.Stability of Dividends: In order to maintain dividend per share a company prefers to declare the same rate of dividend to its shareholders.
      4.Growth Opportunities: The growing companies prefer to retain a larger share of profits to finance their investment requirements, hence they prefer distributing less dividends.
      5.Cash Flow position: A profitable company is in a position to declare dividend but it may have liquidity problems as a result of which it may not be in a position to pay dividends to its shareholders.
      6.Shareholders' Preference: Management of a company takes into consideration its shareholders expectations for dividend and try to take dividend decisions accordingly.
      7.Taxation policy: Dividends are a tax free income for shareholders but the company has to pay tax on the share of profit distributed as dividend.
      8.Legal Constraints: Every company is required to adhere to the restrictions and provisions laid by the companies Act regarding dividend payouts.
      9.Contractual Constraints: Sometimes companies are required to enter into contractual agreements with their lenders with respect to the payment of dividend in future.
      10.Stock Market: A bull or bear market, also affects the dividend decision of the firm.
      Financial Planning – concept: It means deciding in advance how much to spend, on what to spend according to the funds at your disposal.
      Importance:
      (i) It facilitates collection of optimum funds.
      (ii) It helps in fixing the most appropriate capital structure.
      (iii) Helps in investing finance in right projects.
      (iv) Helps in operational activities.
      (v) Base for financial control.
      (vi) Helps in proper utilisation of finance.
      (vii) Helps in avoiding business shocks and surprises.
      (viii) Link between investment and financing decisions.
      (ix) Helps in co-ordination.
      (x) It links present with future.
      Capital Structure – concept: Capital structure means the proportion of dept and equity used for financing the operations of business.
      i)It is one of the most important decisions under financial management to decide the pattern or the proportion of various sources that should be used for raising the funds.
      ii)Capital structure is a blend of debt and equity or borrowed funds and owners' funds respectively. It is calculated as debt-equity ratio.
      i.e. [DebtEquity]i.e. [DebtEquity]
      Or
      The proportion of debt out of total capital i.e.
      [DebtDebt+Equity][DebtDebt+Equity]
      Classification of Sources of Business Finance: On the Basis of Ownership:
      This can be classified into two categories:
      Owners' Funds:It consists of equity share capital, preference share capital, reserves and surplus and retained earnings.
      Borrowed funds: It can be in the form of loans, debentures, various types of public deposits, borrowed funds from banks and other financial institutions.
      1.Factors affecting capital structure: Cash Flow Position: Before raising finance business must consider the projected flow to ensure that it has sufficient cash to pay fixed cash obligations.A company with high liquidity and a good cash flow position can issue debt capital, as the company will have less chances of facing financial risk than the company with a low cash position.
      2.Size of business:Small businesses generally go for retained earnings, and equity capital, as if they go for debt or borrowed capital, the company has to face a fixed interest burden. However in the case of large companies, issuing debt is not a big issue, and they can raise long term finance from borrowed sources cheaper than that of small firms.
      3.Interest Coverage Ratio: It refers to the number of times a company can cover its interest obligations from the profits and higher ICR reduces the risk of failing to meet interest obligations.
      4.Debt Service Coverage Ratio: It indicates the company's ability to meet cash commitments for interest and principal amount of debt.
      5.Return on Investment: If a company earns hai returns it has the capacity to opt for death as a source of finance.
      6.Cost of debt: A company may raise funds from debts if it has the capacity to borrow funds at a lower interest rate.
      7.Tax Rate: Higher the tax rate, more preference for debt capital in the capital structure, as interest on debt capital being a tax deductible expense makes the debt cheaper.
      8.Cost of equity: If a company has high risk, its shareholder may expect a high rate of return resulting in increased cost of capital.
      9.Floatation cost: Choosing a source of fund depends on the flotation cost to be incurred to raise such funds, flotation cost makes this show less attractive.
      10.Risk Consideration: A company chooses debts as a source of finance depending on its operating risk and overall business risk.
      11.Flexibility: The choice of debts depends on the company's potential to borrow and the level of flexibility it wants to retain for choosing a source of funds in future.
      12.Regulatory Framework: The guidelines norms for documentation procedures influence the decision to choose a source of finance.
      Fixed capital:
      i)Fixed capital is that amount of capital which is incurred in procurement or buying the fixed assets for a business or an organization. The fixed assets of an organization are those assets which remain with the business for more than one year.
      i)For example: Plant and Machinery, land, furniture and fixtures vehicles, etc.
      Factors affecting fixed capital:
      1.Nature of Business: The requirement of fixed capital largely depends upon the type and nature of the business a company or organization is involved in. Trading requires less fixed capital, while manufacturing business requires more fixed capital due to the involvement of heavy plant and machinery.
      2.Scale of operations: Larger the business operation, bigger is the investment and lower the level of business operation smaller is the investment.
      3.Choice of Technique: The requirement of fixed capital of an organization largely depends upon the technique of operation in the organization. An organization that is capital-intensive requires a huge amount of investment in plant and machinery because it does not rely on manual labour whereas if an organization is labour-intensive it requires a comparatively less amount of investment in its fixed assets.
      4.Technology Upgradation: The organizations whose assets become obsolete in a very short duration need to upgrade their technology from time to time which may result in a higher amount of investment in fixed assets.
      5.Growth Prospects: If an organization aspires for higher growth, the investment in fixed assets should be on a higher side.
      6.Diversification: Diversification needs investment in fixed assets. If a jute textile manufacturing company diversifies into FMCG it requires huge investment.
      7.Financing Alternatives: There are many tools that act as alternatives to huge investment in assets. For example: Plant and Machinery may be available on a lease and the firm may use the asset for the required time and pay the rentals thereby reducing huge capital investment.
      8.Level of Collaboration: It has become a common practice to collaborate with different organizations in the industry and use each other's resources for a common good. For example: One single ATM machine can be used to withdraw funds from accounts of different banks, this practice reduces the investment cost at a large scale.
      Working Capital:
      1.Working capital is that amount of capital which is used in the day-to-day operations of the business this may be in cash or cash equivalents. The working capital is utilised by the business within one year.
      2.For example: stocks and inventories, debtors, bills receivables, etc.
      Factors affecting the Working Capital requirements advances from customers.
      i)Nature of Business: Manufacturing business requires more working capital as compared to trading business or service provider.
      ii)Business Cycle: During boom period firms require a large amount of working capital to manage the increased sales and production.
      iii)Seasonal Factors: Seasonal businesses require more working capital during their season time.
      iv)Scale of Operations: Businesses operating on a large scale require larger amounts of working capital as compared to small business firms.
      v)Credit Allowed: A business extending a longer credit period to its buyers will need more working capital as compared to a business doing cash business or offering a lesser credit period.
      vi)Production Cycle: Businesses with longer production cycles require more working capital as compared to businesses with short-term production cycles.
      viii)Credit Availed: A business organisation receiving longer credit period from their supplier will require lesser working capital as compared to business purchases goods for cash or receive short credit period.
      ix)Operating Efficiency: A business operating efficiently is able to convert current assets into cash easily and thus will require lesser working capital.
      x)Availability of Raw Material: A business having each and continuous availability of raw material will not require large stock levels and thus, can manage with lesser working capital.
      xi)Growth Prospects: Firms with high growth rate targets need higher working capital to meet increased sales target.
      xii)Level of Competition: Tougher competition forces businesses to offer discounts liberal credit and maintain high levels of stock requiring larger amounts of working capital.
      xiii)Inflation: Inflation increases prices as a result firms require large amounts of working capital to meet the same volume of purchase and operating expenses.

      LESSON PLAN:-06

      Financial Markets: Concept: Financial market is a market which facilitates creation of assets and exchange of securities to provide short, medium and long term business finance.
      It mobilizes funds between savers and investors.
      It locates funds into the most productive investment opportunities.
      There are two types of Financial Markets:
      Money Market
      Capital Market
      Functions of Financial Market
      Mobilisation of savings and channeling them into the most productive uses: A financial market performs the allocative function by linking the savers and investors, thus mobilising savings and channelising them to make the most use of these idle savings.
      Facilitating price discovery: The interaction between the households (supplier of funds) and business firms helps to establish a price for the traded financial asset in the market.
      Providing liquidity to financial assets: Financial assets can be easily converted into cash as financial markets provide facility of purchase and sale of financial assets.
      Reducing the cost of transactions: Financial markets provide information about the traded securities and save time, effort and money of both the buyers and sellers of a financial asset.
      Money market: Concept:
      It is a market which deals in short term securities and whose maturity period is less than one year.
      Capital market is of further two types:
      A.Primary Market
      B.Secondary Market
      Primary Market
      Primary market deals with the securities which are issued for the first time in the market and is also known as new issues market.
      Banks, financial institutions, insurance companies, mutual funds and individuals are the main participants in the primary market.
      Secondary Market
      Secondary market is a market which deals with the sale and purchase of existing securities. It is also called the stock market or stock exchange.
      SEBI prescribes the framework within which all the securities are traded, cleared and settled.
      It provides opportunities of disinvestment and reinvestment to investors by exchange of securities.
      Stock Exchange – Functions and trading procedure:
      According to Securities Contract (Regulation) Act 1956, defines stock exchange as a body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities.
      Functions of a Stock Exchange
      Providing liquidity and marketability to existing securities: Stock exchange provides a continuous market for sale and purchase of existing securities.
      Pricing of securities: The forces of demand and supply determine the share prices for securities in the stock exchange.
      Safety of transaction: Trading within the regulatory framework of SEBI ensures safety of financial transactions.
      Contributes to economic growth: Process of disinvestment and reinvestment channelizes savings into most productive investments contributing to capital formation and economic growth.
      Spreading of equity cult: Providing constant information about securities traded through stock exchange educates investors.
      Providing scope for speculation: Fluctuations in prices due to demand and supply forces allows for restricted and controlled speculations.
      Trading and Settlement Procedure
      In traditional time: Outcry or auction system.
      In modern time: Electronic trading system for screen based trading. In this system transactions are carried on the computer screen and both the parties are able to see the prices of all shares going up and down all the time during business hours of the stock exchange.
      Securities and Exchange Board of India (SEBI) – objectives and functions
      SEBI was established by the Government of India on 12th April, 1988 and given statutory powers in 1992 being passed by the Indian Parliament.
      SEBI has its headquarters at the business district of Bandra-Kurla complex in Mumbai and it has regional offices in New Delhi (northern), Kolkata (eastern), Chennai (southern), and Ahmedabad (western).
      SEBI works as an interim administrative body which aims to promote growth of the securities market as well as protect the interest of the investors.
      Reasons for the Establishment of SEBI
      To control unfair trade practices and malpractices in trading securities such as rigging of prices, violation of rules, unofficial private placements, etc.
      To protect the interest of the investors.
      Purpose and Role of SEBI
      Issuers: To the issuers, it provides a market for raising finance in an easy, fair, cost effective and efficient manner.
      Investors: To the investors, to protect the interest of the investors by disclosing accurate information on a continuous basis.
      Intermediaries: To the intermediaries, to offer a competitive and professional market with efficient infrastructure.
      Objectives of SEBI
      To regulate the stock exchange and the securities industry in order to promote orderly functioning of capital markets.
      To protect the rights as well as the interests of the investors.
      To prevent and keep a check on any unfair trading malpractices
      To maintain and create a balance between self and statutory regulations.
      To attend investor’s complaints, liaise with the issuers, intermediaries and other stock exchanges in the region through its regional offices.
      Functions of SEBI
      SEBI performs the task of regulation and development of the securities market. The functions performed by SEBI are:
      1. Regulatory Functions
      A.Registration of brokers, sub-brokers and other intermediaries.
      B.Registration of collective investment schemes.
      C.Regulation of Stock Bankers, underwriters, portfolio exchanges, and merchant bankers.
      D.Regulation of takeover bids by companies.
      E.Undertakes inspection, conducts enquiries and audits of stock exchange and intermediaries.
      F.Changing fee or other charges for carrying out the purposes and operations of the Act.
      G.Performing and exercising powers under Securities Contracts (Regulation) Act 1956, delegated by the Government of India.
      2. Development Functions
      A.Educating and training investors and intermediaries of the securities market.
      B.Conduct research and publish information related to trading of securities.
      C.Taking measures for the development of the capital market through the adoption of a flexible approach.
      3. Protective Functions
      A.Prohibiting fraudulent and unfair trade practices.
      B.Controlling insider trading and imposing penalties for malpractices.
      C.Educate and protect the investors.
      D.Promoting fair trade practices and a strict code of conduct in the securities market.
      The Organisation Structure Of SEBI
      SEBI has five operational departments headed by the Executive Director. It is advised or assisted in policy formation by two advisory committees –
      The primary market advisory committee
      The secondary market advisory committee
      Objectives of Advisory Committees
      To advise SEBI on matters related to regulations.
      To advise SEBI on development and regulation of the primary market.
      It advises SEBI on disclosure requirements for the companies as per the provisions mentioned in the Act.
      To advise SEBI in the legal framework for making dealing in the primary market simple and transparent.

      LESSON PLAN:-07

      Marketing – Concept: The term "market" refers to the gathering place of buyers and sellers to conduct transactions involving the exchange of goods and services. The term "market" comes from the Latin word "Marcatus," which means "to trade."
      Marketing
      Marketing is defined as "a human activity aimed at satisfying needs and desires through an exchange process."
      Philip Kotler
      Marketing concept is a key to determining the needs, desires of target markets, delivering the desired satisfactions more efficiently and effectively by competitors is critical to achieving organizational goals.
      Features of Marketing
      1. Needs and Wants:
      1)The marketing process assists consumers in obtaining what they require and desire.
      2)A need is said to be known as a state of deprivation or the feeling that one is depriving oneself of something.
      3)Needs are fundamental to human beings and are unrelated to a specific product.
      2. Creating a Market Offering:
      Market offering is the process of offering and introducing a product or service with specific features such as size, quality, taste, and so on for the purpose of selling.
      3. Customer Value:
      Marketing used to facilitate the exchange of goods as well as services between buyers and sellers.
      4. Exchange Mechanism:
      The exchange mechanism is used in the marketing process.
      Exchange refers to the process where two or more parties used to come together in order to get the desired goods or service from someone while in exchange for something. For example, money is the medium of exchange used to purchase or sell a product or service.
      The following conditions needs to be met in order for an exchange to take place:
      a. There must be at least two parties.
      b. providing something of value to the other party
      c. communication
      d. freedom to accept or reject offer
      e. willingness of the parties to enter into a transaction
      What can be Marketed?
      1. Physical product
      2. Services
      3. Ideas
      4. Person
      5. Palace
      6. Experience
      7. Properties
      8. Events
      9. Information
      10. Organisation
      Marketer
      A marketer is anyone who makes an extra effort to identify the needs of the consumers and offer the product or service as well as persuade them in order to buy in the process of exchange.
      Sellers, as marketers, are the ones who provide satisfaction. They make products/services available and sell them to customers in order to meet their needs and desires.
      They are classified as follows:
      a. goods marketers (such as Hindustan Lever)
      b. services marketers (such as Indian Airlines)
      c. others marketing experiences or places (such as Walt Disney) (like tourist destinations).
      Marketing activities are those undertaken by marketers in order to facilitate the exchange of goods and services between producers and consumers.
      Marketing Management
      Marketing management is the administration of marketing functions.
      It is considered as the process of organizing, directing as well as controlling the activities associated with marketing goods and services in order to meet the needs of customers and achieve organizational goals.
      “Marketing management is defined as the art and science of selecting target markets and acquiring, retaining, and growing customers by creating, delivering, and communicating superior customer service.”
      Philip Kotler
      The Process of Management of Marketing Involves:
      a. Identifying a target market
      b. Creating demand by producing products that meet the needs and interests of customers.
      c. Create, develop, and communicate superior customer values: To provide superior value products/services to prospective customers, and to communicate these values to other potential buyers in order to persuade them to purchase the product/service.
      Marketing and Selling
      Marketing: It refers to a broad range of activities, of which selling is only one component. Before making a sale, a marketer must plan the type, design, and price of the product, as well as select the distribution channels and the appropriate promotional mix for the target market.
      Selling: refers to the sale of a product or service through advertising, promotion, and salesmanship. The product's title is transferred from seller to buyer. The primary goal of selling is to turn a product into cash.
      Marketing Management Philosophies
      Marketing Concepts/Philosophiesusually refers to determining the needs as well as wants of the target markets & then delivering the desired satisfactions more efficiently and effectively by competitors is critical to achieving organizational goals.
      1. Production Concept:
      Because the number of producers was limited in the early days of the industrial revolution, industrialists assumed that consumers were only interested in easily and widely available goods at an affordable price.
      2. Product Concept:
      As time passed, supply improved, and customers began to prefer products that were superior in performance, quality, and features.
      As a result, product improvement has become the key to a company's profit maximization.
      3. Selling Concept:
      Increased production scale resulted in increased competition among sellers. Because there were so many companies selling similar products, product quality and availability were insufficient to ensure survival.
      Consumers will not buy products unless the company engages in aggressive sales and promotional activities.
      4. Marketing Concept :
      Marketing begins with determining what consumers want in order to satisfy consumers and profit.
      Customer satisfaction is a prerequisite for achieving the firm's goals and objectives.
      5. Social Marketing Concept:
      Customer satisfaction is supplemented by social welfare in this concept.
      A company that adopts the societal concept must balance the company's profits, consumer satisfaction, and societal interests.
      Functions: Gathering and Analyzing Market Information:
      Systematic fact-gathering and information-analysis
      Examining a business environment's strengths, weaknesses, opportunities, and threats.
      Identifying customer needs and desires, determining purchasing motivations, selecting a brand name, packaging, and promotional media, and so on.
      Data is available from both primary and secondary sources.
      2. Marketing Planning :
      Create an appropriate marketing plan in order to meet marketing objectives.
      It should specify the action plans to achieve these goals.
      For example, if a marketer wants to increase his country's market share in the next three years, his marketing plan should include various important aspects such as a plan for increasing production levels, product promotion, and so on.
      3. Product Designing and Development:
      Involves decisions about the product to be manufactured and its attributes, such as quality considerations, packaging, new models and variations, and so on.
      A good design can improve the performance of the product while also giving it a competitive advantage in the market.
      Anticipate customer needs and create new products or improve existing ones to meet those needs.
      4. Standardization and Grading:
      Standardisation refers to the production of goods that meet predetermined specifications, which aids in the production of uniformity and consistency (e.g., ISI Mark).
      Grading is said to be the process of categorizing different products into different groups based on important characteristics such as quality, size, and so on.
      5. Packaging and Labeling:
      Packaging is called as the process of designing as well as developing a package for a product that protects it from damage, spoilage, breakage, and leakage. It also makes purchasing easier for customers and serves as a marketing tool.
      Labeling is the process of designing a label to be placed on a package. It can range from a simple tag to intricate graphics. For example, colgate, lays, and so on.
      6. Branding:'
      It aids in product differenttion, builds customer loyalty, and promotes sales.
      An important decision area is branding strategy, which determines whether each product will have a separate brand name or the same brand name will be used for all products.
      7. Customer Support Services:
      Customer support services are extremely effective at increasing prospective customer sales and developing brand loyalty for a product.
      It aims to provide maximum customer satisfaction while also building brand loyalty.
      Examples include sales services, customer complaints and adjustments, credit services, maintenance services, technical services, and consumer information.
      8. Pricing of Product:
      Product price refers to the amount of money that customers must pay in order to obtain a product.
      It is an important factor in a product's success or failure.
      Because the price of a product/service is related to its demand, the price should be set after considering all of the factors that influence the price of the product.
      9. Promotion:
      Product and service promotion entails informing customers about the firm's product, its features, and so on, and persuading them to purchase the products.
      Promotional methods include advertising, personal selling, public relations, and sales promotion.
      10. Physical Distribution:
      The two major decision areas under this function are
      (a) the channels of distribution or marketing intermediaries to be used (e.g. wholesalers, retailers); and the marketing intermediaries to be used.
      (b) Physical movement of the product from the point of manufacture to the point of consumption.
      11. Transportation:
      Transportation refers to the physical movement of goods from one location to another.
      When selecting a mode of transportation, various factors such as the nature of the product, cost, location of the target market, and so on should be considered.
      12. Storage or Warehousing:
      Proper storage of products is required to maintain a smooth flow of products in the market.
      Storage and warehousing are used to protect against unavoidable delays in delivery or to meet contingencies in demand.
      Marketing Mix – Concept: A large number of factors influence marketing decisions; these are classified as ‘non-controllable factors' and ‘controllable factors.'
      Controllable factors are those that can be influenced at the firm level.
      Environmental variables are factors that influence a decision but are not controllable at the firm level.
      In order to be successful, a company must make sound decisions after analyzing controllable factors and keeping environmental factors in mind.
      Marketing Mix refers to the set of marketing tools that a company employs to achieve its marketing objectives in the target market.
      The success of a market offer is determined by how well these ingredients are combined to provide superior value to customers while also meeting sales and profit goals.
      Elements:
      The marketing mix consists of four main elements
      A. Product
      B. Price
      C. Place/Physical Distribution
      D. Promotion
      These elements are used to popularly known as 4 P’s of the marketing.
      1. Product: A product is defined as "anything of value" that is offered for sale in the market. Colgate, Dove, and so on.
      2. Price: the sum of money that a customer must pay in order to obtain a product or service.
      3. Place: Physical product distribution, i.e. making the product available to customers at the point of sale.
      4. Promotion: Informing customers about the products and convincing them to purchase them.
      Product – branding, labelling and packaging – Concept:
      A product, in the eyes of the customer, is a collection of utilities that is purchased because of its ability to meet a specific need.
      Classification of Products
      Products can be classified into two categories:
      (i) Consumers ‘products,
      (ii) Industrial products.
      A. Shopping Efforts Involved
      On the basis of the buyers' time and effort.
      1. Convenience Products: Convenience goods are consumer products that are frequently purchased for immediate use. Medicines, newspapers, stationery, toothpaste, and so on.
      2. Shopping Products: Shopping products are those in which buyers spend a significant amount of time comparing the quality, price, style, suitability, and so on at various stores before making a final purchase. For example, electronic goods, automobiles, and so on.
      3. Specialty Products: Specialty products are goods that have unique characteristics that compel customers to go out of their way to purchase them. For example, art, antiques, and so on.
      B. Durability of Products
      1. Non-durable Products: These are consumer goods that are consumed in a short period of time. For example, milk, soap, stationery, and so on.
      2. Durable Products: Tangible items that can withstand repeated use, such as a refrigerator, radio, bicycle, and so on.
      3. Services: Intangible services are those activities, benefits, or satisfactions that are sold, such as dry cleaning, watch repairs, hair cutting, postal services, doctor services, and so on.
      Industrial Products
      Industrial products are those that are used as inputs in the manufacturing process.
      Characteristics
      Number of Buyers
      Channel Levels
      Geographic Concentration
      Derived Demand
      Role of Technical Considerations
      Reciprocal Buying
      Leasing Out
      Classification
      Materials and Parts: items that are completely incorporated into the manufacturer's products.
      Capital Items: the manufacture of finished goods, such as installations and equipment.
      Supplies and Business Services: short-term goods and services that aid in the development or management of the final product. Repairs and maintenance, for example.
      Branding:
      Branding is the process of creating a corporate brand identity for consumers and imprinting that brand identity on their minds, which necessitates brand positioning and brand management.
      Amazon's Jeff Bezos
      The process of developing a product's distinct identity. It is the process of identifying a product by using a name, term, symbol, or design alone or in some combination.
      Brand: A name, term, sign, design, or some combination of the above used to identify and differentiate the seller's products from those of competitors.
      Advantages to the Marketers
      Enables Product Differentiation Through Marking: It aids in distinguishing its product from that of its competitors.
      Aids in the development of advertising and display programs
      Differential Pricing: It allows a company to charge different prices for different products.
      Ease of New Product Introduction
      Advantages to the Customers
      Aids in Product Identification: Assists customers in identifying products.
      Ensures Quality: Ensures product quality
      Status Symbol: Brands become status symbols due to their quality As an example, consider Benz automobiles.
      Characteristics of Good Brand Name
      Short, simple to say, spell, recognize, and remember
      Suggest the product's advantages and characteristics.
      Different from other products
      Adaptable to packing or labeling requirements, as well as different advertising media and languages.
      Versatile enough to accommodate new products;
      Legally registered and protected
      Packaging
      Packaging: The act of designing and developing a product's container or wrapper. Because good packaging often aids in the sale of a product, it is referred to as a silent salesman.
      Levels of Packaging
        1. Primary Package: This is the product's immediate container/covering, such as toffee in a wrapper, a match box, a soap wrapper, and so on.
        2. Secondary Package: It's all about additional layers of protection that are kept until the product is ready for use, such as a red cardboard box for Colgate toothpaste.
        3. Transportation Package: refers to additional packaging components required for storage, identification, and transportation, such as putting a package of toffees into cardboard boxes for storage at a manufacturer's warehouse and transportation.
        Functions of Packaging
        Product Identification: Packaging aids in product identification.
        Product Protection: The primary function of the packaging is to protect the product.
        Facilitating Product Usage: It makes transportation, stocking, and consumption easier.
        Product Promotion: Packaging makes sales promotion easier.
        Rising Health and Sanitation Standards: It is believed that there is minimal adulteration in packaged goods.
        Self-Service Outlets: Good and appealing packaging can help to promote a product.
        Opportunities for Innovation: Packaging innovation has increased the shelf life of products.
        For example, tetra packs for milk.
        Product Differentiation: The color, size, material, and other characteristics of packaging influence customers' perceptions of the product's quality.
        Labelling
        Labeling is the process of affixing identification marks to a package. Labels are information carriers that provide information such as the name of the product, the name of the manufacturer, the contents of the product, the expiry and manufacturing date, general information for use, weight, and so on.
        Labels Perform Following Functions:
        1. Identify the product: It assists customers in identifying the product among the various types of products available. For example, the purple color of a Cadbury chocolate label easily distinguishes it from other chocolates.
        2. Describe and specify the product's contents: The manufacturer provides all information regarding the product's contents, etc.
        3. Product grading: With the help of labels, products can be classified into different categories based on quality, nature, and so on, for example: Brooke Bond Red Label, Brooke Bond Yellow Label, Brooke Bond Green Label, and so on.
        4. Aids in product promotion: Attractive and colorful labels excite customers and entice them to purchase the products. For example, 40 percent extra free, as stated on detergent, buy two get one free, and so on.
        5. Providing legal information: There is a legal requirement to print the batch number, maximum retail price, weight/volume on all products, and a statutory warning on the packet of cigarettes, “Smoking is harmful to one's health”: In the event of a hazard on/poisonous material, appropriate safety warnings should be posted.
        Pricing
        Meaning of Price:
        It is considered as the sum of the values that customers exchange in exchange for the benefit of owning or using the product. Price can thus be defined as the sum of money paid by a buyer (or received by a seller) in exchange for the purchase of a product or service.
        Factors Determining Price Determination:
        1. Pricing Objectives
        The marketing firm's goal is to maximize profits. Pricing objectives can be determined in both the short and long run. If the company wants to maximize profits in the short run, it will charge the highest price for its products. However, in order to maximize its total profit in the long run, it would choose a lower per unit price in order to capture a larger share of the market and earn higher profits through increased sales.
        2. Product Cost:
        Price should cover all costs and aim to earn a reasonable profit above and beyond the cost.
        It takes into account the costs of manufacturing, distribution, and sale of the product.
        Costs establish the floor price, or the lowest price at which the product can be sold.
        The price should rise. Total costs (Fixed costs/overheads + Variable costs + Semi-variable costs) in the long run, but in certain circumstances (introduction of a new product or entry into a new market), the product price may not cover all costs for a short period of time.
        3. Utility and Demand:
        The utility provided by the product, as well as the demand for the product, determine the maximum price that a buyer will be willing to pay for that particular product.
        Buyers would be willing to pay until the utility of the demand exceeded or equaled the utility derived from it.
        According to the law of demand, consumers buy more at a lower price.
        Demand elasticity is the responsiveness of demand to changes in product prices. If a small change in price leads to a larger change in quantity demanded, demand is elastic. Firms can set higher prices if demand is inelastic.
        4. Extent of Competition in Market:
        Before setting prices, competitors' prices and anticipated actions must be considered.
        5. Government Policies:
        In the public interest, the government can intervene to regulate product prices.
        6. Marketing Methods Used:
        Other marketing elements such as distribution system, sales promotion efforts, packaging type, product differentiation, credit facility, and so on all have an impact on the price fixing process.
        Physical Distribution – concept:
        A series of decisions must be made in order to make the product available for purchase and consumption by customers.
        The marketer must ensure that the product is available in sufficient quantities, at the appropriate time, and in the appropriate location.
        A channel of distribution is a group of companies and individuals who take title, or assist in the transfer of title, to specific goods or services as they move from producers to consumers.
        Choosing an appropriate channel of distribution is a critical marketing decision that affects an organization's performance. It is a strategic decision whether the firm will use direct marketing channels or long channels involving a number of intermediaries.
        Components of Physical Distribution:
        Functions of Distribution Channels
        1. Sorting: Middlemen obtain supplies of goods from a variety of sources, which are not always of the same quality.
        2. Accumulation: the accumulation of goods into larger homogeneous stocks that aid in the maintenance of a continuous flow of supply.
        3. Allocation entails dividing homogeneous stock into smaller, more marketable lots.
        4. Assorting: the collection of products for resale.
        5. Product Promotion: Middlemen take part in activities such as demonstrations, special displays, and so on.
        6. Bargaining: Manufacturers, intermediaries, and customers bargain over price, quality, and other issues.
        7. Risk Taking: Merchant middlemen take title to the goods, assuming risks such as price and demand fluctuations, spoilage, destruction, and so on.
        Channels of Distribution
        Consists of a network of firms, individuals, merchants, and functionaries who assist in the transfer of title to a product from the producer to the end consumer.
        Intermediaries help to cover a large geographical area and increase distribution efficiency, including transportation, storage, and negotiation. They also provide customers with convenience by having a variety of items available in one location, as well as serving as an authentic source of market information because they are in direct contact with the customer.
        Types of Channels:
        Direct Channel ( Zero Level)
        The manufacturer and the customer establish a direct relationship. Manufacturer-Customer. For example, mail order, internet, and door-to-door sales.
        Indirect Channel
        The distribution network is referred to as indirect when a producer uses one or more intermediaries to move goods from the point of production to the point of sale.
        1. Manufacturer-Retailer-Customer (One Level Channel)
        Between the manufacturers and the customers, one intermediary, namely retailers, is used. Typically used for high-end items such as watches, appliances, automobiles (Maruti Udyog), and so on.
        2. Manufacturer-wholesaler-Retailer-customer (Two Level Channel):
        This channel is primarily used for consumer goods distribution. Typically used for consumer goods such as soaps, salt, and so on.
        3. Manufacturer ? Agent ? Wholesaler ? Retailer ? Customer (Three Level Channel):
        Manufacturers use their own selling agents or brokers in this case, who connect them with wholesalers, then retailers, and finally consumers.
        Factors Determining Choice of Channels of Distribution
        The selection of an appropriate channel of distribution is a critical marketing decision.
        1. Product Related Factors: The nature of the product, whether it is industrial or consumer goods, perishable or nonperishable, etc., determines the distribution channels used.
        2. Company Characteristics: The company's financial strength and the level of control it wishes to exert over other channel members. Short channels are used to exert more control over intermediaries and vice versa.
        3. Competitive Factors: Companies may copy the channels used by their competitors.
        4. Market Factors: The size of the market as well as the geographical concentration of potential buyers influence channel selection.
        5. Environmental Factors: Legal constraints and a country's economic situation. In a down economy, marketers use shorter distribution channels.
        Promotion – Concept and elements;
        A promotion mix is considered as a combination of promotional tools used by a company to achieve its communication goals.
        Promotion mix tools:
        (i) Advertising,
        (ii) Personal Selling,
        (iii) Sales Promotion,
        (iv) Publicity.
        1. Advertising
        Advertising, as defined by a specific sponsor, is a paid form of nonpersonal presentation and promotion of goods, services, or ideas.
        The most widely used promotional tool. It is a cold, impersonal form of communication that is paid for by marketers (sponsors) to promote their products and services. Newspapers, magazines, television, and radio are all common mediums.
        Features
        Paid Form: The sponsor must bear the cost of communicating with customers.
        Lack of Personalization: There is no direct face-to-face contact between the prospect and the advertiser.
        Identified Sponsor: Advertising is done by a specific person or company.
        Merits
        Mass Reach: a large number of people can be reached across a large geographical area.
        Increasing customer satisfaction and trust.
        Expressiveness: It is a powerful medium of communication.
        Economy: Because of its wide reach, is a very cost-effective mode of communication.
        Limitations
        Less Forceful: There is no pressure on the prospects to listen to the message.
        Feedback Deficit:
        Inflexibility: It is less flexible because the message is standardised and not tailored to the individual.
        Low Efficacy: It is difficult to get advertising messages heard by the intended prospects.
        Objections to Advertising
        Some critics argue that advertising is a social waste because it raises costs, multiplies people's needs, and undermines social values.
        1. Adds to Cost: Unnecessary advertising raises the cost of the product, which is then passed on to the buyer in the form of high prices.
        2. Undermines Social Values: It undermines social values while encouraging materialism.
        3. Confuses the Buyers: A similar product of the same nature/quality confuses the buyer.
        4. Encourages Sale of Inferior Products: It makes no distinction between superior and inferior goods.
        5. Some Advertisements are in Bad Taste: These depict something that some people do not agree with.
        2. Personal Selling
        Personal selling entails personally contacting prospective buyers of a product, i.e. engaging in a face-to-face interaction between seller as well as the buyer for the purpose of sale.
        Features of the Personal Selling
        1. Under personal selling, personal contact is established.
        2. Establishing relationships with prospective customers, which are critical in closing sales.
        3. Oral communication
        4. Quick response to queries.
        Merits of Personal Selling
        1. Flexibility
        2. Direct Feedback
        3. Minimum wastage
        Role of Personal Selling
        Importance to Business Organisation
        (i) Effective Promotional Tool
        (ii) Versatile Tool
        (iii) Reduces Effort Wastage
        (iv) Consumer Attention
        (v) Long-Term Relationship
        (vi) Personal Relationship
        (vii) Role in the Introduction Stage
        (viii) Customer Relationship
        Importance to Customers
        (i)Assist in the Identification of Needs
        (ii) Up-to-date market information
        (iii) Expert advice
        (iv) Customers are enticed
        Importance to Society
        (i)Converts the most recent demand
        (ii) Employment Possibilities
        (iii) Job Opportunities
        (iv) Salesperson Mobility
        (v) Standardization of Products
        3. Sales Promotion
        Short-term incentives or other promotional activities that aim to pique a customer's interest in purchasing a product are referred to as sales promotion.
        Merits of Sales Promotion
        Attention Value: Using incentives, attract people's attention.
        Useful in New Product Launch: Sales promotion tools persuade people to abandon their usual purchasing habits and try new products.
        Synergy in Total Promotional Efforts: Sales promotion activities contribute to the overall effectiveness of a company's promotional efforts.
        Limitations of Sales Promotion
        Reflects Crisis: A company that frequently relies on sales promotion activities may give the impression that it is unable to manage its sales and that its products are unpopular.
        Damages Product Image: Customers may believe that the products are of poor quality or are overpriced.
        Commonly Used Sales Promotion Activities
        Product Combination: Including another product as a free gift with the purchase of one.
        Rebate: Providing products at reduced prices.
        Instant draws and assigned gifts: Scratch a card and instantly win a prize with the purchase of a TV, Tea, or Refrigerator, for example.
        Lucky Draw: a lucky draw coupon for free gasoline when a certain amount is purchased, and so on.
        Useful Benefit: 'Purchase goods worth Rs 3000 and get a holiday package worth Rs 3000 free,' and so on.
        Full finance at 0%: Many marketers of consumer durables such as electronics, automobiles, and so on offer simple financing schemes such as "24 easy instalments" and so on.
        Contests: Holding competitive events that require the use of skills or luck, etc.
        Quantity Gift: Providing an extra quantity of the product, for example, "Buy three, get one free."
        Refunds: Refunding a portion of the price paid by the customer upon presentation of proof of purchase.
        Discount: Selling products at a lower price than the list price.
        Sampling: Provide free product samples to potential customers. Typically used at the time of a product's introduction.
        4. Publicity
        Publicity occurs when favorable news about a product or service is broadcast in the mass media. For example, if a manufacturer makes a breakthrough in the development of a car engine and this news is covered by television, radio, or newspapers as a news item.
        Features of Publicity are:
        I. Publicity is a form of communication that is not compensated.
        II. There is no identified sponsor
        5. Public Relations
        Public relations encompasses a wide range of tactics and is typically concerned with providing information to independent media outlets in the hope of obtaining favorable coverage. It also includes a mix of promoting specific products, services, and events as well as promoting an organization's overall brand, which is an ongoing tactic.
        Role of Public Relations:
        1. Press Relations: A press release is an announcement of an event, performance, or other newsworthy item issued to the press by an organization's public relations professional. It is written in the form of a positive story with an appealing heading in order for the media to quickly grasp and spread the message.
        2. Product promotion: The company tries to draw attention to new products by organizing sporting and cultural events such as news conferences, seminars, and exhibitions, among other things.
        3. Corporate Communication: The image of the organization is promoted through newsletters, annual reports, brochures, and other means.
        4. Lobbying: The organization maintains cordial relations with government officials and ministers in charge of corporate affairs, industry, and finance in regard to business and economic policies.
        5. Counseling: The public relations department advises management on general issues affecting the public and the company's position.
        Maintaining Good Public Relations also Helps in Achieving the Following Marketing Objectives:
        (a) Building awareness
        (b) Building credibility
        (c) Stimulates sales force
        (d) Lowers promotion costs

        LESSON PLAN:-08

        Consumer Protection Concept: Consumer protection refers to safeguarding consumers from manufacturers or sellers that engage in anti-consumer trade activities.
        Earlier Approach
        The previous approach was of ‘caveat emptor’, which literally translates to "let the buyer beware."
        Present Approach
        However, presently the approach is of ‘caveat venditor’, which literally translates to "let the seller beware."
        Exploitative and unfair trading practices, such as defective and dangerous items, adulteration, false and misleading advertising, hoarding, and black-marketing, expose consumers to dangers. As a result, effective consumer protection against such acts is required.
        Importance of consumer protection:
        A. From Consumer’s Point of View
        1.Consumer Ignorance: The majority of consumers are unaware of their rights and remedies, and as a result, they are constantly exploited. Consumer protection is required to protect consumers from such exploitative practices.
        2.Widespread Exploitation of Consumers: Consumers are abused on a huge scale through a variety of unfair trade practices, and consumer protection is necessary to safeguard them.
        3.Unorganized Consumers: Consumers in India are still unorganised, and there are few consumer organisations that would advocate for them.
        B. From Business Point of View
        1.Business utilises societal resources: Every business utilises societal resources, and it is their job to operate in the society's best interests.
        2.Long-term business interests: It is in the business's best interests to keep its customers happy. Customers must be satisfied in order to win the global competition. Satisfied consumers lead to repeat purchases, which helps to expand the company's customer base.
        3.Government Intervention: If a firm engages in any type of unfair commercial practices, the government will take action against it, harming the company's reputation.
        4.Social Responsibility: A business has social duties to a variety of stakeholders, including owners, employees, the government, and customers. As a result, shoppers should be able to purchase high-quality goods at affordable pricing.
        5.Moral Justification: Any firm has a moral obligation to behave in the best interests of its customers and prevent exploitation and unfair trade practices such as faulty and unsafe products, adulteration, false and misleading advertising, hoardings, black marketing, and so on.
        Consumer Protection Act 2019:
        The Consumer Protection Act of 2019 aims to safeguard and promote consumers' interests by resolving their complaints in a timely and cost-effective manner. It came into force on July 20th 2020.
        It covers the entire country of India, except the State of Jammu and Kashmir..
        It applies to all types of enterprises, whether they are manufacturers or traders, and whether they sell goods or services, including e-commerce companies.
        The Act gives consumers specific rights in order to empower them and defend their interests.
        Scope of the Act
        The scope of this act is broad and covers a wide range of activities. This act covers all the undertakings;
        Both large and small scale undertakings.
        All three sectors are covered, namely private, public, and cooperative.
        It is applicable to e-commerce companies as well.
        It is applicable to whole of India.
        All goods, services and trade practices are a part of this act, until specifically exempted.
        Meaning of consumer: A consumer is defined as someone who buys or receives consumer goods or services against a payment. It includes anyone who benefits from such services, but it excludes anyone who uses such services for financial gain.
        Under the Consumer Protection Act 2019, a consumer is a person who buys any goods or avails services for a consideration, which has been paid or promised, or partly paid and partly promised, or under any scheme of deferred payment.
        Rights and responsibilities of consumers:
        1.Right to Safety: Consumers have the right to be safeguarded against items and services that are harmful to their health and well-being. The consumers are righteous to get quality products, and they can also demand quality assurance from the seller for the same. Such as ISI, FPO, AGMARK, Hallmark etc are quality marks for industrial items, food products, agricultural products, gold respectively.
        2.Right to be Informed: Before purchasing a product, the consumer has the right to get complete information about it, regarding the quality, quantity, ingredients, purity, price etc.
        3.Right to Choose: Consumers have the right to choose any product from the available options based on their own preferences. Hence no seller has the right to influence the consumer into purchasing a certain product through unacceptable means
        4.Right to Seek Redressal: If a product or service fails to meet the consumer's expectations or is dangerous, the consumer has the right to seek redressal. The consumer may be entitled to a replacement or repair of the problem, as well as reimbursement for any losses.
        5.Right to Consumer Education: Consumers have the right to learn and be well-informed throughout their lives. He should be informed of his rights and remedies in the event that the goods or service does not meet his expectations. The Indian government has integrated consumer education in school curriculum and is using the media to educate consumers about their rights. For example, efforts like Jaago Grahak Jaago is one such measure to educate the consumers
        6.Right to be Heard: The consumer has the right to provide his opinion regarding the product and services, as well as he has the right to to be heard in such cases. Hence the consumer has a right to file a complaint if he thinks that his rights have been violated. Also various consumer cells have been opened up in India so as to provide them the right to be heard.
        Consumer Responsibilities
        Consumers have the following responsibilities:
        1.Be knowledgeable: Be knowledgeable about the numerous items on the market so that you can make an informed and educated decision.
        2.Standardized products: Purchase just standardized products to ensure quality. Look for the ISI mark on electrical goods, the FPO label on food products, and the Hallmark on jewellery, among other things.
        3.Follow Instructions: Follow the product's instructions and learn about the hazards linked with it, then use it safely.
        4.Cautious Purchasing: Carefully read labels for information on prices, net weight, manufacturing, expiration dates, and so on.
        5.Assert Yourself: Assert yourself to guarantee that you obtain a fair bargain, and fair price of the product.
        6.Honesty: Be truthful in interactions and buy only legal goods and services, thus discouraging buying from sellers who follow unethical methods such as black marketing and hoarding.
        7.Cash Memo: When purchasing products or services, request a cash memo. This will serve as proof of the transaction.
        8.Consumer Societies: Establish consumer societies that will actively participate in consumer education and protection.
        9.Take action whenever needed: In the event of a defect in the quality of items purchased or services received, file a complaint with an appropriate consumer forum. Even if the sum involved is modest, don't hesitate to take action.
        10.Avoid Littering: Respect and value the environment, and avoid any activity that would adversely affect it.
        Who can file a complaint?
        a consumer; or
        any voluntary consumer association registered under any law for the time being in force; or
        the Central Government or any State Government; or
        the Central Authority; or
        one or more consumers, where there are numerous consumers having the same interest; or
        in case of death of a consumer, his legal heir or legal representative; or
        in case of a consumer being a minor, his parent or legal guardian.
        b. Redressal Agencies
        As per Consumer Protection Act, 2019, The statute establishes a three–tier system for resolving consumer complaints, as follows:
        ;c. District Commission
        The state concerned establishes district forums in each district. The following are the key characteristics:
        a)It is made up of a President and two members, one of whom must be a woman, who are officially nominated by the state government.
        b)The value of consumer complaints should not exceed Rs. 1 crore.
        c)Upon receiving the complaint, the district forum shall forward it to the opposing party and submit the items or sample to a laboratory for testing.
        d)If the district forum determines that the goods are defective or that there has been unfair trading practices, the opposite party may be ordered to repair or return the items or pay compensation. If any of the party is not satisfied with the district forum's decision, they have 45 days to file an appeal with the state forum from the date of order.
        d. State Commission
        The government establishes a state commission in each state. The following are the key characteristics:
        Each commission has a president and at least two members appointed by the state government, one of whom should be a woman.
        The total worth of the products or services, including the compensation sought, is greater than Rs. 1 Crore but less than Rs. 10 crore.
        Upon receiving a complaint, the state commission may submit the matter to the opposing party and send the items to a laboratory for examination.
        After being satisfied, the state commission might require the other party to replace, reimburse, or pay compensation. If any of the parties is not pleased with the judgement, they can file a complaint with the national commission within 30 days of the order being issued.
        e. National Commission
        Central government sets the National commission. The provisions are:
        It is made up of a President and at least four members chosen by the central government, one of whom should be a woman.
        All complaints relating to products and services with a compensation value above Rs. 1 crore can be filed with the national commission.
        When the national commission receives a complaint, it can also refer it to the opposing party and send items for testing.
        The National Commission has the authority to issue orders for product replacement and loss compensation, among other things.
        If any of the parties is not pleased with the decision taken, they can file a complaint with the Supreme Court of India within 30 days of the order being issued.
        Remedies available:
        (i) Removal of defects from the goods
        (ii) Replacement of the goods
        (iii) Refund of the price paid
        (iv) Compensation of loss or injury suffered
        (v) Removal of deficiency in service
        (vi) Discontinuance of unfair trade practices
        (vii) Stopping the sale of hazardous goods
        (viii) Withdrawal of hazardous goods from market
        Consumer awareness – Role of consumer organizations and Non-Governmental Organizations (NGOs)
        There are a number of NGO’s and consumer organizations active in India who are working for consumer protection. Their roles involve:
        Raising awareness of consumer rights among the general public.
        Educating consumers through periodicals and other publications.
        Providing consumers with legal help, such as legal counsel.
        Filing complaints on behalf of consumers in competent consumer tribunals.
        Inspiring consumers to take action against unfair business practices.
        Taking the initiative to file cases on behalf of consumers in consumer courts.

      LESSON PLAN:-01

      What is Macroeconomics?
      Macroeconomics is a branch of economics that depicts a substantial picture. It scrutinises itself with the economy at a massive scale and several issues of an economy are considered. The issues confronted by an economy and the headway that it makes are measured and apprehended as a part and parcel of macroeconomics. When one speaks of the issues that an economy confronts, inflation, unemployment, increasing tax burden, etc., are all contemplated. This makes it apparent that macroeconomics focuses on large numbers.
      Basic concepts in macroeconomics:
      Consumption goods: Consumption goods are those goods that are used by the consumers and have no use in future.
      Capital goods: Capital goods are those goods that have a future use and are used for production of consumption goods.
      Final goods: Final goods are referred to as those goods which do not require further processing. These goods are also known as consumer goods and are produced for the purpose of direct consumption by the end consumer.
      Intermediate goods: Intermediate goods are referred to as those goods that are used by businesses in producing goods or services.
      Stocks and flows:Stock refers to any quantity that is measured at a particular point in time, while flow is referred to as the quantity that can be measured over a period of time. Both the stock and flow are interdependent on each other.
      Gross investment and depreciation: Gross Investment is defined as the total expenditure or investment that is made by a company to acquire capital goods. Depreciation represents how much of an asset's value has been used.
      Circular flow of income (two sector model): The two sectors in the two-sector model are households and firms. The upper half of the diagram represents the factor market while the lower half represents the commodity market. The factors of production flow from households to firms. The firms use these factors to produce goods and services required by households.
      Methods of calculating National Income –
      Value Added or Product method:This method is used to estimate national income at the production level.
      National income is the value of final products and services generated in a country's domestic territory plus net factor income from the rest of the world at the production level.
      The goods and services produced by each producing unit is the gross output value at market prices.
      To calculate the net value added at factor cost (of all producing units) we deduct the value of intermediary goods, net indirect taxes and the depreciation value. This is the Net Domestic Product at factor cost.
      Net Factor Income from the rest of the world is added to the net domestic product at factor cost to get Net National Product at factor cost.
      Expenditure method:The expenditure method can also be used to calculate national income during the disposition phase.
      It calculates national income by calculating final expenditure on GDP at market prices. Final expenditure refers to money spent on finished items.
      The goods that are demanded final consumption and investment are known as final goods.
      All four sectors of the economy, namely households, businesses, the government, and the rest of the world, create demand for final consumption and investment.
      From the estimated GDP at market prices after summing up all final expenditures, we deduct net indirect taxes and the consumption of fixed capital (depreciation) to get the Net Domestic Product at Factor Cost.
      Net Factor Income from the rest of the world is added to the net domestic product at factor cost to get Net National Product at factor cost.
      Income method:At the distributional level, the income method is used to calculate national income.
      National income is calculated using this method by summing the incomes obtained by all factors of production for their factor services over the course of a year.
      This sum gives the net domestic product at factor cost or net value added at factor cost.
      To obtain the net national income the net factor income from the rest of the world is added to it.
      Aggregates related to National Income-
      Gross National Product (GNP): Gross national product (GNP), total market value of the final goods and services produced by a nation's economy during a specific period of time (usually a year), computed before allowance is made for the depreciation or consumption of capital used in the process of production.
      Net National Product (NNP): Net national product (NNP) is gross national product (GNP), the total value of finished goods and services produced by a country's citizens overseas and domestically, minus depreciation. NNP is often examined on an annual basis as a way to measure a nation's success in continuing minimum production standards.
      Gross Domestic Product (GDP) and Net Domestic Product (NDP) –
      at market price: Value of all the final goods and services produced by all producing units located in the domestic territory of a country during an accounting year. Includes value of depreciation or consumption of fixed capital.
      The market value of final goods and services produced within the country’s domestic territory during a year exclusive of depreciation.
      at factor cost: To understand this concept of GDP at factor cost, you first need to understand a few pointers as mentioned below.
      GDP and GVA are the tools that are used for measuring the economic growth of a nation.
      GDP stands for Gross Domestic Product and is the measure of the value of the end-products produced in a country.
      GVA stands for Gross Value Added, and it quantifies the value of the total production of goods and commodities in a nation.
      Therefore, GDP at Factor cost is the total value of goods and commodities produced in a year in a country by its all-production units. This value calculated here is inclusive of depreciation as well.
      GDP at Factor Cost = Sum of all GVA at factor cost.
      GDP at Market Price = GDP at factor cost + Product taxes + Production tax – Product subsidies – Production subsidies.
      Real and Nominal GDP: Nominal GDP measures output using current prices, while real GDP measures output using constant prices. We can explore how price changes can distort GDP using a visual representation of GDP.
      GDP and Welfare: Gross Domestic Product (GDP) is the price value of all the goods and services produced in a country in the past year. GDP per capita is a measure of how developed a country is. Welfare on the other hand is the overall wellbeing of the society including happiness, health, and economic wellbeing.

      LESSON PLAN:-02

      Money – meaning and functions: Money is a liquid asset used to facilitate transactions of value. It is used as a medium of exchange between individuals and entities. It's also a store of value and a unit of account that can measure the value of other goods.
      Supply of money – It refers to the total money held by the public at a particular point in time in an economy. The supply of money does not include the cash balances held by the national and state governments, as well as the stock of money held by the country's banking system, because these are not in active circulation in the country.
      Currency held by the public and net demand deposits held by commercial banks: Currency possessed by public + Net Demand Deposits possessed by commercial banks.
      M1 = C + DD + OD Where,
      C stands for currencies and coins possessed by the public.
      DD stands for Demand Deposits in the name of the public with the banks.
      OD stands for other deposits.
      M2 = M1 + POSB deposits.
      M3 = M1 + Time Deposits of Commercial Banks.
      M4 = M3 + Total POSB Deposits excluding the deposit on National Savings Certificates.
      Money creation by the commercial banking system: The process of money creation by the commercial banks starts as soon as people deposit money in their respective bank accounts. After receiving the deposits, as per the central bank guidelines, the commercial banks maintain a portion of total deposits in form of cash reserves.
      Central bank and its functions (example of the Reserve Bank of India):
      Bank of issue: Central banks possess the exclusive right to manufacture notes in an economy. All the central banks across the world are involved in issuing notes to the economy.
      This is one of the most important functions of the central bank in an economy and due to this the central bank is also known as the bank of issue.
      Earlier all the banks were allowed to publish their own notes which resulted in a disorganised economy. To avoid this situation the government around the world authorised the central banks to function as the issuer of currency, which resulted in uniformity in circulation and balanced supply of money in the economy.
      Govt. Bank: Another chief function of RBI is that it takes care of the banking needs of the government, which includes maintaining & operating the deposit accounts of the government, collecting the receipts of funds, and making payments on behalf of the Government of India. It also represents the Indian Government, as a member of the International Monetary Fund and the World Bank.
      Banker’s Bank: Reserve Bank acts as a common banker, known as 'Banker to banks' function, the operational instructions for which are issued by concerned central office departments of the Reserve Bank. Among other provisions, the Reserve Bank stipulates minimum balances to be maintained by banks in these accounts.
      Control of Credit through Bank Rate: Central banks possess the exclusive right to manufacture notes in an economy. All the central banks across the world are involved in issuing notes to the economy.
      This is one of the most important functions of the central bank in an economy and due to this the central bank is also known as the bank of issue.
      Earlier all the banks were allowed to publish their own notes which resulted in a disorganised economy. To avoid this situation the government around the world authorised the central banks to function as the issuer of currency, which resulted in uniformity in circulation and balanced supply of money in the economy.
      CRR(CASH RESERVE RATIO): Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank.
      SLR(STATUTORY LIQUIDITY RATIO):Statutory Liquidity Ratio or SLR is the minimum percentage of deposits that a commercial bank has to maintain in the form of liquid cash, gold or other securities. It is basically the reserve requirement that banks are expected to keep before offering credit to customers.
      Repo Rate and Reverse Repo Rate: Repo rate refers to the rate at which commercial banks borrow money by selling their securities to the Central Bank of our country i.e. Reserve Bank of India (RBI) to maintain liquidity, in case of shortage of funds or due to some statutory measures.
      Reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country.
      Open Market Operations: Open market operations refer to the selling and purchasing of the treasury bills and government securities by the central bank of any country in order to regulate money supply in the economy. It is one of the most important ways of monetary control that is exercised by the central banks.
      Margin requirement: Margin requirement refers to the difference between the current value of the security offered for loan (called collateral) and the value of loan granted. It is a qualitative method of credit control adopted by the central bank in order to stabilize the economy from inflation or deflation.

      LESSON PLAN:-03

      Aggregate demand and its components: Aggregated demand means the total demand for final goods and services in an economy.
      It is the total (final) expenditure of all the units of the economy, i.e., households, firms, government, and the rest of the world.
      Propensity to consume and propensity to save (average and marginal): It is a schedule that shows consumption expenditure at different levels of income in an economy.
      Consumption function (propensity to consume) is of two types:
      (a) Average propensity to consume (APC)
      (b) Marginal propensity to consume (MPC)
      Average propensity to Consume (APC): It refers to the ratio between total consumption(C) and total income(Y) at given level of income in the economy.
      Important Points about APC
      (i) APC is more than 1: as long as consumption is more than national income before the break-even point, APC > 1.
      (ii) APC = 1, at the break-even point, consumption is equal to national income.
      (iii) APC is less than 1: beyond the break-even point. Consumption is less than national income.
      (iv) APC falls with increase in income.
      (v) APC can never be zero: because even at zero level of national income, there is autonomous consumption.
      Marginal Propensity to Consume (MPC): Marginal propensity to consume refers to the ratio of change in consumption expenditure to change in income.
      Important Points about MPC
      (1) Value of MPC varies between O and 1: If the entire additional income is consumed, then ?C = ?Y, making MPC = 1. However, if entire additional income is saved, than ?C = 0, making MPC = 0
      (2) MPC is the slope of consumption curve and remain constant throughout in the short run.
      (3) Value of APC > MPC
      Saving function (Propensity to Save) is of two types.
      (i) Average Propensity to Save (APS)
      (ii) Marginal propensity to Save (MPS)
      Average Propensity to Save (APS): Average propensity to save refers to the ratio of savings to the corresponding level of income.
      Important Point about APS
      (1) APS can never be 1 or more than 1 :As saving can never be equal to or more than income.
      (2) APS can be zero: At break even point C = Y, hence S = 0
      (3) APS can be negative: At income levels which are lower than the break-even point, APS can be negative when consumption exceeds income.
      (4) APS rises with increase in income.
      Marginal Propensity to Save (MPS): Marginal propensity to save refers to the ratio of change in savings to change in total income.
      MPS varies between 0 and 1
      (i) MPS = 1 if the entire additional income is saved. In such a case, ?S = ?Y, then MPS = 1
      (ii) MPS = 0 If the entire additional income is consumed. In such a case, ?S = 0, then MPS = 0
      (iii) Mps is the slope of saving curve.
      (iv) MPS remains constant throughout in short run.
      Relationship between APC and APS
      The sum of APC and APS is equal to one. It can be proved as under we know:
      APC + APS = 1
      Y = C + S
      Dividing both sides by Y, we get
      APC + APS = 1
      because income is either used for consumption or for saving.
      Relationship between MPC and MPS
      The sum of MPC and MPS is equal to one. It can be proved as under:
      MPC + MPS = 1
      We kno>w
      ?Y = ?C + ?S
      Dividing both sides by ?Y, we get
      MPC + MPS = 1 because total increment in income is either used for consumption or for saving.
      Short-run equilibrium output:Short run is referred to as that period in which the firm can try varying its output by bringing about a change in the variable factors of production, which can lead to maximum profit or maximum losses.
      In this period the number of firms in the industry are fixed due to the reason that neither the existing firms are able to leave nor any new firm is able to join.
      In the short run period, the prices and wages are sticky or in other words, are slow to adjust to equilibrium level thereby creating sustained periods of shortage or surplus and thus prevents the economy from operating, as per its full potential or potential output.
      An economy is said to be in short run equilibrium when the level of aggregate output demanded is equal to the level of aggregate output supplied.
      In the AD-AS model, the short-run equilibrium output can be found at the point where the Aggregate Demand (AD) intersects the Short-Run Aggregate Supply (SRAS).
      Investment multiplier and its mechanism:Investment multiplier (K) is the ratio of change in income (?Y) due to change in investment ?I.
      Value of investment multiplier lies b/w 1 to infinitive.
      Meaning of full employment and involuntary unemployment: It is a situation when all those who are able and willing to work at prevailing wage rate, get the opportunity to work.
      Involuntary unemployment is a situation where worker is able and willing to work at prevailing wage rate but does not get work.
      Problems of excess demand and deficient demand:Excess Demand is the state in which aggregate demand is more than the aggregate supply at full employment level in the economy.
      Causes of Excess demand/Inflationary gap
      1.It occurs due to a rise in AD
      2.Rising consumption expenditure of households, due to rising propensity to consume.
      3.The rise in government expenditure.
      4.Rise in investment expenditure, due to decrease in the rate of interest or rise in expected return.
      5.Rise in export due to decrease in export duty.
      6.Fall in import due to increase in import duty.
      When AD falls short of AS at full employment it is called deficient demand. In other words, AD < AS at the level of full employment. It is called deficient demand.
      Measures to correct them – changes in government spending, taxes and money supply:
      We can control the excess demand with the help of the following policy:
      (a) Monetary Policy (b) Fiscal Policy
      Let us discuss it in detail:
      (a) Monetary Policy: Monetary policy is the policy of the central bank of a countiy to control money supply and availability of credit in the economy. The central bank can take the following steps:
      (i) Quantitative Instruments or General Tools of Monetary Policy: These are the instruments of monetary policy that affect overall supply of money/credit in the economy. These instruments do not direct or restrict the flow of credit to some specific sectors of the economy. They are as under
      Bank Rate or Discount Rate (Increase in Bank Rate)
      -> Bank rate is the rate of interest at which central bank lends to commercial banks without any collateral (security for purpose of loan). The thing, which has to be remembered, is that central bank lends to commercial banks and not to general public.
      -> In a situation of excess demand leading to inflation
      -> Central bank raises bank rate that discourages commercial banks in borrowing from central bank as it will increase the cost of borrowing of commercial bank.
      It forces the commercial banks to increase their lending rates, which discourages borrowers from taking loans, which discourages investment.
      Again high rate of interest induces households to increase their savings by restricting expenditure on consumption.
      Thus, expenditure on investment and consumption is reduced, which will control the excess demand.
      Repo Rate (Increase in Repo Rate):
      -> Repo rate is the rate at which commercial banks borrow money from the central bank for short period by selling their financial securities to the central bank.
      -> These securities are pledged as a security for the loans.
      -> It is called Repurchase rate as this involves commercial bank selling securities to RBI to borrow the money with an agreement to repurchase them at a later date and at a predetermined price.
      -> So, keeping securities and borrowing is repo rate.
      -> In a situation of excess demand leading to inflation
      Central bank raises repo rate that discourages commercial banks in borrowing from central bank as it will increase the cost of borrowing of commercial bank.
      It forces the commercial banks to increase their lending rates, which discourages borrowers from taking loans, which discourages investment.
      Again high rate of interest induces households to increase their savings by restricting expenditure on consumption.
      Thus, expenditure on investment and consumption is reduced, which will control the excess demand.
      Reverse Repo Rate (Increase in Reverse Repo Rate):
      -> It is the rate at which the central bank (RBI) borrows money from commercial bank.
      -> In a situation of excess demand leading to inflation, Reverse repo rate is increased, it encourages the commercial bank to park their funds with the central bank to earn higher return on idle cash. It decreases the lending capability of commercial banks, which controls excess demand.
      Open Market Operations (OMO) (Sale of securities):
      -> It consists of buying and selling of government securities and bonds in the open market by central bank.
      -> In a situation of excess demand leading to inflation, central bank sells government securities and bonds to commercial bank. With the sale of these securities, the power of commercial bank of giving loans decreases, which will control excess demand.
      Increase in Varying Reserve Requirements or Legal Reserve Ratio:
      -> Banks are obliged to maintain reserves with the central bank, which is known as legal reserve ratio. It has two components. One is the Cash Reserve Ratio or CRR and the other is the SLR or Statutory Liquidity Ratio.
      -> Cash Reserve Ratio (Increase in CRR):
      It refers to the minimum percentage of a bank’s total deposits, which
      it is required to keep with the central bank. Commercial banks have to keep with the central bank a certain percentage of their deposits in the form of cash reserves as a matter of law.
      For example, if the minimum reserve ratio is 10% and total deposits of a certain bank is Rs.100 crore, it will have to keep Rs.10 crore with the central bank.
      In a situation of excess demand leading to inflation, cash reserve ratio (CRR) is raised to 20 per cent, the bank will have to keep Rs.20 crore with the central bank, which will reduce the cash resources of commercial bank and reducing credit availability in the economy, which will control excess demand.
      -> Statutory Liquidity Ratio (Increase SLR):
      It refers to minimum percentage of net total demand and time liabilities, which commercial banks are required to maintain with themselves.
      In a situation of excess demand leading to inflation, the central bank increases statutory liquidity ratio (SLR), which will reduce the cash resources of commercial bank and reducing credit availability in the economy.
      (ii) Qualitative Instruments or Selective Tools of Monetary Policy: These instruments are used to regulate the direction of credit. They are as under:
      (i) Imposing margin requirement on secured loans (Increase):
      Business and traders get credit from commercial bank against the security of their goods. Bank never gives credit equal to the full value of the security. It always pays less value than the security.
      So, the difference between the value of security and value of loan is called marginal requirement.
      In a situation of excess demand leading to inflation, central bank raises marginal requirements. This discourages borrowing because it makes people get less credit against their securities.
      (ii) Moral Suasion:
      Moral suasion implies persuasion, request, informal suggestion, advice and appeal by the central banks to commercial banks to cooperate with general monetary policy of the central bank.
      In a situation of excess demand leading to inflation, it appeals for credit contraction.
      (iii) Selective Credit Control (SCC) [Introduce Credit Rationing]:>
      In this method the central bank can give directions to the commercial banks not to give credit for certain purposes or to give more credit for particular purposes or to the priority sectors.
      In a situation of excess demand leading to inflation, the central bank introduces rationing of credit in order to prevent excessive flow of credit, particularly for speculative activities. It helps to wipe off the excess demand.
      (b) Fiscal Policy: The expenditure and revenue policy taken by the general government to accomplish the desired goals is known as fiscal policy. A general government can take the following steps:
      (a) Revenue Policy (Increase Taxes):
      (i) Revenue policy is expressed in terms of taxes.
      (ii) During inflation the government impose higher amount of taxes causing the decrease in purchasing power of the people.
      (iii) It is so because to control excess demand we have to reduce the amount of liquidity from the economy.
      (b) Expenditure Policy (Reduces Expenditure):
      (i) Government has to invest huge amount on public works like roads, buildings, irrigation works, etc.
      (ii) During inflation, government should curtail (reduce) its expenditure on public works like roads, buildings, irrigation works thereby reducing the money income of the people and their demand for goods and services.
      (c) Increase in Public Borrowing/Public Debt:
      (i) This measure means that government should raise loans from public and hence borrowing decreases the purchasing power of people by leaving them with lesser amount of money.
      (ii) So, government should resort to more public borrowing during excessive demand.
      (iii) Government should make long term debts more attractive so that public may use their excess liquidity amount of money in purchasing these bonds, which will reduce the liquidity amount of money in the economy and thereby inflation could be controlled

      LESSON PLAN:-04

      Government budget – meaning:A government budget is an annual financial statement showing item wise estimates of expected revenue and anticipated expenditure during a fiscal year.
      Objectves and components:
      Objectives of Government Budget
      1.Economic growth- The overall economic growth of a nation relies on savings and investments. Budgetary policies are hence introduced to infuse enough recourse in different public sectors. Government makes provision to boost the rate of savings and investments made within the economy.
      2.Reallocation of resources- Through a budget, the government endeavours to equally allocate resources and wealth. They encourage small industries like “Khadi” to flourish by allowing subsidised loans and reduced taxes on raw material, needed for production. Government can also levy hefty taxes upon production of harmful products like cigarettes and alcohol to discourage the production of those.
      3.Redistribution of income- To close the income gap between rich and poor, several budgetary schemes are launched from the government's end. Fiscal instruments like subsidies, taxations, etc. are effectively used to achieve this goal.
      4.Financial stability- Budget keenly focuses on lowering the price fluctuations in the market. Policies like Deficit budget during deflation and Surplus budget during inflation thrive on bringing stability within the economy.
      5.Bringing down economic inequality- The Government tries to bring economic equality of society. They do so by imposing taxes on the affluent classes of society and spending them for welfare of the economically weaker section of the community.
      6.Financing Public Enterprises- Several public sector industries are established for the social welfare of the public. An annual budget provides financial aid to such businesses to grow. This objective organically strengthens the economic structure of a nation.
      7.Addressing Regional Disparity- One of the chief aims of the Government budget is to alleviate social disproportion. They achieve so by installing manufacturing facilities in the economically weaker section of the society. Also by producing goods and supply directly.
      The two main components of government budget are
      1.Revenue budget- It comprises revenue receipts and revenue expenditure of a government. These receipts are again classified into two segments: tax revenue (income, excise, corporate, custom taxes) and non-tax revenue (income and profits earned by government other than taxes).
      2.Capital budget- Just like the former one, Capital revenue is classified into capital receipts and expenditure. Capital recipients are government liabilities (borrowings, disinvestments like shares of public enterprises). However, capital expenditure is long-term investments that the government makes by creating assets like building roads, hospitals etc.
      Classification of receipts –
      Revenue receipts: The money received by a business through normal business operations is known as revenue receipts. The revenue receipts are recurring and affect the profit and loss of business on the income statement.
      Capital receipts: Capital receipt has a nature of occurring again and again in the balance sheet. The capital receipt is a cash-flow receipt and is situated in the liability portion of the balance sheet. It gradually leads to the formation of all the liabilities that can be useful in the future and can be curated well. The decrement of such assets eventually takes place in the future.
      Classification of expenditure –
      Revenue expenditure: Revenue expenditure meaning can be defined as the summation of all expenses incurred by a business through the course of production of its goods and services. They are considered significant for generating revenue in a given accounting period.
      Capital expenditure: A capital expenditure refers to the expenditure of funds for an asset that is expected to provide utility to a business for more than one reporting period. Examples of capital expenditures are as follows: Buildings
      Balanced Budget: Government’s budget is assumed to be balanced where anticipated expenditure is equal to the expected recipients in a financial year. It brings economic stability in a country by cutting down wasteful expenses. This can be expressed symbolically like, Balanced Budget = (Assumed collected revenues = Assumed expenditure)
      Surplus Budget: A surplus budget occurs when the estimated revenues exceed the expected expenditure. In this case, imposed taxes surpass the expenses. It means that the Government is taking more money under its control which leads to fall in prices.
      Deficit Budget: A budget is in deficit if the expenditure of the government is higher than that revenue generated in a fiscal year. Symbolically, Deficit budget = estimated expenditure > estimated revenues.
      Measures of government deficit.
      Increased emphasis on tax-based revenues and appropriate measures to reduce tax evasion.
      Disinvestment should be done where assets are not being used effectively
      Reduction in subsidies by the government will also help reduce the deficit.
      Try and avoid unplanned expenditures.
      Borrowing from domestic sources.
      Borrowing from external sources.
      A broadened tax base may also help in reducing the government deficit.
      To summarize, a government deficit is a condition where the budget expenditure exceeds the budget revenue receipts. This could be due to a sudden shift in budget requirements. A controlled deficit situation causes an economy to grow.
      An uncontrolled government deficit may lead to deterioration in the financial health of the economy. The agenda of the government should be to plan the revenues and expenditures such that the economy moves towards a balanced budget situation.

      LESSON PLAN:-05

      Balance of payments account – meaning:The balance of payment is a systematic record of all the economic/monetary transactions between the residents (all the units) of a country and the rest of the world in an accounting year.It is prepared on the principles of the double-entry system.
      Components: There are two components of balance of payments-
      (i) Current account
      (ii) Capital account
      Current Account: The current account is a record of businesses in commodities, transfer payments, and services. Trade-in commodities comprise the exports and imports of commodities. Trade-in services comprise factor income and non-factor income transactions or undertakings.
      Transfer payments are the receipts that the citizens of a nation get for free’, without having to provide any commodities or services in return. They consist of remittances, grants, and gifts. They could be provided by the government or by private residents living abroad.
      Capital Account: The capital account records all the international undertakings of assets. An asset is any one of the types in which wealth can be held. For instance, stocks, bonds, government debt, money, etc. The purchase of assets is a debit on the capital account. If an Indian purchases a UK car company, it enters the capital account undertakings as a debit (as foreign exchange is going out of India).
      On the other hand, the sale of assets, like the sale of the share of an Indian company to a Japanese customer, is a credit on the capital account. These items are foreign direct investments (FDIs), foreign institutional investments (FIIs), assistance, and external borrowings.
      Balance of payments – Deficit:
      A balance of payment deficit in a country can arise if said country imports more capital, goods and services than it exports.
      Balance of payment deficit is given by –
      (Current account + capital account receipts) < (current account + capital account payments)
      This BoP deficit can be balanced by utilising the country’s foreign exchange reserves to meet the BoP shortfall.
      Following are a few crucial points to remember about the BoP deficit in a country
      i.A BoP deficit can be corrected through an official reserve sale which denotes the sale of foreign exchange by the Reserve Bank.
      ii.The monetary authorities of a country are the financiers when any deficit arises in the country’s balance of payment. Conversely, they are also the recipients when there is a surplus in the country’s BoP.
      iii.An overall decrease in a country’s official reserves signifies a deficit in balance of payments.
      iv.Official reserve transactions can be accounted for only under the regime of fixed exchange rates. They cannot be considered when exchange rates are floating.
      Balance of payments –Surplus: Balance of payments surplus occurs when a country’s total exports are higher than its imports. This helps to generate capital to fund its domestic productions. With a surplus in its BoP, a country can also lend funds outside its borders.
      Balance of payment surplus occurs when –
      (Current account + capital account receipts) > (current account + capital account payments)
      A surplus in BoP can help to boost the short term economic growth of a country.
      Foreign exchange rate –
      Meaning of fixed and flexible rates: Fixed exchange rate system is referred to as the exchange system where the exchange rate is fixed by the government or any monetary authority. It is not determined by the market forces.
      Flexible exchange rate system is the exchange system where the exchange rate is dependent upon the supply and demand of money in the market.
      Managed floating Rate:In simple terms, a managed floating exchange rate is a system where currencies fluctuate daily but the regulatory authorities, including the government and the Reserve bank of India, may step in to control and stabilize the value of the currency.
      Determination of exchange rate in a free market: Every nation has a distinct methodology to decide its currency’s exchange rate.. It can be decided via three methods which are : fixed exchange rate, managed floating exchange rate or pegged exchange rate, and flexible exchange rate.
      Flexible Exchange Rate
      This exchange rate is decided by the marketplace forces of demand and supply. It is also known as the floating exchange rate. As represented in the given figure, the exchange rate is decided where the demand curve converges with the supply curve, that is, at point e on the y-axis. Point q on the x-axis decides the quantity of US $ that has been demanded and supplied on exchange rate. In a fully flexible system, the Central banks do not interfere in the foreign exchange marketplace.
      Speculation
      Money, in any nation, is an asset. If Indians credit that the British pound would go high in value compared to that of the rupee, then they would want to hold pounds. Hence, the exchange rates also get impacted when people hold foreign exchange in the anticipation that they can accrue profits from the appreciation of the currency.
      Exchange Rate and Interest Rates
      Another aspect that is significant in deciding the exchange rate is the distinctive interest rates, that is, the difference between the interest rates between the nations. There are immense amounts of funds owned by banks, MNCs, and affluent individuals that move around the globe in search of the highest percentage interest rates.
      Exchange Rates in the Long Run
      The theory of PPP or purchasing power parity is utilised to make long-run anticipations regarding the exchange rates in a flexible exchange rate structure. Conforming to the theory, if there are no frontiers to the business like taxes (tariffs on business) and quotas (quantitative constraints on imports), then the exchange rates must gradually adapt so that the same products cost the same prices whether quantified in rupees in India, yen in Japan, or dollars in the US, except for the dissimilarities in terms of transportation.
      Merits and demerits of fixed exchange rate: The main aspect of a fixed exchange rate system is that there must be a reliability that the government will be able to perpetuate and maintain the exchange rate at the mentioned degree of level. Often, if there is a deficit in the balance of payment in a fixed exchange rate system, governments have to take care of the gap by the use of their official reserves.
      If people are aware that the amount of reserves are insufficient, then they begin to be sceptical about the capability of the government to maintain the fixed rates.
      This may increase the hypothesis of devaluation. When this reliance translates into aggressive purchasing of one currency, thereby forcing the government to devalue, it is known to compose a notional attack on the currency.
      Fixed exchange rates are liable to such types of attacks as observed in the time period before the subside of the Bretton Woods system.
      Merits and demerits of flexible exchange rate: A flexible exchange rate system provides the government with more flexibility, and it does not need to perpetuate large stocks of foreign exchange reserves. The vital merit of flexible exchange rates is that movements in the exchange rate instinctively takes care of the deficits and surpluses in the balance of payment.
      Also, nations gain independence in regulating their monetary policies, since they do not have to interfere with maintaining the exchange rate, which is instinctively taken care of by the market.
      Managed Floating exchange rate system: A managed floating exchange rate is occasionally called a ‘dirty float’ as opposed to a ‘clean float’ where central banks do not intervene.
      According to numbers made public by the Reserve Bank of India, more than 40% of all countries use some sort of a managed floating regime. Without the guiding hand of Governments and their respective Central Banks, countries including Algeria, Argentina, Croatia, Egypt, Romania, Singapore, and Ukraine would face rising foreign exchange costs.
      It can be safely said that a managed float is a hybrid control system. It is neither a free-float nor a flexible float exchange rate.

      LESSON PLAN:-06

      A brief introduction of the state of Indian economy on the eve of independence: During the decades of British colonial rule in India, there were no efforts made to calculate India’s per capital income. Similarly, the British rulers never found it necessary to calculate our National Income or our Gross Domestic Product. Upon gaining independence, some Indian individuals did try to measure India’s incomes. But the attempts tragically failed due to inconsistency, lack of expertise and inaccuracy. But the contributions of VKRV Rao and DadabaiNaoroji was very significant in this field.
      Our economy had been a victim of enormous exploitation. Our natural resources, iron ores, gold mines, wealth and manpower was subject to intense exploitation. Due to these atrocities, the Indian economy on the eve of independence showed poor/low economic growth. Immense efforts and knowledge were essential in order to move ahead.
      Although India was a very independent economy before the British rule, towards the end, it was exhausted. The Indian economy on the eve of independence was struggling to find the path. Since all the policies that the British were framing only promote their interests, we were diverging from prosperity. We were mere raw-material suppliers to the British. They made use of our labour without treating them well. The 200 years of British rule also took away our will to gain knowledge and awareness. Since we were their slaves, we never got the right to proper education. And as a result of these actions, towards the end of their reign, we were illiterate. The Indian economy on the eve of independence was full of people who had absolutely no plan as to how to help the nation.
      Indian economic system and common goals of Five Year Plans: Long term objectives of Five Year Plans in India are:
      1.High Growth rate to improve the living standard of the residents of India.
      2.Economic stability for prosperity.
      3.Self-reliant economy.
      4.Social justice and reducing the inequalities.
      5.Modernization of the economy.
      The idea of economic planning for five years was taken from the Soviet Union under the socialist influence of first Prime Minister Pt. Jawahar Lal Nehru.
      The first eight five year plans in India emphasised on growing the public sector with huge investments in heavy and basic industries, but since the launch of Ninth five year plan in 1997, attention has shifted towards making government a growth facilitator.
      An overview of all Five Year Plans implemented in India is highlighted below:
      Main features, problems and policies of agriculture (institutional aspects and new agricultural strategy), industry (IPR 1956; SSI – role & importance) and foreign trade:
      Main Features of Indian Agriculture
      1. Low productivity
      2. Disguised unemployment.
      3. Dependence on rainfall
      4. Subsistence farming-objective of farmer is to secure subsistence for his family not to earn profit.
      5. Traditional inputs
      6. Small holdings
      7. Backward technology.
      8. Landlord tenant conflict.
      Problems of Indian Agriculture
      A. General Problems
      1. Pressure of population on land
      2. Land degradation
      3. Subsistence farming
      4. Social environment
      5. Crop losses-by pest, insect, flood draught etc.
      B. Institutional Problems.
      1. Small and scattered holdings.
      2. Poor implementation of land reforms.
      3. Lack of credit and marketing facilities.
      C. Technical Problems.
      1. Lack of irrigation facilities.
      2. Wrong cropping pattern.
      3.Outdated technique of production.
      Reforms in Indian Agriculture
      A. Institutional Reforms also called Land reforms.
      (i) Abolition of intermediaries.
      (ii) Regulation of rent.
      (iii) Consolidation of holdings.
      (iv) Ceiling on land holdings.
      (v) Cooperative Farming
      B. General reforms.
      (i) Expansion of irrigation facilities.
      (ii) Provision of credit
      (iii) Regulated markets and co-operative marketing societies.
      (iv) Support price policy.
      C. Technical Reforms or Green Revolution
      (i) Use of HYV seeds
      (ii) Use of chemical fertilisers.
      (iii) Use of insecticides and pesticides for crop protection
      (iv) Scientific rotation of crops
      (v) Modernised means of cultivation.
      ACHIEVEMENTS OF GREEN REVOLUTION
      1. Rise in production and productivity.
      2. Increase in income.
      3. Rise in commercial farming.
      4. Impact on social revolution-use of new technology HYV seeds, fertilisers etc.
      5. Increase in employment.
      6. Substantial Rise in Acerage
      FAILURES OF GREEN REVOLUTION
      1. Restricted to limited crops and areas such as two crops wheat & rice growing states like Punjab, Haryana, U.P. and Andhra Pradesh.
      2. Partial removal of poverty.
      3. Neglected land reforms.
      4. Increase in income disparity between small and big farmers
      5. Ecological degradation.
      INDUSTRY
      ROLE OF INDUSTRIAL SECTOR IN INDIA
      Industrialisation is important for overall growth of a country. Following points highlight the importance of Industry is an economy:
      1. Provides employment.
      2. Raises national income.
      3. Promotes regional balance.
      4. Leads to modernisation.
      5. Helps to modernise agriculture.
      6. Leads to self-sustainable development.
      7. High potential for growth.
      8. Key to high volume of exports.
      9. Growth of civilisation.
      10. Change in basic structure of economy
      11. source of Employment
      12. Imparts Dynamism to Growth Process
      Industrialisation is a pre-condition for the final take-off of an economy.
      INDUSTRIAL DEVELOPMENT SINCE INDEPENDENCE 26.4.2010-11
      Share of industrial sector in the GDP has increased upto 20% in 2013-14.
      The following important changes have taken place:
      (i) Development of infrastructure like power transport, communication, banking & finance, qualified and skilled human resource.
      (ii) Much progress in the field of research and development.
      (iii) Expansion of public sector.
      (iv) Building up of capital goods industry.
      (v) Growth of non-essential consumer goods industries.
      PROBLEMS OF INDUSTRIAL DEVELOPMENT IN INDIA
      1. Sectoral imbalances- Agriculture and infrastructure have failed to provide the support to the industrial sector.
      2. Regional imbalance- Restricted to few states.
      3. Industrial sickness- which raised the problem of unemployment.
      4. Higher cost of industrial product due to lack of healthy competition.
      5. Dependence on the Government- for reduction in tax or duty to make import easier.
      6. Poor performance of the public sector
      7. Under utilisation of capacity.
      8. Increasing capital-output ratio
      ROLE OF PUBLIC SECTOR/GOVT. IN INDUSTRIAL DEVELOPMENT
      Direct intervention of the state was considered essential in view of the following factors:
      1. Lack of capital with the private entrepreneurs.
      2. Lack of incentive among the Pvt. entrepreneurs demand due to limited size of the market.
      3. Socialistic pattern of society-main aim of Govt. is to generate employment rather than profits.
      4. Development of infrastructure.
      5. Development of backward areas.
      6. To prevent concentration of economic power.
      7. To promote import substitution.
      INDUSTRIAL POLICY RESOLUTION (IPR) 1956
      Industrial policy is an important instrument through which the govt. regulates the industrial activities in an economy.
      The 1956 resolution laid down the following objectives of industrial policy.
      (a) To accelerate the growth of industrialization.
      (b) To develop heavy industries.
      (c) To expand public sector.
      (d) To reduce disparities in income and wealth.
      (e) To prevent monopolies and concentration of wealth and income in the hands of a small member of individuals.
      FEATURES OF INDUSTRIAL POLICY RESOLUTION (IPR) OF 1956
      Features of Industrial policy resolution of 1956 were.
      1. New classification of Industries: Industries were classified into three schedule depending upon role of state.
      (a) Schedule-A- 17 industries listed in schedule-A whose future development would be the responsibility of state.
      (b) Schedule-B- 12 industries were included in schedule-B, Private sector could supplement the efforts of the Public Sector, with the state taking sole responsibility for starting new units.
      (c) Schedule-C – other residual industries were left open to private sector.
      2. Stress on the role of cottage and small scale industries.
      3. Industrial licensing: Industries in the pvt. sector could be established only through a licence from the government.
      4. Industrial concessions-were offered-pvt. entrepreneurs for establishing industry in the backward regions of the country. Such as tax rebate and concessional rates for power supply.
      SMALL SCALE INDUSTRY (SSI)
      A small scale industry is presently defined as the one whose investment does not exceed Rs. 5 crore.
      CHARACTERISTICS OF SSI OR ROLE OF SMALL SCALE INDUSTRIES
      1. Labour intensive-employment oriented
      2. Self-employment.
      3. Less capital intensive.
      4. Export promotion.
      5. Seed beds for large scale industries.
      6. Shows locational flexibility.
      PROBLEMS OF SMALL SCALE INDUSTRIE
      1. Difficulty of finance.
      2. Shortage of raw material.
      3. Difficulty of marketing.
      4. Outdated machines & equipment
      5. Competition from large scale industries.
      FOREIGN TRADE
      At the time of independence raw material was exported from India to Britain in abundance, on the other hand finished goods from Britain were imported into India.
      Notably our balance of trade was favourable (exports > imports)
      After independence India’s foreign trade recorded a noticeable change such as.
      (i) Decline in percentage share of agricultural exports.
      (ii) Increase in percentage share of manufactured goods in total exports.
      (iii) Change in direction of export trade and import trade.
      (iv) Decline of Britain as main trading Partner.
      TRADE POLICY
      In the first seven five year plans of India, the trade was commonly called an ‘inward looking’ trade strategy.
      This strategy is technically known as ‘import substitution’. Import substitution means substituting imports with domestic production. Imports were protected by the imposition of tariff and quotas which protect the domestic firms from foreign competition. Impact of Inward looking Trade strategy on the domestic industry.
      1. It helped to save foreign exchange by reducing import of goods.
      2. Created a protected market and large demand for domestically produced goods.
      3. Helped to build a strong industrial base in our country which directly lead to economic growth.
      Economic Reforms since 1991: the major factors that were responsible and let the government came up with the economic reforms since 1991 were:
      1.A decrease in foreign exchange reserves: imports grew faster than exports
      2.The unfavourable balance of payments gave rise to a repayment crisis
      3.The budget deficit worsened as public expenditure increased faster than receipts
      4.Prices increased, with a negative impact on investment
      5.Failure of state-owned enterprises: – very small high return on investment
      6.The Gulf crisis has led to a rise in crude oil prices, which has had a negative impact on the balance of payments.
      7.High ratio of deficit funding
      8.The collapse of the soviet block
      Features and appraisals of liberalisation: Liberalization was one of the three structural reforms that were adopted by the Indian government. It was adopted to put an end to various restrictions and reforms which later on became a hindrance in the development and the growth of the Indian economy. The government decided to loosen up its influence and let private sector organisations and companies enter the Indian economy and start working without or with fewer government restrictions. This allowed the economy to become liberal and grow eventually.
      Objectives Of Liberalization Policy
      There were many reasons due to which the structural reform of liberalization was undertaken by the government. They are mentioned below.
      Increase competitiveness between domestic industries
      Encourage foreign trade with other countries whose imports or exports are regulated
      Foreign capital and technological improvements
      Expand the borders of the country’s global marketplace
      A reduction in the country’s debt burden
      Major Economic Reforms Since 1991 Under Liberalisation
      1.Industrial sector reforms- these included factors and reforms like:
      oContraction off Public Sector
      oAbolition of Industrial Licensing
      oFreedom to Import capital goods
      2.Financial sector reforms- these included factors and reforms like:
      oDe-regulation of interest rates
      oReducing various Ratios like SLR and CRR
      oChange in the role of the central bank or the RBI from the regulator to facilitator of the economy and banks.
      3.Foreign exchange reforms- these included factors and reforms like:
      oDevaluation of rupee
      4.Trade and investment reforms
      5.Fiscal reforms
      6.Tax reforms
      Globalisation: Globalisation refers to the integration of the economy of the nation with the global economy. During globalization, the emphasis is placed on foreign trade and private and institutional foreign investment. It was the final LPG policy to be implemented in India. Having said that, globalization as a term is a very complicated phenomenon. The main objective is to transform the world into an independent and integrated world by defining various strategic policies. Globalisation tries to create a world without borders, where the needs of a country can come from all over the world and become a great economy.
      The most important outcome of globalisation in the Indian economy is the concept of outsourcing model. Outsourcing refers to when a company of a country hires professionals from other countries to get their work done at cheap prices. The best part about outsourcing is that the work can be done at a low cost and from the top source and human resources available throughout the world. Services such as legal advice, marketing, technical assistance, etc. were being outsourced from companies based in the US, UK, and other parts of Europe. As information technology or IT was also developing in recent years, outsourcing of contract work from one country to another increased considerably due to globalisation. As a means of communication has broadened their reach, all economic activities have increased around the world.
      Having said that, various business process outsourcing (BPOs) companies or call centers, which have their voice business process model, are being developed in India. Activities such as accounting and bookkeeping services, clinical counselling, banking or even education were being outsourced from developed countries to India.
      Benefits Of Globalization
      Towards the end, Class 11 Liberalization, Privatization and Globalisation talks about the many benefits of Globalization. You can have a look here:
      •The biggest advantage of globalisation and its outcome outsourcing is that large multinational corporations or even small businesses can benefit from good services at a lower rate than their country’s standards.
      The skill set and the availability of the human resource capital in abundance in India is regarded as the most dynamic and effective throughout the world.
      •The professionals in India are the best at what they do.
      •The low wage rate and highly skilled personnel have made India the most favourable global outsourcing destination in the subsequent phase of the reform.
      •It has helped in the growth and development of the tertiary sector of the economy and creation of more jobs and employment for the people.
      Policies Promoting Globalisation
      The main policies that were adopted by the government of India to promote and implement globalisation were:
      1.Increase in the equity limit for foreign investments
      2.Partial convertibility
      3.Long-term business and trade policy
      4.Reduction of tariffs
      Privatisation (LPG policy): This was the second policy among the three policies of LPG that were adopted by the government. Privatization policy has been used to enhance the dominant role of private sector enterprises and the diminished role of public sector enterprises. In other words, it’s reducing the ownership of the management of a government-owned company. Now these State-owned enterprises can be turned into private enterprises in two ways:
      •By disinvestment
      •By withdrawal of governmental ownership or stakes from these public sector companies
      Forms Of Privatization
      There are various forms of Privatization. They are mentioned below.
      •Denationalization or Strategic Sale: When full ownership of productive assets is transferred to private sector companies, the law is called denationalization.
      •Partial Privatization or Partial Sale: Where the private sector holds more than 50% but less than 100% of the shares of a public sector corporation whose transfer has already been interpreted, this is called partial privatization. In this case, most of the shares are held by the private sector. Accordingly, the private sector has significant control over the functionality and autonomy of the business.
      •Deficit Privatization or Token Privatization: When the government disinvest its share capital to a degree of 5-10% to compensate for the deficit in the budget is called privatization deficit.
      Objectives Of Privatization
      the various objective of privatization as a policy. They are mentioned below.
      •Improve the government’s fiscal situation.
      •Reduce the workload on public sector firms.
      •Raise capital through divestment.
      •Increase the effectiveness of governmental agencies.
      •Provide the consumer with higher quality and improved goods and services.
      •Develop healthy competition in society.
      •Encouragement of foreign direct investment (FDI) in India.
      Policies Adopted for Privatisation
      As per the unit of class 12 on Economic Reforms Since 1991, the policies that were adopted for privatisation by the government of India are as follows:
      1.Contraction of the public sector
      2.Abolishing the ownership of the Government in the management of public enterprises
      3.Sale of shares of public enterprises
      Cultural erosion
      Concepts of demonetization and GST:
      Demonetisation is referred to as the process of stripping a currency unit of its status to be used as a legal tender. In simple words, demonetisation is the process by which the demonetised notes cease to be accepted as legal currency for any kind of transaction.
      After demonetisation is done, the old currency is replaced by a new currency, which may be of the same denomination or may be of a higher denomination.
      The impact of changing the legal tender status of a currency unit has a huge impact on the economic transactions that take place in an economy.
      Demonetisation can cause unrest in an economy or it can help in stabilizing the economy from existing problems. Demonetisation is usually taken by a country for various reasons.
      The goods and services tax (GST) is a tax on goods and services sold domestically for consumption. The tax is included in the final price and paid by consumers at point of sale and passed to the government by the seller. The GST is a common tax used by the majority of countries globally. The goods and services tax (GST) is a tax on goods and services sold domestically for consumption. The tax is included in the final price and paid by consumers at point of sale and passed to the government by the seller. The GST is a common tax used by the majority of countries globally.

      LESSON PLAN:-07

      Human Capital Formation: Human capital formation is the process of increasing the number of people as resources who are skilled and have experience. These people are an asset to the economic, social, and political development of the country.
      How people become resource; People become resources through the skills they acquired, through the knowledge they apply, through the productivity they contribute, and through their abilities. To understand this better, we will focus on human capital formation first. Let’s discuss this. Human capital formation involves investment in human capital to make them more efficient so that the economy can grow better. To invest in human capital formation; one needs to spend on education, health, providing training on the jobs, etc.
      Role of human capital in economic development: When we talk about economic growth, human capital is the main reason for the accelerated growth and expansion for many countries that provide investment in human capital. This gives the best advantages to these countries for providing the best situations for work and lifestyles.
      A significant advantage in generating a stable environment for growth is that the nation has the expanded high-quality human capital in fields like health, science, management, education, and other fields. Here, the main components of human capital are definitely human beings, but presently, the principal component is a creative, educated, and enterprising person with a high level of professionalism.
      Human capital in the economy manages the central portion of the national wealth. Hence, all researchers consider that human capital is the most important resource of the community, which is more powerful than nature or wealth. In most countries, human capital determines the rate of development, economic, technological, and scientific progress.
      (i) Inventions, innovations, and technological improvement
      1.Human capital leads to more innovations in the areas of production and other related activities.
      2.Innovation leads to more growth.
      3.Human capital also creates the ability to absorb new technologies.
      (ii) Higher productivity of physical capital
      1.Human capital increases labour productivity.
      2.Trained workers will use the physical capital (like machines) more efficiently.
      (iii) Raises production
      1.The formation of human capital raises production levels and leads to economic growth by adding to the GDP.
      2.Knowledgeable and skilled workers can make better use of resources at their disposal.
      (iv) High rate of participation and equality
      1.By improving the productive measures of the labour force, the formation of human capital increases excellent employment.
      2.This leads to a high rate of participation in the labour force.
      3.It reduces the gap between the poor and the rich.
      (v) Improves the quality of life
      1.Quality of life is indicated by income and health.
      2.Income and health depend upon the level of education, skill formation, etc.
      3.The formation of human capital increases these skills and improves the quality of life of the masses.
      4.Better quality of population means more economic growth.
      Growth of Education Sector in India:
      The education sector in India is growing swiftly with large private individuals collaborating with the government to develop this sector. The government is also considering many steps to enhance the quality of education in India. Primary education is increasing and many international schools are making their presence felt in India. Parents are now willingly enrolling their children into international schools for good quality education straight from the primary level.
      In India, the government expenditure in the education sector is expressed in the following two ways:
      •Total government expenditure percentage: The total government expenditure in education shows the significance of education in the plan of things before the government. From the year 1952 to 2014, the total government education investment grew from 7.92 to 15.7.
      •Gross domestic product (GDP) percentage: The education expenditure of GDP states the total amount of income being invested in the development of education in the country. From the year 1952 to 2014, the total GDP percentage increased from 0.64 to 4.13.
      Rural development: Key issues – credit and marketing –
      Rural development is a comprehensive term which essentially focuses on action for the development of area which is lagging behind in overall development of village economy.
      Objectives of rural development:
      1. Increasing productivity of agricultural sector.
      2. Generating alternative means of livelihood in rural sector.
      3. Promoting education and health facilities in the rural areas.
      Key issues in rural development.
      (i) A robust system of rural credit.
      (ii) A system of marketing that ensures remunerative price to the farmer for his produce.
      (iii) Diversification of crops that reduce risks of production and induces commercialisation of farming.
      (iv) Diversification of production activity with a view to find alternative means of sustainable living other than crop-cultivation.
      (v) Promotion of organic farming with a view to make crop cultivation environmental friendly as well as a sustainable process over a long period of time.
      (vi) Honest system of land reforms.
      (vii) Development of human resource like health, addressing both sanitation and public health.
      (viii) Development of human resource including literacy, education and skill development.
      (ix) Development of Infrastructure like electricity, irrigation, transport facility, etc.
      Rural credit means credit for the farming communities. Farmers require credit for various purposes like purchasing agricultural tools and machines, digging wells and tube wells, purchasing seeds, fertilizers, pesticides, etc.
      The gestation period between sowing and harvesting is high. so, farmers have to borrow to fulfill their needs during this period.
      Sources of rural credit in India.
      1. Non-institutional sources are money lenders, traders and commission agents, landlord, relatives and friends.
      2. Institutional sources are as follow:
      (i) Co-operative credit societies.
      (ii) Commercial Banks
      (iii) Regional Rural Banks
      (iv) NABARD (National Bank for Agriculture and Rural Development.) (established in 1982)
      (v) Self Help Groups (SHGs)
      The above institutional structure of rural banking which is called multi-agency system which has initiated by govt. in 1969.
      Agricultural marketing means all those activities which includes-gathering the produce after harvesting, processing the produce, grading the produce according to its quality, packaging the produce according to preferences of buyers, storing the produce for future sale and selling the produce when price is lucrative.
      In other words, Agricultural marketing covers the services involved in moving an agricultural product from the farm to the consumer.
      Defects of agricultural marketing
      (i) Inadequate warehouses
      (ii) Multiplicity of middlemen
      (iii) Malpractice in unregulated markets.
      (iv) Lack of Adequate finance
      (v) Inadequate means of transport and communication.
      Measures adopted by the government to improve marketing system.
      (i) Regulation of markets.
      (ii) Co-operative agricultural marketing societies.
      (iii) Provision of warehousing facilities.
      (iv) Subsidised transport.
      (v) Dissemination of marketing information.
      (vi) Buffer stocks and minimum support price (MSP)
      (vii) Public Distribution System (PDS)
      (viii) Alternative marketing channels
      (ix) Improvement of physical Infrastructure
      Agricultural diversification:
      Diversification in agriculture activities- It has the two aspects.
      1. Diversification of crop production refers to a system of multiple cropping rather than mono cropping. It may also mean a shift from subsistence farming to commercial farming.
      It has the three advantages:
      (i) It lowers the risk of farmer on account of failure of monsoon.
      (ii) It enhances the scope for commercialisation of farming.
      (iii) Minimise the market risk arising due to price fluctuation.
      2. Diversification of productive activities imply a shift from crop farming to non-farming areas of employment. Non-farm areas of employment include.
      (i) Animal husbandry.
      (ii) Fisheries.
      (iii) Horticulture.
      (iv) Cottage and household industry.
      (v) Information technology-every village a knowledge Centre
      It has following advantages:
      1. Reduce the risk from agriculture sector.
      2. Provide ecological balance.
      3. Provide sustainable livelihood option to people living in village.
      Alternative farming – organic farming:Organic farming is a system of farming that maintains, enhances and restores the ecological balance. It helps in sustainable development of the agricultural sector, In organic forming, farmers use organic manure, bio fertilizers and organic pesticides.
      Advantages of organic farming:
      (i) Inexpensive process.
      (ii) Generates income.
      (iii) Healthier and tastier food.
      (iv) Solves unemployment problem.
      (v) Environment friendly.
      Limitation of Organic farming:
      (i) Yields from organic farming is less than modern agricultural farming in initial years.
      (ii) Organic produce have shorter shelf life than sprayed produce.
      iii) Choice in production of off-season crops is quite limited in organic farming.
      Organic farming involves labour-intensive process of production of labour so India has comparative advantage in organic farming.
      Employment:Employment most generally means the state of having a paid job—of being employed. To employ someone is to pay them to work. An employer provides employment to employees. Employment can also refer to the act of employing people, as in We're working to increase our employment of women.
      Growth and changes in work force participation rate in formal and informal sectors; problems and policies:
      Employment and Informalisation of Indian workforce
      Work plays an important role in our lives as an individual or a group of members can earn their living after doing work. Being employed gives us a sense of self-worth and enables us to relate ourselves meaningfully with others. In this way, every working person can actively contribute towards national income.
      Thus, there is need to know who is a worker and what is an employment.
      A person is classed as a worker if
      •he has contract or agreement to do work.
      •he gets reward or other benefits from doing a work.
      •he works for himself or is self-employed.
      Formal Sectors All the public sector establishments and those private sector establishments which employ 10 hired workers or more are called formal sector establishments and those who work in such establishments are formal sector workers.
      Informal Sectors All other enterprises and workers working in those enterprises form the informal sector. Informal sector includes millions of farmers, agricultural labourers, owners of small enterprises and people working in those enterprises as also the self employed who do not have any hired workers.
      Those who are working in the formal sector enjoy social security benefits. They earn more than those in the informal sector. Workers and enterprises in the informal sector do not get regular income; they do not have any protection or regulation from the government. Workers are dismissed without any compensation.
      As the economy will grow, more and more workers would become formal sector workers. Owing to the efforts of the International Labour Organisation (ILO), the Indian government has initiated the modernisation of informal sector.
      So, it can be concluded that all those who are engaged in production activities, in whatever capacity high or low, are workers.”
      Policy and Programmes
      Government seeks to solve the problem of unemployment through its poverty eradication programmes generating employment opportunities for poorer sections of the society. Rural employment Guarantee scheme is a significant recent attempt of the government, offering guaranteed employment to those in the rural areas who are below poverty line.
      Some of the basic issues related to unemployment in India are emphasised in this chapter. It also addresses the growth rate of Indian economy and various employment generation, schemes. It also specifies the need of transformation of workers from in formal sector to formal sector.
      Sustainable Economic Development: Meaning: Sustainable development is an approach to economic planning that attempts to foster economic growth while preserving the quality of the environment for future generations.
      Effects of Economic Development on Resources and Environment, including global warming: Economic development leads to the scarcity of natural resources. The present production technology makes use of renewable and non-renewable natural resources to such an extent that their regeneration becomes difficult. In this way natural resources tend to reduce. The environmental impact of economic growth includes the increased consumption of non-renewable resources, higher levels of pollution, global warming and the potential loss of environmental habitats. However, not all forms of economic growth cause damage to the environment.
      Higher levels of economic activity tend to go hand-in-hand with additional energy use and consumption of natural resources. As fossil fuels still account for 80 percent of the global energy mix, energy consumption remains closely related to greenhouse gas emissions and hence to climate forcing.

      LESSON PLAN:-07

      A comparison with neighbours
      India and Pakistan
      India and China
      (i)All the three countries started their development path at the same time. India and Pakistan got independence in 1947 and people’s Republic of China was established in 1949.
      (ii) All the three countries had started planning their development strategies in similar ways. India announced its First Five Year Plan in 1951, Pakistan announced in 1956 and China in 1953.
      (iii) India and Pakistan adopted similar strategies, such as creating a large public sector and raising public expenditure on social development.
      (iv) Both India and Pakistan had adopted ‘mixed economy’ model but China had adopted ‘Command Economy’ model of economic growth.
      (v) Till 1980s, all the three countries had similar growth rates and per capita incomes.
      (vi) Economic Reforms were implemented in China in 1978, in Pakistan in 1988 and in India in 1991.
      Development Strategy:
      A. China
      (i) After the establishment of People’s Republic of china under one party rule, all the critical sectors of the economy, enterprises and lands owned and operated by individuals, were brought under government control.
      (ii) A Programme named ‘The Great leap Forward (GLF) campaign was initiated in 1958, which aimed at industrialising the country on a massive scale. Under this programme, people were encouraged to set up industries in their backyards.
      (iii) 1965, Mao Tse Tung introduced the ‘Great Proletarian Cultural Revolution (1966-1976)’, under which students and professionals were sent to work and learn from the countryside (rural areas).
      (iv) In rural areas, commune system was started, under which people collectively cultivated lands.
      (v) Reforms were introduced in China in phases.
      (vi) In the initial phase, reforms were initiated in agriculture, foreign trade and investment sectors. In the later phase, reforms were initiated in the industrial sector.
      (vii) The reforms process also involved dual pricing. This means fixing the prices in two ways; farmers and industrial units were required to buy and sell fixed quantities of raw materials and products on the basis of prices fixed by the government and rest were purchases and sold at market prices.
      (viii) In order to attract foreign investors, special Economics Zones (SEZ) were set up. SEZ is a geographical region that has economic laws different from a country’s typical economic laws. Usually the goal is to increase foreign investment.
      B. Pakistan
      (i) Pakistan followed the mixed economy model with co-existence of public and private sectors.
      (ii) Pakistan Introduced tariff protection for manufacturing of consumer goods, together with direct import controls on competing imports.
      (iii) The introduction of Green Revolution and increase in public investment in infrastructure in select areas, led to a rise in the production of food grains.
      (iv) In 1970s, Capital goods industries were nationalised.
      (v) In 1988, structural reforms were implemented. Major thrust areas were denationalisation and encouragement to private sector.
      (vi) Pakistan also received financial support from western nations and remittances from emigrants to the Middle countries. This helped the country in stimulating economic growth.
      C. India
      After Independence, India has adopted mixed economy as economic developmental strategy. Both public and private sector co-exist side by side. In order to achieve rapid economic growth, planned development economy was introduced.
      Issues: economic growth, population, sectoral development and other Human Development Indicators
      Issues related to economic growth are the followings:
      1.High rates of unemployment or underemployment
      2.Increasing inequality, with many not being included in the growth process
      3.High rates of poverty and low growth
      4.Volatile growth dependent on one source
      5.Disruption of major economic activities due to the pandemic, e.g. tourism
      6.Lack of fiscal space to save jobs and address pandemic
      7.Macroeconomic instability and recurrent balance of payments shocks
      8.Low productivity due to poor human capital development
      9.Skills mismatch between skills you have and the jobs you want to create
      10.Lack of quality jobs; high levels of informality in the economy
      Indicators of Human Development
      Human development index rank
      •India has been on 130th rank in Human Development Index.
      Life expectancy
      •It is the age by which a particular person belonging to a particular age is expected to live.
      •Life expectancy at birth in India: Males: 67.34 years , Females: 69.64 years
      Infant mortality rate
      •It is the total number of infants dying below the age of 1 year out of 1000 babies.
      •Infant mortality rate in India is 40.5 infants.
      Maternal mortality rate
      •It is the total number of dying mothers out of 1000 mothers while giving birth to babies.
      •According to the 2011–13 census, maternal mortality rate in India is 167 deaths.
      Adult literacy ratio
      •It refers to the number of people of both the sexes, i.e., male and female aging more than 15 years having the ability to read and write.
      Pecentage of the population below poverty line
      •People below the poverty line are categorised according to calories consumed by each person per day, which is 2400 in rural areas and 2100 in urban areas.
      •Any person consuming calories less than the minimum limit mentioned above is said to be below the poverty line.