Explained

Have you ever wondered why African countries are still underdeveloped or developing. Most of the former colonies still lag behind in technological development and their economies are not yet mature. So, we'll try to understand the post-colonial world economic system from Marxist perspective. First will try to understand what is colonialism ? The policy of acquiring political control of a country and exploiting it in such a way that it completely alters the economic structure of that country and destroys its industries, manufacturing and trading sector and the country remains only the supplier of raw material with all other sectors disabled. How the sectors were destroyed is a topic of discussion for another article. Explaining briefly, the colonizers used to gain the political control of the colony, procure the raw materials from the territory and send it to their country to manufacture finished goods while barring the entry of all other European traders into their colony for tradi...

Money is primarily used to quantitatively measure the value of goods or services and supply of money plays an important role in the determination of inflation and interest rates. As the name suggests, money multiplier means ‘some’ supply of money creates a multiplier effect. Let’s see it in detail. Now let’s say there is a country called “Gokul Dham” and this country has infinite banks and infinite population but one central bank and the central bank has deposited Rs 100 in one bank named Bank#1. We know that all the deposits in the bank are the bank's liability since they are obliged to give it back to the depositors at some point in time and loans are the bank's asset. Let’s consider for the sake of understanding that the Cash Reserve Ratio is 10%. Cash Reserve ratio (CRR) is the proportion of money that banks are asked by the RBI to keep with themselves i.e they have to maintain some cash reserve with themselves and can’t loan all the money they have. Bank#1 can now loan Rs ...

Monetary Policy is a macroeconomic policy, designed by the central bank of a country, RBI in India to manage money supply in an economy. It helps shaping variables such as inflation, consumption, savings, investment, capital formation etc.  Operation twist is a newly added tool in the arsenal of monetary policy. To understand this let's first refresh the concept of bond yield through Mr. Jethalal and Ms. Babita's conversation. Babita: Hi Jethaji, I have a government security with face value of Rs 100 which gives me 10% per annum interest, and matures in a year but I am selling it as of now will you please purchase it from me? Jethalal: Yes sure, since you are selling I would purchase it for Rs 105. So, here a bond's face value is Rs 100, that is returned at the end of an year with an interest of Rs 10. Babita buys a bond at Rs 100 and if she keeps it till maturity she gets back Rs 110 while Jethalal buys the same bond at Rs 105 and if he keeps it till maturity he gets back ...

India saw the sharpest decline in the Q1 GDP growth since the quarterly figure started being published in 1996. The GDP downfall is exacerbated by COVID-19 but the slowing trend for past 3 years can't be ignored. If we break the GDP into its components from the production side, we have Agriculture, manufacturing, and service sectors. The worst affected sector is the construction sector, seeing a decline of 50%,  trade, hotels and other services(-27%), manufacturing(-39%), and mining (–23%) leading to a decline in income or job loss, in term reducing the purchasing power of an individual. Now let's look through another lens and break the GDP in terms of spending: Consumption, Investment, Government spending, Net export. India is a consumption-based economy and its growth is primarily driven by private consumption, which accounted for about 56% before this quarter, followed by investments, which accounted for 32%. So, GDP in terms of spending,  GDP=C+I+G+Net Export. C=Private co...

Tax is a compulsory financial charge levied on the citizens of a country to finance government's spending. When we earn our salary we pay a portion of it to the govt. based on the tax slab we lie in, called the direct tax while when we eat in a restaurant or order something online, we are levied with a surplus charge on our orders called an indirect tax. Earlier we used to have a very complicated tax system and the same products where sold at different prices in different states like petrol since different states charged different taxes. With the implementation of GST, the indirect tax system has become uniform. Here the GST has 3 parts: i) CGST (Central Goods and Service Tax) collected by the central government. ii)SGST (State Goods and Service Tax)  collected  by the state. iii)IGST (Integrated Goods and Service Tax)  shared  by the central govt. and the destination state when the transaction is inter-state. So, when a good is manufactured and sold in the same stat...

The Indian smartphone market is about $28.5 Billion as per a 2018 report and a 2019 report indicates an 8% year-over-year growth. In layman's term if last year sales were worth $100 this year's sales will be of $108. As of Jan 2020 report, India's digital population is approximately around 700+ million, 2nd in the world and is rising rapidly supported by cheap data and various government initiatives. Seems quite a big market, isn't it? 4 of the top 5 companies that dominate the Indian smartphone market are Chinese and these top 5 brands capture almost 85-90% of the Indian market share (as of 2019).  Let's see how the US and the global market look like.   Here we observe that Samsung and LG other than Apple are non-Chinese big market players in the smartphone industry. It is found that 30-40% of the smartphones sold in India are in the range of 10k-18k and is the fastest-growing segment. For the matter of mid-range smartphones, Samsung and LG have a huge opportunity ...