MICROECONOMICS AND MACROECONOMICS

Studying the subject matter of economics like Theory of demand and supply , consumer behavior, national income , balance of payment , unemployment, etc. We come across two broad categories of economics one is macroeconomics, taking the economy as a whole and other is microeconomics.

Distinction between the two will not be easy until we see the scope and importance of both the categories. So here it begins.

Macroeconomics and Microeconomics
Macroeconomics and budget

Microeconomics (from Greek prefix mikro- meaning “small” + economics)  , here microeconomics is made from two words i.e micro which means Small + Economics that means economics studied at small scale.

It studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individual. Microeconomics generally applies to markets of goods and services and deals with individual and economic issues.

The specific concepts being focused under microeconomics are:

1.marginal utility and demand.

2. diminishing returns and supply.

3. elasticity of demand.

4. elasticity of supply.

5. market structures (excluding perfect competition and monopoly)

6. role of prices and profits in determining resource allocation.

Some Important microeconomic theories on :

1. Consumers .

2. Production.

3. Cost production

4.Opportunity cost theory

The major importance of Microeconomics is as given below:

1 . It helps in price determination and also explains how the prices of various factors of production are determined.

2. Microeconomics theory also helps in understanding the working of the free market economy as in free market economy , decisions are based on the preference of the consumer or demand for the product.

3. We understand many international trade aspects like effects of tariff, determination of exchange rates, gains from international trade etc. It is also useful in public finance to analyze both, the incidence as well as effect of a particular tax in microeconomics.

Finance

3.  microeconomics also explains how we can utilize our scarce resources effectively and efficiently and how can we maximise our output.

Not only is it useful in efficiently allocating the scarce resources to productive uses but it also helps control the use of the allocated resources as well.

4 . Theories of microeconomics also help managers in taking rational busienss decisions .

5. Microeconomic Concepts also helps governments and policymakers in framing policy for the country for the welfare of our economy.

6. As , microeconomics help in optimum utilization of resources thus it helps in zero wastage of our resources.

If we talk about SCOPE OF MICROECONOMICS then microeconomics includes variour concepts like :-

1. COMMODITY PRICING : Helps in determining the price of a perticular comodity.

2 . FACTOR PRICING : It helps us in studying how prices of factors are detrimined .

3. SOCIAL WELFARE : optimum utilization of resources will eventually leads to efficient allocation of scarce resources thus contributing to social welfare.

Macroeconomics

Summing up , we conclude that Microeconomic approach of economics helps us study and understand the practical working of the economy. The entire economy is complex and complicated for a layman to analyze. However, microeconomics facilitates easy comprehension of the economic system.

MACROECONOMICS:

Macroeconomics is a branch of economics that studies how an overall economy—the market systems that operate on a large scale—behaves. It studies economy-wide phenomena such as inflation, price levels, rate of economic growth, national income, gross domestic product (GDP), and changes in unemployment.

 If we talk about SCOPE OF MACROECONOMIC then it covers following topics :-

1. National income.

2. Employment.

3. Resources.

4. Postulate of General price level.

5. Idea of economic growth.

Importance of Macroeconomics:

1. Helps to understand the functioning of a complicated modern economic system. It describes how the economy as a whole functions and how the level of national income and employment is determined on the basis of aggregate demand and aggregate supply.

2. Assist us in achieving the goal of economic growth, higher level of GDP and higher level of employment. It analyses the forces which determine economic growth of a country and explains how to reach the highest state of economic growth and sustain it.

3. It helps to bring stability in price level and analyses fluctuations in business activities. It suggests policy measures to control Inflation and deflation.

4. Macroeconomics explains factors which determine balance of payment. At the same time, it identifies causes of deficit in balance of payment and suggests remedial measures.

5. Provides a way to solve economic problems like poverty, unemployment, business cycles, etc., whose solution is possible at macro level only, i.e., at the level of whole economy.

Economical growth

6. With detailed knowledge of functioning of an economy at macro level, it has been possible to formulate correct economic policies and also coordinate international economic policies.

7. Last but not the least, is that macroeconomic theory has saved us from the dangers of application of microeconomic theory to the problems of the economy as a whole.

CONCEPT OF MACROECONOMICS :

▪︎ Income and Output

One of the most important concepts of macroeconomics is income and output. The national output is the total amount of all goods and services produced in a country during a specific period. And when production units or organizations sell everything they produce, they generate an equal amount of income

GDP
GDP

▪︎Unemployment

Another important component of macroeconomics is unemployment. Economists measure the unemployment rate in an economy by calculating the percentage of individuals without jobs.

▪︎Inflation and Deflation

The study of inflation and deflation is another important aspect of macroeconomics. The term inflation refers to an increase in the prices of goods and services across the country. On the other hand, the term deflation refers to a decrease in the prices of goods and services.

MACROECONOMIC POLICIES :

The two main macroeconomic policies that a government may apply to bring about stability are the monetary policy and the fiscal policy.

▪︎Monetary Policy

The monetary policy is an important process, which is under the control of the monetary authority of a country. This monetary authority is usually the central bank or the currency board. The monetary policy is usually implemented by the central bank to stabilize prices and to increase the strength of a country’s currency.

The monetary policy also aims to reduce unemployment rates and stabilize GDP. It also controls the supply of money in an economy.

▪︎Fiscal Policy

The fiscal policy is a process that makes use of a government’s revenue generation. It also utilizes expenditure as tools to control economic windfalls. The government uses the fiscal policy to stabilize the economy during a business cycle.

Microeconomics and Macroeconomics

Summing up , we conclude that Macroeconomics deals with the performance, structure, and behavior of the entire economy. In contrast to microeconomics, it is less focused on the choices made by individual actors in the economy (like people, households, industries, etc.)

NATIVISM AND RISING UNEMPLOYMENT CRISIS IN INDIA

Indian politics has already come up with different versions of “sons of the soil” theory over the decades. Recently, Shivraj Singh Chouhan, the Chief Minister of Madhya Pradesh announced that only those domiciled in their state would be eligible for the government jobs in Madhya Pradesh.

Though it is not unique, it directly signifies accepting of nativism in a democratic country like India.

Recently, some other states like Madhya Pradesh introduced some domicile eligibility for the government as well as private job seekers.

‘Sons of the soil’ theory and “Nativism”:

These two terms are profoundly interrelated to each other.

Sons of the soil” theory defines as the view that a particular state belongs to the main linguistic community inhabiting it or the state constitutes the exclusive homeland of its native resident.

Nativism is the political policy by which native-born or established residents are given more preference than immigrants by supporting some immigration-restriction measures.

For several months to the worldwide lock down, the unemployment rate in India has taken a drastic hit. According to the data compiled by India today’s data intelligence unit, the unemployment rate in April 2020 touched 23.52% which was almost three times the average number of 2019 and 2020.

Under the critical circumstances, many states are thinking to walk through the same path as the Madhya Pradesh government took.

Mr. Chauhan’s declaration was served as a commitment to the youths of the state, but in reality, it is a cause of concern. Maharashtra government is also moving forward towards measures to give privilege to locals in employment in private sectors.

Nativism cannot figure out India’s unemployment issue:

Although regional parties always give focus to the resident, Nativism is not a solution to India’s rising joblessness. The policy may help the residential job seekers to some extent but unable to eradicate the rate of unemployment in the country.

Nevertheless, mainstreaming of nativism is partially a good sign in the case of languages. Some states demand a certain proficiency in local languages to be worked in the government sector mainly, which is for administrative purposes.

There are also some limitations in tribal areas apart from the cultures and way of living which comes under India’s diversity.

On the other side, if the area is restricted then it would be a new challenge for youths to explore their career. Moreover, migrant populations fulfill a market demand which is made by gaps in skills.

That is why government laws of the past in several states in the mandatory quota system for locals in jobs were not applied.

Conclusion:

India is currently facing severe joblessness crisis and it affects the young minds. Unemployment is the ratio of the people who are seeking jobs and not getting jobs compared to all job seekers.

India’s growing unemployment rate denotes the failure of society to give the jobs. Nativism can create a barrier for migrants that may beneficial for local people but it also affects the economy.

It would hinder the path of youngsters across the country to brainstorm by creating this kind of policy.

By Saswati Chattopadhyay.

DO YOUNG PEOPLE HAVE GREATER OPPORTUNITIES THAN WERE AVAILABLE 30 OR 40 YEARS AGO?

The answer to this statement is YES & No.

They have more opportunities for all things technically. However, neuro scientists are telling us that these are not good for small children. And so I would lean the answer to the fewer opportunity side.

Back in those days when technologies were limited and people were not much aware of the fact that they are more capable of what they are doing.

Back in those days there were opportunities but people kind of neglected it. They had a basic mindset and their thinking level was very much grounded and they all believed that all these opportunities were a waste of time.

If we talk in India people back then were quite dependent on agriculture and thought that it was enough for them and their survival. But we have also seen people during that era have achieved what was unachievable at that moment.

We have praise the people who have achieved this immense feat with limited resource and hard work. But today when the technologies have advanced and everything is at our fingertips we have slightly have an upper hand.

If we want to pursue a course or a degree we can look at it on the internet and get details about it but in those days there was no internet. So we can say that we can edge past the people if the things are technical and related to the field of internet.

One thing we can look at is COMPETITION.

Right now we all are aware that we have to fight for our success but 30-40 years ago things were quite different, the competition was quite less back then compared to today.

Today it is so much difficult for a person to get a government job but back then it was much easier because people were not aware of the opportunities that they had.

But as we gradually grew our thoughts and mindset changed, people started to look at more things and then came more competition. But competition is not the sole reason to this debate.

I know that competition would be in those days but what matters the most is the HARDWORK one puts into it. Hard work is often the key to success. The people who are not blessed with good talents are left to work hard.

RIGHT WE HAVE MORE OPPORTUNITIES THAN WE HAD 30-40 YEARS AGO

We all are humans and we all evolve from a phase to another, so this process starts to happen we open some new opportunities for people. For instance we can say call centers; who would knew that India would run worlds 44% of outsourcing.

It happened because we all are evolving at a steady pace. And who knows that we would have way more opportunities 10 years later than we have now.

 ONE OF THE MAIN REASON FOR MORE OPPORTUNITIES NOW IS GLOBALIZATION

Due to globalization a person sitting in Bangalore can run a company in US. Most of the top companies are doing this because of globalization. Like for example we can say UBER owns no cars. The world’s most popular media company FACEBOOK, creates no content. The world’s most valuable retailer, ALIBABA carries no stock. And the world’s largest accommodation provider AirBnB owns no property. SOMETHING BIG IS GOING ON.

In the end we could say that there were ample amount of opportunities around us now or 30-40 years back, it’s us who has to the right step for it to grasp it.

Written By: Kartik Singh Negi         

COVID Impact: Workers Laid Off

This is imperative to that so far there had been no official estimate of loss brought about by lockdown implemented over the months due to corona-virus pandemic. A mutilate effect on an economy as large as India’s caused due a complete lockdown was impended. Unemployment across the country has ascended due to the coronavirus pandemic with sector making probably the greatest employment cuts.

The unemployment rate in the respective months of lockdown

A lockdown to restriction the spread of corona virus has seen 122 million Indians lose their positions in April alone, new information from a private examination office has appeared. Around 75% of them were little brokers and pay workers. Tamil Nadu was among the most exceedingly hit States. Its assessed unemployment rate in April was the most elevated among States and its work cooperation rate among the least. Kerala had the most reduced labour investment rate in April.

Glimpses of hopeless labourers, especially daily-wage workers, escaping urban areas filled TV screens and papers for the greater part of April. Their casual occupations, which utilize 90% of the populace, were the first to be hit as development halted, and cities suspended public vehicles.

Yet, extended curfews and the continued with the closure of organizations – and the unsure of when the lockdown will end – haven’t saved formal, secured occupations either.

Huge organizations across different divisions – media, aeronautics, retail, cordiality, autos – have reported enormous cutbacks as of late. What’s more, specialists anticipate that numerous small and medium organizations are probably going to close shop completely more critical glance at CMIE’s information shows the overwhelming impact the lockdown has had on India’s composed economy. Of the 122 million who have lost their positions, 91.3 million were little merchants and workers. In any case, a genuinely huge number of salaried specialists – 17.8 million – and independently employed individuals – 18.2 million – have likewise lost work.

India’s unemployment rate increased to 26.2 per cent in the third week stretch of April amid coronavirus lockdown, a report said. The all-inclusive lockdown is just expected to additionally hit the work economic situations, Mahesh Vyas, Managing Director and CEO, Center for Monitoring Indian Economy (CMIE), said. “The work rate has tumbled from 40 per cent in February to 26 per cent now. This is a steep fall of 14 rate focuses. This infers 14 per cent of the working-age populace has lost their jobs. The working-age populace is of the request for a billion,” Mahesh Vyas likewise said in an article on the CMIE site. Fourteen crore individuals are relied upon to have lost work in the lockdown time frame, he said. Thus, the pace of work support has plunged to 35.4 per cent from 35.5 per cent. The work rate has now plunged to 26.1 per cent as against 27 per cent in the previous week, it included.

The worker markets are under equivalent pressure both in provincial and urban territories, he included. The pace of unemployment in provincial India stands higher at 26.7 per cent as against urban 25.1 per cent. “During the most recent seven day stretch of March and in the initial fourteen days of April, the unemployment rate drifted around 23-24 per cent. In the 1st week, it was 23.8 per cent; in the second week it dropped a piece to 23.4 per cent yet in the third week it bobbed back to 24 per cent. The differences were minor and all in all, they affirmed that the unemployment rate had for sure increased to around 24 per cent following the lockdown,” Mahesh Vyas further mentioned. The instability of the unemployment rate in urban India is additionally astounding, he said. The unemployment rate in urban India flooded to 30 and 31 per cent, individually in the first and second weeks of the lockdown. “At that point, in the accompanying fourteen days, it fell rather strongly to 23 and 25 per cent. This is a fairly sharp fall in the joblessness rate in urban India in spite of the fact that it remains very raised,” the report said.

In the meantime, the joblessness rate remained at 8.74 per cent in March, most noteworthy since August 2016 when demonetization occurred, an ongoing report by CMIE said. In August 2016, the unemployment rate was 9.59 per cent. While the joblessness rate was recorded at 9.35 per cent in urban zones, it remained at 8.45 per cent in provincial pieces of the nation, the information likewise appeared. In February, it was recorded at 7.78 per cent.

Unemployment rose to 24 per cent on May 17, 2020. This was perhaps an aftereffect of a diminishing sought after just as the disturbance of the workforce looked up by organizations. Moreover, this caused a GVA loss of nine per cent for the Indian economy that month.

Who suffered the most?

The direst outcome is for workers who don’t have a secure job. In the travel industry, for example, this class incorporates individuals who either work in temporary transient agreements or even without them. This incorporates guides, workers, cleaners working in shops, servers in cafés, vegetable sellers, meat, and flower vendors.

For these labourers, the infection flare-up has implied lost vocation. Industry body CII said that the greater part of the travel industry and accommodation industry can go wiped out with a potential loss of more than 20 million occupations if recuperation in the business extends past October 2020.

The content is comparative in numerous different administrations enterprises, in assembling and non-fabricating areas, for example, development. Lower development on account of falling interest and flexibly imperatives would make new occupation creation harder, yet besides, hurt the individuals who are now hired. Generally, around 136 million non-agrarian employments are at impending danger, gauges dependent on National Sample Survey (NSS) and Periodic Labor Force Surveys (PLFS) information proposed. These are individuals who don’t have a composed agreement and incorporate casual workers, the individuals who work in the non-enrolled small-scale industry, enlisted small organizations, and even the self-employed.

While the daily paid workers are enduring the worst part in the primary period of the pandemic, organizations across businesses could give termination notice on momentary agreements next. More than 5,000,000 Indians have work contracts not exactly a year in incumbency.

Demographic disaster

The COVID-19 pandemic comes at a troublesome segment time for India and would just aggravate an approaching employment emergency. India needs to make almost 10 million vacancies consistently to ingest individuals moving into the working-age populace, other than those that are as of now jobless.

The Adecco Group India, a staffing organization, has planned the effect of COVID-19 spread across work in some Indian companies. It said around 9,000,000 occupations can be decreased over the assembling groups of materials, capital merchandise, textiles, food items, metals, plastics, elastic, and gadgets. Manpower cuts in the automobiles began last quarter due to falling deals.

 The coronavirus circumstance will just intensify joblessness. Adecco assessed that the vehicle business can lose up to a million occupations in the vendor biological system, forefront jobs, and the semi-talented. Around 600,000 ground and bolster jobs on contract in the avionics business are in danger.

Unmistakably, a work advertises crunch right currently can without much of a stretch transform into a bad dream. Other than the chance of social agitation, expect more requests for additional reservations in government occupations.

“The ramifications of this emergency will be critical. We will have less financial space to make truly necessary interests in, for instance, instruction, aptitudes, safeguard social insurance, and foundation. This won’t simply keep us from pushing ahead however will slow down us. Our enormous and developing youth populace will be additionally disappointed, conceivably prodding social conflict, wrongdoing, and flimsiness,” she included.136 million at risk

Santosh Mehrotra, a human development economist, and professor at the Centre for Informal Sector and Labour Studies at Jawaharlal Nehru University pegs India’s labour force at 495 million. In 2017-18, about 30 million were unemployed, which implies that 465 million are currently employed.

Who among the already hired are the most helpless ones? The simple answer is those that don’t have the security for their job; those with no social assurance. They are graded as “impermanent” labourers.

The portion of the formal segment was fixed at 90.7% generally and 83.5% in the non-agriculture areas. Most gauges in the paper depend on NSS and PLFS information. Since there are 260 million individuals hired in India’s non-farm unit (agribusiness utilizes another 205 million), the number of casual specialists aggregates around 217 million across administrations, producing, and non-production zone.

One shade of insecure work among the casual groups is those that have no composed employments contract. Numbers sorted out from the Mehrotra paper proposes that around 28 million have no composed activity contracts in assembling; 49 million in non-producing; and 59 million in administrations in 2017-18. In general, around 136 million labourers in India, or over a large portion of the absolute employee hired in non-agriculture parts, have no agreements and remain at risk in the repercussion of the corona pandemic.

They can be terminated without notice or severance. Most daily wage workers or informal workers fall in this section. Their torment is found in Twitter and TV channels—recordings of several vagrant labourers strolling back to their towns. A lot of them work in buildings. Work in land development, for instance, is affected because real estate dispatches and deals are travelled south given that lower economic development is presently a conviction.

In the United States workforce, 44% of individuals are engaged in low-salary, temporary employment—the fragment of the working populace that is turning into the first to lose their positions because of the pandemic. Left to confront expanded monetary load, they are getting scared of the fact that where and when their next pay will originate from. They are even very nearly thinking if their families will have the option to endure this epic emergency.

With the loss of their occupations, they can’t pay for necessities including rent, utilities, and food. Additionally, schools were providing meals for youngsters, presently leaving these kids in danger of confronting hunger with schools being shut. With fears of appetite, vagrancy, and certain misery on the ascent for this effectively defenceless populace.

Because of this desperate circumstance, embrace relief is propelling a battle with your assistance to give the same number of individuals in the U.S. with money related help for lease, food, and utilities during the Coronavirus pandemic. one just can’t leave this defenceless populace to confront this difficulty all alone and realize that particularly amid aggregate concern.

The trickle-down effect

 Between February and April 2020, the share of households that experienced a fall in income shot up to nearly 46 per cent. Inflation rates on goods and services including food products and fuel were expected to rise later this year. Social distancing resulted in job losses, specifically those Indian society’s lower economic strata. Several households terminated domestic help services – essentially an unorganized monthly-paying job. Most Indians spent a large amount of time engaging in household chores themselves, making it the most widely practised lockdown activity.

By Dimple