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Chapter 1 Development

Chapter 2 SeCtorS of InDIan eConomICS

Chapter 3 money anD CreDIt

Chapter 4 QuaDratIC eQuatIonS

Chapter 5 GlobalIzatIon anD InDIan eConomy

Chapter 6 ConSumer rIGhtS

PART V

Economics

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1Development

CHAPTER

Development

We the people have needs and aspirations to have better life, bet-ter surroundings, better infrastructures, etc. Thus, development is a long and complex process in a given human society. Economics is a subject, which deals with an understanding of development and seeking answers to these questions. It is through a demo-cratic political process that these desired goals of equality and justice—economic, social and political—are to be achieved in our real life too.

SyllabuSDefine development. Define income and per capita income. Define national development and issues related to national development. Define the concept of sustainable development

IntroDuctIonDevelopment is a complex issue as development means dif-➤➤

ferent things to different people. Development is a comprehensive term, which involves devel-➤➤

opment of political, social and economic life of the people.To understand development, it is also important to understand ➤➤

our past as the way we live today is influenced by the past.We can achieve the goal of development through the demo-➤➤

cratic political process.Development means all round changes for betterment.➤➤

Development—DIfferent people, DIfferent GoalSDifferent persons have different notions because each of them seeks different things. They seek things that are most important for them,

i.e., which can fulfil their aspirations or desires. Different people have different goals because they are different and they are lead-ing their life in different situation but their general goal is progress. There are two things (a) Different persons can have different devel-opment goals. (b) What may be development for one may not be development for other. It may even be total destruction for other.

Traditional Notion of Development (i) With the independence of the Third World countries, there

aro se a need for economic development. Till 1960s, the term economic development was generally used as a syn-onym of economic growth. But now it is no longer consid-ered identical with economic growth.

(ii) Definitely notion about the meaning of term development is changing but it is also a hard fact that there is no unanimity among economists with regard to the meaning on definition of economic development.

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Industrial Output Inflation Exoports Imports

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MonthsIndustrial Output Inflation Exoports Imports

India Economy

In P

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or II

P &

Inf

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In B

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US

Dol

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PART V Economics

(iii) However, all agree that economic development is more than the economic growth. Hence, it is taken to mean growth plus progressive changes in certain variables of material welfare.

Changes In The Traditional Notion of Development (i) The increase in income is not sufficient for a nation. Income can

be a major base of economic growth of a nation. But experi-ences had shown that economic growth could not automatically translated into the improvement of levels of living of the poor masses. Therefore, economists redefined the concept of eco-nomic development in terms of the reduction of poverty, unem-ployment and inequality in the context of a growing economy.

(ii) Now-a-days, redistribution and growth have become the popular slogan in most of the progressive nations, includ-ing India. The concept of economic growth is related to the increase in output of goods and services in an economy. This can be expressed in two ways: (i) increase in total out-put or increase in gross domestic product (GDP): and (ii) rise in per capita income or rise in per capita GDP.

(iii) Economic development is a broader concept than economic growth. Development concerns not only man’s material needs but also the improvement of social conditions of life. It is, therefore, not only economic growth but growth plus change in social, cultural and institutional pattern. It includes both growth aspect and distribution aspect. Development must, therefore, be conceived of as a multi-dimensional concept.

Income anD other GoalSSustained increases in income through wages, decent price ➤➤

for the crops are few primary goal of development.Money, or material things that one, can buy with it, is one ➤➤

factor on which our life depends.But the quality of our life also depends on non-material things ➤➤

mentioned above.If it is not obvious to you, then just think of the role of your ➤➤

friends in your life. You may desire their friendship.

Similarly, there are many things that are not easily measured ➤➤

but they mean a lot to our lives.Apart from income people requires freedom, security and ➤➤

respect in the society, which are non-material goods.There are many things that are not easily measured but they ➤➤

mean a lot for our lives.Sometimes people prefer regular and steady income, rather ➤➤

than fluctuating income.Thus, we can conclude that people look at mix of goals, for ➤➤

development. Goals are not only about income.

how to compare Development InDIfferent countrIeS or StateS?For comparing countries, their income is considered to be one of the most important attributes. Countries with higher income are more developed than others with less income. To find the income of a country, we have to find out the National Income of that country and its per capita income.

National IncomeNational Income is defined as the total value of all the goods and ser-vices produced within a country plus income coming from abroad.

Per Capita IncomeWhen the total national income is divided by the total popula-tion it gives us the Per Capita Income. In World Development Report 2006, brought out by the World Bank, this criterion is used in classifying countries. Countries with per capita income of `453000 per annum and above in 2004, are called developed or rich countries and those with per capita income of Rs 37000 or less are called low-income countries. India comes in the cat-egory of low-income countries because its per capita income in 2004 was just Rs 28000 per annum

White Averages are Useful for Comparison, They Also Hide DisparitiesLet us consider two countries, A and B. For the sake of simplic-ity, we have assumed that they have only five citizens each.

Comparison of Two CountriesCountry Monthly incomes of citizens in 2007 (in rupees)

I II III IV V AverageCountry A 9500 10,500 9800 10,000 10,200 50,000Country B 500 500 500 500 48,000 50,000

Will you be equally happy to live in both these countries? Are both equally developed? Perhaps some of us may like to live in country B if we are assured of being its fifth citizen but if it is a lottery that decides our citizenship number then perhaps most of us will prefer to live in country A. Even though both the countries have identical average income, country A is preferred

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Chapter 1 Development

Notes: 1. HDI stands for human development index. HDI ranks in

above table are out 177 countries in all. 2. Life expectancy at birth denotes, as the name suggests.

Average expected length of life of a person at the time of birth.

3. Gross Enrolment Ratio for three levels means enrolment ration for primary school, secondary school and higher education beyond secondary school.

4. Per Capita Income is calculated in dollars for all coun-tries so that it can be compared. It is also done in a way so that every dollar would buy the same amount of goods and services in any country.

On the basis of HDI, 177 countries of the world have been classified into high, medium and low human develop-ment categories. India is placed into the group of medium human development countries with 126th rank.

Life Expectancy in years = 64 years Combined gross enrolment ratio = 60 GDP per capita US $ = 3139

because it has more equitable distribution. In this country peo-ple are neither very rich nor extremely poor. On the other hand, most citizens in country B are poor and one person is extremely rich. Hence, while average income is useful for comparison, it does not tell us how this income is distributed among people.

Income anD other crIterIaApart from income, people require basic services like health ➤➤

and education facilities.High income alone cannot guarantee these basic services. ➤➤

These services are to be provided by the government then only human development is possible.For example, Punjab has a highest per capita income out of ➤➤

three states Kerala is at the bottom has very low (11) infant mortality rate as compared to Punjab (49).In Kerala literacy rate is 91%, which is only 70% in Punjab.➤➤

Some Comparative Data on Punjab, Kerala and Bihar

State Infant Mortality Rate per 1,000

(2003)

Literacy Rate (%)

(2001)

Net Attendance Ratio for Class I–V

(1995–96)

PunjabKeralaBihar

491160

709147

819141

Explanation of some of the terms used in this table:Infant Mortality Rate➤➤ (or IMR) indicates the number of children that die before the age years as a proportion of 1000 live children born in that particular year.Literacy Rate➤➤ measures the proportion of literate population in the 7 and above age group.Net Attendance Ratio➤➤ is the total number of children of age group 6–10 attending school as a percentage of total number of children in the same age group.

Kerala Punjab

Bihar

human Development reportToday human development is the core of United Nations Development Programme (UNDP), which presents it into a new perspective of political and economic freedom and deepening of democracy at global level, which is economically productive

and socially and environmentally sound. The United Nations Development Programme (UNDP), in its first Human Development Report, 1990 introduces the concept of Human Development Index (HDI). The HDI is the cumulative measurement of the (a) longevity, (b) knowledge and (c) decent standard of living.

Longevity is a choice to live a long and healthy life. It is measured in terms of life expectancy (years).

Knowledge is a choice to acquire literacy/information. It is mea-sured by educational attainment percentage, which is a combined gross enrolment ratio in primary, secondary and tertiary levels.

Decent standard of living is a choice to enjoy a quality and standard life. It is measured by national income or income per capita in Purchasing Power Parity in US dollar (PPP, US $).The rank of a country is determined by the overall achievements in these three basic dimensions of human development. HD ranks countries in relation to each other to tell them how far a country has travelled, and how far it has yet to travel the path of develop-ment. In this way, HDI is indicative to the levels of human devel-opment and not the complete measurement of development.

Some Data Regarding India and its Neighbours for 2004Country Per

capita income in US$

Life expec-tancy at birth

Literacy rate for 15+ yrs popula-tion

Gross enrolment ration for three levels

HDI rank in the world

Sri LankaIndiaMyanmarPakistanNepalBangladesh

439031391027222514901870

746461636263

916190505041

696048356153

93126130134138137

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PART V Economics

Human Development and Economic Development (i) Economic development is a broader concept. It is eco-

nomic growth plus something more than economic growth. The basic ideas in economic development are rise in pro-ductivity decline in unemployment, poverty and inequality from high levels. Economic development alone cannot pro-mote human development. Human development is the pro-cess of both quantitative change and qualitative growth.

(ii) The concept of human development was taken into a broader sense. It touches social, economic, political and cultural aspects of human life with special emphasis on reduction in poverty and minimizing gap between rich and poor. There should not be unemployment problem in the economy. The concept of human development touches all aspects of human life.

SuStaInabIlIty of DevelopmentThe concept of sustainability of development has gained ➤➤

momentum due to environmental concerns and the rate of resource depletion Ground water is an example of renewable resource but the ➤➤

rate at which we are using then it may not be replenished by rain water.Sustainability of development means that development should ➤➤

take place at the same time environment should be conserved from degradation.Sustainability of development also means that needs of the ➤➤

present generation should not be compromised and at the same time resource should be conserved for coming generation.Non-renewable resources are those resources, which will get ➤➤

exhausted after years of use. So we have to use them judiciously.The consequences of environmental degradation do not ➤➤

respect national or state boundaries and is no longer region or nation specific.

Sustainability of development is a new area of knowledge in ➤➤

which scientists, economists, philosophers and other social scientists are working together.Few examples to suggest the need for sustainable development.➤➤

Crude Oil Reserves

Region / country Reserve (Billion)

No. of years it will last

Middle East USAWorld

894

137

931043

Important termSNational Income: ➤➤ Total value of all goods and services pro-duced within a country plus income coming from abroad.Per Capita Income (Average Income): ➤➤ It is obtained by dividing the national income by the population of the country,

Per Capita Income =National Income

Mid year Population−

Other factors like equitable distribution of income should also be taken into consideration while comparing per capita income of different countries.Infant Mortality Rate (IMR): ➤➤ In a year, number of children that die before the age of one year per 1000 children born live. Gross Enrolment Ratio: ➤➤ It refers to enrolment ratio for pri-mary schools, secondary schools and higher education beyond secondary schools.Economic Development: ➤➤ A sustained increase in real per cap-ita income that promotes economic welfare by reducing pov-erty, unemployment and inequalities in distribution of income.

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2Sectors of Indian Economics

CHAPTER

SectorS of IndIan economIcSPeople are engaged in various economic activities. Some of these are activi-ties producing goods. Some others are producing services. These activities are happening around us every minute even as we speak. How do we under-stand these activities? One way of doing this is to group them using some important criteria. These groups are also called sectors.

SyllabuSSectors of economic activities; comparing the three sectors—the primary, secondary and tertiary sectors in India; division of sectors as organized and unorganized. Features of different sectors. Types of unemployment. Ways to remove unemployment.

economIc actIvItIeSActivities, which provide us income in return, are known as economic activities.

The economic activities can be divided into three sectors—primary, secondary and tertiary sectors.

Primary SectorWhen the economic activity depends mainly on exploitation of natural resources then that activity comes under the primary sector. Agriculture and agriculture-related activities are the pri-mary sectors of economy.

Secondary SectorWhen the main activity involves manufacturing then it is the secondary sector. All industrial production where physical goods are produced come under the secondary sector.

Tertiary SectorWhen the activity involves providing intangible goods like ser-vices then this is part of the tertiary sector or service sector. Financial services, management consultancy, telephony and IT are good examples of service sector.

comparIng the three SectorSThe various production activities in the primary, secondary ➤➤

and tertiary sectors produce a very large number of goods and services. Also, the three sectors have a large number of people working in them to produce these goods and services.The next step, therefore, is to see how much goods and ➤➤

services and produced and how many people work in each sector.In an economy, there could be one or more sectors, which ➤➤

dominate in terms of total production and employment, while other sectors are relatively small in size.

Industry &Manufacturing

32%

Transportation28%

Residential22%

Commercial18%

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Economists suggest that the values of goods and services ➤➤

should be used rather than adding up the actual numbers. For example, if 10,000 kg of wheat is sold at `8/kg, the value of wheat will be `80,000. The value of 5000 coconuts at `10/piece will be `50,000. Similarly, the value of goods and ser-vices in the three sectors are calculated, and then added up.Not every good (or service) that is produced and sold needs ➤➤

to be counted. It makes sense only to include the final goods and services. Take, for instance, a farmer who sells wheat to a flour mill for `8/kg. The mill grinds the wheat and sells the flour to a biscuit company for `10/kg. The biscuit company uses the flour and things, such as sugar and oil to make four packets of biscuits. It sells biscuits in the market to the con-sumers for `60 (`15/packet). Biscuits are the final goods, i.e., goods that reach the consumers.The value of final goods already includes the value of all ➤➤

the intermediate goods that are used in making the final good.The value of final goods and services produced in each sec-➤➤

tor during a particular year provides the total production of the sector of the year. The sum of production in the three sectors gives what is called the gross domestic product (GDP) of a country—GDP shows how big the country’s economy is.If we include the value of intermediary goods, it will lead to ➤➤

double counting.The task of measuring GDP is undertaken by a Central ➤➤

Government ministry (NSSO). With the help of all the Indian states and union territories, collect information relating to total volume of goods and services and their prices and the estimates the GDP.Secondary sector gradually became the most important in ➤➤

total production and employment.The service sector has become the most important in terms ➤➤

of total production. Most of the working people are also employed in the service sector.

hIStorIcal change In SectorSAt initial stages of development, primary sector was the most important sector of economic activity. As the methods of farming changed and agriculture sector began to prosper. It produced much more food than before. Many people could now take up other activities. Over a long time (more than 100 years), and especially because new methods of manufactur-ing were introduced, factories came up and started expanding. Those people who had earlier worked on farms now began to work in factories in large numbers. People began to use many more goods that were produced in factories at cheap rates. Secondary sector gradually became the most important in total production and employment. Hence, over time, a shift had taken place. This means that the importance of the sectors had changed.

In the past 100 years, there had been a further shift from secondary to tertiary sector in developed countries. The ser-vice sector has become the most important in terms of total production. Most of the working people are also employed in the service sector. This is the general pattern observed in developed countries.

Interdependency of SectorsTo understand this interdependency, let us take an example of a cold drink. A cold drink contains water, sugar and arti-ficial flavour. Suppose if there is no sugarcane production then procuring sugar will become difficult and costly for the cold drink manufacturer. Now to transport sugarcane to sugar mills and sugar to the cold drink plant needs the services of a transporter. A person or system of persons is required to main-tain and monitor all these movements of goods from farm to factory to shop in different locations. That is where role of administrative staffs comes. Let us go back to the farmer. He also needs fertilizers and seeds, which are processed in some factory and which will be delivered to his doorstep by some means of transportation. To top it all, at every step of these activities we require the proper monetary and banking system. So, in a nutshell this describes how interrelated all sectors of an economy are closely observe the following figures. The first figure shows the rupee wise turnover of various sectors in 1973 and 2003. The second figure shows the share of three sectors in the GDP during these 20 years and last graph shows share in providing employment.

Value of Sectors in indian EconomyRs. Crore

250000

200000

150000

100000

50000

01973 2003

Tertiarysectot

Secondarysector

Primarysector

Share of sector in GDP

120.00%100.00%

80.00%

40.00%

60.00%

20.00%0.00%

1973 2003

TertiarysectotSecondarysectorPrimarysector

35%

20%

45%25%

20%

55%

Share of Sectors in Employment

120.00%

100.00%

80.00%

40.00%

60.00%

20.00%

0.00%1973 2000

TertiarysectotSecondarysectorPrimarysector

15%10%

75%60%

18%

22%

Growth and Status of Different Sectors in India

The first graph shows a massive increase in turnover for all these sectors during 20 years, which shows the way our econ-omy grew. The second graph shows that share of agriculture decreased substantially and that of industry remained static and share of services grew. Particularly the growth of share of ser-vices sector was phenomenal from 35% to 55%.

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Chapter 2 Sectors of Indian Economics

Now the third graph paints a distressing picture. The share in providing employment was not in tune with the share in GDP. The agriculture provided employment to 75% workers and this decreased to 60% in 2000, which is not as big a drop as agriculture’s drop in GDP contribution. On the other hand, the growth in employment provided by other two sectors was substantially low.

The meaning of this finding is as follows: 1. Majority of people are still employed in agricultural activ-

ities. As agriculture provides seasonal employment dur-ing cropping season so chances of hidden employment are big. Moreover, as history suggests a developed nation’s dependency shifts from primary sector towards tertiary sector in all aspects of economic development, so it can be said that India is still way behind because majority still depend on agriculture.

2. Secondary and Tertiary Sector have failed to generate enough employment opportunities making a pressure on primary sector. Although educated and skilled workforce do get employed in secondary and tertiary sector but for unskilled and semi-skilled workers there is still shortage of employment avenues.

other claSSIfIcatIonS of economy

Organized SectorThe sector, which carries out all activity through a system and follows the law of the land, is called organized sector. Moreover, labour rights are given due respect and wages are as per the norms of the country and those of the industry. Labour working organized sector get the benefit of social security net as framed by the Government. Certain benefits like provident fund, leave entitlement, medical benefits and insurance are pro-vided to workers in the organized sector.

These security provisions are necessary to provide source of sustenance in case of disability or death of the main bread-winner of the family. Otherwise, the dependents will face a bleak future.

Unorganized SectorThe sectors, which evade most of the laws and do not follow the system, come under unorganized sector. Small shopkeepers, some small scale manufacturing units keep all their attention on profit-making and ignore their workers basic rights. Workers do not get adequate salary and other benefits like leave, health benefits and insurance are beyond the imagination of people working in unorganized sectors.

Public SectorCompanies which are run and financed by the Government com-prise the public sector. After independence, India was a very poor country. India needed huge amount of money to set up manufactur-ing plants for basic items like iron and steel, aluminium, fertilizers and cements. Additionally infrastructure like roads, railways, ports and airports also require huge investment. In those days, Indian entrepreneurs were not cash-rich; so the government had to start creating big public sector enterprises like SAIL (Steel Authority of India Limited), ONGC (Oil & Natural Gas Corporation).

Private SectorCompanies, which are run and financed by private people, com-prise the private sector. Companies like Hero Honda, Tata are from private sectors.

Government-Aided Schemes to Fight UnemploymentGovernment, from time to time, announces and implements various employment scheme to fight unemployment or hidden employment to help the weaker section of society. Schemes like NREG (National Rural Employment Guarantee) is the latest announced by the UPA government in 2004. This programme guarantees a minimum of 100 days of employment to at least one person from every rural household. This is part of government’s effort to ensure the ‘Right to Work’ to the rural poor citizen.

Important termS

Poverty: ➤➤ It implies the inability to secure the minimum consumption need for life.Poverty Line: ➤➤ It is defined as the minimum intake of 2400 calories in rural areas and 2100 calories in urban areas per person per day.Unemployment: ➤➤ It refers to a situation in which all able and willing persons do not get suitable jobs.Technological Unemployment: ➤➤ Unemployment caused by technological improvements or advances is called techno-logical unemployment.Frictional Unemployment: ➤➤ Unemployment caused by the rigidities and frictions in the economy.Structural Unemployment: ➤➤ Unemployment caused by the fact that the economy is going through structural changes.Deficit Financing: ➤➤ Spending more than its earning by the government.Workforce: ➤➤ It means labour force minus the unemployed.

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3Money and Credit

CHAPTER

Money and CreditMoney is a fascinating subject and full of curiosities. It is important to capture this element for the students. The history of money and how

various forms have been used at different times is an interesting story. At this stage, the pur-pose is to allow students to realize the social situation in which these forms have been used. Modern forms of money are linked to the banking system.Credit is a crucial element in economic life and it is, therefore, important to first understand this in a conceptual manner. The world around us offers a tremendous variety of such ar-rangements and it would be ideal to explain these aspects of credit from situations that are familiar to your students.The other crucial issue of credit is its availability to all, especially the poor, and on reasonable terms. We need to emphasize that this is a right of the people and without which a large sec-tion of them would be kept out of the development process.

SyllabuSBarter system, problems created by barter system. Modern forms of money. How it has solved the problem of barter system? Need for credit. Formal and informal sources of credit. Problems of informal sources of credit.

Key PointSThe use of money spans a very large part of our everyday life.➤➤

In many transactions, goods are being bought and sold with ➤➤

the use of money.For some, there might not be any actual transfer of money ➤➤

taking place now but a promise to pay money later.A person holding money can easily exchange it for any com-➤➤

modity or service that he or she might want.Thus everyone prefers to receive payments in money and then ➤➤

exchange the money for things that they want.

ProbleMS Created by the barter SySteMBarter system was a system of exchange that was prevalent ➤➤

before the use of money in ancient and medieval period.It was a system in which good was exchange with other good. ➤➤

There was no common medium of exchange.

This created many problems, which can be illustrated by an ➤➤

example.Take the case of a shoe manufacturer. He wants to sell shoes ➤➤

in the market and buy wheat.Imagine how much more difficult it would be if the shoe man-➤➤

ufacturer had to directly exchange shoes for wheat without the use of money.He would have to look for a wheat growing farmer who not ➤➤

only wants to sell wheat but also want to buy the shoes in exchange.That is, both parties have to agree to sell and buy each other’s ➤➤

commodities.This is known as double coincidence of wants. What a person ➤➤

desires to sell is exactly what the other wishes the need for double coincidence to buy.In a barter system where good are directly exchanged without ➤➤

the use of money, double coincidence of wants is an essential feature.

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PART V Economics

iMPortanCe of MoneyA person holding money can easily exchange it for any com-modity or service that he or she might want. Everyone prefers to receive payments in money and then exchange the money for things that they want.

Double Coincidence of WantsDouble coincidence of wants mean both parties i.e., the buyer and the seller have to agree to sell and buy each other’s commodities.

In a barter system where goods are directly exchanged with-out the use of money, double coincidence of wants is an essen-tial feature. In an economy where money is in use, money by providing the crucial intermediate step eliminates the need for double coincidence of wants.

Money as Medium of ExchangeSince money acts as an intermediate in the exchange process, it is called a medium of exchange. (i) Medium of exchange is an important function of money. It

means that money acts as an intermediary for the goods and services in an exchange of transaction. Use of money as a medium of exchange has removed the major difficulty of double coincidence of wants in the barter system.

(ii) The medium of exchange, function of money has classified all transactions on the basis of time and place. Now, the seller of goods need not sell his goods at a particular time and place and buy goods of the same value as well.

(iii) The ‘medium of exchange’ function of money implies that money is generally acceptable by the people. They can buy goods and services they need using money. That is, money facilitates multilateral trade.

(iv) Money also offers economic freedom to the people.

Role of Money in an Economy (i) Money plays an important role in the economy of a country.

The use of money is at every step of life. In fact it would be hard to imagine life without money.

(ii) The main function of money in an economic system is to facilitate the exchange of goods and services, i.e., to lessen the time and effect required to carry on trade.

(iii) Without exchange of goods and services nobody can fulfill all his needs and requirements. Without money, exchange is not easy. Barter system has many problems.

(iv) We are living in world, with a very large group of coun-tries and their population. As the group becomes larger and larger, problems begin to emerge more and more with the barter system.

(v) Modern economies are highly specialized. There is special-ization of firms, of business, of regions, of types of capital, etc. Such specialization allows the utilization of each per-son at the best of his or her ability and skill, each region to the maximum advantage, and the use of large amounts of

specialized capital to reap economics of scale. The fruits of this are high standards of living and productivity. All this spe-cialization will not be possible without an equal highly devel-oped system of exchange and trade, i.e., the use of money.

(vi) Money serves the economy of the country performing the following four most important functions:

(a) A unit of value (b) Medium of exchange (c) A standard deferred payments and (d) Store of value

Modern forMS of MoneyMoney is something that can act as a medium of exchange in ➤➤

transactions.Before the introduction of coins, a variety of objects was used ➤➤

as money.For example, since the very early ages, Indians used grains ➤➤

and cattle as money.Thereafter came the use metallic coins—gold, silver, copper ➤➤

coins—a phase, which continued well into the last century.

Why Currency is Accepted as A Medium of Exchange? (i) It is accepted as a medium of exchange because the cur-

rency is authorized by the government of the country. (ii) The law legalizes the use of rupee as a medium of payment

that cannot be refused in settling transactions in India. No indi-vidual in India can legally refuse a payment made in rupees.

Monetary System Adopted By India (i) India has adopted paper currency standard, which is also

referred as the managed currency standard. (ii) The monetary standard means the types of standard money

used and the standard refers to legal money in which the government discharges its obligations. The monetary standard is, thus, synonymous with the standard money adopted. Thus in India paper currency is the unlimited legal tender i.e., it is used to settle debts and make payments to an unlimited amount.

(iii) Reserve Bank of India issues all currency notes and coins except one rupee notes and coins, which are issued by min-istry of finance.

(i v) The system governing note issue is the minimum reserve sys-tem, which means that we have kept a reserve of 200 crore and the Central Bank is permitted to issue notes to any extent.

Deposits With BanksThe other form in which people hold money is as deposits ➤➤

with banks.At a point of time, people need only some currency for their ➤➤

day-to-day needs.The extra cash available with the people is deposited in the ➤➤

bank account in their names.

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Banks accept the deposits and also pay an interest rate on the ➤➤

deposits.In this way people’s money is safe with the banks and it earns ➤➤

an interest.People also have the provision to withdraw the money as and ➤➤

when they require.Since the deposits in the bank accounts can be withdrawn on ➤➤

demand, these deposits are called demand deposits.Demand deposits offer another interesting facility. It is this ➤➤

facility, which lends it the essential characteristics of money (that of a medium of exchange).

Cheque and its AdvantagesDemand deposits offer another interesting facility. Any per-son who has an account with the bank can make his payments through cheques. A cheque is a paper instructing the bank to pay a specific amount from the person’s account to the person in whose name the cheque has been made.

A Cheque leaf

(i) It is the safest mode of transactions. (ii) It is easy to carry a cheque as compare to money. (iii) The facility of cheques against demand deposits makes it

possible to directly settle payments without the use of cash.

Cred it card

ROLE THE BANKS PLAY IN THE ECONOMY OF A COUNTRYThe banks play an important role in the economy of a country (i) They keep the money of the people in safe custody other-

wise people can become an easy prey of thieves or robber. (ii) They give interest on the money deposited by the people.

Thus they add to the income of the depositor. Many fami-lies survive on the bank interest.

(iii) The banks mediate between those who have surplus money and those who need money.

(iv) Banks provide cheap loans to a large number of people.

(v) Banks promote agriculture by providing loans to the farmers who can increase their production by bringing new farm implements and make better arrangements for the irrigation of their fields without which they cannot survive.

(vii) The banks are the backbone of the country’s trade also. (viii) Banks employ a large number of people and as such they

solve the employment problem also.

CENTRAL BANKBanks boost the country’s industry also by providing cheap loans to the industrialists, etc.Is an apex institution in the banking and financial structure of a country. It plays a leading role in controlling, regulating, super-vising and developing the banking and financial structure of the economy.

Function of A Central Bank (i) It issues the currency notes. (ii) It acts as a banker to the government. (iii) Central Bank acts as a banker of banks. (iv) Central Bank also functions as the custodian of foreign

exchange reserve of a country. (v) It controls credit. (vi) It also performs developmental and promotional functions. (vii) It maintains relation with the international organizations,

such as the World Bank, IMF, etc. (viii) It conducts research studies and surveys and publishes

reports. (ix) It formulates an appropriate monetary policy for the

country. (x) It provides training facilities to the staff working in a vari-

ous banking institutions in the country.

Commercial BanksA banking company is one, which transacts the business of bank-ing, which means accepting deposits for the purpose of Indian com-panies lending or investment, deposits of money from the public, repayable on demand or otherwise withdrawable by cheque, draft etc. Commercial banks are also called joint stock banks because they are organized in the same manner as joint stock companies.The main features of commercial banks are as follows: (i) It deals with money; it accepts deposits and advances loans. (ii) It also deals with credit. It has the power to create credit. (iii) It is a commercial institution, whose aim is to earn profit. (iv) It is a unique financial institution that creates demand. (v) It deals with the general public.

loan aCtivitieS of banKSWhat do the banks do with the deposits which they accept ➤➤

form the public?Banks keep only a small proportion of their deposits as cash ➤➤

with themselves.

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For example, banks in India these days hold about 15 per cent ➤➤

of their deposits as cash.This is kept as provision to pay the depositors who might ➤➤

come to withdraw money from the bank on any given day.Since, on any particular day, only some of its many depositors ➤➤

who might come to withdraw cash, the bank is able to manage with this cash.Banks use the major portion of the deposits to extend loans.➤➤

There is a huge demand for loans for various economic ➤➤

activities.Banks make use of the deposits to meet the loan requirements ➤➤

of the people.In this way, banks mediate between those who have surplus ➤➤

funds (the depositors) and those who are in need of these funds. (Investors).Banks charge a higher interest rate on loans than what they ➤➤

offer on deposits.The difference between what is charged from borrowers and ➤➤

what is paid to depositors is their main source of income.

CreditCredit (loan) refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment.

Two Different Credit Situations (i) During the situation of a sudden demand, the producers

obtain credit to meet the working capital needs for produc-tion. The credit helps him to meet the ongoing expenses of production on time, and thereby increases his earn-ing. Credit therefore plays a vital and positive role in this situation.

(ii) In rural areas, the main demand for credit is for crop cultiva-tion. Farmers usually take crop loans at the beginning of the season and repaythe loan after harvest. Repayment of the loan is crucially dependent on the income from farming. The failure of the crop makes the loan repayment impossible. Credit instead helping them in improving their earnings, left those worse off. This is an example of what is commonly called debt trap. Credit in this case pushes the borrower into a situation from which recovery is very painful.

Role of Credit for Development (i) It plays a major role in the development of a country by

creating better facilities for agricultural and industrial activities.

(ii) Moreover, it helps people from all walks of life insetting up their business, increase their earnings and support their families.

(iii) To some people, loans help a lot in constructing their houses and get rid of monthly rents.

(iv) To others, loans or credit help a lot in raising their social sta-tus by enabling them to buy cars, scooters, televisions etc.

Swapna’s ProblemSwapna, a small farmer, grows groundnut on her three acres of land. She takes a loan from the moneylender to meet the expenses of cultivation, hoping that her harvest would help repay the loan. Midway through the season the crop is hit by pests and the crop fails. Though Swapna sprays her crops with expensive pesticides, it makes little difference. She is unable to repay the moneylender and the debt grows over the year into a large amount. Next year, Swapna takes a fresh loan for cul-tivation. It is a normal crop this year. But the earnings are not enough to cover the old loan. She is caught in debt. She has to sell a part of the land to pay off the debt.

Terms of CreditInterest rate, collateral and documentation requirement, and the mode of repayment together comprise what is called the terms of credit. The terms of credit vary substantially from one credit arrangement to another. They may vary depending on the nature of the lender and the borrower,

CollateralIs an asset that the borrower owns (such as land, building, vehi-cle, livestock, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid? If the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to obtain payment. Property, such as land titles, deposits with banks, livestock are some common examples of collateral used for borrowing.

Loans From CooperativesBesides banks, the other major sources of cheap credit in rural areas are the cooperative societies (or cooperatives). Members of a cooperative pool their resources for cooperation in certain areas. There are several types of cooperatives possible, such as farmers’ cooperatives, weavers’ cooperatives, industrial work-ers’ cooperatives, etc. Krishak Cooperative functions in a village not very far away from Sonpur. It has 2300 farmers as members. It accepts deposits from its members. With these depositions as collateral, the Cooperative has obtained a large loan from the bank. These funds are used to provide loans to members. Once these loans are repaid, another round of lending can take place.

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Krishak Cooperative provides loans for the purchase of agricul-tural implements, loans for cultivation and agricultural trade, fishery loans, loans for construction of house and for a variety of other expenses.

Formal and Informal Sector Credit in IndiaThe various types of loan can be conveniently grouped as for-mal sector loans and informal sector loans.

Formal SectorAmong the formal sectors are loans from banks and ➤➤

cooperatives.The Reserve Banks of India supervises the functioning of for-➤➤

mal sources of loans.For instance, we have seen that the banks maintain a mini-➤➤

mum cash balance out of the deposits they receive.The RBI monitors the banks in actually maintaining cash ➤➤

balance.Similarly, the RBI sees that the banks give loans not just to prof-➤➤

it-making businesses and traders but also to small cultivators.

TradersRelatives and

Friends

Others

Landiords

30%Moneylenders

27%Cooperative

Societies

25%Commercial

Banks

3%7%

7%

1%

Small scale industries, to small borrowers etc.➤➤

Periodically, banks have to submit information to the RBI on ➤➤

how much they are lending, to whom, at what interest rate, etc.This sector changes very low rate of interest.➤➤

Informal SectorThere is no organization, which supervises the credit activi-➤➤

ties of lenders in the informal sector.They can lend at whatever interest rate they choose. There ➤➤

is no one to stop them from using unfair means to get their money back.Compared to the formal lenders, most of the informal lenders ➤➤

charge a much higher interest on loans.Thus, the cost of the borrower of informal loans is much ➤➤

higher.Higher cost of borrowing means a larger part of the earnings ➤➤

of the borrowers is used to repay the loan. Hence, borrowers have less income left for themselves.In certain cases, the high interest rate of borrowing can mean ➤➤

that the amount to be repaid is greater than the income of the borrower.This could lead to increasing debt and debt trap.➤➤

For these reasons, banks and cooperative societies need to ➤➤

lend more.

This would lead to higher incomes and many people could ➤➤

then borrow cheaply for a variety of needs.They could grow crops, do business, set up small-scale indus-➤➤

tries etc.They could set up new industries or trade in goods. Cheap and ➤➤

affordable credit is crucial for the country’s development.

forMal and inforMal Credit: Who GetS What?

The people are divided into four groups, from poor to rich.➤➤

85 per cent of the loans taken by poor households in the urban ➤➤

areas are from informal sources.

Rural credit

Compare this with the rich urban households.➤➤

Only 10 per cent of their loans are from informal sources, ➤➤

while 90 per cent are from formal sources.A similar pattern is also found in rural areas.➤➤

The rich households are availing cheap credit from formal ➤➤

lenders, whereas the poor households have to pay a heavy price for borrowing.First, the formal sector still meets only about half of the total ➤➤

credit needs of the rural people.The remaining credit needs are met from informal sources. ➤➤

Most loans from informal lenders carry a very high interest rate and do little to increase the income of the borrowers.Thus, it is necessary that banks and cooperatives increase ➤➤

their lending particularly in the rural area, so that the depen-dence on informal sources of credit reduces.Secondly, while formal sector loans need to expand, it is also ➤➤

necessary that everyone receives these loans.At present, it is the richer households who receive formal credit, ➤➤

whereas the poor have to depend on the informal sources.

SELF-HELP GROUP FOR THE POOR (i) A typical self-help group can have 15 to 20 members usu-

ally belonging to the same village. (ii) The main motive of self-help group is to pool the savings of

the poor people.

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Mind-MaP

(iii) Saving per member can vary from `25 to `100 or more depending on the ability of the people and the strength of the group.

(iv) The self-help groups provide loans to their members at a reasonable rate.

(v) After a year or two, if the group is regular in savings, it becomes eligible for bank loans.

(vi) Loan is sanctioned in the name of the group with the main motive to create self-employment opportunities for the members.

(vii) In the recent years, many commercial and cooperative banks have provided loan to these self-help groups for releasing mortgaged land, for meeting working capital needs, for housing materials, for acquiring assets like sewing machines, handlooms, cattle etc.

(viii) Most of the self-help groups work in a democratic way, i.e., it is the group, which decides regarding the loans to be granted, interest to be charged, schedule etc.

(ix) A case of non-repayment of loan by any member is fol-lowed up seriously by other members in the group and because of this feature the commercial banks do not hesi-tate to lend loans to these groups.

(x) The most important feature of self-help groups is that most of these groups are being organized by women. These are helping women to become financially self-reliant. The regular meetings of the group provide a platform to dis-cuss and act on a variety of social issues, such as health, dowry, domestic violence, child marriage etc.

Grameen Bank of BangladeshGrameen Bank of Bangladesh is one of the biggest success stories in reaching the poor to meet their credit needs at reasonable rates. Started in the 1970s as a small project, Grameen Bank now has over 6 million borrowers in about 40,000 villages spread across Bangladesh. Almost all of the borrowers are women and belong to poorest sections of the society. These borrowers have proved that not only are poor women reliable borrowers, but that they can start and run a variety of small income-generating activities successfully.

“If credit can be made available to the poor people on terms and conditions that are appropriate and reasonable these millions of small people with their millions of small pursuits can add up to create the biggest development wonder.”

Professor Muhammad Yunus, the founder of Grameen Bank,

and recipient of 2006 Nobel Prize for Peace

Important TermsMoney:➤➤ Money may be defined as anything, which is gener-ally accepted by the people in exchange of goods and services or in repayment of debts.

According to Crowther, ‘Money can be defined as anything ➤➤

that is generally accepted as a means of exchange and at the same time acts as a measure and as a store of value.’Barter exchange/Barter system: ➤➤ It implies direct exchange of goods against goods without use of money is called barter exchange. It is also called CC economy, i.e., commodity for commodity exchange economy. When a weaver gives cloth to the farmer in return for getting wheat from that farmer, this is called barter exchange.Money as Legal tender money:➤➤ Currency (coins and notes) is bound to accept it and it is in exchange for goods and ser-vices and in discharge of debts. None can refuse to accept it because non-acceptance is an offence. It is issued by the government or duly authorized Central Bank.Demand Deposits: ➤➤ Deposits in a bank, which are payable on demand are called demand deposits. It also provides the facility of medium of exchange, which is a function of money, when payments are made by cheques.Cheque: ➤➤ It is a paper instructing the bank to pay a specific amount from the person’s account to the person in whose name the cheque has been made.Loan activities of banks: ➤➤ Basically, banks borrow money to lend. Banks pay interest (suppose x per cent) from whom it borrows. After keeping a portion of deposits as reserves, banks lend to people who demand money as loan and bank charges interest (suppose y per cent) from them. The differ-ence between what is changed from borrowers (y per cent) and what is paid to depositors is their main sources of income.Credit (loan):➤➤ Credit refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment. Main demand for credit is for crop production in case of rural areas.Debt trap: ➤➤ Suppose a person takes a loan and due to unavoid-able circumstances he is not able to repay his loan. Now he faces a difficult situation and has to take a loan to repay the previous loan. This situation is called debt trap.

Limitation of Barter SystemWhen goods were exchanged for goods➤➤

Lack of double coincidence of wants➤➤

Lack of divisibility➤➤

Difficulty in storing wealth➤➤

Functions of moneyAs a medium of exchange➤➤

Measure of value➤➤

Standard of offered payment➤➤

Store of value➤➤

Loan ActivityFormal sources➤➤

Banks collects money from depositors and gives for invest-➤➤

ment and charges interest.Rate of interest is low.➤➤

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Needs collateral➤➤

Informal sources➤➤

Not registered by the government➤➤

Charges high rate of interest➤➤

No requirement of collateral➤➤

Forms of MoneyPaper works and coins, which has been authorized by the ➤➤

governmentDeposit with bank➤➤

Amount of money people hold in banks which they can ➤➤

withdraw on demand.Cheque➤➤

Paper, which authorizes a bank to pay a certain amount ➤➤

from once accountDebit cards➤➤

Money that can be withdrawn from ATM from one ➤➤

accountSelf -Help Groups

Consists of 15–20 members➤➤

They pool their resources.➤➤

Members get the credit at a very low rate of interest.➤➤

Banks also provide loan to them.➤➤

It is a micro-level credit policy and programmer in rural ➤➤

areas.

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4Globalization and Indian Economy

CHAPTER

Globalization and indian EconomyIndian economy had experienced major policy changes in early 1990s. The new economic reform, popularly known as Liberalization, Priva-tization and Globalization (LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive. The

series of reforms undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient.

Globalization has many meanings depending on the context and on the person who is talking about. Though the precise definition of globalization is still unavailable, a few definitions are worth viewing, Guy Brainbant says that the process of globalization not only includes opening up of world trade, development of advanced means of commu-nication, internationalization of financial markets, growing importance of MNCs, pop-ulation migrations and more generally increased mobility of persons, goods, capital, data and ideas but also infections, diseases and pollution. The term globalization refers to the integration of economies of the world through uninhibited trade and financial

flows, as also through mutual exchange of technology and knowledge.

Ideally, it also contains free inter-country movement of labour. In context to India, this implies opening up the economy to foreign direct investment by providing facilities to foreign companies to invest in different fields of economic activity in India, removing constraints and obstacles to the entry of MNCs in India, allowing Indian companies to enter into foreign collaborations and also encouraging them to set up joint ventures abroad; carrying out massive import liberalization programs by switching over from quantitative restrictions to tariffs and import duties; therefore, globalization has been identified with the policy reforms of 1991 in India.

SyllabuSWhat is globalization? Role played by MNCs in globalization. How MNCs take control of local market? What made globalization possible? What do you mean by liberalization, role of WTO, positive and negative impact of globaliza-tion, suggestion for fair globalization.

india’S dEvElopmEnt StratEGy prior to 1991 (i) India followed mixed economy approach. (ii) Industries critically important for the economy were

retained by the government. (iii) Private sector was allowed to operate, but was subjected to

control and regulations to prevent concentration of wealth in few hands.

(iv) Government outlay in public sector enterprises increased from `81.1 crore in First Five Year Plan (1950–51) to `34,200 crore in Ninth Five year Plan (1997–2002).

(v) Government’s aim was to eliminate poverty, reduce inequal-ity in the distribution of income and to achieve economic growth with social justice.

(vi) MostofthegovernmentrevenuewentinthefinancingPublicSector Enterprises rather than development purposes.

Positive Aspects (i) A large industrial base was created, which helped in indus-

trial development. (ii) Problem of unemployment and poverty declined

substantially.(iii) Self-sufficiencywasachievedinfoodproduction. (iv) Base for export oriented industries was created. (v) We were able to generate our own resources for

development. (vi) A large pool of scientists and technically skilled persons

was created.

Negative Aspects (i) Industrialization did not take place as expected. (ii) Industrial growth rate declined to 4 per cent ( 1965–80)

from 8 per cent (1950–65).

GLOBALIZATION

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(iii) Corruption, lack of efficiency in work and ineffective,management became common features in Public Sector Enterprises.

(iv) Government invested `18,207 crore in 1980–81 in cen-tral public sector enterprises but incurred losses of Rs.203 Crore.

(v) Government failed to reduce concentration of economic power in few hands in private sector.

Conditions Which Led to Reforms in Indian Economy (i) Rising prices, shortage of adequate capital, slow economic

development and technological backwardness. (ii) Borrowings from abroad increased to such a level that we

werefindingdifficultyinpayingeventheinterests, therewas nothing left to pay for the imports.

(iii) Indian government was forced to borrow more money from International Banks.

multi-national corporationSA multi-national company (MNC) is a company that owns or controls productions in more than one nation. MNCs set up officesandfactoriesforproductionsinregionswheretheycanget cheap labour and other resources. This is done so that the costofproductionsislowandtheMNCscanearngreaterprofits.Multi-national corporations has changed the world economy. (i) Before the entry of MNCs production was largely orga-

nized within a country.(ii) Countriesusedtotradeinrawmaterial,foodstuffandfin-

ished goods. (iii) But with the entry of MNCs, economic activities of com-

panies are getting spread over many countries. (iv) The goods and services are being produced globally.

Interlinking Production Across CountriesMNCs set up production where it is close to the markets; ➤➤

where there is skilled and unskilled labour available at low costs; and where the availability of other factors of produc-tion is assured.MNCs might look for government policies that look after their ➤➤

interests. MNCs set up factories and offices for production.The money that is spent to buy assets, such as land, build-➤➤

ing, machines and other equipment is called investment. Investment made by MNCs is called foreign investment.MNCs set up production jointly with some of the local com-➤➤

panies of these countries.MNCs can provide money for additional investments, like ➤➤

buying new machines for faster production. MNCs might bring with them the latest technology for production.

Advantages of Multinational Corporations (i) Availability of capital and foreign investment: Multi-

national corporations help to solve the problem of capital and foreign investment of under-developed

and developing countries. Most of the underdeveloped countries suffer from lack of capital. Consequently, their rate of economic growth is low. MNCs set up fac-tories, and offices for production in these developingand underdeveloping countries and made high invest-ments. The money that is spent to buy assets, such as land, buildings, machines and other equipment, is called investment. Investment made by these MNCs is called foreign investment.

(ii) Availability of foreign exchange: MNCs can be helpful in solving the problem of foreign exchange of the underde-veloped and developing countries. In 90s, India faced a huge shortage of foreign exchange but, with the entry of MNCs it has surplus foreign exchange reserves.

(iii) Promotion of Small Scale Industries: Most of the MNCs take help from small scale and local industries in manufac-turing. Garments, footwear, sports items etc. are examples of industries where production is carried out by a large number of small producers around the world. The products are supplied to the MNCs, which then sell these under their own brand names to the customers.

(iv) Foreign Trade and Integration of Markets: MNCs helps in the integration of world markets. With the entry of MNCs even the small countries have opened up their domestic markets for other countries.

(a) MNCs increase foreign trade. (b) Foreign trade by the MNCs creates an opportunity for

the local producers to reach beyond the domestic mar-kets, i.e., markets of their own countries.

Disadvantages of Multi-National Corporations (i) Harmful for host country: The main objective of the

MNCsistoearnmaximumprofit.Toachievethisobjectivethey invest their capital in underdeveloped and developing countries. These MNCs over-exploit the natural resources ofthehostcountry.Bugchunkofprofitsearnedinunder-developed countries go to the headquarters of MNCs.

(ii) Harmful for the local producers: MNCs place orders for production with small producers. The products produced are sold by MNCs undertheir own brand names. MNCs have tremendous power to determine manufacturing con-ditions for the local producers. The history has shown that most of the local producers have failed to compete with the MNCs so, either they have sold their units to MNCs or have been wiped off.

(iii) Harmful for Economic Equality: MNCs have been proved harmful to the goal of economic equality, in more than one way:

(a) Regional inequality has further aggravated because of them. MNCs are interested in setting up industries in particular regions and hence, these regions develop very rapidly and other regions remain undeveloped.

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(b) MNCs pay more salaries and perks to their employees than other employees. This widens the gap between the incomes of the labourers giving rise to economic inequality.

(iv) Harmful for freedom: MNCs also prove detrimental to the economic and political freedom of the host countries. These dabble in the politics of the country. MNCs were at the back of armed insurgence of many host countries. These corporations make all efforts to bring to power in the host county a political party that is favourably inclined to them. Thus, it is not possible for the rulers of host countries to pursue nationalistic, economic and political policies.

ForEiGn tradE and intEGration oF markEtS

For a long time, foreign trade have been the main channel ➤➤

connecting countries.In history, you would have read about the trade routes con-➤➤

necting India and South Asia to markets both in the East and West and the extensive trade that took place along these routes.Foreign trade creates an opportunity for the producers to ➤➤

reach beyond the domestic markets, i.e., markets of their own countries.Producers can sell their produces not only in markets located ➤➤

within the country but can also compete in markets located in other countries of the world.Similarly, for the buyers, import of goods produced in another ➤➤

country is one way of expanding the choice of goods beyond what is domestically produced.With the opening of trade, goods travel from one market to ➤➤

another. Prices of similar goods in the two markets tend to become equal.Producers in the two countries now closely compete against each ➤➤

other even though they are separated by thousands of miles.Foreign trade, thus, results in connecting the markets or inte-➤➤

gration of markets in different countries.

Chinese Toys in IndiaChinese manufacturers learn an opportunity to export toys to India, where toys are sold at a high price. They start export-ing plastic toys to India. Buyers in India now have the option of choosing between Indian and the Chinese toys. Because of the cheaper prices and new designs, Chinese toys become more popular in the Indian markets. Within a year, 70 to 80 per cent of the toy shops have replaced Indian toys with Chinese toys. Toys are now cheaper in the Indian markets than earlier.

As a result of trade, Chinese toys come into the Indian mar-kets. In the competition between Indian and Chinese toys, Chinese toys prove better. Indian buyers have a greater choice of toys and at lower prices. For the Chinese toy makers, this provides an opportunity to expand business. The opposite is true for Indian toy makers. They face losses, as their toys are selling much less.

LiberalizationTo make economy-free from director physical controls imposed by the government. (a) Two components or steps taken under liberalization: (i) To allow private sector to run those industries, which

were earlier restricted only to public sector.Many industrial activities are now opened for private ➤➤

sector also.Number of industries reserved for public sector has ➤➤

been reduced from 17 to 3. Private sector can also enter in core industries.➤➤

(ii) Relaxation in all the rules and regulations—private sector was freed from: Licensing➤➤

Permission to import raw materials ➤➤

Regulation in price and distribution ➤➤

Restriction on investment by large business ➤➤

companies (b) ‘Developed countries want developing countries to

liberlize their trade and investment’ (i) Developed countries wanted to invest in developing

countries to earn high rate of returns. (ii) According to developed countries, trade barri-

ers are harmful as they hinder growth of trade and investments.

Developed countries want that all developing countries should liberate their trade but they themselves have retained trade barriers. Developing countries should align with other developingcountrieswithsimilarintereststofightagainstthe domination of developed countries. They should negoti-ate with the WTO and other organizations for `fairer rules.’

(c) ‘Liberalizations of trade and investment policies helped the globalization process.’

Liberalizationmeansfollowingaliberalpolicyinthefiledofindustry and trade. Liberalization of trade and investment pol-icies helped the golbalization process in a number of ways:

(i) Since 1991, the Government of India began to follow a liberal policytowards foreign trade and foreign invest-ments. As a result of the removal of the barriers on foreign trade and foreign investments, foreign compa-nieswereabletosetuptheirfactoriesandofficeshere.Like wise Indian companies were able to set up their factoriesandofficesinothercountries.

(ii) As a result of liberalization, businessmen from India and abroad were allowed to make decisions freely about what they wanted to produce, import or export.

(iii) As a result of liberalization of trade and investment, the government of India established many Special Economic Zones (SEZs) where all sorts of facilities were made available to foreign companies and relaxation of taxes foraninitialperiodoffiveyearswasgiven.

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(iv) Foreigncompanieswereallowedflexibilityinlabourlaws so that they could employ workers for short peri-ods and cut off the cost of their production.

All the above steps of liberalization of trade and investment policies greatly helped the globalization process.

GlobalizationGlobalization means integrating Indian economic with the ➤➤

world economic so that there can be free flow of goods, ser-vices and investment from the rest of the World.Foreign investment by MNCs in Asia and Africa has been ➤➤

increasing at the same time foreign trade between countries has been rising.A large part of the foreign trade is also controlled by MNCs.➤➤

For instance, the car manufacturing plant of Ford Motors in ➤➤

India not only produces cars for the Indian markets, it also exports cars to other developing countries and exports car components for its many factories around the world.The result of greater foreign investment and greater foreign ➤➤

trade has been greater integration of production and markets across countries.Globalization is this process of rapid integration or intercon-➤➤

nection between countries.More and more goods and services, investments and technol-➤➤

ogy are moving between countries.People usually move from one country to another in search of ➤➤

better income, better jobs or better education.In the past few years, however, there has not been much ➤➤

increase in the movement of people between countries due to various restrictions.

Factors that have Enabled Globalization (i) Rapid improvement in technology has been one major fac-

tor that has stimulated the globalization process. Several improvements in transportation technology have made much faster delivery of goods across long distances pos-sible at lower costs.

(ii) Information and communication technology has played a major role in spreading out production of services across countries.

(iii) Starting around 1991, some far-reaching changes in policy were made in India. The government decided that the time had come for Indian producers to compete with produc-ers around the globe. Barriers on foreign trade and foreign investment were removed to a large extent. This meant that goods could be imported and exported easily and also for-eigncompaniescouldsetupfactoriesandofficeshere.

Impact of Globalization in IndiaGlobalization and greater competition among producers—both local and foreign producers—has been of advantage to con-sumers, particularly the well-off sections in the urban areas. There is greater choice before these consumers who now enjoy

improved quality and lower prices for several products. These people today, enjoy much higher standards of living than was possible earlier. Among producers and workers, the impact of globalizations has not been uniform. (i) MNCs have increased their investments in India over the

past 15 years, which means investing in India has been beneficial for them. New jobs have been created. Localcompanies supplying raw materials, etc. to these industries have prospered.

(ii) Several of the top Indian companies have been able to ben-efitfromtheincreasedcompetition.Theyhaveincreasedcompetition. They have invested in newer technology and production methods and raised their production standards. Some have gained from successful collaborations with for-eign companies.

(iii) Globalization has enabled some larger Indian companies to emerge as multi-national themselves.

(iv) Globalization has also created new opportunities for companies providing services, particularly those involving IT.

Liberalization of Foreign Trade and Foreign Investment Policy

Government puts tax on import of certain items. Suppose ➤➤

the Indian government puts tax on the import of Chinese toys. This will raise the price cert these toys. Chinese toys will no longer be cheap in Indian market and its import will automatically reduce. Indian toy maker will, auto-matically proper. Tax on imports is an example of trade barrier. It is called a ➤➤ bar-rier because some restrictions have been set up. Government can use trade barrier to regulate foreign trade.The Indian government, after independence, had put barriers ➤➤

to foreign trade and foreign investment. This was considered necessary to protect our industries.Industries were just coming up in the 1950s and 1960s ➤➤

and competition from imports at that stage would not have allowed these industries to come up. India allowed the imports of only essential item, such as machinery, fertilizers petroleum etc.All developed countries, during the early stages of develop-➤➤

ment, have given protection to domestic producers through a variety of means.The government decided that the time had come for Indian ➤➤

producers to compete with producers around the globe. It feet that competition would improve the performance of Indian companies as they had to improve the quality.Thus, barriers on foreign trade and foreign investment were ➤➤

removed to a large extent.Removing barriers or restrictions set by the government is ➤➤

what is known as liberalization. With liberalization of trade, businesses are allowed to make decisions freely about what they wish to import or export.

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Export Quotas: Government put restrictions on exports to pro-tect their local consumers.

WTO wants to abolish import and export quota, and to have multi-national agreement instead of bilateral agreements.

Impact of WTO on Indian EconomyPositive impacts (i) Increased opportunities to have trade with other countries. (ii) Availability of modern technology at reduced rates.

Negative impacts:

(i) Benefitstodevelopingcountriesareverylimited. (ii) Companies of developing countries would not be able to

compete with international companies, can face closure, reducing employment opportunities.

(iii) Developed countries will interfere in the domestic econ-omy of developing countries.

(iv) Prices of many essential and life-saving drugs may go up.

SumminG upIn this chapter, we looked at the present phase of ➤➤

globalization.Globalization is the process of rapid integration of countries.➤➤

MNCs are playing a major role in the globalization process.➤➤

More and more MNCs are looking for locations around the ➤➤

world that are cheap for their production.As a result, production is being organized in complex ways.➤➤

Technology, particularly IT, has played a big role in organiz-➤➤

ing production across countries.Liberalization of trade and investment has facilitated global-➤➤

ization by removing barriers to trade and investment.At the international level, WTO has put pressure on develop-➤➤

ing countries to liberalize trade and investment.While globalization has benefited well-off consumers and ➤➤

also producers with skill, education and wealth.But many small producers and workers have suffered as a ➤➤

result of the rising competition.Fair globalization would create opportunities for all, and also ➤➤

ensure that the benefits of globalization are shared better.

important tErmSEconomic Reforms:➤➤ By economic reforms, we mean a change in the set of economic policies.Liberalization:➤➤ Liberalization means lifting of controls imposed by the government. In other words, liberalization means giving greater freedom to economic agents to take their own decisions.Globalization:➤➤ Globalization means increasing integration between different economics of the world.Privatization:➤➤ Privatization is closely associated with liber-alization. It signifies a greater role for private sector in the functioning of an economy.

Struggle for a Fair GlobalizationThe above evidence indicates that not everyone has benefited ➤➤

from globalization.People with education skill and wealth have made the best ➤➤

use of the new opportunities.On the other hand, there are many people who have not shared ➤➤

the benefits.Fair globalization would create opportunities for all, and also ➤➤

ensure that the benefits of globalization are shared better.The government can play a major role in making this ➤➤

possible.The government can ensure that labour laws are properly ➤➤

implemented and the workers get their rights.The government can use trade and investment barriers. It can ➤➤

negotiable at the WTO for ‘fairer rules’.It can also align with other developing countries to fight ➤➤

against the domination of developed countries in the WTO.People’s organizations have influenced important decisions ➤➤

relating to trade and investments at the WTO.

World tradE orGanizationGATT (General Agreement on Tariffs and Trade) is a multi-lateral treaty or arrangement, which was instituted in 1948 by 102 countries with the objective of bringing dow tarrif and non-tarrif barriers to international trade by providing a multi-later-ally accepted framework of principles and norms to govern the trade relations among member countries. India was one of the original members of GATT. Untill 1994; the main concerns of GATT of GATT were to regulate ‘dumping’ and unfair business practices and to ensure that member nations gradually reduce protectionist measures. Moreover, it is only now (1944) that GATT members have accepted the commitment to establish and international organization to implement the objectives ad provi-sions of GATT. The original GATT agreements were revised several times through the Kennedy Round in 1960s and the Tokyo Round in 1970s. The latest round of talks for wide rang-ing revision started in Uruguay in 1986. The prolonged talks and negotiations under the Uruguay round has resulted in a comper-hensive, radical revision of GATT. The draft for this comprehen-sive revision was prepared by the ex-chairman of GATT, Arther Dunkef. Hence, it is popularly known as the Dunkel Draft. The Uruguay Round Agreements envisage the establishment of an institution called World Trade Organization (WTO) to pro-vide a common institutional framework to conduct trade rela-tions among member nations in accordance with the provisions of these agreements.

Expectations of Wto from its Member CountriesBilateral agreements are held between two countries for the smoothflowoftrade.Import Quotas: Government put restrictions on imports to pro-tect their local manufacturers.

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Bilateral Agreement:➤➤ When a country makes trade relation with other country then it makes an agreement with the coun-try separately. This is called bilateral agreement.Import Quota:➤➤ When a country puts restriction on the amount of commodities to be imported them it is called import quota. This is done in the interest of the domestic consumers.Export Quota:➤➤ When a country imposes restriction on the quality of a commodity to be exported then it is called export quotas. This is done in the interest of the domestic consumers.MRTP:➤➤ Following the recommendations of Monopoly Inquiry Committee (1965), an act was passed in 1970. The act was called Monopolies and Restricted Trade Practices Act.Laissez Faire :➤➤ It is a French term, which means leave us alone. It denotes the view that government should interfere as little as possible in economic activity and leave decision to the market.Foreign Investment:➤➤ Foreign investment is of two types. The first is investment of foreign capital into new produc-tive activity. This is known as direct foreign investment. The other is foreign capital, purchasing the shares of Indian com-panies. This is known as Port Folio Investment.Direct Foreign Investment:➤➤ Direct foreign investment creates additional capacity and contributes to additional production.Intellectual Property Rights:➤➤ Laws governing patents, copy-rights, trade secrets, electronic media and other commodities, comprised primarily of information.Mixed Economy:➤➤ Under this economy, both public sector and private sectors work together.Sustainable Economic development:➤➤ It means that the development should take place without damaging the environment.Hard Currencies:➤➤ Currencies of those countries, which are in great demand.Development Strategy:➤➤ Development strategy refers to a basic long-term policy to realize certain objectives.

GlobalizationForeign investments by the MNCs➤➤

Foreign trade is controlled by MNCs➤➤

Integration is the result of greater foreign investment and ➤➤

greater foreign trade.

Factors enabling globalizationTechnology—Development in the information and com-➤➤

munication technologyTelecommunication facilities (telegraph telephone, mobile ➤➤

phones, fax)Internet (e-mail, voice mail)➤➤

World Trade OrganizationThe liberalization of foreign trade in India supported by ➤➤

international organizationThe aim of WTO is to liberalize international trade.➤➤

149 countries of the world are the members of the WTO➤➤

WTO is supposed to allow free trade.➤➤

Liberalization of Foreign Trade and Investment Policy

Tax on imports reduced➤➤

Industries coming up➤➤

Indian produces to compete with producers around the globe.➤➤

Removal of barriers on the foreign trade and foreign investment.➤➤

Competition and Uncertain EmploymentGlobalization and pressure changed the lives of workers.➤➤

Indian garment exporters try hard to cut their own cost.➤➤

Jobs have become less secure.➤➤

Steps to Attract Foreign InvestmentCentral and state government in India talking steps to attract ➤➤

foreign companies.Government allowed flexibility in the labour laws.➤➤

Exclusive economic zones formed.➤➤

mind-map

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5 Consumer Rights

CHAPTER

Consumer rightsThere are many aspects of unequal situations in a market and poor enforcement of rules and regulations. There is a need to sensitize

learners and encourage them to participate in the consumer movement. This chapter provides case histories—how some consumers were exploited in a real life situation and how legal insti-tutions help consumers in getting compensated and in upholding their rights as consumers. The case histories would enable the students to link these narratives to their life experiences. This chapter also provides details of a few organizations helping consumers in different ways. Finally, it ends with some critical issues of the consumer movement in India.

syllabusWhat is globalization? Role played by MNCs in globalization. How MNCs take control of local market? What made globalization possible? What do you mean by liberalization? Role of WTO, positive and negative impact of globaliza-tion, suggestion for fair globalization.

Consumers in the marketplaCeConsumer’s consciousness towards his rights and the social and legal obligation of the business community and government towards consumer is known as consumer awareness. If the consumer is not provided the amount of goods and services for which he/she has paid, it is called consumer exploitation.

how Consumers are exploited?Moneylenders in the informal sector that you have read earlier ➤➤

adopt various tricks to bind the borrower: they could make the producer sell the produce to them at a low rate in return for a timely loan;

Consumers’ Montage

Many people who work in the unorganized sector have to ➤➤

work at a low wage and accept conditions that are not fair and are also often harmful to their health.Rules and regulations are required for the protection of the ➤➤

consumers in the marketplace.Whenever there is a complaint regarding a good or service ➤➤

that had been bought, the seller tries to shift all the responsi-bility on to the buyer.Exploitation in the marketplace happens in various ways. For ➤➤

example, sometimes traders indulge in unfair trade practices, such as when shopkeepers weigh less than what they should or when traders add charges that were not mentioned before, or when adulterated/defective goods are sold.Markets do not work in a fair manner when producers are few ➤➤

and powerful, whereas consumers purchase in small amount and are scattered.At times, false information is passed on through the media, ➤➤

and other sources to attract consumers. For example, a com-pany for years sold powder milk for babies all over the world

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as the most scientific product claiming this to be better than mother’s milk. It took years of struggle before the company was forced to ➤➤

accept that it had been making false claim. Similarly, a long battle had to be fought with court cases to ➤➤

make cigarette-manufacturing companies accept that their product could cause cancer.Hence, there is a need for rules and regulations to ensure pro-➤➤

tection for consumers.

Consumer MovementsIn India, the consumer movement as a ‘social force’ originated with the necessity of protecting and promoting the interests of consumers against unethical and unfairtrade practices. Rampant food shortages, hoarding, black marketing, adulteration of food and edible oil gave birth to the consumer movement in an orgainsed form in the 1960s. Till the 1970s consumer orga-nizations were largely engaged in writing articles and holding exhibitions. They formed consumer groups to look into the mal-practises in ration shops and overcrowding in the road passen-ger transport. More recently, India witnessed an upsurge in the number of consumer groups. Because of all these efforts, the movement succeeded in bringing pressure on business conduct, which may be unfair and against the interests of consumers at large. A major step taken in 1986 by the Indian government was the enactment of the Consumer Protection Act, 1986, popularly known as COPRA.

Social consumer movements Consumer Protection Act, 1986

Need for Rules and Regulations to Save the Consumers (i) Due to the expansion of the business activities and global-

ization there are variety of goods available in the market and producers are spending a lot of money to influence the consumers, which makes it difficult for the consumers to make a correct choice. So there is a need for consumer awareness.

(ii) Producers do not provide sufficient information to the con-sumers and sometime even harass them.

(iii) Consumer awareness is also must because at times greedy traders begin to play with the health of the people by indulging in adulteration of edible oils, milk, butter, ghee etc.

(iv) After 1991, the Government of India has withdrawn it self from most of the productivities and allowed the private sector to take over. So it was felt that there is a greater need to enforce discipline and regulations in the market and to make the consumers aware not only of the commercial aspects of sale and purchase of goods but also the health and security aspects.

(v) There is a need for rules and regulations because most of goods and services are being produced by private sector with profit as a main motive.

Consumer rights

Safety is Everyone’s RightReji’s suffering shows how a hospital, due to negligence by ➤➤

the doctors and staff in giving anaesthesia, crippled a student for life.

While using many goods and services we have the right to ➤➤

be protected against the marketing of goods and delivery of services that are hazardous to life and property.Producers need to strictly follow the required safety rules and ➤➤

regulations.There are many goods that require special attention to safety.➤➤

For example, pressure cookers have a safety valve, which if it ➤➤

is defective, can cause a serious accident. The manufacturers of the safety valve have to ensure high quality.You also need public or government action to see that this ➤➤

quality is maintained.

Information about Goods and Services Consumers have the right to be informed about the particulars of goods and ser-vices that they purchase. Consumers can then complain and ask for compensation or replacement if the product proves to be defective in any manner. Similarly, one can protest and complain if someone sells a good at more than the printed price on the packet. This is indicated by ‘MRP’— maximum retail price. In fact, consumers can bargain with the seller to sell the product at less than the MRP. In October 2005, the Government of India enacted a law, popularly known as RTI (Right to Information) Act, which ensures its citi-zens all the information about the functions of government departments.

When Choice is Denied Any consumer who receives a service in whatever capacity, regardless of age, gender and nature of

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service, has the right to choose whether to continue to receive the service. Consumer can choose the products from the given alternatives. In case of a single supplier, consumer must be assured of quality and price of the good.

Where should consumers go to get justice?These are some examples in which consumers are denied ➤➤

their rights. Such instances occur quite often in our country.Consumers have the right to seek redressal against unfair ➤➤

trade practices and exploitation.If any damage is done to a consumer, she has the right to get ➤➤

compensation depending on the degree of damage.

It is a problemof Horsepower

CONSUMER RECRESSAE FORUM

Redressal

Let us take the case of Prakash. He had sent a money order ➤➤

to his village for his daughter’s marriage. The money did not reach his daughter at the time when she needed it nor did it reach months later. Prakash filed a case in a district level con-sumer court in New Delhi.The consumer movement in India has led to the formation of ➤➤

various organizations locally known as consumer forums or consumer protection councils.If you are living in a residential colony, you might have ➤➤

noticed name boards of Resident Welfare Association.If there is any unfair trade practice meted out to their mem-➤➤

bers they take up the case on their behalf.Under COPRA, three-tier quasi-judicial machinery at the ➤➤

district, state and national levels were set up for redressal of consumer disputes.The district level court deals with the cases involving claims ➤➤

upto `20 lakh, the state level courts between `20 lakh and `1 crore and the national level court deals with cases involving claims exceeding `1 crore.Thus, the Act has enabled us as consumers to have the right to ➤➤

represent in the consumer courts.

Steps Taken by Government for Protection of ConsumersAt National level (a) Legislative steps:

Various Acts have been formed, the most important Act is: (i) Consumer Protection Act, 1986: To solve the consumer

grievances in a speedy, simple and inexpensive manner. Under this three types of courts have been established.

(ii) Separate departments for consumer welfare have been established in both central and state government.

(b) Administrative steps: (i) Public distribution system has been established for pre-

venting the exploitation of consumers. (ii) Government tries to prevent illegal ways of making

profit like hoarding and black marketing. (c) Technical steps:

Government has established various agencies for develop-ing standard for various products and to check and certify the products according to the standards. In India, two agen-cies are responsible for it.

(i) BIS or Beureau of Indian standards: Sets the standards for industrial products, checks them and certifies them with ISI mark. Through regular surveillance and tak-ing samples both from market and factories ensures the standards of the products.

(ii) AGMARK: Established under the Ministry of Agriculture is responsible for certifying the food and agricultural products.

At International level (i) ISO or International Standards Organization: Anon-govern

mental organization with its headquarters located in Geneva, creates standards through international agreements and certifies companies, goods and institutions with ISO 6000, ISO 14000, etc. certificates, which indicates specific levels of standards.

(ii) Codex Alimentarius Commission: It was created in 1963 by FAO and WHO. It develops food standards, guidelines and codes of practices for production and international trade in food products.

Learning to become Well-Informed Consumers

When we as consumers become conscious of our rights, while ➤➤

purchasing various goods and services, we will be able to dis-criminate and make informed choices.This calls for acquiring the knowledge and skill to become a ➤➤

well-informed consumer. The enactment of COPRA has led to the setting up of sep-➤➤

arate departments of Consumer Affairs in central and state governments.

ISI and Agmark While buying many commodities, on the cover, you might have seen a logo with the letters ISI, Agmark or Hallmark. These logos and certification help consumers get assured of quality while purchasing the goods and services. The organizations that monitor and issue these certificates allow producers to use their logos provided they follow certain quality standards.

Bhattar Cable Industries Pure Ghee as per Agmark

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Though these organizations develop quality standards for many products, it is not compulsory for all the producers to follow standards. However, for some products that affect the health and safety of consumers or of products of mass consumption like LPG cylinders, food colours and additives, cement packaged drinking water, it is mandatory on the part of the producers to get certified by these organizations.

Features of Copra 1986Under COPRA 1986, a separate department called ➤➤ con-sumer affairs department has been formed at the union and state level.A three-tier quasi judicial system popularly called ➤➤ con-sumer courts has been established at the national, state and district level.At the national level it is called ➤➤ national consumer court. It can try cases, which deal with claims exceeding `1 crore. At the district level it is called ➤➤ district consumer courts or consumer forums. It can solve dispute, which involves a claim of `20 Lakh and less.At the state level it is called the ➤➤ state consumer commission. It can solve disputes, which involves a claim of `20 lakh one crore.Job of these courts is to provide speedy justice at a very low ➤➤

cost within a time limit.

taking the Consumer movement ForwardIndia has been observing 24 December as the National ➤➤

Consumers’ Day.It was on this day that the Indian Parliament enactment the ➤➤

Consumer Protection Act in 1986.The consumer movement in India has made some prog-➤➤

ress in terms of numbers of organized groups and their activities.There are today more than 700 consumer groups in the coun-➤➤

try of which only about 20–25 are well organized and recog-nized for their work.The consumer redressal process is becoming cumbersome, ➤➤

expensive and time consuming.Many a times, consumers are required to hire lawyers. ➤➤

These cases require time for filling and attending the court proceedings. In most purchases, cash memos are not issued; hence, evi-➤➤

dence is not easy to gather.The existing laws also are not very clear on the issue of com-➤➤

pensation to consumers injured by defective products.It is often said that consumer movements can be effective ➤➤

only with the consumers’ active involvement.

important termsConsumer Awareness:➤➤ Consumer awareness means the con-sciousness or awakening among consumers towards their rights and duties.

Consumer Exploitation:➤➤ Consumer exploitation signifies a situation in which the consumer is cheated, misbehaved or harassed by the business community.Adulteration:➤➤ Mixing up of inferior goods with the costlier superior goods with a view to make profit.Hoarding:➤➤ Illegal storing of essential commodities by the traders in their godowns with a view to sell them in future at a higher price.National Consumer Commission:➤➤ A consumer court at national level.State Consumer Commission:➤➤ A state level consumer court.District Form:➤➤ It is a consumer court at district level.Consumer Protection Act:➤➤ Consumer Protection Act, 1986 provides a legal procedure concerning consumer rights.Bureau of Indian Standards (BIS):➤➤ It is an institution or set-ting up the standard for making and producing various prod-ucts and enforcing them.Indian Standard Institution (ISI) :➤➤ It is an institution whose headquarters is located in New Delhi. It lays down the stan-dards for industrial and consumer goods on a scientific basis. It certifies the goods, which meet these standards.Standardization:➤➤ Maintaining quality, grades, size and con-stituents of the product is called standardization.Agmark:➤➤ Agmark sign is an assurance of conformity to the specification while producing the commodity. It is meant for agricultural products.Limited Competitions:➤➤ It signifies a situation when there is only one producer or a group of producers who are in position to control the supply of goods.AAY:➤➤ Antyodaya Anna YojanaNGOs:➤➤ Non-Governmental OrganizationFAO:➤➤ Food and Agricultural OrganizationWHO:➤➤ World Health OrganizationFPS:➤➤ Fair Price ShopsDMI:➤➤ Directorate of Marketing and Inspection

mind-map

Factors causing exploitation of consumersLimited information➤➤

Limited supplies➤➤

Limited competition➤➤

Low literacy➤➤

Consumer Exploitation Underweight and under measurement ➤➤

Substandard quality ➤➤

High prices➤➤

Duplicate articles➤➤

Adulteration and impurity➤➤

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Chapter 5 Consumer Rights

Lack of safety devices➤➤

Artificial scarcity➤➤

False or incomplete information➤➤

Unsatisfactory after sale service➤➤

Rough behaviour➤➤

Consumer DutiesTo check the quality as well as guarantee by preferably ➤➤

buying AGMARK productsShould ask for cash memo➤➤

From consumer organization➤➤

To make complaint for genuine grievances should know ➤➤

their rights

Rights of consumerRight to safety➤➤

Right to be informed➤➤

Right to choose➤➤

Right to be heard ➤➤

Right to seek redressal➤➤

Right to consumer education➤➤

Measures for consumer protectionLegislative measures: COPRA 1986➤➤

Administrative measures: PDS➤➤

Technical measures: AGMARK ➤➤