Today the world is moving very fast in technology space and being technology savvy is considered as well-educated.
My take on Education, Knowledge and Technology is as follows,
Education is the growth of a human being as one who believes in the equality of all and inclusivity of one another.
Knowledge is of knowing about the present practices, its evolution from the past, pros and cons of past and present practices, and working upon a future-ready model, in the above said “Education” concept.
These both are timeless concepts.
Technology is more of a skill building genre and has to be seen as a subset of the above.
Neither Education be replaced with Knowledge nor Knowledge with Technology.
So in this above said conviction, I guess, it’s pertinent for one to know about economy, Money Circulation, GDP, and Taxes – to make informed decisions in life in tandem with societal obligations.
This discourse is an attempt to serve awareness only on the basic tenets.
An economy is an area of the production, distribution, or trade and consumption of goods and services by different agents in a given geographical location.
A given economy is the result of a set of processes that involves its culture, values, education, history, social organization, political structure and legal systems, as well as its geography, natural resource endowment, and ecology, as main factors.
To understand this we need to know how Money Circulation, GDP and Taxes functions.
Don’t get baffled with jargon. Am going to serve this through story telling mode with simple language.
Good economy is quintessential for any country as it is to a high cash-inflow for any household – for prosperity.
This is a most complicated subject to understand and hence am trying to serve my thoughts through an oft-repeated ( in social media circle ) story – which not only will give a clear understanding on how economy works, but can also be a learning leverage for other topics.
Once a man walked into a hotel and asked for a room to stay. The manager explained him the tariff and asked for a refundable deposit of Rs. 1000/- .
The guest handed over Rs. 1000/- took the key and said that he will go and inspect the room ; and will stay only if the room matches up to his expectation, for which the Manager obliged. The room was on 6th floor and no lift.
The minute guest left his desk the Manager called his assistant handed over the Rs.1000/- and asked him to go and give it to the vegetable supplier – towards the outstanding due amount.
The vegetable vendor who received the Rs.1000/- handed over that to his assistant and instructed to give it to the farmer who supply vegetables – towards the outstanding due amount.
The farmer who received the Rs.1000/- handed over that to his assistant and instructed to give it to the seed supplier who supply seeds – towards the outstanding due amount.
The seed supplier who received the Rs.1000/- handed over that to his assistant and instructed to give it to the trainer who has trained his staff – towards the outstanding due amount.
The trainer who received the Rs.1000/- handed over that to his assistant and instructed to give it to the hotel which provided space for him to conduct his program – towards the outstanding due amount.
Thus the Rs.1000/- reached back to the hotel.
Meanwhile the guest came back from 6th floor after inspecting the room and told the Manager that he is not happy with the room and so requested for the refundable deposit of Rs. 1000/- which the Manager obliged.
All the stakeholders in this above given story – guest, hotel manager, vegetable supplier, farmer, seed supplier and trainer – can be considered as a network of society.
So as per the story each member of the society network has earned Rs. 1000/- each – hotel, vegetable supplier, farmer, seed supplier and trainer – and thus the society’s cumulative income became Rs. 5000/-, due to the money circulation.
Now let us dissect the story to understand the money circulation concept better.
If the hotel manager has decided to keep the money – and not to circulate, he would not have made an earning, as he would have to return the money when the guest came back. It would have been a “no-loss no-gain” situation.
Whereas when the wise manager decided to circulate the money he earned – in the form of a reduction of Rs. 1000 to his credit – from the vegetable supplier, not only he aided the hotel’s income but also became instrumental for the earning of other four entities – and thus enabled the network to earn Rs. 5000/-
That is the POWER OF MONEY CIRCULATION !
More the circulation more the GDP Growth ; more the GDP growth more the purchasing power in the society ; more the purchasing power in the society more the circulation – thus it becomes a flourishing cycle of economy.
Ah…GDP !!! What’s that ? Let’s see that in the coming chapter..
This story showcases the need for 3 things as follows,
• Need for Money Circulation
• Need for credible credit system
• Need for Trust in the economy cycle
Each one in the story is running on credit. And due to the financial integrity of all the 5 members in the story there is no credit default and thus no NPA ( Non Performing Assets).
GDP (Gross Domestic Product)
Imagine you are the family head of 5 member family, consisting of your wife and three children – all earning their income through business.
You doing a business with a turnover of Rs.500,000/- and earn a profit of Rs.100,000/-
Your wife doing a business with a turnover of Rs.200,000/- and earn a profit of Rs.40,000/-
Your children each doing a business with a turnover of Rs.300,000/- and earn a profit of Rs.60,000/-
Now your total household income is Rs.320,000/- (Rupees Three Lakh and twenty thousand / INR 320 thousand)
And your total household turnover is Rs.1,600,000/- (Rupees Sixteen Lakh / INR 1.6 million)
This household turnover of Rs.1,600,000/- is called as GDP .
Theory part of GDP :
Gross Domestic Product : Gross Domestic Product (GDP) is the broadest quantitative measure of a nation’s total economic activity. More specifically, GDP represents the monetary value of all goods and services produced within a nation’s geographic borders over a specified period of time
Guess, now we have a fair idea on GDP !
Still now we were seeing the earning part of the family. Now let’s see the expense part of the family.
Let’s imagine your family expense is Rs.150,000/-.
Handling such an expense should be a cake walk in the given situation of Family Income being Rs.320,000/-.
But if none of the other family members contribute and let you alone – with your income of Rs.100,000 – to fend the expenses, how difficult it will be ?
Ah….Taxes are a major source for the expenses needed for running the country.