Sunday, 10 August 2014

Money and Credit

Money & Credit

v Money - Anything which is generally accepted as payment for goods & services.
v Main Function – Medium of Exchange

v History of Money
Ø Barter system existed – prehistoric times
Ø Double coincidence of wants main feature
Ø Later  ‘cowry’  (sea shells ) came into usages
Ø Acc. To Herodotus ‘lydians’ (people around black sea ) were the first to introduce the use of gold & silver coins (650-600B.C) 
Ø India
Ø Punch –Marked coins (2500 years ago) ,earliest coins.
Ø Gupta Coins- Gold & Silver
Ø Tughlaq- Token Currency
Ø Akbar – gold mohar
Ø Paper Money was first used in China (7 century A.D)
Ø Money avoid the inefficiencies of barter system, such as ‘double coincidence of wants’

v Modern form of currency
1.  Cash (Bank Notes & Coin)
Ø Not made of precious metals- stainless steel
Ø Authorized by Govt.
Ø No Individual Can Legally refuse a payment made in rupee .

2.  Demand Deposits
Ø i.e Money Deposited with banks .
Ø Banks accept deposit & also Pay Interests.
Ø Deposits in banks can be withdrawn on demand.

3.  Cheque
Ø Cheque facility directly settle payments without use of cash .  In India cheque is valid for 3 months from the date of issue .

v Credit (loan)
Ø A Contractual agreement in which borrower receives something valuable & agrees to repay the lender at some later time .

v Bank Credit
Ø India banks keep 15% as cash and 85% is given as loan to borrower.
Ø Depositor might ask for cash.
Ø Banks use the major portion to extend loans.
Ø Thus Banks mediate those who have surplus funds( depositor) and those who need funds (borrower) .

v Terms of credit
    I.        Collateral: asset that borrower own which is a guarantee to a lender until loan repaid.
  II.        Interest Rate
III.        Documents
IV.        Mode of Repayment

v Two Different credit situation
Ø Situation one – Earning improves
Ø Situation two –debt trap mainly agricultural Sector.

v Formal Sector
                    I.        Banks
                  II.        Co operatives

Ø RBI Supervise functioning of formal source of loan .
    I.        Monitors cash balance
  II.        Monitors Loans available to cultivators & small scale industries.
III.        Periodic auditing of loans , interest rate etc.
Ø Formal sector meets ½ of rural credit needs.

v Informal Sector
Ø No Organizational Supervision
Ø Lenders- Money lenders, traders, employers, relatives & friends.
Ø High Interest rate

v SHGs (Self Help Groups )
Ø 15- 20 members
Ø Pool  their savings
Ø Give Loan to members in need .
    I.        A.T.M: Automated Teller Machine
  II.        Smart Money : Credit Card
III.        D.D. : Demand Draft

Sunday, 3 August 2014


Ø In Societies differences exist

v Gender Division
Ø It is natural biological fact
Ø However based on social expectation & stereotypes
    I.        Sexual division of labour
Ø Domestic work & bringing up children –responsibilities of women
Ø Outside  work- men
Ø Majority of women do some sort of paid work outside in addition to domestic labour
Ø Their work- no recognition & not valued i.e. invisible
Ø “Time use survey “ (1998-99) says men work 6.5 hrs. & females 7hrs.  Men sleeps 12.25 hrs. women 11.10 hrs.

  II.        Women role in public life
Ø Role minimal in most societies. Women agitated for equal rights.
Ø Feminist: a woman or man who believes in equal rights & opportunities for women.
Ø Feminist movements aimed at equality in personal & family life as well.
Ø Scandinavian  countries (Sweden , Norway & Finland) participation of women in public life is very high (42%)
Ø World average is (19.7%)
Ø India male dominated “patriarchal society” (rule of father )
Ø Women in India , face discrimination, disadvantage & oppressions.
1.  Literacy rate :- Women-54% (2001)       65.46(2011)
                         Men-76% (2001)              82.14 (2011)
2.  Highly paid  jobs – low proportion
3.  Ineffective equal wages act
4.  Girl child aborted
Sex ratio   1000 : 933 (2001)
                 1000 : 940 (2011)
Ø State of Haryana has just 877
5.  Frequent reports of harassment, exploitation & violence.

III.        Women political representation (India)
Ø Representation very low in legislatures.
Ø 2009 percentage of women crossed 10% of its total strength for the first time in Lok sabha .
Ø State assemblies – less than 5%
Ø Reservation for women just like 1/3  seats in local self government
Ø Bill still pending for more than a decade

v Division based on religion
Religious diversity in India
1.  Hindu-80.5 %               2.Muslim-13.4%
3.Christians-2.3%            4.Sikh- 1.9%
5.Buddhist -0.8%             6. Jain-0.4%

Ø Acc. to Gandhi religion never be separated from politics. Politics be guided by ethics drawn from religion.
Ø Human rights groups says victims of riots are minorities.
Ø Different “ family laws” of different religions (i.e divorce , marriage, inheritance ) discriminates women.
Meaning: loyalty or commitment to one’s own ethnic (mainly religion) group rather than to the wider society.
Ø When state power is used to establish domination of one religious group over the rest, then it termed as communal politics.
Communalism can take different forms in politics
1.  Most common expression of communalism prejudices, stereotypes of religious communities superiority of one’s religion.
2.  Idea of majoritarian dominance or political dominance
3.  Use of sacred symbols & emotional appeal
4.  Religious leaders plan fear in order to bring the followers of one religion together
5.  Most ugly form- communal violence i.e. riots & massacre.
Eg. India & Pakistan, 1947- 10 Lakh killed
v Secular state

Ø Constitution does not give special status to religion.
1.  Constitution provides freedom to profess practice & propagate any religion or not to follow any.
2.  Constitution prohibits discrimination on the basis of religion.
3.  Constitution allows govt. to intervene in the matters of religion. eg. “Untouchability”.

v Division based on caste

Ø Caste special to India especially in Hinduism
Meaning: a hereditary class of Indian society, based on occupational division sanctioned by rituals
Ø Caste system based on exclusion of outcaste, marriage within caste.  Caste communities did not eat with members of other caste.
Ø Worst form : untouchability
Ø SC ( Dalits) - 16.2% of total population
Ø ST – 8.2%
Ø SC, ST & OBC – 41%

v Changes in caste system
1.  Urbanization
2.  Occupational mobility

v Caste in politics
1.  In elections candidate choosed keeping in mind caste composition of constituency.
2.  During election campaign, emotional appeal to caste sentiments
Is Indian election are all about caste?..
Ø Not true
Ø No constituency in India has a clear majority of one single caste, Candidate need to win confidence of more than one caste.
Ø In a constituency voter can have more than one candidate from their caste.
Ø Ruling party & sitting MLA & MPs frequently lose election. that could not have happened if all caste were frozen in their political preferences.

v Politics in caste

Ø Politics too influences the caste system how?
1.  Each caste group tries to become bigger by adding sub caste.
2.  Various caste groups enter into coalition

3.  New kind of caste group formed like “Backward” and “Forward” caste groups. 

Friday, 1 August 2014


             In 1900, a popular music publisher E.T. Paull produced a music book that had a picture on the cover page announcing the ‘Dawn of the Century’
          Characterstic of cover page;
®     A “angel of progress” going on wheels of wings sorrounded by signs of progress i.e. railways, camera, machines, printing press & factory.
®     Glorification of machinary.          
1901 in a trade magzine:
®     Shows two magicians
          1. On top Aladdin representing orient world (East)- built building with magical lamp.
          2. At bottom modern mechanic - built bridges, ships and towers with modern tools.
®     Thus modern world is associated with technological changes and innovation, machines and factories.          
®     In this chapter we will look at this history by focusing first on Britain, the first industrial nation, and then India, where the pattern of industrial change was conditioned by colonial rule.
          1. Industrialisation rapid technological development?
          2. Effects of Industrialisation on peoples life.
          3. Can we glorify Industrialisation?
Condition Before the Industrial Revolution
®     Proto Industrialisation: There was a large scale industrial production for the international market even before factories started in England. This era is termed as proto industrialisation.
          Reasons for production:
®     During 17th and 18th century with the expansion of world trade and the acquisition of colonies in different parts of the world, the demand for goods began growing.

          Production done in countryside:
®     Trade guilds were powerful, rulers granted different guilds the monopoly right to produce and trade in specific products.
          In countryside people egar to work:
®     Open field were disappearing and commons were being enclosed, Cottagers and poor peasants had to now look for alternative sources of income.
®     When merchant came around and offered advances to produce goods for them, peasant household eagerly agreed.
®     Income from proto industrial production supplemented their shrinking income.
®     It also allowed them a fuller use of their family labour resources.
®     The work mainly done in countryside. Merchants purchase wool from stapler (sorts wool according to fibre)®           Carding i.e. twisting (Fibre prepared before spining) ®    Give to spinner (Prepare yarn by spinning) ®Weaver ® Fuller (Pleating) ® Dyer        
The coming up of the factory
®     The earliest factories in England came up by the 1730s.
®     The first symbol of the new era was cotton.
®     18th century  Richard Arkwright created the cotton mill.
Difference between production in countryside and in mill
®     In mill the processes were brought under one roof and management.
®     It  allowed a more careful supervision over the production process, a watch over quality, and the regulation of labour
®     In the early 19th century, factories increasingly became an intimate part of the English landscape.
          Eg. Manchester & Lancashire
The pace of industrial change
First: Cotton and metals (Iron and Steel) industries were most dynamic industries in Britain. Cotton was the leading sector in the first phase of industrialisation up to the 1840s.
®     With the expansion of railways, in England from the 1840s, the demand for iron and steel increased rapidly.
®     By 1873 Britain was exporting iron and steel worth about  double the value of its cotton export.
Second: At the end of the 19th century, less than 20 percent of the total work force was employed in technologically advanced industrial Sectors.
®     New industries not easily replaced traditional.
Third: Large number of people employed in non-mechanised sector: Food processing, construction, pottery, tanning, furniture. 
Fourth:  Technological changes occurred slowly.
®     New technology was expensive
®     The machines often broke down and repair was costly.
®     Not as effective as then inventors and manufacturers claimed.
          Eg.Case of Steam Engine
®     James Watt improved the steam engine produced by Newcomen and patented the new engine in 1781.
®     His Industrialist friend Mathew Boulton manufactured the new model. But for years he could find no buyers. At the beginning of the nineteenth century, there were no more than 321 steam engines  all over England.
Hand labour and steam power
®     In Victorian Britain there was no shortage of human labour as poor peasant moved to cities for jobs and worked at low wages.
®     Industrialists did not introduce machine which required large capital.
®     In mid-nineteenth century Britain, for instance, 500 varieties of  hammers were produced and 45 kinds of axes. These required human skill, not mechanical technology.
®     Upper class preferred hand made goods  of intricate designs.
     Life of the workers
®     The process of industrialisation brought with miseries for newly emerged class of industrial workers.
®     Abundance of labour : As news of possible jobs travelled to the country side, hundreds of villagers migrated to the cities.  
®     Many job seekers had to wait weeks, spending nights under bridges or in night shelters.
®     Seasonality of work : In most of the industries there were seasonality of work (Binding, Catering) it meant prolonged unemployment.
Introduction of Spinning Jenny  
®     In 1764 AD James Hargreaves invented the Spinning Jenny. It was a wheel which helped the spinner to run eight spindles at a time.
®     The fear of unemployment made workers hostile to the introduction of new technology when the Spinning  Jenny was introduced in the woollen industry women who survived on hand spining began attacking the new machines.
Industrialisation in the Colonies
The Age of Indian Textiles
®     Historically, India was one of the leading produces of cotton textile. India was known for its finer varieties of cotton. Armenian and Persian merchant took these goods from Punjab via. Afghanistan.
®     Surat, Masulipatnam and Hoogly were the most important ports for trade.
®     By 1750 Indian merchants lost control.
®     The European companies gradually gained power. This resulted in a decline of the old ports of Surat and Hoogly through which local merchants had operated.
®     Bombay and Calcutta grew as new port. Trade through the new ports came to be controlled by European companies. and old trading house collapsed.
Effect on weavers
®     Before establishing political power in Bengal and Carnatic (Tamil Nadu) in 1760 and 1770, the East India company had found it difficult to ensure a regular supply of goods for export.
Reason: French Dutch, Portuguese and local merchants competitors.
®     After establishing political power in India the East India Company got monopoly to trade with this country.
®     It was done through a series of steps.
First: The Company tried to eliminate the existing traders and brokers . It appointed a paid servant called the ‘Gomastha’ to supervise weavers, collect supplies, and examine the quality of cloth.
Second: The system of advances.  Those took loans had to handover cloth to ‘Gomastha’
Result: Clashes between weavers and Gomastha
          1. Gomastha acted arrogantly, punished weavers with sepoy for delays in supply.
          2. The price received from EIC was miserably low.
          3.      Weavers deserted villages, to get rid of the loan agreement.
Manchester comes to India: (a new set of problems)  
®     In 1811-12 textiles accounted for 33 per cent of India's exports ; by 1850-51 it was no more than 3 per cent.
®     Cotton industries which had developed in England pressurised the British government to increase import duty on goods imported from India. So that  British goods could be sold in Britain easily.
®     The imported goods were so cheap that weavers could not easily complete with them.
American Civil War:
®     Cotton supplies from US into Britain cut off. Britain turned to India.
®     Raw cotton exports from India to Britain increased, the price of raw cotton shot up and weavers in India were starved of supplies and forced to buy raw cotton at high prices.
Factories come up
          (i)     First cotton mill set up in Bombay in 1854.
          (ii)    By 1862, four more cotton mills were started.
          (iii)   First Jute mill come up in Rishra in Kolkata in 1855.
          (iv)   The first Elgin mill was started in Kanpur in 1862s.
          (v)     The first cotton mill of Ahemdabad was set up in 1860s
          (vi)   By 1874 the first spinning and weaving mill of Madras started production.
The early entrepreneurs
®     In 18 century, the British in India began exporting opium to China and took tea from China to England. Indians becames junior players in the trade, Having earned through trade Dwarkanath Tagore (Bengal), Dinshaw Petit and Jamsetjee Nusserwanjee Tata (Bombay), Seth Hukumchand the father as well as grandfather of famous industrialist G.D. Birla, all made their fortune in China trade.
®     Capital was accumulated through other trade networks. Some merchants from Madras with Burma while others had link with mid East and East Africa. There were commercial groups which carrying goods from one place to another. They had to export mostly raw material and food grains raw cotton, opium, wheat, Indigo required by the Britishers. 
®     However European managing Agencies,  in fact controlled a large sector of Indian Industries. Three European managing agencies were
          (i)     Bird Heiglers and co.            
          (ii)    Co Andrew Yule                     
          (iii)   Jardine Skinner and co.
Workers in Factories
®     1901 - 5,84,000 workers
®     1946 - 2,436,000 workers
From where they came?  
®     In most industrial region workers came from the districts around.
          Example: 50% workers in Bombay cotton mills came from nearby districts of Ratnagiri.
®     Jobber: Getting jobs was always difficult. The number of people seeking work are always more than the job available.          Entry in the mills was also restricted. Industrialist usually employed a jobber to get new recruits.
Role of  Jobbers
®     They were an old trusted workers who get new recruits from his village and insured them jobs, helped them to settle in the city and provided with money at the time of crisis.
®     Jobber became a person of power and authority and demanded money for his favour and controlled the life of workers.
The Pecularities of Industrial Growth
®     European managing agencies  invested in mining, Tea, Indigo plantation. There goods were required for export and not for sale in India.
®     Indian businessman avoided competing with Manchester goods in the Indian market.
®     Indian mills produced yarn and exported to China.
®     During Swadeshi Movement people boycoted  foreign goods  (1906)
®     As Japanese goods flooded in the Chinese markets the exports of Indian yarn to China declined and Indian Industrialist shifted from yarn production to cloth production which doubled. (1900 - 1912)
First World War and Indian industries:
®     During war British mill became busy in meeting war need goods. So flow of manchester goods to India declined
®     Indian mills thus got a vast home market to supply goods . Thus 1st world war gave a boost to Indian industries.
®     After the war, Manchester could never recapture its old position in the Indian market.

Small Scale Industries Predominate
®     Large industries  (1911) were located in Bengal and Bombay - 67% & rest of the country small scale industries.
®     Small proportion of labour force was registered in  large scale i.e. 5% in 1911, 10% in 1931  & 90 % in small scale industries.
®     In 20th century handloom cloth production expanded steadily.
Why the handloom production  expanded in 20th century?  
®     Technological changes helped people to increase production without increasing costs.
®     Weaver started using fly shuttle which reduced labour and speeded production. Handlooms were set up with fly shuttles in Travancone, mysore, cochin.
®     The invention of fly shuttle made it possible for weavers to operate large looms & weave wide pieces of cloth.
®     Weavers competed with the mill sector.
®     Famines did not affect sale of Banarasi or Baluchari sarees, sarees with woven border, famous lungis could not be displaced by mill production.
Market for Goods
®     When new products are produced people have to be  persuaded to buy them. Britishers persuaded people  to buy Manchester Goods through advertisement. They tried to attract people and created new needs  for the people.
®     When  buyer saw. ‘MADE IN MANCHESTER’ written in bold on the label, They feel confident about buying the cloth.
®     Manchester goods also carried beautifully illustrated images like images of gods and goddess which gave divine approval to goods like image of Krishna and Saraswati.
®     Figures of important personage of emperors and nawab adorned advertisement and calenders to give message like if you respect the royal figure than respect this product by buying it.
®     Similarly Indian manufacturers advertised that if you respect the nation than buy only Indian goods.
Example: In an Indian mill cloth label, the goddess is shown offering cloth produced in an Ahmedabad mill, and asking people to use things made in India.