ECONMY PART 2

Written by :M.SAIRAVINDRA

Why RBI can’t be print more and more currency during crisis time to help the country and its people?
 This is the most common doubt for me and also most of the people and occasionally during crisis time . Here I am going to explain this in a very interesting and simple way. I think this small information most of the people easily understand & also helpful in your future.

There are nearly 10 people living in our country. The average income of each person is 10/- per year. If our country produced 10 kgs of rice per month and each KG of rice costs 1/- & our country produced 100kgs of rice per annum. Now, our country wants to increase its economy. So, they thought of printing more currency notes. Reserve Bank of india has printed more currency notes and so, the salary of 10 people in the country has increased by 10/-. So, now the annual income of each person in the country became 20/-. Now, the people of our country are capable of buying anything because of the increase in their salary. But, the production of rice which is now 100kgs per year cannot be increased as it is not in the hands of people or government. So, the rice sellers will now increase the price. Now, 1kg of rice which was 1/- has now become 10/-. This means that people have more money and production is less. This phenomenon is called “HyperInflation”.

This got failed in many countries. Zimbabwe, Venezuela in order to improve its economy has printed more currency notes. Thus there was more rotation of currency in their hand. When there is money, people want to buy things and lead a luxurious life. But, to buy things, there should be more productive, for more production, there should be raw materials and machinery. Almost all the countries import raw materials and so, it is impossible to increase production. This leads to inflation. Salaried persons earn more and unemployed turn thieves. This leads to an increase in the crime rate, an increase in the goods price. And thus, the economy of the country can never be grown. It is said that during Hyperinflation in Zimbabwe, a piece of whole bread price was around 15000/- Indian rupee.

So, in order to increase the economy, the country should increase production. Sell their goods to other countries, increase the exports and raise the economy. The government and RBI should work in maintaining the balance between production and currency rotation in the hands of people. So, printing money can’t be solution to raise the economy. When you have more money and less things to buy, then the money will lose its importance. The currency note will then become a waste paper.

FINAL VERDICT: Prodouction more and also export to other countries than country will profitable and import also a good decision to increase the economy but how? 

If govt will be bought phones from china than if one phone cost in china 5000 /- than if india imported that product and it will release in our country than that phone cost was 10000 in our country including taxes etc.so govt profitable in this case and this was happened in our country.

So more production and more export but less import than it will help to develop financial condition and grow economical condition.

Some times less money but more production may also economical crisis will be happened.

When people and govt equally profitable than crisis or hyper inflammation will not happened.

Example: In above I wrote about some countries like  zim and Venezuela money was more but production  less so crisis happened because less production if production will more than people can buy more items and govt also profitable this is called balance. 

                                               Balance:

                 People also profitable as well as govt also profitable

                                                                                                                                      WRITTEN BY:M.SAIRAVINDRA
PART3 ON MAY 10