Assignment - Communism

7/27/2019 Assignment - Communism

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Q.6Chinas Communism v/s Us Democracy, leading the world.

China follows a principal extreme nationalism and communalism. While a free

communalism can prove beneficial, but when it is clubbed with extremist

approach, impact for positive growth is short runned. However, for China, thistheory is not true, their growth is exponential, and it is already said that China has

outpassed Germany in being the Words second largest holder of Gold reserves, it

is also the largest holder of US Treasury Bonds. But the main question remains

what really defines the growth of a nation? , just numbers cannot define the

growth aspect, its the citizens that show the real well being of a nation. Both the

aspects have their own positives & negatives. No major decisions can be taken.

Bureaucracy holds every decision.

Total Democracy is not an answer to a successful country. In fact, it is chaotic.However, it has a silver lining, in that the individual and his opinion matters but

cannot be fully accepted and implemented.China has been able to achieve what ithas, all because it was totalitarian. If it were a democracy, it would have been a

very low rated world country, though USA has developed under Democracy but

for a long period of time it has been in stagnation stage (facing lot of problems,

like terrorism, unethical breakdown, economic crisis, etc.)

Who and What will lead the world is the most complicated question , and only

time will know and show the real scenario.

Q.4 Is India Walking On Greece Footprints?

Ans:1.Indias budget deficit is nearly at $50 billion,which is the highest amongst BRIC

countries, which is not a healthy sign for a emerging economy like us, both for the

internal and external aspect.

2.India, like Greece, has huge tax deficit.

3.Indias public deficit is three times the average of any emerging economy.

4.India also has high level of corruption, delayed interim developmental projects,

a sufficient number of populatin that is still under bpl level.


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6.India has a very inconvenient way of taxation system, hich is also seen in greec,

however, there is no way to believe that India will follo greec footprints and end up

being the most deficited nation on globe.

7India is under a change, a scenario where the economy has been subjected tovarious changes.

8.The world sees India as the Leader of the world economy in approximately 30

years from now.

9.However, this is not a reason to underperform and convince ourself that

everything will be done just by doing it.

10. If India wants to b e a superpower, it will have to widen its economy, increase

its revenue, be robust and dynamic in every sector, which will thereby strengthenits citizens faith and encourage to perform better.

Q.4 what are the key areas India needs to work upon to control gold

contribution to current account deficit?

Ans: The key areas where India needs to work upon to control gold contribution to

current account deficit are:

1. On measures to reduce gold imports, the government should further enhance the

customs duty on gold and platinum from 4 per cent to 6 per cent in January 2013 to

lower the import of gold.

2. The government should provide link between the Gold Exchange Traded Fund

(ETF) and the gold deposit scheme with an objective to release a part of gold

physically held mutual funds under Gold ETF.

3. Efforts should also be made to introduce attractive financial instruments todivert household savings in non-productive assets like gold.

4. The situation also demands a complete overhaul of foreign trade and industrial

competitiveness strategies adopted so far.


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5. Policy makers must also consider cutting import of non-essential items including

second hand and re-manufactured goods, especially non-competitive goods from

China.

6. Alongside,government should also take steps to improve availability of gold.

7.RBI should ban the sale of gold coins, medallions and dores without a licencefrom the foreign trade office.

8.The government has initiated to raise diesel prices, aligning the domestic crudeprices to the global crude prices which will eventually curb the demand. So there

will be some rationalization of demand for gold.

9. Investor education and financial literacy are critical. With appropriate investor

education about the positive aspects of investment in gold-backed financialproducts, it is possible to reduce the demand for physical gold or we can, at least,

postpone the demand for gold to future.

10.Setting up of Bullion Corporation may be considered. The proposed BullionCorporation may function as a Backstop Facility providing liquidity for lending

against gold or as a refinancing agency.

Q.7 Does the falling economies indicative, a rethink on Breton Woods1971

decision against gold standard?

Ans:

Yes. In the case of Breton Woods the widespread belief that the Great Depression

and World War II were dissolved by the collapse of the gold exchange standard,

and the fear of the uncertainties of changes in the floating exchange rates, led to

the case for a failsafe man-made creation.

The operations of Breton woods standards were dependent on IMF rules.

Various countries engaged in competitive currency devaluation turn in desperate

and tries to export deflation to each other by means of depreciating the value of

their respective currencies.

Situations became worse during the subprime crisis of 2007-08; the entire world

faced a huge setback in all aspectseconomically and financially. So the


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performance of the gold standard once upon a time assured long-term price

stability.

But because economies under the gold standard were so vulnerable to real and

monetary shocks, prices were highly unstable in the short run.Most of the EU countries like France and Belgium did not follow the rules of Gold

standards. In short they never allowed interest rates to rise enough to decrease the

domestic price level.

Also, many countries frequently broke the rules by sterilization i.e. protecting

the domestic money supply from external disequilibrium by buying or selling

domestic securities.

If, for example, Frances central bank wished to prevent an inflow of gold fromincreasing the nations money supply, it would sell securities for gold, thus

reducing the amount of gold circulating.

Breton woods was man-made rules which ultimately showed some errors like the

failure of adjustment mechanism between Germany (and others) and the peripheral

countries

A lack of liquidity which lead to the threat of confidence in the euro from the high

costs of Germany bailing out the defaulting periphery.

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Assignment - Communism