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National Income Accounting Part 4
Yes, India consumption driven country. India has a huge population, so tend to consume in what ever capacity they are. This basically ranges from match box to Mercedes benz and asha to audi. The advantage is the more we consume the more we pay indirect taxes. This may not always be true. India import goods from different countries. Like electronics and pretty retail goods from china and we also import textiles from Bangladesh, though we are a major players in textiles,many more imports.Our consumption is helping grow imports, that means companies in other countries are benefiting at the cost of India's growth. Assume India has all those companies to replace the imports. People will be buying desi products, desi companies will be paying taxes to the government. And many people will be employed domestically. If this production business is vibrant, our companies will excess the production, they will export it to the other countries which will make money and eventually our foreign exchange will increase. But if the process consumption decreases due to any reason , there will be stock of unsold goods, which will have to be sold either at throwaway prices or unreasonably at cheaper rates. The economy will collapse and jobs will lost. Consumption based economy is good, till such time our export balances imports and till such time imports do not eat into our exports.Domestic production should also increase to at least the quench the requirement thirst of domestic consumption.
Mohini Jain
a year ago
That's a really good answer actually... I think you don't have to worry about answer writing Ramana :)
Mohini Jain
a year ago
And if possible i hope to see you in today's special class :)