TyroCity: Economics 11 Notes

Human Development Indicator

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Better Economic
Human development is development of overall situation of human being such as health, education, income, life expectancy etc. The variables such as human development index (HDI) per capita income (PCI), literacy rate, life expectancy at birth etc are regarded as indicators of Human Development. Some major indicators of Human Development have been discussed below.

2. Education

Educational Indicators include total literacy rate, male/female literacy rates, adult literacy rate, school enrollment rate and average years of schooling. It helps to increase the efficiency of human being.

3. Demographic

It indicates the number of year new born children would live subject to the prevailing risks of mortality. It depends upon the infant mortality rate and as of death.

4. Health

Basic needs include food, shelter, clothing, education and health service. Higher the fulfillment of basic needs, higher will be the level of human development and vice-versa.

Public Revenues

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

The revenues from different sources received by the government are called public revenues. Some are regularly collected whereas some are irregularly collected. Revenues are not repayable. Some of them are obtained from the sale of public utilities whereas some are obligatory payments to the government.
Types or sources of government (public) revenue
The public revenue can be classified into tax revenue and non tax revenue:

Tax revenue:

The tax is compulsory payment to the government without quid pro quo. The government does not repay back it to the payers nor does it do anything for the personal benefit to the payers. It is very effective fiscal tool essential for the achievement of different socio-economic objectives. There are mainly two types of tax.

1. Direct tax:
The tax that is not shiftable in nature and paid by the payers who really take its burden is called direct tax. The person or organization which faces the incident taxes the burden too. The taxes imposed in income, profit, land, houses, vehicles etc are called direct taxes.

2. Indirect taxes:
It is the tax shiftable in nature. The person or organization which faces the incident of tax is different from person or organization who really takes the burden of tax. The incident is faced by the producers and traders but the burden is taken by the final consumers. The tax is imposed on production, sales, export and imports etc. The taxes like excise duty, custom duty, entertainment tax, octroi charges etc are indirect taxes. The VAT is also called indirect tax

Non tax revenue

1. Fees:
The government receives the money from the sale of different services like health, education etc. Moreover it takes fees for registration, license etc. The examples of fees are education fee, health fee, registration fee (birth, death, marriage, organization etc) license fee (driving, share broker, export, import, pistols) etc.

2. Fines and penalties:
Against the violation of rules and regulations the government charges the fines but if there is violation of law and order government charges penalties. Fines and penalties are not regular source of government revenue.

3. Royalties:
The government receives the royalties its production right, copy right, public land and building, capital equipment and plants for use to others. It obtains dividends from public enterprises, rents from public properties etc. this is also regular source of public revenue.

4. Cess:
The government collects different types of cess like road cess, pool cess etc in order to recover he construction cost and to reach the fund for maintenance of the construction.

5. Grants and donation:
The government receives the grants and donations from the people, business organization, NGOs, within the country or outside the country. It obtains grants from foreign government too.

6. Escheats:
The nationalized properties of people after the death being unclaimed are called escheats. This is irregular source of government revenue.

Importance of agriculture in Nepal

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Source of food
Agriculture is determined as main source of food in Nepal. All food and cash crops are grown from agriculture. Agriculture is the mean to survive. We get all required food from it. So, it is a main source of food.

2. Source of raw material
Agriculture is not only source of food but a dominant source of raw material. Jute, sugarcane, tobacco etc. are produced or obtained from agriculture.

3. Employment opportunities
Agriculture is the primary source of employment. According to a report of World Bank about 71.74% of total population depends upon agriculture. The number are 3,831,000 families depending on agriculture as per the 6th agricultural counting from Nepal Government. Thus, almost all farmers are completely engaged in agriculture, making agriculture dominant in agricultural employment.

4. Source of foreign trade
Most of the agro-product is export to foreign or international market. About 60% of agro-product is exported to foreign land. Tea, coffee, woolen clothes, leather jackets etc. are exported which is agricultural products.

5. Increase in Government revenue
Since, 60% of goods exported are obtained from agriculture. So, Government of Nepal includes export tax, tax, registration tax etc. which is the important source of Government revenue.

Problems of tourism industry

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Lack of transportation and communication:

Nepal is economically poor country. Nepal has not been able to provide transportation and communication facilities in all sectors. So, tourists who visit Nepal cannot get a chance to observe all parts of Nepal.

2. Lack of trained tourism manpower:

Tourism industry needs trained and untrained manpower. Trained manpower is scarce in Nepal. Such as: Geographical experts, Trained and Export guides etc.

3. Lack of good quality hotels:

According to the fiscal year 2009/10, there were 103-star hotels with 9613 beds. The hotels are not well managed and unhygienic. So, tourists do not prefer to visit Nepal due to unhygienic, unmatched and unmanaged hotels.

Public Expenditures

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

Government revenue collected from different sources is allocated for different purposes. Generally public expenditure is classified into development expenditure and administrative expenditure. The government allocates resources through its ministries, departments and local authorities. These types of expenditures are made either for their own maintenance or for the promotion of social welfare of the people. In the government expenditure we include development expenditure, administrative expenditures, diplomatic expenditure, difference expenditure, payments of public debts and interest and miscellaneous expenditure.

Role or importance of public expenditure

To maintain law and order’
To maintain national security
To provide administrative services
To invest in social overheads like transportation, communication, irrigation, energy, education, health, security, law and justice
To ensure economic equity in the society.
For development and promotion of basic and strategic industries

Classification of public expenditure

1. Development expenditures:
Expenditures on the construction of infrastructures of transportation, communication, sanitation, irrigation, education, health, power, energy etc is called development expenditure

2. Expenditure on public utilities:
After the construction of infrastructures the government spends the money to provide facilities of education, sanitation, drinking water, communication, transportation etc. these expenditures are expenditure on public utilities.

3. Defense expenditure:
The expenditure on arms and armaments to protect the country and the people from foreign aggression is called defense expenditure

4. Expenditure on general administration:
For the good governance, to keep peace, security and justice in the country, the government makes the expenditures through different ministries, departments and constitutional bodies etc. These expenditures are called general administration expenditure

5. Conservation of resources:
To avoid depletion in the quantities and qualities of the resources and for their sustainability the government makes expenditures on their conservation. It includes expenditure on forestry, soil fertility management, irrigation, flora fauna management

6. Preservation and renovation of monuments:
For the preservation of culture, traditions, arts, skills of the people of the country the government makes the expenditure. The government spends the money also to renovate the historical, archaeological, religious monuments.

Problems of Medium and Large scale Industries

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Lack of capital
For the establishment of medium and large scale industries huge amount of capital is required which is very difficult to be formed in the context of Nepal. So, lack of capital is the problem of medium and large scale industries.

2. Lack of infrastructure

Infrastructures such as transportation, communication and electricity are the most essential elements for a industry to be operated. In our country all there mentioned infrastructure are not available in adequate number or are not sufficient.

3. Lack of skilled–manpower

Generally, medium and large scale industries need skilled manpower for handling the delicate task but there is a situation of Brain Drain in our country. So, there is scarcity of skilled manpower.

4. Lack of competitiveness

Most of the Nepalese industrial products are of low quality. Such low quality products pose a formulate difficulty to complete in both domestic and international market. Car telling is the major problem of Nepalese market.

5. Limited Market

The domestic market for Nepalese industrial products is very limited due to low purchasing power of the people. There is lack of transport and communication facilities to sell the commodity throughout the country.

General Economics Data

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

According to NLFS, 2008, 73.9% of labour force is engaged in agricultural sector.
Agriculture sector is the primary sector of Nepalese economy.
About 34% contributions in the GDP by agriculture sector.
According to three year plans 2010/13, 69.48% of total irrigable land has irrigable facilities.
According to NLFS, 2010/13, 25.16% of Nepalese are below the poverty line.
The share of food crops is 49.5% cash crops are 28.1% and other crops 22.3%.

Difference Between Private And Public Finance

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

Private finance (individual)	Public finance ( government)
An individual adjusts his or her expenditure according to his or her income.	The public authority adjusts its income to its expenditure.
A private individual tries to have a surplus of income over expenditure i.e. surplus budget.	A public authority will spend all that it gets
An individual can borrow money from other individual only and externally	A public authority esp a state can raised loans from both internally
Finances of individuals are limited	Finances of government are flexible
Private individuals cannot use force to get their income; they cannot compel others to get income	The government can use coercive method to realize revenues
Not a single individual can print notes	A state can print currency notes in order to meet its expenditure in difficult times

Importance of Public Finance

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Steady state economic growth:
Government finance is important to achieve sustainable high economic growth rate. The government uses the fiscal tools in order to bring increase in both aggregate demand and aggregate supply. The tools are taxes, public debt, and public expenditure and so on.

2. Price stability:
The government uses the public finance in order to overcome form inflation and deflation. During inflation, it reduces the indirect taxes and genera expenditures but increases direct taxes and capital expenditure. It collects internal public debt and mobilizes for investment. In case of deflation, the policy is just reversed.

3. Economic stability:
The government uses the fiscal tools to stabilize the economy. During prosperity, the government imposes more tax and raises the internal public debt. The amount is used to repay foreign debt and invention. The internal expenditures are reduced. During recession, the case is just reversed.

4. Equitable distribution:
The government uses the revenues and expenditures of itself in order to reduce inequality. If there is high disparity it imposes more taxes on income, profit and properties of rich people and on the goods they consume. The money collected is used for the benefit of poor people through subsidies, allowance, and other types of direct and indirect benefits to them.

5. Proper allocation of resources:
The government finance is important for proper utilization of natural, man made and human resources. For it, on the production and sales of less desirable goods, the government imposes more taxes and provides subsidies or imposes taxes lightly on more desirable goods.

6. Balanced development:
The government uses the revenues and expenditures in order to erase the gap between urban and rural and agricultural and industrial sectors. For it, the government allocates the budget for infrastructural development in rural areas and direct economic benefits to the rural people.

7. Promotion of export:
The government promotes the export imposing less tax or exempting from the taxes or providing subsidies to the export oriented goods. It may supply the inputs at the subsidized prices. It imposes more taxes on imports and so on.

8. Infrastructural development:
The government collects revenues and spends for the construction of infrastructures. It has to keep peace, justice and security too. It has to bring socio-economic reformation too. For all these things it uses the revenues and expenditures as fiscal tools.

Features of agriculture

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Sustenance farming

Nepal carries out sustenance farming rather than commercial. In the Nepali Market, demand of food is equal to its supply. In last 3-4 decades Nepal use to export wheat to Bangladesh but now its vice versa. The production of agro-products makes just equal to its demand.

2. Monsoon based agriculture

Due to lack of irrigation facilities, almost all the farmers depend upon monsoon rain. Nepal’s government has not made any irrigation plant till today. Only few places are reaching to irrigation facilities. Only 69.48% of land has irrigation facilities where only 50% of land or cultivable lands have year round facilities.

3. Predominance of food crops

Food crops are the type of crops that are basically used as primary source of food. Such as paddy, maize, etc. From centuries back in Nepal has been continuously growing more amounts of food crops and today also it shares around 48.9% of total food which is nearly half.

4. Traditional technology
Nepal is practicing traditional method of farming since past. To plough the field, we never use improved seed and pesticides. GON also does not have any attention towards it.

5. Low productivity

It’s obvious to have low productivity because farmers entirely depend upon monsoon rain which is uncertain. No proper irrigation facilities and traditional method of farming causes low production.

Introduction to Industry

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

Industry is a group of a firm such as sole trading, partnership, joint stock etc.

Types of industries	Fixed capital investment
Cottage industry	In small amount
Small scale industry	Fixed up to – Rs 10 million
Medium scale industry	Fixed between Rs 10 – 50 million
Large scale industry	Fixed more than Rs 50 million

Prospects of Tourism Industry

Economics 11 Notes — Sun, 08 Apr 2012 05:41:42 +0000

1. Natural beauty

Nepal is a country full of natural beauty. Fast flowing river, evergreen hills, snow capped mountains etc makes Nepal look attractive and majestic. Yearly thousands of tourists visit Nepal to have glance over her magnificent beauty.

2. Religious places

Nepal is the destiny per Hindus. The greatest and the biggest temple of Hindu, Pashupatinath temple is situated in Kathmandu Nepal. The largest statue of Shiva in the world, 143ft is situated in Bhaktapur (Sanga), Nepal other many famous temples shrines etc are in Nepal such as Swyambhunath, Changunarayan, Budhanikantha etc.

3. Art and architecture

Nepal is renowned for its natural and cultural heritage and is generally reputed for the pagoda style of temple which is rare in the world. Many tourist visit Nepal to know the art and architecture of Nepal.

4. Climate and cultural diversity

Nepal is rich in both climate and cultural sector. Different climate can be found in each topography of Nepal. Extreme cold in Himalayan, mixed climate in Hilly and hot climate in Terai. Due to variety in climate, bio-diversity exists in Nepal.

Moreover, Nepal is rich in cultural aspect. There are more than 60 ethnic groups found in Nepal with 103 language. So, many tourists come to visit Nepal to learn or for research purposes.

5. Less expensive

Nepal is an underdeveloped country with few infrastructures. So, Nepal is less expensive country than others. Tourists can visit Nepal in reasonable price.