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How can YOU pedal India's growth?

Priyadarshan Banjan 
on 09 April 2013

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“Knowledge is power”- Abdul Kalam

“With great power come great responsibility”- Ben Parker(Uncle of SpidermanJ, remember that scene in the car?)

Right from our CPT days, we have been taught the meaning and importance of Economic Growth of our Nation and how vital a role it plays in enhancing our standard of living. Normally, from our viewpoint, ‘Economic Growth’, ‘GDP’ etc. are part of jargons we usually hear during Budget season every year. So, is it just that? Are all these concepts just for our Economists & esteemed Finance Minister to think & blabber about?  In this article, I’ll endeavor to bring clarity to the way we think about these concepts and its practical relevance.

We as the future of our nation share amongst ourselves a common responsibility to build on the legacy left for us by our predecessors. One of the ways we can do this is by enhancing our nation’s economic growth. A universally accepted yardstick for measuring our Economic Growth is our Gross Domestic Product (GDP). So, what exactly is GDP?

Normally, GDP is considered to be the value of Goods & Services produced within a nation in toto. What exactly does this ‘VALUE’ refer to? I will try to elucidate this in a simple and easy to understand manner.

Let's link Economics with Accountancy. Just imagine a Profit & Loss Account (Statement) of an enterprise. On the Credit side, we have our Income (Turnover), Closing Stock, and Loss if any and on the Debit side, we have all our Opening Stock, Purchases, Expenses and of course, our Profit. As is with an enterprise, when we recreate the same thing from a macroeconomic point of view, taking our own nation into account, the Profit or Loss we earn is our Gross Domestic Product i.e. GDP! creating a Profit & Loss Account for our Nation,

                EXPENDITURE of economy

                 INCOME of economy

Factors used up in Production/ Service of Goods and Service in whole of India.

Eg. Salaries, Wages, Purchases, etc.

Turnover of all the Goods/ Services produced across all the Sectors in India(Agricultural, Industrial, Service)

Economic Value Added c/d (balance like Profit)

           Debit

           Credit

Government subsidies

Economic Value Added c/d

+

Indirect Taxes collected from public

GDP (Balance)

Note: Please view the diagrams from the Nation’s (Government) viewpoint with macroeconomic as well as microeconomic eyes (from businessman’s viewpoint) assuming our GDP is running on a Profit. There are 3 methods of calculating GDP…, all 3 give the same answer. The aforementioned diagram is based on the ‘Production Method’. The aforementioned diagram takes an over simplistic view of the concept, but it’s so needed to make the concept clear.

In the aforementioned diagram, it becomes clear what exactly GDP is. The more we enhance our GDP, the more we are on the pathway of Economic growth. So now the question remains, how do we increase our GDP? Well, the simple answer is Entrepreneurship. Entrepreneurship refers to the generation of Economic Activities in the form of an Enterprise. A profit which an Enterprise makes over the course of its business is in fact a contribution to a country’s GDP and consequently our Economic Growth. Look at the World around you. Just walk around the very place you stay, all those small traders and shops, or simply, take a look at the Financial Statements & Accounts of the entities you come across in your articleship/ newspapers. The Economic Value Added, or simply put, the Cash Profit is the VALUE that defines Goods and Services they provide. It’s logical to think that if we follow the same path and take our first few steps toward Entrepreneurship, even us, with whatever meager resources we have, will start contributing to our Nation’s Economic Growth. Now, I agree that we can do the same even by working a Job, serving others. Nevertheless people, I’m talking about the scale of activity we are undertaking.

MLA Kshitij Thakur (Yes, the same guy you saw in News for meddling with a Cop at the Sea Link in Mumbai) in one of his Speeches in the Vasai- Virar region had urged the youth to participate in Entrepreneurship because when you do a job, you satisfy your personal demands, but when you choose to be an Entrepreneur, you do so for yourself as well as for others who work for your business. Now, this guy has a point. Working with a Job for yourself, you contribute in your own little way. But doing so for others as well as yourself, you’re contributing to the Growth in more than one way!

So, what as we CAs/ future CA students do about it? Well, for starters, we may try to look at every concept we study at whatever level we may be in from a Business Owner’s viewpoint. This, I’m sure will develop an Entrepreneurial attitude within us, which is so important. We, with our detailed knowledge and astute understanding of all the factors, financial or otherwise, have the necessary mind to contribute to our nation’s economic growth.  

The other thing we can do is stay invested in a business. I’m not asking you to drop your ambitions of working a job and earning a fat payday. You as a Professional workman may be either into your jobs or other activities, but make it a point to stay invested in a Business which tastes your expectations and passion. This way, you provide means for others to add economic value to the market, thanks to your investments!

Of course, if you are really passionate about something, it’s cool to flame the same by becoming an Entrepreneur yourself! Mind you, it involves risk and tension. But people, when you celebrate the success of Ratan Tata, we are also talking about the success of numerous organizations under the TATA group, the success of numerous investors behind it, the success of our nation, India. The feeling when you achieve something as strong as being a successful entrepreneur, you know that it’s not just personal success…, it about the success of your organization and the Nation as a whole!

I’d part with an old Indian saying which inspires me no end.

“Everything’s gonna be all right in the end…, if it’s not all right, it’s not the end!!”

Karma… Period.

Thanks for your time. Cheers!

Hi mates, this is an article based on the concept of Economic Growth & it's relevence in our life. I endeavor to make Complex Stuff simple. I hope you like my analogy of linking Economics with Accountancy. Your comments, as always, stand immensly valuable to me. Hope you enjoyed reading it.


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