<<–2/”>a >h4 style=”text-align: center;”>Chapter 1: Wealth Creation: The Invisible Hand Supported by the Hand of Trust
Importance of Wealth creation:
- It lead to efficient and more utilisation of raw material.
- It lead to increase in the Aggregate Demand in the economy.
- Increase in the Direct Tax flows
- Increase in the salaries of employees working in an ecosystem with expanding wealth.
- Increase in Foreign Exchange survey.
- Increase in the return on Investment.
Wealth creation through the Invisible hands of the market How and examples to prove that:
- Formulation of right policies and schemes.
- Commerceand the pursuit of prosperity is an intrinsicpart of Indian civilizational ethos. Just follow that instinct.
- The evidence since 1991 showsthat enabling the invisible hand of markets,i.e., increasing economic openness, has huge impact in enhancing wealth both inthe aggregate and within sectors.
- Liberalised sector have performed better than the closed sector. Ex: Steel and cement performed better than coal sector, Credit/ GDP increased drastically for Private Sector Banks as compared to Public Sector Banks, Growth of Mutual fund sector post 2003( opening up of sector) . All these examples make a strong case for regulated privatisation and hence the wealth creation.
Instrument of Wealth creation and creation of hand of Trust:
- Equal opportunity for new entrants is important, a 10% rise in new firms at district level yields 1.8% increase in gross domestic product.
Equal opportunity needs to be provided by the government through fair means.
- Do away with the pro crony economy and Regulatory relics
- Pro crony economy: Policies favouring few big tycoons
- Regulatory relics: Overhang of socialist phase between 1950-1991
- Providing efficient financial sector. Indian Banking sector is poorly developed.
- Efficient management of data repository of the consumers in banks. This centralised repository will cation banks in advance against the habitual defaulter and thus preventing NPA.
- Central repository of information on large corporates will help to identify willful and genuine defaulter.
- Government should strengthen its role as referee. The Resource scarcity need to be addressed in SEBI, CCI etc.
- Use of Artificial Intelligence and Machine Learning to flag mall practice.
- Creation of wealth shall be on ethical lines. Intrinsic motivation need to be strengthen. For example: Banks should recognised the ethical corporates and they should be felicitated.
Example to show importance of trust:
Just as farmers burning the stubble create negative externalities for all citizens through the contaminated air, when a corporate intentionally misreports financial information, it harms investors by creatinga negative externality of low trust for all domestic and international investors in the financials of firms in the economy.
To conclude,
| Introducing the idea of “trust as a public good that gets enhanced with greater use”, the Survey suggests that policies must empower transparency and effective enforcement using data and technology to enhance this public good. |
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Wealth creation is the process of generating new wealth. It can be done through a variety of means, including Entrepreneurship, investing, and innovation. Wealth creation is important because it helps to improve people’s lives. It can lead to higher incomes, better Education, and improved Health care.
India is a country with a long history of wealth creation. The country has a rich culture and a strong entrepreneurial spirit. In recent years, India has experienced rapid economic growth, which has led to increased wealth creation. However, there are still a number of challenges that need to be addressed in order to ensure that wealth creation is sustainable and inclusive.
One of the biggest challenges to wealth creation in India is inequality. The gap between the rich and the poor is widening, and this is leading to social unrest. The government needs to take steps to reduce inequality, such as investing in education and healthcare for the poor.
Another challenge to wealth creation in India is Corruption. Corruption is a major problem in the country, and it is estimated that it costs the economy billions of dollars each year. The government needs to take steps to reduce corruption, such as strengthening the judiciary and improving transparency.
Infrastructure-2/”>INFRASTRUCTURE is also a challenge to wealth creation in India. The country’s infrastructure is in need of major investment, and this is holding back economic growth. The government needs to invest in roads, bridges, Airports, and power Plants.
Education is another challenge to wealth creation in India. The country’s education system is in need of reform, and this is leading to a shortage of skilled workers. The government needs to invest in education and improve the quality of education.
Despite these challenges, India has the potential to be a major wealth creator. The country has a young Population, a growing economy, and a strong entrepreneurial spirit. The government needs to take steps to address the challenges that are holding back wealth creation, and if it does, India can become one of the wealthiest countries in the world.
Here are some specific policy interventions that the government can take to promote wealth creation in India:
- Invest in infrastructure: The government can invest in roads, bridges, airports, and power plants. This will help to improve the business Environment and make it easier for businesses to grow.
- Reform the education system: The government can reform the education system to produce more skilled workers. This will help to address the shortage of skilled workers and make it easier for businesses to find the workers they need.
- Reduce corruption: The government can take steps to reduce corruption. This will help to improve the business environment and make it easier for businesses to operate.
- Promote innovation: The government can promote innovation by providing tax breaks and other incentives to businesses that invest in research and development. This will help to encourage businesses to develop new products and Services that meet the needs of consumers.
These are just some of the policy interventions that the government can take to promote wealth creation in India. If the government takes these steps, India can become one of the wealthiest countries in the world.
What is wealth creation?
Wealth creation is the process of generating new wealth. It can be done through a variety of means, such as investing, entrepreneurship, and innovation.
What are the different types of wealth?
There are two main types of wealth: financial wealth and non-financial wealth. Financial wealth is the value of assets such as cash, stocks, and