Unpaid internship argument essay Example | Topics and Well Written Essays - 750 words

Unpaid internship argument - Essay Example spending efficient summer vacation becomes a duty for students. Many companies required high expectation of specifications from students. To fill out owns resume blanks, students need to invest their vacation for their future. Commonly, they are looking for volunteer jobs or internships. Especially, internship is a very attractive title for one’s resume and career experience. However, unfortunately, in this tough reality, the purpose of internship has been changed. Many companies and institutions offer unpaid internships for photocopying or making coffee. It is hard to expect real tasks as an intern. Moreover, through unpaid internship, it would bring many economic problems on individual interns to our society. Unpaid internship is just a way for companies to have free workforces. Companies and institutions use student’s future to satisfy their own profits and it will hurt economy and education markets in our society. Unpaid internship realistically is not designed for common students who have loans and debts. In NYC, a city that offers many unpaid internships but also one of high inflation cities in America, many unpaid interns are suffering because of this unrealistic opportunity. However, there are some students who are really suitable for unpaid internships. Their common factor is rich. For example, to do unpaid internship at the White House, a student is required to get financial support from the home front. Living in Washington, one of expensive cites in America, is not easy for common students; if they are not living in Washington, the costs are increased because they need to pay for a rent, transportation, and food, etc. However, the rich students don’t even consider this inquires. This gap between these students are called â€Å"blatant class discrimination†.(Lind) In reality, college tuition has been increased with the percentage of student’s loans. Moreover, to get a fine job, students unavoidably

MyReligionLab Assignment Week 2 Essay Example | Topics and Well Written Essays - 250 words

MyReligionLab Assignment Week 2 - Essay Example They also believe in the karma, the law of cause and effects that make an individual to create his own destiny by thoughts, words, and deeds. In the context of Vellaringat (2002), religion is a set of beliefs (Hindu beliefs) that that relate humanity to supernatural realities. This brings the art of worship and ritual practices as observed by the Hindus. Self seeking, through the intense meditation in order to realize the whole self identity does involve acknowledging the gods, according to the Hindu religion and beliefs. Many of the Hindus have a primary focus on fulfilling their social, moral, political, as well as cultural duties and responsibilities appropriately to their gods in order establish their positions in life. As it may seem, there are similarities with other religious traditions and beliefs in this context. The Christians and the Muslims societies as well believe in the supreme God who determines destiny and affect their social, cultural, as well as moral motives. Considering the Hindus beliefs, practices, and holidays, one similar fact that connects these religions to the people’s daily lives is the ir commitments to devotion, liberation, and knowledge on what they believe in their respective religions. It is therefore true that religious practices centers daily lives of many and dictates their social, traditional, and cultural

Group Development Essay Example for Free

Group Development Essay First, here is a summary of the development stages of a team. In the forming stage, team members come togetherand form initial impressions. They socialize in order to get to know each other and bond with other team members. In the storming stage, team members experience hostility and infighting over tasks and how the team works. In the norming stage, team members start to come together and realize what needs to be accomplished. In the performing stage, team members are well-organized and well-functioningand maintain a positive balance. In the adjourning stage, team members achieve closure when the project is accomplished. At the end of the cask study the team is still in the storming phase of team development. The team has not fully come together. There is still some infighting with Mike and the presence of cliques is developing, for example, the situation in the cafeteria. Overall, I think there is tension within the team. Christine’s leadership abilities could benefit by having knowledge of the stages of group development. Aside from the very first meeting Mike was not present at any subsequent meetings. He missed out on the forming stage of team development. During this stage Mike could have talked with the team about his outside distractions, job and girlfriend, that may prevent him from fully participating at the meetings, and on the project. If Christine had some knowledge of team development she would have recognized this lapse in the forming stage and could have been able to address this issue with Mike before it became a bigger problem. Christine, as the team leader, could have pulled Mike aside and talked to him about the importance of attending the meetings. She could have spoke with him after the cafeteria incident to reassure him that he was not being excluded, but that all the team members being there was truly a coincidence. Also, she could have told Mike her opinion about how she felt he had a lot to offer the team, the value of his contributions and how it would help with the success of the team. PART II – Problem Identification The primary problem that appears in this case is Christine’s lack of knowledge in team development and as a team leader. The secondary problem is Mike’s unwillingness to contribute to the team. Since Christine did not have knowledge of team development or experience she was ineffective as the team leader. She could have organized the team better by assigning tasks’, scheduling meetings in advance, and possible scheduling a team building event to solidify the forming stage of development. Mike was the second problem to overall team success. Although Mike had issues outside of the team he should have talked to the team at the beginning and asked for assistance and support. After the incident in the cafeteria Mike simply walked away. He should have stayed for a few minutes and discussed the situation with the other members. I don’t fell Mike did his part to interact with the team to enhance the forming stage of development. After the first meeting he immediately set himself as an outsider. Christine as a leader must understand the each group of individuals is going to have its own personality, both individually and collectively. When you understand the needs of each member, and the dynamic that each one brings to the group, then and only then, are you able to develop a strategy to utilize team development to achieve the groups ultimate goal. The goal is to complete a quality project on time. If Christine’s knowledge of team synergy, social facilitation, and overall team effectiveness would have server her well in her role as project leader. Lastly, Christie needs to learn how to assign tasks based on the strengths, and weaknesses of each team member. Other members of the team each had something to offer, including Mike. He was classified as a clown. Clowns tend to be very spontaneous in their thinking; this is a possible source of new and innovative ideas. This should have been communicated to Mike as well as the rest of the team. PART III – Retrospective Evaluation In order for Christine to solve her primary problem two things need to occur. First, Christine should take a class in organization behavior. Understanding the team development process, as well as, team effectiveness, and teams in an organization will definitely help Christine. She will be able to understand, and identify positive and negative aspects of her project team and would have been able to implement steps to correct any deficiencies. The second aspect was Christine’s lack of effectiveness and her inability to integrate Mike into the team. After the first meeting which Mike attended, the problems started. Mike did not make meeting, and was submitting hand written notes. Christine should have structured a meeting that Mike could attend, or scheduled a team building social event. in addition, she could have started reviewing his notes with the other team members at the meetings since he was not there to do it himself. This would at least have given the other team members the knowledge that Mike was making an effort on his part of the project. PART IV – Reflection In my opinion Christine was presented with a challenge that was way above her level of experience. Her lack of knowledge in team development, and as a team leader was evident in the project team. The team did not make it past the storming phase, and therefore never fully developed into an efficient team. She failed to integrate one individual into the team. This caused friction within the team and left one section of the project incomplete with one week remaining until the deadline. Overall, I do not believe Christine was an effective group leader. REFERENCES 1. Schermerhorn, J.R. Jr.,Osborn, R.N., Uhl-Bien, M., Hunt, J.E., Organizational Behavior 12th Edition (2012), John Wiley Sons, Danvers, MA.

Impact of Malaysias Recession on Undergraduate Start-up

Impact of Malaysias Recession on Undergraduate Start-up Chapter 1 1.0 Introduction This part contains research background which illustrates basic knowledge for readers to understand better on the research. Problem statement and objectives tell the reasons why this research is done. Basically this part is significance for introducing the whole research. Other information includes scope and assumption, definition and abbreviation, limitation and significance of the research and research outline. 1.1 Research Background Recession occurs when the GDP (Gross Domestic Product) of a country falls below 5-10 per cent, lasting for two or more quarters consecutively. The GDP is the total market value of services, goods, investment and labour created within a country in a given period of time, which is usually one year. Frankly speaking, it is said that a recession is a less severe downturn in the economy, and it has a tendency of getting resolved faster compare to the great depression. The differences between a recession and a depression is, recession is a regular economic downturn that lasts for about 6 months to 1Â ½ years, and a depression is a sharp downturn lasting a number of years. Generally a recession occurs when there is more than 5% people are unemployed for a period of 6-18 months, whereas a depression occurs when more than 10% people are unemployed for a longer period of time lasting years. Different people had different perception towards a recession. For example, it means a recession for a retailer when his sales drop from 5% to 20%. To stockbrokers, it means a fall in the prices of stocks. The fall of demand and production means a recession for manufacturers. For normal people, recession can happened in two ways either a significant increase in prices, known as inflation, or a decrease in prices, known as deflation. If there is a decrease in prices, it caused by people that are having less money to spend or chooses not to spend as much money; it leads to the lowering of the GDP. Whereas, when there is an increase in the prices it will reduce of public as well as private purchase power and it causes the GDP to decrease. (Makhsudul Islam, n.d.) As a highly open economy, Malaysia has been affected by the deepening global economic recession. After growing by 7% in the first half of 2008, the Malaysian economy recorded a growth of 0.1% in the fourth quarter of 2008, and contracted by 6.2% in the first quarter of 2009, as a result of a sharp decline in exports. Given the expectation of a more pronounced global recession, the Malaysian economy is projected to contract by 4 5% in 2009. Conditions are expected to improve in the second half year particularly in the fourth quarter and going into 2010. Amidst the unfavourable external conditions, support to the economy will be from domestic demand, following the implementation of a significant fiscal stimulus, the cumulative accommodative monetary policy actions and the continued access to financing. The Malaysian economy is expected to experience the full impact of the global economic downturn in 2009. In response, several policy measures have been put in place with a primary focus on supporting domestic demand as well as mitigating the impact of the global slowdown on the affected segments of the economy A great deal of emphasis has been placed on nurturing the next generation of Malaysian entrepreneurs with programmes and initiatives that expose youth to business culture and cultivate entrepreneurship. This was designed to prepare youth to be independent and self employed later in life, if they choose this career path. In 2008, the Small and Medium Industries Development Corporation (SMIDEC) in collaboration with the Ministry of Higher Education (MOHE) introduced the SME University Internship Programme to train and develop budding entrepreneurs among graduates. The programme links SMEs to universities, thus enhancing the synergy between industry and academia to upgrade the capacity and capability of SMEs. Under this Programme, final-year students under the tutelage of their lecturers, SMIDECs SME Business Counsellors and the SME Expert Advisory Panel (SEAP) provide consultancy, advisory and mentoring services to SMEs with the aim to upgrade the companies operations in packaging, branding, marketing, accounts and technical areas. As for the graduates, the programme provided exposure to industry and real-life day-to-day issues faced by SMEs, enabling them to make practical applications of their studies and sharpen their interests to venture into business. Meanwhile, to facilitate unemployed graduates and school leavers to venture into the retail sector, the Ministry of Domestic Trade, Cooperatives and Consumerism (MDTCC) conducted the Train and Work Programme benefiting 1,000 individuals. The programme was aimed at providing training and career development in operating hypermarkets, exposing participants to the retail sub-sector and inculcating entrepreneurial culture. To assist start-up businesses, the Ministry of International Trade and Industry (MITI) continued to provide Matching Grant for Business Start-ups via its agency, SMIDEC which benefited 1,400 SMEs. (SME AR, 2008) In this paper, we are going to discuss factors that affecting undergraduates start-up decision in entrepreneurship point of view. During the recession, most of the start-up is a necessity entrepreneurship. The 2004 Global Entrepreneurship Monitor (GEM) report shows that there is great variability in the relative distribution of opportunity and necessity entrepreneurship across the 34 countries in the GEM sample. GRM 2004 had distinguished between necessity entrepreneurship, and opportunity entrepreneurship. According to GEM 2004, a necessity entrepreneurship is which has to become an entrepreneur because no better option and an opportunity entrepreneurship is an active choice to start a new enterprise based on the perception that a unexploited, or underexploited business opportunity exists. The opportunity entrepreneurs are more prevalent in high-income countries (such as France, the United Kingdom and the United States), while necessity entrepreneurs are more common in the low-incom e countries (such as Hungary and Poland). Accordingly, it may be argued that in developed countries opportunity entrepreneurship is linked to economic growth, while in most developing countries necessity entrepreneurship exists because of low growth. It may be that because richer countries are characterized by a more developed labour market or access to stronger safety nets (social welfare), there is a lower need for starting up a business and that therefore these countries exhibit lower necessity-based entrepreneurial activity rates. (Reynolds, Bygrave Autio, 2004) 1.2 Problem Statement The factors that affecting undergraduates start-up decision was chosen to be area of study with due of the following reason: Malaysia is having recession, various policies had been made to counter this crisis and we could see that government is stressing on the role of entrepreneurs in helping Malaysia to come out from the recession. We need to identify undergraduates perception and their supportiveness to entrepreneurship as they maybe the pool of unemployment in this crisis. Graduates unemployment rate had keep increasing; it is believe to reach a critical high rate in this long recession. Start-up can be a good ways for them in overcoming this problem. Now we need to recognize what are the forces that push undergraduates to start-up in despite of recession. Basically the main problem statement and research direction is to answer this question: 1) What are the factors that influence undergraduates to start-up during recession? 1.3 Research Objectives The objectives of this research are: 1) To understand how undergraduates perceive the role of entrepreneurship and start-up in stimulating Malaysia economic during recession. 2) To identify factors that influence undergraduates to start-up in despite recession 1.4 Significance of the Research This research is significant because it distinguish undergraduates perception on entrepreneurship role in this economic crisis. Economists had clarified the importance of entrepreneurship in economic recovery, but many people didnt realise it. Most of the people are fear to start their business in the downturn even they are jobless. In their view, start-up during recession is too risky and couldnt create enough benefits for them to try it compare to the loss possibility. This perception is negative in helping Malaysia economic recovery and relief jobless people from the unemployment. In this paper, undergraduates are tested on their willingness to start-up and what are the causes that may influence them to make such decision. This is significance as undergraduates unemployment rate had being an issue in Malaysia for many years. A large number of undergraduates will jobless in the recession and this incident could be solve by start-up. 1.5 Limitation of the Research Some of the respondents may not have sufficient background knowledge about this research so they may not understand or misunderstand the question asked. There are a lot of economics terms which maybe unfamiliar and create confuse for the respondents. It also cannot be discounted that the respondents might have completed the questionnaire without giving serious review on the question in the survey as they could try to be compassionate and sympathetic to assist the undergraduate to complete the project. As this research is a non-sponsor research, the limited expense budget has significant influence on the population sample size. Therefore, there were some limitations with respect to the analysis and data that may affect the accuracy of the results. 1.6 Outline of the Research This study is divided into 5 chapters. Chapter 1: Introduction It introduces general information of this research, especially in the Malaysia context. It also briefly discussed the background of the study. This is followed by a brief on problem statement and objectives of the study, which is the most important section of this chapter. In addition, the, limitations of the research, the significance of the study, the scope and assumption are described. Chapter 2: Literature Review Literature review presents some basic knowledge and theories relating to the research variables. This chapter will provide the information needed to answer the research question. The review is the foundation for developing a conceptual framework in the next chapter. Chapter 3: Methodology This chapter is an important chapter of this study. It includes the research variables, conceptual framework, hypothesis and the research methodology. This chapter describes the conceptual framework which is the basis for designing questionnaire. The hypothesis formed will be tested too by the result of the questionnaire. Chapter 4: Results and Discussions This chapter presents and statistical analyses the raw data collected from the survey. The statistical relationship of the data is logically interpreted, discussed and argued to make sense on the findings. The results and findings will be discussed deeply on the consequences and effect for each variable. Chapter 5: Conclusions and Recommendations This section will precede an overall summary of the study and propose discussion after conducting the entire research. Moreover, in this chapter it will also stated the limitation of the study and yet it will propose the suggestion for future research. A conclusion is made and which must answered the problem statement propose before. 1.7 Definition and Abbreviations Definitions used by researchers are often not conform, so it is important to define the positions and views taken in this thesis in regards to some key concepts. Definitions of core constructs will also be dealt with in more depth when the various literatures are discussed. Providing an overview here will give readers a clearer understanding of important concepts. Recession: A period of general economic decline; typically defined as a decline in GDP for two or more consecutive quarters. A recession is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market. Entrepreneurship: The assumption of risk and responsibility in designing and implementing a business strategy or starting a business. Start-up: A new business venture SME: Small Medium Enterprise GEM: Global Entrepreneurship Monitor Fiscal Policy: The use of government spending and revenue collection to influence the economy Monetary Policy: The process by which the government, central bank, or monetary authority of a country controls (i) the supply of money, (ii) availability of money, and (iii) cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy Market concentration: Is a function of the number of firms and their respective shares of the total production (alternatively, total capacity or total reserves) in a market FRB: Federal Reserve Bank 1.8 Scope and Key Assumptions The scope of the population sample covers undergraduates majoring in Bachelor of Business Administration in Malaysia. The sample is selected from the final year student of a university. All of the respondents are assumed to have basic business knowledge and some acquiring knowledge on entrepreneurship, economic recession and government policy implemented in Malaysia. Most of the population samples are chosen from Malacca region. Assumptions on the respondents are as follows: l Respondents have basic business knowledge and understand economic terms used in the questionnaire l Respondents are familiar with current economic condition and policy implemented in Malaysia l Respondents are honest in their responses to the survey and are not influenced by hearsays in completing the questionnaire. 1.9 Conclusions This chapter has laid the foundation for this research. It introduced the research objectives and raise up the research question.. The research was justified, definitions were presented, the scope and assumption was briefly described, the report was outlined, and the limitations were given. On these foundations, this paper can proceed with a detailed description of the research. Chapter 2 2.0 Literature Review This chapter gives an overview of literature that is related to the research problem presented in the previous chapter. This chapter will introduce the factors that affecting undergraduates start-up and how this factor influence their decisions. Besides, it still covers some definition and experts opinion about the variables in order to give a clear idea about the research area. 2.1 Job Opportunity Tay (2009) point out that in Malaysia, traditional medicine company Hai-O has successfully helped thousands of ordinary Malaysian bumiputeras becomes millionaires through its entrepreneurship development business model. In times of economic slowdown, Malaysian companies should emulate Hai-Os example to create opportunities and employment for the people. The government should also quickly initiate an entrepreneurial development campaign for all races based on merit, since this is one of the measures to create self-employment and counter the economic crisis. In the midst of record unemployment, a new Kauffman Foundation-funded U.S. Census Bureau study reports that startup companies are a major contributor to job creation. The Business Dynamics Statistics (BDS) also indicate that while business startups decline slightly in most of the cyclical downturns, startups remain robust even in the most severe recession over the sample period (in the early 1980s). Job growth is essential for our economy to rebound, and this study shows that new firms have historically been an important source of new jobs in the United States, said Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation, which funded the BDS. Our research into the early years of business formation consistently shows how vital new firms are to our economy, and this data should give policymakers and budding entrepreneurs alike great hope for how we can solve our current crisis—create and grow jobs through entrepreneurship. (Ewing Marion Kauffman Foundation, 2009 Jan) The BDS data show that employment accounted for by U.S. private-sector business startups over the 1980-2005 period was about 3 percent per year. While still a small fraction of overall employment, these jobs from startups reflect new jobs, which is a large percentage compared to the average annual net employment growth of the U.S. private sector for the same period (about 1.8 percent). This pattern implies that, if you exclude the jobs from new firms, the U.S. net employment growth rate is negative on average. Micro firms (firms with one to four employees) accounted for a large percentage of new jobs in any given year—about 20 percent on average. Although substantially larger startup firms (those with 250 to 499 employees) created a considerably smaller percentage of jobs in any given year—about 1.3 percent of employment in this firm-size class—their numbers still are substantial relative to net growth. Although the overall business startup rate in the BDS does not exhibit much of a trend, the data do reveal a declining trend in the micro-firm business startup rate. This may reflect compositional changes in sectors such as retail trade, where there is ample evidence of substantial shifts away from small, single-establishment firms to large, national firms. (Haltiwanger, Miranda, Jarmin, 2009) Entrepreneurs will be the foundation of our nations economic recovery because they start and grow businesses that create jobs. Research indicates that former employees are often receptive to starting a new business during a recession. A Kauffman Foundation-funded U.S. Census Bureau study released in January reports that startup companies are a major contributor to job creation. The Business Dynamics Statistics (BDS) also indicate that while business startups decline slightly in most of the cyclical downturns, startups remain robust even in the most severe recession over the sample period .( in the early 1980s) (Ewing Marion Kauffman Foundation,2009 Feb) The relationship between entrepreneurship and unemployment is analyzed by Audretsch, Carree, Thurik (2001) in an econometric model covering 23 OECD countries between 1974-1998. They find a complex relationship between the two variables. Defining entrepreneurship as firm start-ups there is both a positive effect of unemployment on entrepreneurship (the shopkeeper or refugee effect) as well as a negative relation (the Schumpeter effect). The GEM (2000) concludes that there is a strong relationship between entrepreneurial activities, defined as start-up activities, and economic growth. In the study, this definition of entrepreneurship is claimed to constitute the singularly most important factor for economic growth. In an econometric analysis of Sweden 1976-95, FÃ ¶lster (2000) finds significant support for the hypothesis that an increase in self-employment has a positive effect on overall employment. Another study of Sweden by Davidsson, Lindmark, Olofsson (1994) finds that 70 % of the new net jobs are generated in the small business sector in the period 1985-89. A further emphasis is that most of the new firms are not growth oriented, but are founded on a hobby or subsistence motive. Thus, small firms are important to the economy because of their large number but a vast majority of the upstarts will remain micro firms. Blanchflower (2000) does not support the hypothesis that increases in the level of self-employment increase the real growth rate. Furthermore, making a comparison of the level of self-employment in 23 OECD countries 1966, 1976, 1986 and 1996, Blanchflower finds that the level of non-agricultural self-employment has decreased in most of the countries. The relative importance of small firms is not undisputed as Davis, Haltiwanger, Schuh, (1996) and Bednarzik (2000) remark in their studies. Although important, entrepreneurship through start-ups is claimed to make a smaller contribution to job growth than expansion within existing firms in the U.S., Davis et al draw their conclusion from a study of data from the U.S. Census Bureau during 1972-1988, whereas Bednarzik has studied the mid-1990s. Although smaller firms have a higher gross job creation rate, large firms supply more in terms of net job creation. In a comment on Davis et al, Carree and Klomp (1996) contest its conclusion, arguing that small firms created more net jobs in the 1972-1988 periods relative to their employment share. Davidsson et al (1998) empirically test the regression fallacy, one reason for overestimating the importance of small firms according to Davis et al. The test by Davidsson et al covers Sweden 1989-96 and concludes that the bias does not imply a qualitative change on the overall result. Baldwin and Picot (1995) have studied the Canadian manufacturing sector 1970-90 and in order to avoid a regression-to-the-mean bias three different methods of estimation are used. A consistent finding is that small firms have a higher gross volatility in job growth and destruction but also a higher net employment growth than large firms. While an international comparison of the relative importance of small firms with respect to net job creation is interesting, the results are likely to differ between countries due to ins titutional reasons. For example, Davis and Henrekson (1999) show that the Swedish institutional environment prior to the economic crisis in the beginning of the 1990s significantly disfavored Swedish intensive-intensive, small, and/or managed-owned family businesses as well as entry of new firms compared to similar types of firms in the United States and other European countries. Using data from the U.S. manufacturing sector 1972-93 Haltiwanger and Krizan (1999) find that young firms exhibit high average net employment growth rate but also high volatility compared to mature establishments. Furthermore, among newly started firms there is no evidence of any systematic pattern by employer size of net employment growth. The conclusion is that in the context of employment growth, the age of firms appears to be more important than size, with the caveat that attributing a principal role to a single factor might be misleading. The survey, conducted by pollster Schoen, reveals that 63 percent to 23 percent, survey respondents prefer giving individuals the incentives they need to start their own businesses as opposed to allowing the government to create new jobs directly or through big corporations. Further, as a means of leading the country out of the economic crisis, 63 percent of respondents say the United States government needs to encourage the creation of new businesses, which will create sustainable, long-term employment opportunities and economic growth, while only 22 percent favor the government creating new jobs in the public and private sector. 79 percent of respondents say entrepreneurs are critically important to job creation, ranking higher than big business, scientists and government.Besides, Americans think the government does little to encourage entrepreneurship, despite its importance; 72 percent of respondents say the government should do more to encourage individuals to start businesses. Almost half of respondents think the laws in America make it more difficult to start a business.(Schoen,2009) 2.2 Innovation Tay (2009) study illustrate (cited from Professor Russell Sobel of West Virginia University), that infusions of venture capital funding do not necessarily foster entrepreneurship. Funding does not create new ideas — it is people who create new ideas. Funding merely follows and flows to those with new ideas and helps to commercialise the venture. In Malaysia, the government encourages ideas and provides seed funding through Cradle Sdn Bhd for commercially viable ideas. FRB of Dallass publication Entrepreneurs and the Economics say that the market system rewards those who create opportunities for employment and further innovation. When new products, processes and services are introduced by the entrepreneur, and when customers vote favorably with their dollars, even more opportunities arise. New products or service lines develop to further enhance the recently introduced products. The computer, for example, paved the way for the Internet, which, in turn, paved the way for search engines and software to explore the World Wide Web, which, in turn, created a new way for people to shop and obtain valuable information, and on and on. A wealthy economy is one teeming with superior contributions and the entrepreneurial opportunities created by them. The director of the U.S. Patent Office during 1899 was wrong when he said that everything that could be invented had already been invented. But the actual is most of the modern conveniences we take for granted today did not exist 100 years ago. According to FDB of Dallas in its publication Entrepreneurship and the Economics, the progress sparked by entrepreneurs ideas does not simply happen. A tremendous amount of work and a great deal of risk go into every new idea that eventually makes its way into the marketplace. And even though entrepreneurs create wealth and opportunity with their ideas, they are not always appreciated for what they do in the economy. One reason for this is that entrepreneurs can be extremely disruptive. When entrepreneurs take bold leaps and break contact with the familiar, they often leave behind a clutter of obsolete products and processes. This force is called creative destruction. For example, manual typewriters used to be in great demand, because they ser ved a useful function. Now, one would be hard-pressed to find a manual typewriter, or even an electric one, at work in a business. The same fate awaits countless other products, processes and services. New technologies replace old ones, and entrepreneurs spark the change. A healthy economy is one that allows creative destruction to occur because, overall, more people benefit than lose. Each act of creation brought about by entrepreneurs more than offsets the losses associated with products or processes becoming obsolete. (Federal Reserve Bank of Dallas, n.d.) Sobel stated that a vibrant, growing economy depends on the efficiency of the process by which new ideas are quickly discovered, acted on, and labeled as successes or failures. Just as important as identifying successes is making sure that failures are quickly extinguished, freeing poorly used resources to go elsewhere. This is the positive side of business failure. Successful entrepreneurs expand the size of the economic pie for everyone. Sam Walton, the founder of Wal-Mart, was an entrepreneur who touched millions of lives in a positive way. His innovations in distribution warehouse centers and inventory control allowed Wal-Mart to grow, in less than thirty years, from a single store in Arkansas to the nations largest retail chain. Shoppers benefit from the low prices and convenient locations that Waltons Wal-Marts provide. Along with other entrepreneurs such as Ted Turner (CNN), Henry Ford (Ford automobiles), Ray Kroc (McDonalds franchising), and Fred Smith (FedEx), Walton significantly improved the everyday life of billions of people all over the world. Schumpeter stressed the role of the entrepreneur as an innovator who implements change in an economy by introducing new goods or new methods of production. (Sobel, nd) In the Schumpeterian view, the entrepreneur is a disruptive force in an economy. Schumpeter emphasized the beneficial process of creative destruction, in which the introduction of new products results in the obsolescence or failure of others. The introduction of the compact disc and the corresponding disappearance of the vinyl record is just one of many examples of creative destruction: cars, electricity, aircraft, and personal computers are others. (Schumpeterian, 1911) In contrast to Schumpeters view, Kirzner focused on entrepreneurship as a process of discovery. Kirzners entrepreneur is a person who discovers previously unnoticed profit opportunities. The entrepreneurs discovery initiates a process in which these newly discovered profit opportunities are then acted on in the marketplace until market competition eliminates the profit opportunity. Unlike Schumpeters disruptive force, Kirzners entrepreneur is an equilibrating force. An example of such an entrepreneur would be someone in a college town who discovers that a recent increase in college enrollment has created a profit opportunity in renovating houses and turning them into rental apartments. Some empirical studies have attempted to determine the contribution of entrepreneurial activity to overall economic growth. The majority of the widely cited studies use international data, taking advantage of the index of entrepreneurial activity for each country published annually in the Global Entrepreneurship Monitor. These studies conclude that between one-third and one-half of the differences in economic growth rates across countries can be explained by differing rates of entrepreneurial activity. Similar strong results have been found at the state and local levels.(Kirzner, 1997) Entrepreneurship and competition fuel creative destruction. Schumpeter summed it up as follows: The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates. (Schumpeter, 1939) Entrepreneurs introduce new products and technologies with an eye toward making themselves better off—the profit motive. New goods and services, new firms, and new industries compete with existing ones in the marketplace, taking customers by offering lower prices, better performance, new features, catchier styling, faster service, more convenient locations, higher status, more aggressive marketing, or more attractive packaging. In another seemingly contradictory aspect of creative destruction, the pursuit of self-interest ignites the progress that makes others better off. (Alm Cox, n.d.) Romer, a leading scholar of Economic Growth, has explained that innovation results from a combination of growth-fostering social institutions and new ideas. Because ideas, unlike objects, can be shared by many at the same time, they greatly increase the speed of technological advancement. Capital, social institutions, and new technology, therefore, do not alone cause growth; they must be combined with the ability and willingness to think and act creatively, which in turn means that innovation, has philosophical and psychological requirements. (Sandefur, n.d.) Novus ordo seclorum, characterized by greater uncertainty, asymmetry, and reliance on knowledge as a factor of production, has increased the importance of small entrepreneurial firms. Acs and Audretsch (2001) conclude that there are significant differences in the importance of small firms regarding innovative activity across sectors. Specifically, they mention computers and process control instruments as industries where new entrepreneurial firms are an important part of the innovation process. This adds to a list of Baldwin and Johnson (1999), who mention the importance of small firms regarding electronics, instruments, medical equipment, steel, and biotechnology. Acs (1996) presents an innovation measure, defined as the total number of innovations per 1000 employees in differe

A Critique of DiLorenzos The Real Lincoln Essay -- Thomas J. DiLorenz

A Critique of the Real Lincoln The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War, by Thomas J. DiLorenzo completely shatters the illusion of the 16th President as the liberator of the slaves. DiLorenzo provides convincing evidence for Lincoln’s overt racism as expressed in his documented views on racial supremacy as stated in his desire to colonize all American blacks outside the United States (p. 4); Lincoln’s views were matched by the majority in the North who used such tools as state constitutional amendments to prohibit the emigration of black people into Northern states like Lincoln’s home of Illinois (p. 4); and that the Presidents war which killed 620, 000 Americans and destroyed 40% of the economy, was a singularly terrible, unjustified conflict given the proven success in the 19th century of the peaceful end to slavery through the policy of compensated emancipation (p. 4). DiLorenzo accordingly notes that, â€Å"Between 1800 and 1860, dozens of count ries, including the entire British Empire, ended slavery peacefully; only in the United States was war involved (p. 4). DiLorenzo documents that history’s claims that the abolition of slavery as the leading motive behind the Union’s aggression against the South is untrue. He states that Lincoln’s motives were economic and political and in no way altruistic. Lincoln did oppose slavery, but his opposition did not stem from any moral motive. He wished to preserve white labor, and to avoid artificial inflation of Southern representation in Congress under the three-fifths clause of the Constitution, under which every five slaves counted as three free persons for the purpose of allotting number of congressional seats. DiLorenzo explains that from th... ...ding Fathers had tried to institute through the Declaration of Independence and the U.S. Constitution. Thomas DiLorenzo does a good job in documenting Lincoln’s ruthlessness and hypocrisy and how historians have covered it up. The founding fathers had a fear of federal governmental abuse. They saw state sovereignty as a protection. That’s why they gave us the Ninth and Tenth Amendments. I found this book very interesting and it makes you wonder what else we may have learned growing up that could be completely untrue according to your elementary school history books. I do however understand that there is two sides to every story and I wish DiLorenzo did a better job at explaining why history has painted Lincoln as such a hero. Works Cited DiLorenzo, Thomas. The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War. Three Rivers Press, 2003.

The Young Years of Queen Victoria Essay -- Queen Victoria Childhood Es

The Young Years of Queen Victoria Victoria was born on a spring day, May 24th, 1819, at Kensington Palace, in the then quiet suburb of London. "Plumb as a partridge" was her father's description of the baby, and she certainly bore a marked resemblance to her sturdy and robust Hanoverian ancestors who had ruled Great Britain for little more than a century at the time of her birth. By 1798 Victoria's grandfather, King George III, had reigned for nearly sixty years, but he was now old and feeble. The symptoms of his terrible illness, porphyria, seemed to his doctors to be those of madness, and for years the King had be confined in Windsor Castle while his eldest son, George, Prince of Wales, ruled in his stead. Victoria's father, Edward, Duke of Kent, was the old King's fourth son, but since his three elder brothers were without heirs, there seemed a good chance that he might one day himself become King. He had married late in life, when he was over 50, to supply an heir to the throne in the younger generation. Between the seven princes and five princesses of the royal family, not one of them had a legitimate child to carry on the succession, until 1819 saw three royal births within two months. The Prince of Wales had one child, the Princess Charlotte, who in time would have become Queen, but she died in childbirth in the autumn of 1817. It was her death, which drove her uncles into marriage, to father heirs to replace her in the line of succession. Indirectly, Charlotte herself had found her uncle Edward his bride: the Princess had married a minor German prince, Leopold of Saxe-Coburg-Saalfeld, and, deeply in love with him, suggested to the Duke of Kent that he would find a wife in Leopold's widowed sister, Victoire. In fact, Edward and Victoire met in 1816, but then there seemed no urgency in the matter of their marriage. But soon after Charlotte's death, Edward proposed to Victoire, and the couple was married the following summer. Victoire of Saxe-Coburg-Saalfeld was 31 years old when she married the English Duke, a pretty woman with dark hair, with a fine figure and lively ways. She had been married once before to Emich Charles who died in 1814, leaving his widow with two small children and the many demands of nobility which forced to test her wits and strength. Her marriage with the Duke of Kent seemed to promise Victoire a brighter future,... ...he Duchess of Kent regained her daughter's affection. â€Å"I love peace and quiet, I hate politics and turmoil. We women are not made for governing, and if we are good women, we must dislike these masculine occupations. There are times which force one to take interest in them, and I do, of course intensely.† (Victorian Station, P.2. 2000) Bibliography 1. Arnstein, Walter L. â€Å"Victoria (queen).† Microsoft Encarta Encyclopedia. CD-ROM. Redmond, WA: Microsoft Corporation, 1993-1998. 2. Erickson, Carolly. Her Little Majesty: The Life of Queen Victoria. New York, NY: Simon & Schuster, 1997 3. Farley, M. Foster. â€Å"Queen Victoria’s Childhood.† Online. Internet Explorer. Accessed 1 March 2000. Available http://www.thehistorynet.com/BritishHeritage/articles/1998/11982_text.htm 4. Miller, Ilana. â€Å"The Life & Issue of Queen Victoria.† Online. Internet Explorer. Accessed 1 March 2000. Available http://www.likesbooks.com/victoria.html 5. â€Å"Victorian Station.† Excerpts from Queen Victoria’s journals and personal correspondence. Online. Internet Explorer. Accessed 1 March 2000. Available http://victorianstation.com/queenquotes.htm

Priority Sector Lending in India

Definition and more details5 Priority sector: A need5 Priority Sector Target: Financial Reforms Effect6 Effect of reforms on priority sector lending:6 Priority Sector: Specific sector guidelines8 Agriculture8 Small enterprises8 Weaker section:9 Other sectors9 Priority Sector: present status10 Participating Entities : Targets to be met10 Participating Entities : How much is achieved11 Public Sector banks11 Private Sector banks11 Foreign banks12 Participating Entities : penalties in case of failure in achieving the target12 Priority Sector : Advantages12Priority Sector : Major Issues13 Strategies Ahead13 Exhibits15 References18 INTRODUCTION Priority sector bank lending was mainly started by the government to reach the unbanked areas through regular banks which were till that time not much willing to go to rural and undeveloped areas. It was one most important tool in our financial policy to compel banks to increase their loanable customers. Before independence, banks were mostly privat ely owned and they used to lend only to the sectors in which they were assured of returns.According to the reports from 1940s, 79% of bank finances were made available to industry and commerce. Of that amount too, around 32% went to large industries of jute, cotton and sugar mills. When looking at the less rosy picture, the advances to agriculture sector stood a meager 4%. Post independence, according to RBI survey of 1954, in 1951-52, of all credit disbursal by credit agencies to cultivators, only 7. 3 % was from institutional credit agencies. Of this small contribution, the part of banks was only 0. 9%. Rest was given by government and cooperative agencies.From this statistics, it is clear that the rest of the credit was availed by the cultivators from non-institutional credit agencies. When the interest rates charged by these agencies was checked, they were found to be usuriously high with professional moneylenders charging 41. 9% interest rate while agricultural moneylenders cha rged 23. 9% interest rate which was 5-6 times more than the normal bank rate. It shows that if a farmer is getting loan at this interest rate, chances are more that he will never be able to repay it fully and fall in the vicious circle of loans.By getting working capital at such high interest rates, it was equally difficult to breakeven. So, agriculture and small and medium enterprises were in deep need for credit at easy terms. PRIORITY SECTOR DEFINITION AND MORE DETAILS Priority sector and its coverage area kept changing all through these years, mostly due to economic and political pressures. Although its definition can be divided in two parts i. e. pre-reform and post reform period.Pre reform period definition: â€Å"It included agriculture, Small scale industry (including setting up of industrial estates), small road and water transport operators, small business, retail trade, professional and self employed persons, state sponsored organizations for SC/STs, educational loans gr anted to individuals by banks under schemes, Credit schemes for weaker sections and refinance by sponsor banks to Regional Rural Banks. † About the post reform definition we will talk later in details when dealing in the section about priority sector guidelines. PRIORITY SECTOR: A NEED Population support and employment generation: According to the definition of priority sector it covers about 70% of India’s population by rough estimates. So, by making it mandatory for the banks to lend to priority sector, government is actually trying to cover a big part of population. Priority sector mostly includes agriculture and allied sector which employs largest number of people in our country. †¢Freedom from non-institutional credit: The priority sector cut out by government was mostly the one which was earlier taking loans from non-institutional sources and was always indebted because of usurious rates of interest.By creating priority sector lending, it was tried to make in stitutional credit available to a bigger section, at affordable interest rates. †¢Willingness of banks: Most of the banks were not willing to lend to this sector because of the risk involved here as well as more paperwork required to lend smaller loans to large number of people. They were happy lending to urban sector which was more reliable and trustworthy. They preferred lending to industry, commerce, trade and securities as their traditional loanees and who were supposed to default less. Location of banks: Banks were earlier situated mostly in urban area where the business was and so, it was geographically also difficult for them to lend to rural and backward areas where there was no banking network earlier. It was difficult to know about the credit history of borrower and the potential ability of loaned to repay the loan as well as potential of the project for which loan was to be given. So, they were skeptical about loaning to those sectors. †¢Institutional credit: By allowing priority sector credit to flow, RBI and government actually allowed large amount of institutional credit to flow in this area.So, as it became mandatory for the banks to complete certain target for priority sector, they started searching for viable projects and loaners who can successfully repay the loan. For this to happen branches were opened in rural areas and people were encouraged to take loan from banks. Many people availed loan under priority sector lending and got involved in successful enterprises. PRIORITY SECTOR: FINANCIAL REFORMS EFFECT After financial sector reforms, priority sector lending underwent lots of change.As earlier, it was only focused towards weaker and rural section of society but afterwards it included many new sectors as well as the definition of earlier sectors was widened to include more areas in them: Priority sector targets are: Table 1: Priority Sector Targets to be achieved by Banks Before 1991 After 1991 Total priority sector credit 40% o f net bank credit 40% of net bank credit Agricultural credit 18% of net bank credit 18% of net bank credit Weaker section credit 10% of net bank credit 10% of net bank credit Export credit – 12% of net bank credit for foreign banks SSI credit – 10% of net credit for foreign banksSource: Reserve Bank of India Banking norms EFFECT OF REFORMS ON PRIORITY SECTOR LENDING: A chorological sequence of changes in priority sector lending policy is given below which show how the definition of priority sector has changed in all these years: 1. 1992-1993: In the light of reforms, and many new industries coming up in all sectors, government and RBI decided to help out industry with credit facilities and asked banks to fulfill demand of small scale industries upto Rs. 100 lakh limit for setting institutional framework to rejuvenate potentially viable small scale industry units. . 1993-1994: The overall target of net bank credit to be given for priority sector remained unchanged but t he direct and indirect target for lending to agricultural sector was clubbed together to make a sub target of 18% for agricultural lending. But, in this system also, the indirect lending was not supposed to extend one-fourth of the total sub target. Lending above this in indirect lending, was not to be considered in priority sector lending. At least 40% of total credit was supposed to go to small scale and khadi and village industries within limit of Rs. 5 lakh.Foreign banks were asked to revise their priority sector advance target from 10% to 32%. Two more sectors were included in that i. e. advances to small-scale industries and export sector were made with each being 10%. 3. 1995-1996: In case of any shortfall in PSL (agricultural sector), banks were required to contribute to Rural Infrastructure Development Fund (RIDF), which was set up under NABARD, the maximum of which was 1. 5 % of bank’s net credit. Shortfall in case of other areas, they were required to provide Rs. 1 000 crores for financing in Khadi and Village Industries Commision (KVIC).All the refinances which was done to RRBs by the banks was now to be considered under priority sector lending. 4. 1996-1997: In this year Union Budget provided Rs. 2500 crore for RIDF fund. Export credit target increased from 10% to 12% in this year. Credit advanced to priority sector increased this year very much. From the last year numbers, it increased from 30. 37% of net bank credit to 32. 4%. 5. 1997-1998: The scope of priority sector lending was increased for road and water transport operators, with number of eligible vehicles increasing from ‘not more than six’ to ‘not more than ten’.The credit limit for housing in rural and urban areas also increased upto Rs. 5 lakh. 6. 1998-1999: In this year, the interest rate subsidy for loan in PSL was taken away on the argument that now priority sector lending is also commercially viable for banks. Banks were also given the option to inve st the PSL shortfall by lending to NABARD/SIDBI, so the restriction of not lending to profitable sector was slowly being taken away. 7. 1999-00: Banks were asked to lend to NBFCs and MFIs under priority sector, to enable them to lend to rural and weaker section.INSTITUTIONAL AND NON-INSTITUTIONAL CREDIT IN INDIA Before independence, the credit which was available to farmers was just non-institutional credit or in other words private money lenders. But, after independence, government took major steps to uproot this problem which was eating up the poor population and was hampering with the country’s economic growth. In 1951, institutional credit accounted to 92. 7% of the total credit availed (Refer Graph-1) where as all these reforms positively impacted the credit scenario in India making the Non-institutional credit accounted to be 38. % in the year 2002. Graph 1: Trend of Institutional and Non-institutional credit in India PRIORITY SECTOR: SPECIFIC SECTOR GUIDELINES AGRICULT URE 1. Direct finance: Finance given to individual farmers (including SHG & JLG) for agricultural and allied activities are included under this sector. This includes short-term loans for raising crops, advances upto 10 lakh against pledge of agricultural produce for maximum 12 months period, working capital and term loans, for purchase of land, to indebted distressed farmers, for pre and post harvest activities.Loans given to partnerships, corporate and institutions for agricultural activities, and upto 1 crore for most of the activities mentioned above also come under direct finance. 2. Indirect finance: It covers vast range i. e. corporate, Primary agricultural Credit societies, Farmers service societies, Large sized Adivasi Multi Purpose Societies, cooperative societies, and for the construction of warehouse, agricultural input dealers, arthias, NCDC, NBFCs, NGOs, MFIs, RRBs and overdraft upto 25000 for no-frills account in rural and semi-urban areas. SMALL ENTERPRISES 1. Direct finance: a.For manufacturing enterprises, for small enterprises the upper cap for taking loans is less than 5 crores, while for micro enterprises it is upto 25 lakh only. b. For service enterprises, for small enterprises it is upto 2 lakh, while for micro enterprises it is only 10 lakh. c. For khadi and village industries it is upto 60% of small enterprise segment. 2. Indirect finance: a. It is made available for the person involved in marketing activities of artisans, village and cottage industries. b. Under this Loans made by NABARD, SIDBI and commercial banks to NBFCs and cooperatives involved in this sector also come.WEAKER SECTION: In weaker section, small and marginal farmers with less than 5 acres land holding, landless labourers, artisans, village and cootage industries, beneficiaries of SGSY, SC, ST, DRI, SJSRY, SLRS, self help groups, distressed poor, minority communities etc are included. They are given loans under priority sector loans. OTHER SECTORS Retail trade : Retai lers involved in essential commodities, consumer co-operative stores, private retail traders, upto the limit of Rs. 20 lakh. Micro-credit : For poor indebted borrower of non-institutional credit, it is given against collateral or group security.The upper limit for it is upto Rs. 50000 per borrower. State sponsored organization: It is for scheduled castes/tribes for extending credit for purchase of input or for marketing of output. Education: Within India the maximum cap for education loan granted is 10 lakh, while outside India it is 20 lakh. It is applicable for individuals as well as NBFCs. Housing: a. For purchase and construction of houses, the maximum loan allowed is 20 lakh. b. For repair of houses, the maximum loan allowed is 1 lakh in rural India and 2 lakh in urban areas. c.For government agencies for construction of dwelling units, or for slum dwellers, upto a maximum of Rs. 5 lakh is allowed. PRIORITY SECTOR: PRESENT STATUS PARTICIPATING ENTITIES: TARGETS TO BE MET The Re serve Bank of India from time to time has issued a number of guidelines/instructions/directives to banks in lending credit to Priority sector. In priority sector various banks that are involved are- public and private sector bank under domestic banks and foreign banks. There are separate targets to be met for all the banks which are set by the RBI.RBI issues a master circular containing all the guidelines for incorporation of priority sector lending. If the targets are not met, then various penalties are to be borne by them. The targets set for the domestic and foreign banks working in India are already mentioned before in Table-1. The total advances that a domestic bank has to offer for the priority sector is 40% where as for foreign banks working in India is 32 %. These advances are further bifurcated into the advances provided to agricultural sector, small scale industries (SSI), export credit and weaker sections.However, domestic banks don’t have to contribute to SSI and foreign banks don’t have to contribute to agricultural advances and weaker sections. Over the years, the advances provided to this sector are increasing in gross value and some other sectors like education, housing, retail trade which were not the part of this sector previously were also included. The trend observed during the last three years is explained in the graph provided below. In the year 2006, the advances offered by the public sector banks were Rs. 409. 745 thousand crores where as private sector provided Rs. 06. 556 thousand crores. Then in year 2008, these advances increased to Rs. 605. 965 thousand crores and Rs. 165. 225 thousand crores by public and private sector bank respectively. This marked a growth rate of 48% in public sector and 53. 5 % in private sector.Source: Reserve Bank of India- Trend and Progress of Indian Banking 2008-09 The share of various sectors i. e. agriculture, SSI, education, housing have also registered a change as shown in the figure gi ven below. The share of advances provided to agriculture sector is more or less same where as the dvances provided to SSI has been replaced by small enterprises, housing and education where housing accounted for 30% of the advances and education accounted for 25% of the advances. Source: Reserve Bank of India- Trend and Progress of Indian Banking 2008-09 The rationale of including these sectors was to provide the holistic development to the poor people. It was understood that it’s not just the credit requirement which has to be fulfilled but also the education which would ensure the socio-economic development of the society. In all, those sectors which can impact large section of populations are to be a part of priority sector.But, how efficiently are banks able to achieve these set targets – is still questionable. PARTICIPATING ENTITIES: HOW MUCH IS ACHIEVED PUBLIC SECTOR BANKS Exhibit-1 shows the targets achieved by public sector bank. The public sector banks were ab le to meet the target of 40% till 2005-06 but in 2007 they fell short by 0. 7%. There were 28 banks in total, out of which- seven banks failed to achieve the target (Allahabad Bank, Oriental Bank of Commerce, Syndicate Bank, IDBI Ltd. , State Bank of India, State Bank of Mysore and State Bank of Patiala).However, only 8 banks were able to meet target of agricultural lending and only 7 for weaker sections. PRIVATE SECTOR BANKS Exhibit-2 shows the targets achieved by private banks in lending to the priority sector. Out of 26 private sector banks, four banks (Bank of Rajasthan Ltd. , Centurian Bank of Punjab Ltd. , Jammu and Kashmir Bank Ltd. and Karnataka Bank Ltd. ) didn’t achieve the target as stipulated for the priority sector lending. However, only three banks were successful in meeting agricultural credit target and no bank met the target for weaker sections. FOREIGN BANKSExhibit-3 shows the targets achieved by foreign banks in lending to the priority sector. Out of 29 for eign banks working in India five banks (Abu Dhabi Commercial Bank, Bank of Tokyo-Mitsubishi, Citi Bank, HSBC Ltd. and Mizuho Corporate Bank) did not achieve the target. However, only Seven banks (Bank of Nova Scotia, Bank of Tokyo-Mitsubishi, Citi Bank, HSBC Ltd. , JP Morgan Chase Bank, Mizuho Corporate Bank and Shinhan Bank) were not able to achieve SSI target and three banks (American Express Bank, Bank International Indonesia and Mizuho Corporate Bank) were not able to achieve the export credit target.The banks which failed to achieve the target have to pay the penalties decided by the RBI. PARTICIPATING ENTITIES: PENALTIES IN CASE OF FAILURE IN ACHIEVING THE TARGET DOMESTIC BANKS Domestic banks which fail to achieve the target have to contribute to Rural Infrastructure development Fund (RIDF) established with NABARD or funds with other financial institutions, as specified by RBI by giving them one month’s notice. The particulars of this fund are decided in the beginning o f financial year. Interest rate and period of deposit are also to be decided by RBI.FOREIGN BANKS Foreign banks which fail to achieve the target have to contribute to Small Industries Development Bank of India (SIDBI) or funds with other financial institutions, as specified by RBI . The particulars of this fund are decided in the beginning of financial year. Interest rate and period of deposit are also to be decided by RBI. Non-achievement of meeting the priority sector targets are considered while granting regulatory approvals for various purposes. PRIORITY SECTOR: ADVANTAGES 1.Financial Inclusion – It provided credit availability for small-marginal farmers, and to those sections which were previously deprived of taking any credit from the institutions. 2. Previously because of high default rate amongst the weaker sections,the institutions were reluctant to give credit to those people which forces the farmers or the weaker people to go to the money-lenders who charged them h igh rate of interests (varying between 10% to 50%). Mandatory lending to priority sector has eradicated this problem and ensured advances by the institutions. 3.Poverty Alleviation – If the timely credit is provided to small households, they can give more inputs to their produces which will result in better productivity. In effect agricultural GDP grows, which helps in upliftment of both the primary and secondary sector which are dependent on small scale industries and agriculture, directly or indirectly. It generates more employment, hence, resulting in poverty alleviation. 4. Social Inclusion – Poorer sections previously were deprived of participating in various community activities. The rise in their livelihood has given them a strong support to participate in various social activities.PRIORITY SECTOR: MAJOR ISSUES 1. High Non-performing assets – Since borrowers are not able to repay the loan on time, have created a fear in the banks and provoke them to make slow disbursement of loans. 2. Quantitative targets –Since, the stringent targets has been set by RBI, this has resulted in lowering the quality of delivering targets. 3. Government interference – Due to the regional Government intervention, the more influential people get the loan, and the poorer still get ignored. So, rich gets more richer. 4. Transaction cost – Handling disbursement of huge quantity of small loans requires more time and labor. 5.Low absorption of credits -This occurs due to lack of capital infrastructure in agriculture and other small scale industries. 6. Low Profitability -Low rate of interest charged from the borrowers makes this sector vulnerable. STRATEGIES AHEAD 1. Initiatives by Government a) Recovery of Non-Performing Assets †¢Establishing Debt-recovery tribunals – this will act as a mediator between the bank and borrower and will help bank in better recovery from the borrowers. †¢Internal audit before sanctioning of l oan should be done. b)Strengthen the cooperative bank network to increase credit advances to the farmers. c)Link crop-insurance with loan amount.This mitigates the risk for Lender and borrower. d)Promote group lending to people – group lending develops a collective responsibility amongst the borrowers which decreases the default rate. e)Government need to promote rigorous extension activities for promoting modern agricultural techniques for increasing production. f)Strict actions needs to be taken against the banks for not meeting the priority sector criteria. 2. Initiatives by Bank a)Banks should increase the term and delay the installments under term loan in case the borrowers are not able to repay in time. b)They should not charge compound interest on the loan amount.In a nutshell, Government need to strengthen backward and forward linkage both to provide inputs, increase productivity and develop markets. EXHIBITS Exhibit 1: Target achieved by Public Sector banks Exhibit 2 : Target achieved by Private Banks Exhibit 3: Target achieved by foreign banksREFERENCES †¢Priority Sector lending information (2010). Retrieved on August 4, 2010 from-http://www. rbi. org. in/scripts/FAQView. aspx? Id=8†¢Trends, issues and strategies (2010). Retrieved on Aug 5, 2010 from-http://www. academicjournals. org/jat/PDF/Pdf2009/December/Uppal. pdf†¢Planning Commission reports on labour and employment (2010). Retrieved on Aug 5, 2010 from-http://books. google. co. in/books? id=qOOmWsfqfe4C&pg=PA96&lpg=PA96&dq=priority+sector+lending+appraisal&source=bl&ots=HZTEbRCSVo&sig=QtcebyqWJ5xWqkZ_TMdmPzCp4-4&hl=en&ei=KbFaTLK7DISXrAe9u52-DA&sa=X&oi=book_result&ct=result&resnum=9&ved=0CEsQ6AEwCA#v=onepage&q&f=false†¢All India Debt and Investment Surveys (2002). Retrieved on August 6 ,2010 from- http://www. rbi. org. in/scripts/BS_SpeechesView. aspx? Id=298†¢Trend and Progress of Indian Banking 2008-09 (2009). Retrieved on August 6, 2010 from- http://www. rbi. o rg. in/scripts/AnnualPublications. aspx? head=Trend%20and%20Progress%20of%20Banking%20in%20India