Macro Economics | Economics Related to Building Industry



Study of Macro Economics

Study of Economics can be divided into two parts:

  1. Micro Economics
  2. Macro Economics

In this article, we are going to discuss various terms related to Micro Economics. Check out the brief on “Macro Economics and Micro Economics“.

Here is the list of terms we are about to discuss in this article:

  1. Demand and supply
  2. Inflation
  3. Interest rate
  4. Employment
  5. Savings and Investments
  6. Monetary Policy
  7. Fiscal Policy

Demand and Supply

At national level, this depends on the government policies. How different building activities and infrastructure are planned and budgeted. Taxation polices, direct and indirect tax, allocation of funds for housing for the weaker sections in Five Year plans.

Inflation

This aspect depends on how effectively the government can control inflation by exercising control over general price rise and building materials, effective tax collection both at central and state level, maintaining equilibrium in demand and supply, earning foreign exchange. The increase in oil prices invariably increase the cost of living in all walks of life including building industry.

Interest rate

The finance ministry through RBI (Reserved Bank of INDIA) controls the interest rates over products, personal incomes, including housing loans and building materials.

Employment

Now major employment takes place only in private sector. Only an insignificant percentage of employment takes place in central government and state governments. Pension schemes have to be discontinued by the governments. The unemployment rate is very high now either in the underemployment, or employment which is not compatible to qualifications, and resulted in crime rate to unprecedented level by either educated or uneducated youth.

Lack of proper education like basic education, education in trades which helps the weaker sections.

Savings and Investments

Government through nationalized banks, financial institutions, public schemes can attract savings by offering reasonable interest on the public investments.

Monitory system and policies

The monitory systems are controlled by RBI through nationalized banks, LICHFL, HDFC, HUDCO, which offer housing loans. The overall policies are controlled by central government and sometimes implemented by state governments.

Fiscal Policies

Some Fiscal policies are controlled by Central Government and some by State Government by levying taxes like sales tax, excise tax, income tax, import/export duties, property tax, wealth tax, taxes on investments in fixed deposits if the interest earned is more than 10,000/ per year, taxation is either directly or indirectly.

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