OPTIMISTIC-ECONOMIC THEORY
BALAJI K, STUDENT
Govt. R.C. College of Commerce and Management, Race-Course Road, Bangalore, INDIA- 560001
ABSTRACT
This is a theory by name “OPTIMISTIC-ECONOMIC THEORY” which is a capital raising model that is being prepared with the concept of finding an innovative method to raise the capital and at the same time it considers the various societal drawbacks and also helps to provide a solution to the same. The scheme that is being proposed in the theory uses ‘Marriage as a micro concept’ and keeps ‘Women-Empowerment as the macro concept’ along with which it also concentrates on the major issues that are currently creating a considerable amount of an issue in the economy. Such problems are the lack of awareness in having education in government institution, reducing business prospects in the rural areas, lack of higher-education to women, providing monetary independence to women. It primarily tries to use the concept of marriage and helps in ascertaining significant solutions through that for the various economic issues.
This is an attempt made in order to make contribution to the masses in the smallest way possible, whereby this is a project prepared with a vision of submitting it to the “Government of Karnataka” and with a mission of further submitting it to “Government of India”, If the project so prepared and submitted is found to be feasible and viable to the government.
Therefore, I make an appeal to the State Government to review this project and approve the same for implementation on checking its potential through the respective Finance and the Women Welfare Departments of the Government.
If this project is being implemented by the government, it has a capital raising capacity of around Rs 250 crores (approx) every year.
KEYWORDS: MARRIAGES, SCHEMES, CAPITAL, WOMEN, EMPOWERMENT.
In developing economies such as India, there is always a need to increase awareness among the people about opportunities. Entrepreneurship happens to play a major role in such economies. Considering various factors needed to enter into a developed stage, masses always argue how the expenditure made on certain traditional rituals in India tend to play a spoil-sport in the economy that’s heading to be a developed one in the near future.
Generally, when we put up an argument regarding the expenditure made on traditional rituals in India, we tend to argue that such expenditure should be drastically reduced, sometimes even there is an argument made by most of the economists that India could clear most of its external debts by decreasing such expenses made on such rituals. However, every transaction has two aspects in the form of debit and credit, every coin has two sides, one the head and other the tail. In the same way let us try and analyze how such expenditure made on certain traditional rituals can actually play a significant role in the development of a developing economy such as India.
The major problems of any developing economy are:
The difference b/w the richer and poorer sections of the society Non-equitable distribution of the income b/w the two sections Regional imbalance
These are certain major issues on which there are an immediate necessity to lay the emphasis on. However, we often tend to concentrate on major reforms while we breakdown to actually realize that certain small solutions can relatively provide some kind of a relief from these problems and help us to take the next step forward.
Industrialization, Development of Stock Markets, Improving the other Finance related sectors are not the only way forward. There is also a potential sector that can actually be used as a short term opportunity at least for the next 30-40 years.
The potential sector that is being discussed here is the traditional and the cultural aspects of India, which off late have also been gaining popularity abroad as well. Under this one of the major areas to concentrate on is the marriage rituals that are performed in our country.We can actually develop this concept into a boon to our economy instead of often criticizing it to be a bane. Marriages are considered to be one of the most non-productive investments made by people and often there have been serious discussions in order to scrap these rituals or to keep it as a low/no cost affair. But, let us try and analyze how such marriages can actually be productive to the economy and how they actually help in resolving or at least providing certain short term solutions to our problems in the nation.
KEY STATISTICAL DATA IN RELATION TO THE MARRIAGE EXPENDITURE IN INDIA.
Currently, the Indian wedding industry is over Rs 100,000 crore and is growing at 25 to 30 per cent annually. The estimated cost of a wedding with no expenses spared could be between Rs 5 lakh to Rs 5 crore, in India.
(Aggregate figures of the Indian wedding industry)
No. of Indian marriages in a year: Approx 1, 00, 00,000
Indian wedding market worth: Rs 100,000 to Rs 110,000 crore
Gold and diamond jewellery market worth: Rs 60,000 crore
Apparel market (wedding) worth: Rs 10,000 crore
Durable goods market worth: Rs 30,000 crore
Hotel and other wedding related market worth: Rs 5,000 crore market
Pandal and venue decoration market: Worth Rs 10,000 crore
Favorite honeymoon destinations: Goa, Jaipur and Udaipur
Goa wedding cost: Between Rs 1 crore to 1.5 crore
Jaipur wedding cost: 1 to 2 crore
Udaipur wedding cost: 1.5 crore to 2 crore
Wedding cost in metropolitan cities: Between Rs 25 lakh to 70 lakh
KEY SECTORS ASSOCIATED WITH THE MARRIAGE INDUSTRY.
Eating Establishments (includes Caterers)
Women's, Misses', and Juniors' Dresses (includes Wedding Dresses, Wedding Gowns)
Women's Clothing Stores (includes Bridal shops, except custom-retail)
Miscellaneous Apparel and Accessory Stores includes Custom Dress Making Shops)
Miscellaneous Personal Services, Not Elsewhere Classified (includes Wedding Gown Rental and
Wedding Planning)
Stationery Stores
Caterers
Women's and Girls' Cut and Sew Dress Manufacturing (includes Wedding Gowns, Bridal Dresses,
Wedding Gowns)
Wedding dresses, women's, cut and sew apparel contractors
Other Clothing Stores (includes Bridal gown shops -except custom)
Formal Wear and Costume Rental (includes Bridal Wear Rental)
All Other Personal Services (includes Wedding Planning)
Office Supplies and Stationery Stores (pt)
With so many sectors being associated with marriage and the industry expected to grow at such a large rate in the next few years it’s time to use it to the advantage of the country so that it could
actually help in solving some of the economic problems.
Capital model: Let us try and innovate a model that can actually help the government to introduce certain schemes
With the industry expected to grow at a whopping 25-30% in the next few years this can be the most positive sign for the industries associated and also the government as even a small concept called marriage can also be used in a very big way in order to raise capital.
Let us discuss how it can actually help in raising capital:-
In the recent days the central and the state government have introduced a lot of attractive schemes such as:
SURAKSHA BHIMA YOJANA
PM KAUASHAL VIKAS YOJANA
GOLD MONETISATION SCHEME
SUKANYA SAMRUDDHI YOJANA
ATAL PENSION YOJANA
SURAKSHA BANDHAN YOJANA
VIKALP YOJANA
In the same way even a model for marriages can be introduced where such model can actually help in resolving some of the major issues.
Here in this model the government needs to declare a yojana or scheme called as “LAKSHMI
The government needs to decide the monthly payments to be made by the public and the stipulated time period. Here the public are invited to make monthly payments every month on a bond issued by the government which would be getting matured after a stipulated period prescribed.
The major or the core part of this scheme would be the various rules, regulations, terms and conditions that would be associated with the maturity of this bond.
Let us basically try to get a bird eye view regarding the various terms and conditions associated with the bonds:
TERMS AND CONDOTIONS OF THE BOND:
At the time of enrolling for the bond the girl child must not be less than 11 and more than 15 years of
age.
The time period for the bond would be for a minimum period of 12 years and a maximum period of,
the girl child attaining 26 years of age.
Age of the girl Min period(fixed/flexible bonds) Max (fixed/flexible bonds)
11 12 years 15 years
12 11 years 14 years
13 10 years 13 years
14 9 years 12 years
15 8 years 11years
The lock in period of the bonds would be 3 years in all the cases of minimum period stated above.
Incase if the investor goes for maximum period then the government would still enjoy the annuity
paid during the lock in period in the above case.
The interest rate of the bonds would be anywhere around 8.5%-10% where by this scheme could be a
collaborative initiative of the central and the respective state government, thereby reducing the complete interest payment burden on a single party.
The interest rate would go on a decreasing trend in the fixed bonds as the period of investment
reduces.
The interest rate on flexible bonds would remain constant at 8.8% for all the periods of investment.
The girl should not be forced to get married before attaining the age of 23 years.
The nominee of the policy would have to be the girl child in whose name the parents are intending to
make the savings. However, the account needs to be opened with the father or mother being the natural guardian and once the girl attains majority the policy would be converted into her name where she becomes the holder and only the monthly payments would have to be made by the FNG/MNG.
The bonds can be bought for any number of girl children by the parents.
RULES IN RELATION TO THE MATURITY AND THE AMOUNT;
The date of maturity for the bonds would take place at the time when the girl attains the age of 26.
(A) In case if the girl is forced to marry before attaining 23 years of age, only the principal amount
along with a small interest rate of 3-4.5% would be paid to the parent of the girl child.
income for the family), under such situations the complete amount of the bond would be paid to the nominee but only with a reduced interest rate of 6-7%.
In both the above cases for the amount to be returned, the policy holder should complete all the
monthly payments up to the prescribed period in the bond (or) in case of default under situation (A) only the principal amount would be returned and in case of situation (B) the amount paid by the holder up to the date of his death would be paid along with the interest rate as stated above (i.e. the 8.5%-10%).
The amount on maturity of the policy would be credited to the account of the holder.
Various other norms pertaining to the bond in relation to monthly payments out of which the holder can take the complete advantage:
If the girl child is given education in any government institution for a minimum period of 5 years in
case if the girl has completed her masters and 6 years in case if the girl has completed her bachelors. Then the holder is relived from the monthly payments for up to a period of 18 months or there is eligibility for premium amount on maturity as decided by the government. Such schooling education should be obtained in any of the state government schools and there are no restrictions on higher education obtained through any government institutions.
If the girl child is given higher education, either masters or bachelors in India irrespective of the
institution then the holder is relieved from the monthly payments of the bond up to a period of 10 months.
If the girl child has completed any professional education such as C.A, Medicine, and Engineering or if
she has been doing her doctoral studies then a complete relaxation of 12 months would be given to the policy holder in relation to monthly payments.
If the marriage of the girl child is conducted in any of the identified rural areas of the government
then the policy holder would become eligible to receive a pre-determined premium amount on maturity of the bond.
If the girl child getting married is in the government service and in any of the key posts in the
government department then the policy holder is relieved from the monthly payments for a period of 3 months.
If the girl child getting married is in the corporate or private service, then there is a relaxation of 6
months from the monthly payments to the holder.
EXCEPTIONAL CASE:
This is the point of exceptional case where the policy amount would be withdraw able by the holder
or the nominee in his absence (but with his approval), if the girl child wants be an entrepreneur and wants to start her own innovative business and has a ready business plan. The bank would provide the amount for her in order to start the business.
Under this situation the policy holder would be eligible to withdraw 75% of the policy amount or the amount of capital required to start the business (w.e.l.) along with which in order to encourage the entrepreneurial skills of women additionally the girl would be given 25% of the 75% of amount withdrawn in her bond. This additional amount would be considered as subsidy. But such business plan must be shown to the banker for approval by the holder herself before the date of maturity of the policy.
Certain relaxation to the bond holders from the rural areas:
Relaxation of 2 year for the enrolment age to the bond
Relaxation of 2 years in the maximum number of years the bond must be held by the holder (i.e. the
maturity period of 24 years instead of 26 years to a rural girl)
Relaxation in the age for marriage where the maximum age would be 22 years.
However the remainder of the norms would remain standard even for a bond holder from the rural
WITHDRAWL OF THE AMOUNT:
The first amount of withdrawal could be made by the holder at the time of girl’s marriage; an amount
ranging from 60% of the bond could be withdrawn under fixed bonds and 40% in case of flexible bonds.
The complete amount could be withdrawn by the holder of the bond once the time period of his bond
is completed or the maximum period for maturity (w.e.h)
However a secured demand loan on the policy could be raised by the holder in case of a need for
daughter’s education, up to a limit of 50% (government institution) and 40% (private institution),but this is would be an exclusive option only for the fixed bond holders.
However, in case of taking S.D.Loan the holder cannot withdraw any amount thereafter.
In the withdrawal condition the holder would have to be wise in choosing the time period at the time
of purchasing the bond.
In context to the above statement an explanation is being given:
If in case the holder is buying the bond at the time when his girl child is 11 years of age, then the
buyer has to make the monthly payment for his bond until the time period is being completed (in case if he has chosen a minimum time period of 12 years) and the withdrawal can be made only on the maturity (i.e. after the girl child completes 26 years of age). However, the parent is eligible to make a withdrawal of 60%-80% of amount at time of her marriage. Thus, it is always advisable for the holder to take a bond holding longer period of time in order to avoid the idle/lock in time between the time of completion of the monthly payments and the time of maturity. In this case the interest rate during the idle/lock in period would be given at the savings bank a/c rate existing at that time and not at the interest rate of the scheme, but there would be no necessity to make any monthly payments during such period by the holder.
In case if the policy holder raises the secured demand loan for daughter’s education:
Such secured demand loan raised shall be repaid in due course by the holder at the interest rate for
which he had originally purchased the bond.
Such loans would have to be mandatorily cleared by the holder within the commencement of the
lock-in period but not thereafter.
In case if the holder of the policy dies and if the rest of the family is not in a situation to continue the policy:
This scheme should be linked to the PM’s Suraksha-Bhima yojana where in case if the holder of the
policy dies due to the accident then the benefits of the yojana goes to the family and also the girl is given a withdrawal option of the amount of policy paid till the date of death of the policy holder.
This scheme should be linked to the PM’s Jeevan-Jyoti Bhima yojana where in case if the policy holder
dies due to other reasons other than accident, this would give protection to the family of the holder and policy withdrawal options remains the same as above.
Other than the two insurance policies this scheme should also include a special insurance coverage
whereby this is left to the policy holder to take the decision on accepting this insurance where by the holder has to pay a special premium of Rs.800 every year to the banker which covers the risk of his loss to his family up to an amount of Rs. 5, 00,000.
In case if the policy holder becomes a defaulter with respect to the monthly payments or annual contribution:
If the holder becomes a defaulter in payments to be made every month to the bank in relation to the
However such penal interest rate on the flexible bonds would be charged at rate of 2.5% in case if the holder breaks down to contribute less than the prescribed minimum amount in a year.
Such penal interest would be charged on the basis of the annual contribution made by the holder during the previous year.
Then what are those actual bonds that can actually help in such a great way both socially and economically to the nation. Here are the bonds:
Fixed bonds Flexible bonds
Considering various factors and the drawbacks of various existing schemes for girl children, this model is being prepared. This model provides alternatives to the investor to choose the right investment and also the government by making a peculiar way to raise the capital which it desperately needs for various purposes in the nation’s development.
Fixed bonds:
Under this scheme the government can make a very healthy experiment in order to raise capital. It can issue the bonds of fixed values for fixed periods with fixed monthly payments to be paid by the holders.
For Ex: if the government is issuing a bond worth Rs.12,00,000 to the investor for a period of 12 years @ the current rate of 9.1%.then the calculation of the bond would be as follows:
(HERE IT IS ASSUMED THAT THE GIRL IS OF 11 YEARS AT THE TIME OF PURCHASE OF THE BOND AND THEN IF SHE GETS MARRIED AT THE AGE OF 23, 60% OF THE AMOUNT IS WITHDRAWN OUT OF THE PAYMENTS MADE IN THE 10 YEARS SO FAR AND THE REMAINDER OF MONTHLY PAYMENTS SHOULD BE DUE FOR PAYMENT AND ONCE COMPLETED THE MATURITY WOULD BECOME DUE ONLY ONCE THE GIRL COMPLTES 26 YEARS OF AGE)
Here the monthly payments of Rs 4,590 is to be paid by the holder for a period of 144 months whereby at the end of the period he would be getting Rs 12,00,000 (if he has not withdrawn during the period of his daughter marriage), here an additional amount Rs 5,39,149.74 is gained as interest. The parent would also receive certain benefits in various modes if he has fulfilled various terms and conditions of the bond as stated earlier. However the total amount of Rs 1200000 would be received by the holder only on the date of maturity of the bond and the time period between the completion of monthly payments and the date of maturity would be the lock in period that could be enjoyed by the government for its benefit. In case here if the holder would wants to withdraw the %of money during the period of his daughter’s marriage then such amount would be reduced from the value of the bond and only the remainder of the money would form the further value of the bond and the same would be paid with interest until the date of maturity. Any adjustments with monthly payments there on would be made only with the revised value of the bond.
Flexible bonds:
Under this scheme the government can issue those bonds that are flexible in all respects, here the bonds are volatile in nature with respect to the monthly payments but the period of bond would have to be pre-decided by the bond holder.
For Ex: If a buyer purchases a flexible bond form the government for a period of 12 years @ 9.20%, then the contributions and the calculations would have to go as follows:
hailing from the urban area. However, there is no upper limit for contribution of amount for a month but the annual contribution by the holder should not exceed the amount of 1, 00,000. He would also receive certain benefits in various modes if he has fulfilled various terms and conditions of the bond as stated earlier.
In case under this scheme if a purchaser buys a bond when the daughter is of 11 years, but if he purchases the bond for a period of 12 years then the parent can make contributions to the bond for 12 years and then the parent would not have to make any monthly payments thereafter until his daughter attains 26 years of age and in the remainder period of the bond the interest would be paid and ultimate value of the bond would be paid to the holder on the date of maturity.
KEY DIFFERENCES BETWEEN SSYA AND LKY (THIS PROJECT):
The target group of this scheme is the girl of age group between 11-15 years.
The interest goes on a decreasing trend as the enrolment becomes higher.
Secured demand loan for education of the girl child.
Support for women entrepreneurship.
The upper age limit of 23 years for girl’s marriage.
Alternatives for investment in the form of fixed and flexible bonds.
Holiday period for the holder in case if there is compliance with the terms and conditions of the bond.
Reduced lock in period for the bond.
No lock in period if the holder desires to invest in the bonds that holds maximum period.
Attachment of the Mudra scheme.
Attachment of the PM’s insurance yojanas with the bond.
SOCIAL AND THE POLITICAL IMPORTANCE OF THIS PROJECT:
WOMEN EMPOWERMENT:
This is the core and the most important part of this entire project, the various norms and relaxations of annuity payment and premium receivable by the holder in certain cases purely concentrates on this part of the society.
WOMEN ENTREPRENUERIAL SUPPORT:
This project provides a special withdrawal facility to the holder in case if the nominee of the bond would want to become an entrepreneur and if she has a ready business plan, subsidy would also be given by the bank.
TRYING TO PARTIALLY ACHIEVE REGIONAL BALANCE:
One of the norms provides a benefit to the holder in case if he performs the marriage of his daughter in the rural areas as recognized by the government. This would help in raising the small business opportunities for the people residing in such areas.
FIRST OF ITS KIND:
Most of the schemes introduced by the central government concentrate on the children below 10 years of age. This could potentially be the first project that concentrates on providing emphasis on the girl child who is between 11-15 years of age.
IF IMPLEMENTED:
If the government of Karnataka accepts this project, this would the first major step taken by any government in support of women welfare.
MULTIPLE POLITICAL BENEFITS FOR THE GOVERNMENT:
(urban) / 22years (rural) to the girl’s marriage age showing the concern for the women welfare and making her ready for a healthier future.
SOCIAL CONCERN:
In case if most of the people argue that the maturity period of the project is too late. Most of the father’s are retired by the age when their daughters reach such age, then in order to overcome this problem there are various benefits given such as relaxation in making monthly payments, premium on maturity, provided they satisfy some of the important norms of the scheme.
PROMOTION OF EDUCATION IN GOVERNMENT INSTITUTION:
Relaxation of monthly payment for the education in any of the government institution would make the public more aware of the value of the government sector and this step also promotes cost free education.
PROMOTION OF HIGHER EDUCATION TO GIRLS:
Relaxation of monthly payment on the basis of the qualification of the girl is mainly to promote higher education to the girls which is very low in the country.
PROMOTION OF INDEPENDENCE TO WOMEN:
Even the criteria of job is being considered mainly to promote the self dependency of a girl child instead of making her dependent on her husband through getting her married at a very young age. PROMOTION OF TOURISM IN RURAL AREAS:
The bond provides a benefit to the holder in case if he gets the girl child married in of the identified rural areas by the government which clearly helps in increasing the business prospects of such areas by increasing the tourism.
CONSIDERATION OF PROBLEMS IN THE RURAL AREAS:
However relaxation on the maturity is given due to low income in those areas and relaxation on minimum age for marriage as per the policy is given due to lack of awareness in those areas of the country.
ECONOMIC AND THE FINANCIAL IMPORATANCE OF THE PROJECT:
CAPITAL FORMATION:
Though there have been many schemes raised by the central government in order to access capital, yet there has been lack of capital formation in the country. This scheme could be used as one of the major tools for accessing the capital.
MAJORITY OF FINANCE FOR WOMEN:
The majority of finance raised through this project can be used for the purpose of women empowerment which will prove to be fruitful for the country in the days to come.
CONNECTION TO THE MUDRA SCHEME:
If the important Mudra Scheme is also connected to this whereby the industries involved in the marriages are given access to quick and easy finance when they establish their firms in the rural areas. This will also help the poorer sections to earn their living in those places
AVAILABILITY OF LOCK IN PERIOD FOR FURTHER CAPITAL ACCESS:
As the lock periods are available in case if the holder chooses to invest under the scheme of minimum period, this will further help the government to generate more capital
CONNECTION TO THE PM’s JEEVAN JYOTI BIMA YOJANA AND THE PM’s SURAKSHA BHEEMA YOJANA:
This scheme would also be connected to the above schemes which also help in reducing the risk of loss of life of the sole bread winner of the family and also gives more protection to the family and the girl child.
CAPITAL RAISING CAPACITY OF THIS SCHEME TO THE GOVERNMENT:
As per the census 2011, the overall population of the state Karnataka is 6,56,01,659. Out of such huge population present in the state about 50-60% belong to the middle and the lower middle class group who desperately need certain good schemes to invest their hard earned money. Though the NARENDRA MODI led N.D.A. Government have come up with certain great and creative schemes that helps the people no states have yet tried to grab the opportunity and introduce certain creative and people friendly schemes. If the State Government of Karnataka approves and implements the proposed scheme, this would first of its kind introduced by any government and would certainly be the most friendly scheme that would actually help the government to raise a huge amount of capital in the state for the next few years.
Let us now try and analyze the capital raising capacity of this wonderful scheme: (DETAILED FIGURES SHOWN IN THE EXCEL SHEET)
