The features of land have been explained in details as follows:

Features of Land Land is a free gift of nature. For the society, as a whole land has no supply price. Land is gradable according to the quality. It is a heterogeneous factor of production. Supply of land is inelastic or it can be said as fixed. It has no geographical mobility. It does possess occupational mobility as a factor of production. Land is permanent in existence. Demand for land is a derived demand. Returns from land is subject to the law of diminishing marginal returns It is one of the primary factor of production. But at the same time it is a passive factor of production. Land alone cannot produce any goods or services.

FACTORS OF PRODUCTION Factors of production are the resources used to provide a service or good to market. Typically, speaking these three factors are land, labor, and capital. Without the factors of production it is not possible for an entrepreneur, also know as a businessperson, to complete business related activities. All businesses need the factors of production.

Land is the first factor of production. To make a successful business it is required that land is secured for several reasons. First, land is needed to locate your business operations. More importantly, land is needed to develop natural resources. It is impossible for the farmer to grow apples without land; whereas it is similarly impossible for the barber to service his or her customers without a shop. Land is the first necessity required to satisfy the other factors for production.

Labour is work. All business ventures require some type of labor to produce goods or services. To define labor in other words, it is the effort put forth by a worker for which that employee gets paid. For example, the farmer works his fields to produce an increased yield of apples. The barber uses his or her effort to cut the customers' hair. All effort used to produce goods or services are called labor. Chapter II: The Factors of Production The Three Factors: Three things contribute to production as it is carried on to-day. They are therefore called the factors of production. Of these, two are called original or primary factors, because they exist in the very earliest forms of production, and because it is from them that the third factor is derived. These two factors are land, or nature, and labor. Of these, in turn, we may notice that one is passive, while the other is active. In other words, it is primarily labor, acting upon nature, that produces wealth. From this action of labor upon nature, followed by postponement of the enjoyment of the result of the labor, comes capital, which we therefore call a secondary or derived factor. That is, it is secondary to nature and labor, and is derived from them. Nature or Land Meaning of the Term: Under the term nature" we here include all the material things furnished directly by her hand, together with all the natural forces used in production, the power of the wind, the movement of water, gravitation, cohesion, etc. Some of these materials and forces are furnished in unlimited quantities, and are therefore free goods. It is common in economics to use the word " land " instead of " nature," because of all the gifts of nature it is land with which we have chiefly to do in our science. But it must be remembered that the word land " in this use has the very broad meaning which we have here given it. To avoid any possibility of confusion some economists have used the term "natural agents," when the broader meaning is intended.

What Land does for Production: By analysis we learn that the service of land to production is not a single or a simple thing, but that it usually renders three distinct services. In the first place (1) It furnishes standing room, or situs. It gives men something upon which they may rest and move about while conducting productive processes. Moreover, it enables them to utilize the natural forces which go with the land itself. Mere space is often a source of great value, as can be seen in the case of city real estate. As a continually increasing proportion of a growing population dwells in cities, this first service rendered by land is becoming more important. In the second place, (2) Land contains those elements needed by plant life, and thus renders a service to agriculture. We call this property of the land its fertility." Finally, (3) Land contains natural products below its surface, such as coal, gas, petroleum, iron, silver, and gold. Man does not create these natural treasures nor give direction to nature in their formation. Some nations have deemed it unfair that they should become the property of individuals, and have therefore treated them

as a common heritage, exacting a rent or royalty for the opportunity to exploit them. This is perhaps generally the case to-day on the continent of Europe; but English law, with its inclination to the exaggeration of private rights, has long established the principle that he who owns the surface owns downward to the centre of the earth and upward to the sky. WEAKNESSES OF LABOUR ORGANIZATIONS Some of the weaknesses of labor organizations have already been touched upon. These and other weaknesses, some inherent in the nature of the unions and some accidental, may be briefly summarized as follows: 1. Based on Strife: It too often happens that labor organizations are based on strife. They aim to prepare their members for industrial war; but we must hope for peace in industrial society, and any organization that does not look beyond contention to a cessation of strife has inherent in it a certain weakness. 2. Limitation of their Benefits: They have often, particularly in their early history, sought to gain benefits by a selfish and exclusive policy toward other laborers. In some cases, they have been able to build up an evil labor monopoly. It must be admitted, on the other hand, that there is sometimes, even in these days, valid excuse for limiting numbers. Unscrupulous employers have at times sought to increase unduly the number in a single occupation in order to have a reserve force of unemployed from which to draw in case of need and thus to keep down wages. 3. Production not directly increased: Even when labor-unions do not actually try to limit production by restricting individual output, they usually make no effort to increase production or to diminish the wastes of competition. This is narrow, short-sighted action. What is to be desired is not merely that a greater proportion of produced wealth should fall to the wage-earners, but that the total national dividend to be distributed among all classes should be increased; in other words, that the laborer should receive an increasing share of an increasing product. 4. Ultra-conservatism. While radical in many ways, labor-unions have been too conservative in clinging to old methods and opposing progressive policies that will not benefit them immediately as labor organizations. 5. Narrow and Short-sighted Views. It has been one of the weaknesses of labor organizations in general that they have not been sufficiently interested in public measures and reforms designed to benefit society. For example, they have given too little attention to sanitary matters and too little support to public health authorities in efforts to benefit the poorer classes. They have underestimated the importance of purity in politics and a highly trained civil service. At times they have favored measures which were bound to be ultimately injurious to them, simply because such measures would increase temporarily the supply of work. Opposition to labor-saving machinery and processes is of the same character.

6. Lack of Flexibility: Labor organizations show another inherent weakness which is common to all great political and social organizations. Here red tape is necessary. General rules must for the most part govern, and individual interests must often be sacrificed or injured in seeking the welfare of the whole. One who examines into the nature of labor organizations will be able to find many good reasons why union men should object to working with non-union men. (a) The union entails certain expenses, and union men object to having non-union men reap the benefits secured to labor by the organization without sharing in the burden of support. (6) An even more serious argument lies in the danger that employers will gradually substitute non-union men for union men who are strong in their organization, and thus break down the union before the workmen perceive the drift of things. Pretext can usually be found for discharging a workman, obnoxious as a labor-leader, however faithful and efficient he may be in his work. 7. " Urge or Itching for Political Power: Labor organizations too often have acted on the assumption that their members are fitted for political administration. Whatever the cause may be, however much the fact may be regretted, whatever the hope that the future holds out to them, labor organizations should frankly recognize that they have not the trained intelligence or the trained moral character needed for governing our country. Whatever benefits the wage-earner truly and permanently, we may all join in demanding, confident that it will also benefit the country as a whole; but the tendency to encourage the political aspirations of workingmen cannot be accepted as in the line of such reform. The appointment of working-men to office is an expedient which fertile demagogues have used more than once to turn the attention of the workmen from real reforms. MERITS OF CREDIT The Advantages of Credit: It remains for us to sum up in separate paragraphs the advantages and evils which attend the great development of credit in modern industrial society. 1. Credit saves time and labour by furnishing a more perfect and convenient means of payment in large sums and between distant places than is furnished by the precious metals. Thus in international trade, relatively small sums of money have to be sent from one country to another, only balances being paid in money. By exchanging orders among the different debtors and creditors a large part of the total debts may always be paid without the shipment of money. 2. Credit saves capital by taking the place of corresponding amounts of gold and silver. In this way society is enabled to employ a larger portion of the precious metals for other useful purposes. 3. Credit renders capital more productive. Under our credit system he who possesses capital, but is unable to use it, may transfer it for compensation to another person who can employ it productively, and thus the debtor and creditor, as well as the public economy, are benefited. Other things being equal, capital is loaned to those who will pay the most for it, and under normal conditions these must be the ones who can employ it most productively There are evidently two sides to this advantage. On the one hand, as we have just said, credit enables those who have capital, but who are without the disposition or ability to use it productively, so to place their capital that they themselves receive benefit while furthering social production. On the other hand, credit enables those who have great business qualifications, but who have inadequate

capital or no capital at all, to employ their energies and talents for their own benefit in furthering the welfare of society. In many cases credit brings together capital without directive power and directive power without capital, and thus serves to unite capital and labor. 4. Credit furthers the accumulation of capital by gathering together the very smallest sums, as, for instance, in savings banks. Such small sums, forming in the aggregate large masses of capital, are loaned out by those who are responsible for them to joint-stock companies and other productive concerns. In this way the capital itself is concentrated while its returns are scattered widely among the people. Moreover, credit furthers the accumulation of capital by promoting thrift, since it both helps and encourages men to provide for emergencies and for old age. This is particularly the case with institutions that supply capital to the poorer classes, and with American building associations, which furnish the same classes with capital for the construction of homes. ENTERPRISE Some economists simply regard enterprise as a specialist form of labour input. However others believe that they deserve recognition as a separate factor of production in their own right. The term enterprise or entrepreneurship refers to the management skills needed to bring all the other factors together and make them work to produce goods and services. An entrepreneur therefore is a risk taker who has the skills to organise the other factors of production and produce a good or service at a profit. KEY CHARACTERISTICS OF AN ENTREPRENEUR A skilled entrepreneur is the key to the success of a business since it is he or she that has the ability to bring the other factors together in the most efficient way. While there is no universally accepted definitive list of characteristics that an entrepreneur must possess, most successful entrepreneurs would possess all or many of the following: 1. Intuition: A successful entrepreneur will have a sense of what is likely to be successful and what is not. He/she will be original and will have the ability to stay ahead of the market. 2. Vision and communication skills: An entrepreneur will have a clear vision of what he/she wants to achieve and will have the skills necessary to communicate this vision to others. 3. Energy and determination: A successful entrepreneur will have the energy and determination to work long hours to make the business a success. 4. Perseverance: Most successful entrepreneurs have experienced failure in their business dealing at one time or another, but what sets them apart is that they had the perseverance to keep trying. 5. Risk taker: An entrepreneur is someone who is a risk taker, however a successful entrepreneur takes calculated risks, in other words he/she is not foolish with his/her own or anyone elses money.

FACTORS DETERMINING TAX INCIDENCE (a) Elasticity: While considering incidence we consider both elasticity of demand and elasticity of supply. If the demand for the commodity taxed is elastic, the tax will tend to be shifted to the producer but in case of inelastic demand, it will be largely borne by the consumer. In case of elastic supply, the burden will tend to be on the purchaser and in the case of inelastic supply on the producer. (b) Price: Since shifting of the tax burden can only take place through a change in price, price is a very important factor. If the tax leaves the price unchanged, the tax does not shift. (c) Time: In short run, the producer cannot make any adjustment in plant and equipment. If, therefore, demand falls on account of price rise resulting from the tax, he may not be able to reduce supply and may have to bear the tax to some extent. In the long run, however, full adjustment can be made and tax shifted to the consumer. (d) Cost: Tax raises the price; rise in price reduces demand and reduced demand results in the reduction of output. A change in the scale of production affects cost and the effect will vary according as the industry is decreasing, increasing or constant costs industry. For instance, if the industry is subject to decreasing cost, a reduction in the scale of production will raise the cost and hence price, shifting the burden of the tax to the consumer. (e) Nature of tax: The incidence of taxation will definitely depend on the nature of tax. For example, an indirect taxs burden is fall on the consumer. (f) Market form: Another factor determining the incidence of taxation is the market form. Under perfect competition, no single producer or single purchaser can affect the price; hence shifting of tax in either direction is out of the question. But under monopoly, a producer is in a position to influence price and hence shift the tax. Distinction between Direct and Indirect Taxes A direct tax is not intended to be shifted, whereas an indirect tax is so intended. Taxes on commodities are generally called indirect taxes as they completely or partially shifted consumers. But it should be remembered that all the commodity taxes are not indirect taxes. A tax is said to be indirect if its burden is shifted finally to the consumer. Direct tax is the tax in which the commodity is taxed by the government, yet its price remains unaffected or changed. In this case the tax is not shifted to consumer and the tax will be called direct tax. If the tax is shifted, the tax is indirect, otherwise indirect. Incidence of Taxation Taxes are not always borne by the people who pay them in the first instance. They are often shifted to other people. Tax incidence means the final placing of a tax. Incidence is on the person who ultimately

bears the money burden of tax. According to the modern theory, incidence means the changes brought about in income distribution by changes in the budgetary policy. Impact and Incidence: The impact of a tax is on the person who pays it in the first instance and the incidence is on the one who finally bears it. Therefore, the incidence is on the final consumers. Incidence and Effects: The effect of a tax refers incidental results of the tax. There are several consequences of imposition of tax, for example, decreased demand. Money Burden and the Real Burden: The money burden of a tax is represented by the total amount of money received by the treasury. For example, the consumer has to spend Rs. 50 more on sugar monthly, it is the money burden that he has to bear. But if he has to reduce his consumption of sugar it means there is a reduction in economic welfare. This inconvenience, pinching, sacrifices or in short the loss of economic welfare is the real burden of tax. Theories of Tax Shifting and Incidence 1. Earlier Theories: The earlier theories may be classified into: (a) Concentration or Surplus theory: According to concentration theory, each tax tends to concentrate on a particular class of people who happen to enjoy surplus from their products. (b) Diversion or Diffusion theory: The diffusion theory states that the tax eventually got diffused in the entire society. That is, the final placing of tax is not one but multiple. The process of diffusion took place through shifting or through process of exchange. 2. Modern Theory: According to modern theory, the concentration and diffusion theories are partially true. Actually there are both concentration and diffusion of taxes according to the conditions present. The modern theory seeks to analyse the conditions which bring about concentration or diffusion. FACTORS DETERMINING TAX INCIDENCE (a) Elasticity: While considering incidence we consider both elasticity of demand and elasticity of supply. If the demand for the commodity taxed is elastic, the tax will tend to be shifted to the producer but in case of inelastic demand, it will be largely borne by the consumer. In case of elastic supply, the burden will tend to be on the purchaser and in the case of inelastic supply on the producer. (b) Price: Since shifting of the tax burden can only take place through a change in price, price is a very important factor. If the tax leaves the price unchanged, the tax does not shift.

(c) Time: In short run, the producer cannot make any adjustment in plant and equipment. If, therefore, demand falls on account of price rise resulting from the tax, he may not be able to reduce supply and may have to bear the tax to some extent. In the long run, however, full adjustment can be made and tax shifted to the consumer. (d) Cost: Tax raises the price; rise in price reduces demand and reduced demand results in the reduction of output. A change in the scale of production affects cost and the effect will vary according as the industry is decreasing, increasing or constant costs industry. For instance, if the industry is subject to decreasing cost, a reduction in the scale of production will raise the cost and hence price, shifting the burden of the tax to the consumer. (e) Nature of tax: The incidence of taxation will definitely depend on the nature of tax. For example, an indirect taxs burden is fall on the consumer. (f) Market form: Another factor determining the incidence of taxation is the market form. Under perfect competition, no single producer or single purchaser can affect the price; hence shifting of tax in either direction is out of the question. But under monopoly, a producer is in a position to influence price and hence shift the tax. Distinction between Direct and Indirect Taxes A direct tax is not intended to be shifted, whereas an indirect tax is so intended. Taxes on commodities are generally called indirect taxes as they completely or partially shifted consumers. But it should be remembered that all the commodity taxes are not indirect taxes. A tax is said to be indirect if its burden is shifted finally to the consumer. Direct tax is the tax in which the commodity is taxed by the government, yet its price remains unaffected or changed. In this case the tax is not shifted to consumer and the tax will be called direct tax. If the tax is shifted, the tax is indirect, otherwise indirect. Merits and Demerits of Direct and Indirect Taxes Merits of Direct Tax: 1. Equitable, i.e., the principle of progression is applied 2. Economical, i.e., the cost of collection is small 3. Certain, i.e., the direct tax can be calculated with a fair degree of precision 4. High degree of elasticity, i.e., the direct tax can be raised much easily 5. Civic consciousness, direct tax creates civic consciousness among tax-payers 6. Reduction of inequalities, i.e., the objective of direct tax is to reduce economic inequalities by taxing higher income earners at progressive tax rates. Demerits of Direct Tax:

1. Inconvenient: for the tax payer to pay and file the income tax return 2. Unpopular tax system 3. Tax evasion is common 4. Unarbitrary tax rates Merits of Indirect Tax: 1. Convenient: for the tax payer to pay and it requires no filing of returns 2. No tax evasion 3. Unified tax rate 4. Beneficial social effects (in case of harmful drugs and intoxicants) 5. Capital formation 6. Re-allocation of resources 7. Wide coverage Demerits of Indirect Tax: 1. Uncertain 2. Regressive 3. No civic consciousness 4. Inflationary 5. Loss of economic welfare Incidence of Some Taxes Taxes on Personal Income: 1. Income tax, super tax and excess profit tax are all direct taxes and generally cannot be shifted. 2. However, the business is in a strong position and can shift a part of his tax burden to his customers. But this situation is rarely present and the income tax payer must bear the burden of tax. 3. If the income tax is extremely heavy, it may discourage saving and investment. However, it will mainly depend on whether the tax falls on average income or marginal income, the effects would be adverse. If the increase in tax is fall on marginal income, it will mean a positive discouragement to the earning of that income. Corporate Tax: 1. Corporate tax discourages investment, level of national income and employment.

2. A corporation tax, by reducing the earnings of the existing firms, discourages the entry of new firms into the industry which may result in a monopoly or a semi-monopoly for the existing firms with all the attendant evils. 3. A part of corporate tax may be shifted to the buyers through a price rise. Tax on Profits: 1. Some economists are not of the view that the tax on profit should be shifted to buyers. It should be borne by the seller who pays it. 2. The second view does not subscribe with the above approach. It is argued that normal profit is a part of the cost and when the entrepreneur is able to influence the price, the tax is generally shifted to the consumer. 3. However, the tax on profit in the form of a licence duty will be borne by the producer. Wealth Tax: 1. Wealth tax is imposed on value of a persons stock of wealth 2. By enabling the government not to raise the income tax rates too high, the wealth tax encourages investment in modern industries 3. Another obvious effect of wealth tax is the reduction of economic inequalities by reducing the size of inherited wealth Property Tax: 1. The wealth tax is imposed on the net worth of the individual, whereas, the property tax is levied on the gross amount of assets value 2. There is no shifting of tax and the incidence is on the person on whom the tax is levied. However, the tax on productive property may be shifted to consumers. Land Taxation: 1. The value of land depends on two sets of factors: (a) Natural factors like the fertility of the soil, the situation of the land, some other natural conditions, and (b) Investment of capital in drainage schemes, anti-erosion measures, irrigation facilities and other measures necessary to increase and sustain productivity 2. The tax on the first set is a tax on economic rent and has a tendency to fall on the owners 3. But when the owner can vary his investment when the tax increases, he can shift the tax burden to the consumer. Tax on Buildings:

1. If the tax is imposed on the owner, he will try to raise the house rent and thus shift the tax to the occupier or tenant. But he cannot do this during the currency of the lease. 2. A heavy tax will check building activity and the remuneration of the builder and of other people engaged in the trade may fall 3. The tax may fall partly on the owner, partly on the builder and partly on the occupier Death Duty: 1. Death duty may take two forms, i.e., Estate Duty and Succession Duty 2. The Estate Duty is levied on the total value of the estate (i.e., movable and immovable property) left by the deceased irrespective of the relationship of the successor 3. The succession duty varies with the relationship of the beneficiary to the deceased. It takes into consideration individual share of the successor and not the total value as in the estate duty. Tax on Monopoly: 1. The monopoly tax may be: (a) Independent of the output of the monopolised product, or (b) It may vary with the output, i.e., increase or decrease with the output 2. When the tax is independent of the quantity produced, it may either be lump sum tax on the monopolist or a percentage of the monopoly net revenue (profits). In both cases it will be borne by the monopolist and he cannot shift the same to the consumer, because the monopolist is already on a price with maximum beyond which his profit will decline 3. In the second case, the price of the commodity or incidence of taxation will depend on the elasticities of supply and demand, and the influence of laws of returns. 4. Taxing of the commodity, therefore raises the price which will tend to reduce the demand 5. If, however, the demand is inelastic, it cannot be appreciably reduced and the tax will be borne by the consumer. 6. If the demand is elastic, the consumers may buy less when the tax has raised the price. Instead of facing a decline in demand the monopolist may reduce the price and decide to bear the tax himself. Commodity Tax: 1. Taxes on commodities may take several forms: (a) Tax on manufacture or production of a commodity called excise duties, (b) Tax on sale of a particular commodity known as sales tax, and (c) Import or export of commodities known as custom duties. 2. The commodity tax is tended to be shifted to the consumer and from consumer to the producer 3. Tax on production tends to raise the prise and will therefore be normally borne by the consumer 4. But the consumption tax is likely to check consumption and tends to be shifted backward to the producer. 5. Therefore, the tax on commodity will be partly borne by the producer and partly borne by the consumer

6. The portions of commodity tax to be borne by the producer and consumer depends on the degree of elasticity of demand and supply: Elasticity Incidence (i) Elastic demand More tax burden on the supplier / producer (ii) Inelastic demand More tax burden on the buyer / consumer (iii) Elastic supply More tax burden on the buyer / consumer (iv) Inelastic supply More tax burden on the supplier / producer 7. As a rule, the consumer bears a smaller part of the tax when the demand is more elastic than the supply 8. This may happen that the price may not rise at all. This is because the consumers have been able to discover an untaxed supply of the commodity or substitute. In this case, the tax burden will fall on the producer. 9. DD and SS intersect at point P and MP is the price determined. Now suppose a sales tax per unit is levied. As a result the supply curve of the commodity will increase upward equal to the tax per unit. The new supply curve will be SS. The distance between the two supply curves represents the tax per unit of the commodity. SS cuts the demand curve DD at Q and, therefore, now TQ is the price determined which is higher than the old price PM by RQ. Hence RQ is the burden of tax borne by the consumer even though the tax per unit is LQ. Therefore, RL (LQ QR) is the burden of the tax borne by the seller or he has RL price less than before (PM being the first price). 10. Therefore the commodity tax is distributed between the buyers and sellers according to the ratio of elasticities of demand and supply: RL = Burden of the tax on the seller (producer) . RQ Burden of the tax on the buyer (consumer) Ed = Proportionate decrease in quantity demanded Proportionate increase in price ---------------------------------- (i) Es = Proportionate decrease in quantity supplied Proportionate decrease in price ------------------------------------- (ii) = Elasticity of Demand (Ed) Elasticity of Supply (Es)

11. In the above equation, RL is the burden of the tax on the seller and RQ is the burden of tax on the buyers. Hence: RL = Burden of tax on the seller RQ = Burden of tax on the buyer = Elasticity of demand (Ed) Elasticity of supply (Es) Sales Tax: 1. The sales tax is levied on the turnover, profits or no profits. It covers a wide variety of commodities. 2. The sales tax may make heavy inroads into profits which may lead to retrenchment in the staff and management, restrict enterprise and employment and hamper utilisation of resources. 3. Thus, its incidence may fall upon employees, management and landlords. Import Duties and Export Duties: 1. Import Duties are generally borne by the home consumer 2. If the demand for the imported product is elastic and the supply is inelastic and the foreign producer has no alternative market, then in such a case the burden of tax may be shifted to foreign seller. This situation is rarely present. 3. Export duty is borne by the exporter. The price in the world market is fixed and no individual exporter is in a position to influence the world price. 4. There are certain exceptional situations in which the purchaser may bear the burden of export duty. For example, the supplier or the producer has the monopoly of the supply of a commodity. Effects of Taxation on Production, Consumption and Distribution Effects on Production: 1. Production is affected by taxes in two ways: (a) By affecting the ability to work, save and invest (b) By affecting the desire to work, save and invest 2. A tax on necessaries of life, will obviously affect the workers productivity and hence reduce production. A heavy tax on income tends to reduce the ability to save and invest on part of individuals. A decrease in investment is bound to affect adversely the level of output in the country 3. Normally taxation induces people to work harder, earn more, save more and invest more to increase their income and enjoy the same income after tax 4. Some taxes has no adverse effects, for e.g., import duties, tax on monopolists, etc.

5. High marginal rates of income tax are likely to affect adversely the tax payers d esire to work, save and invest 6. The reaction varies from individual to individual. It depends on the individuals elasticity of demand for income. When it is fairly elastic, the tax will lessen his desire to work and save 7. Entrepreneurs may avoid the production of goods which are taxed. There is likely to be a diversion of resources from some sectors of economy to others Effects on Income Distribution: 1. The effects of taxes on income distribution depends on the type of taxes and rates of taxes 2. Taxation of goods of mass consumption is regressive and redistributes incomes in favour of rich. 3. But if such commodities are exempted and luxuries are taxed, and the taxation is made progressive, then the income will be redistributed in favour of poor. Effects on Consumption: 1. By imposing tax on a consumable good which is injurious to health, its consumption can be checked. 2. Similarly the tax on luxury goods can decrease their consumption and resources diverted to the production of mass consumption. A bank is a financial institution which deals with deposits and advances and other related services. It receives money from those who want to save in the form of deposits and it lends money to those who need it. Definition of a Bank Oxford Dictionary defines a bank as "an establishment for custody of money, which it pays out on customer's order." CHARACTERISTICS / FEATURES OF A BANK 1. Dealing in Money Bank is a financial institution which deals with other people's money i.e. money given by depositors. 2. Individual / Firm / Company A bank may be a person, firm or a company. A banking company means a company which is in the business of banking. 3. Acceptance of Deposit

A bank accepts money from the people in the form of deposits which are usually repayable on demand or after the expiry of a fixed period. It gives safety to the deposits of its customers. It also acts as a custodian of funds of its customers. 4. Giving Advances A bank lends out money in the form of loans to those who require it for different purposes. 5. Payment and Withdrawal A bank provides easy payment and withdrawal facility to its customers in the form of cheques and drafts, It also brings bank money in circulation. This money is in the form of cheques, drafts, etc. 6. Agency and Utility Services A bank provides various banking facilities to its customers. They include general utility services and agency services. 7. Profit and Service Orientation A bank is a profit seeking institution having service oriented approach. 8. Ever increasing Functions Banking is an evolutionary concept. There is continuous expansion and diversification as regards the functions, services and activities of a bank. 9. Connecting Link A bank acts as a connecting link between borrowers and lenders of money. Banks collect money from those who have surplus money and give the same to those who are in need of money. 10. Banking Business A bank's main activity should be to do business of banking which should not be subsidiary to any other business. 11. Name Identity A bank should always add the word "bank" to its name to enable people to know that it is a bank and that it is dealing in money. EFFECT OF GOVT EXPENDITURE ON NATIONAL INCOME 1. Effects on Production

The effect of public expenditure on production can be examined with reference to its effects on ability & willingness to work, save & invest and on diversion of resources. 1. Ability to work, save and invest: Socially desirable public expenditure increases community's productive capacity. Expenditure on education, health, communication, increases people's productivity at work and therefore their incomes. With rise in income savings also increase and this in turn has a beneficial effect on investment and capital formation. 2. Willingness to work, save and invest: Public expenditure, sometimes, brings adverse effects on people's willingness to work and save. Government expenditure on social security facilities may bring such unfavourable effects. For e.g. Government spends a considerable portion of its income towards provision of social security benefits such as unemployment allowances old age pension, insurance benefits, sickness benefit, medical benefit, etc. Such benefits reduce the desire to work. In other words they act as disincentive to work. 3. Effect on allocation of resources among different industries and trade : Many a times the government expenditure proves to be an effective instrument to encourage investment on a particular industry. For e.g. If government decides to promote exports, it provides benefits like subsidies, tax benefits to attract investment towards such industry. Similarly government can also promote a particular region by providing various incentives for those who make investment in that region. 2. Effects on Distribution The primary aim of the government is to maximise social benefit through public expenditure. The objective of maximum social welfare can be achieved only when the inequality of income is removed or minimised. Government expenditure is very useful to fulfill this goal. Government collects excess income of the rich through income tax and sales tax on luxuries. The funds thus mobilised are directed towards welfare programmes to promote the standard of poor and weaker section. Thus public expenditure helps to achieve the objective of equal distribution of income. Expenditure on social security & subsidies to poor are aimed at increasing their real income & purchasing power. Public expenditure on education, communication, health has a positive impact on productivity of the weaker section of society, thereby increasing their income earning capacity. 3. Effects on Consumption Public expenditure enables redistribution of income in favour of poor. It improves the capacity of the poor to consume. Thus public expenditure promotes consumption and thereby other economic activities. The government expenditure on welfare programmes like free education, health care and housing certainly improves the standard of the poor people. It also promotes their capacity to consume and save. 4. Effects on Economic Stability

Economic instability takes the form of depression, recession and inflation. Public expenditure is used as a mechanism to control instability. The modern economist Keynes advocated public expenditure as a better device to raise effective demand & to get out of depression. Public expenditure is also useful in controlling inflation & deflation. Expansion of Public expenditure during deflation & reduction of public expenditure during inflation control money supply & bring price stability. 5. Effects on Economic Growth The goals of planning are effectively realised only through government expenditure. The government allocates funds for the growth of various sectors like agriculture, industry, transport, communications, education, energy, health, exports, imports, with a view to achieve impressive growth. Government expenditure has been very helpful in maintaining balanced economic growth. Government takes keen interest to allocate more resources for development of backward regions. Such efforts reduces regional inequality and promotes balanced economic growth. Conclusion Modern economies have all experienced tremendous growth in public expenditure. So it is absolutely necessary for governments to formulate rational public expenditure policies in order to achieve the desired effects on income, distribution, employment and growth. Rural and Community Banks There are over hundred and thirty-five rural banks in the ten regions of Ghana. The importance of Rural/Community Banks as providers of financial services to ensure growth in a predominantly agro-based economy cannot therefore be over-emphasised. The banks undertake a mix of micro finance and commercial banking activities structured to satisfy the need of the rural areas. They provide banking services by way of funds mobilization and credit to cottage industry operators, farmers, fishermen and regular salaried employees. They also grant credits to customers for the payment of school fees, acquisition/rehabilitation of houses and to meet medical expenses. Some of the banks have subsidiary companies engaged in consumer credit and other developmental activities. Rural/Community Banks devote part of their profits to meet social developmental activities such as donations to support education, health, traditional administration and the needy in their respective communities. Some of the banks have specific gender programmes focusing on women-in-development and credit-with-education activities for rural women. Rural/Community Banks are, therefore, the main vehicle for financial intermediation, capital formation and retention of rural dwellers in the rural areas.

REGIONAL DISTRIBUTION OF RCBs AND BRANCHES REGION 1 Ashanti 2 Brong Ahafo 3 Central 4 Eastern 5 Greater Accra 6 Northern 7 Upper East 8 Upper West 9 Volta 10 Western TOTAL NUMBER OF BANKS NUMBER OF BRANCHES 24 20 21 22 6 6 5 4 12 13 133 111 69 68 85 13 3 10 3 22 55 439

HEAD OFFICE + BRANCHES = 564

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ARB Apex Bank - History The ARB Apex Bank Ltd is a mini Central Bank in Ghana for the Rural/ Community Banks (RCBs) financed mainly through the Rural Financial Services Project (RFSP), which is a Government of Ghana project to holistically address the operational bottlenecks of the rural financial sector with the aim of broadening and deepening financial intermediation in the rural areas. The idea of rural banking was conceived some 32 years ago by the Bank of Ghana when it opened a dialogue with the Ministry of Finance about what was called junior league of banking institutions to serve the special needs of the rural population in Ghana. At the time, the traditional licensed banking institutions were all structured, equipped and managed as citycentered institutions with their clients mostly in the export/import business and in the mining sector. It was, therefore, necessary to bring the rural population into the banking system under rules designed to suit their socio-economic circumstances and the peculiarities of their occupation in farming and craftmaking. The ARB Apex Bank Limited was incorporated as a public limited liability company on 4th January, 2000. Its shareholders are the Rural and Community Banks. It was granted a banking licence on 23rd April, 2001 and was admitted to the Bankers Clearing House as the 19th member in August, 2001. It had its certificate to commence business on 1st November, 2001, thus, completing all the legal processes for the commencement of operations. The ARB Apex Bank Limited began clearing services on 2nd July, 2002 in all the 11 clearing centres in Ghana. The bank has outlets in all the 10 regional capitals and Hohoe. The ARB Apex Bank Ltd was registered under the Companies Code 1963, Act 179 as a public limited liability company and licensed by the Bank of Ghana under the then Banking Law, 1989 (PNDCL 225) as repealed by the Banking Act 2004, (Act 673) . Apart from the above legal and regulatory framework in which the Bank is operating, it is also subject to the Bank of Ghana Act, 2002 (Act 612) and other directives issued by the Bank of Ghana from time to time. The Bank is also regulated by other legislations relating to the administration of financial matters which are in force for the time being, that is, Financial Administration Act, 2003 (Act 654), Public Procurement Act, 2003 (Act 663); among others. Furthermore, the ARB Apex Bank Ltd is regulated by its Regulations; ARB Apex Bank Regulation (L.I.1825). Functions of Rural Banks The ARB Apex Bank is a minicentral bank for the Rural/Community Banks under the supervision of the Bank of Ghana. Being a dedicated controlling bank, the Apex Bank ensures effective supervision of rural/community banks. Its functions are the following:

a) Provision of cheque clearing services. This addresses the constraints of delays in cheque clearing through the big commercial banks. b) Handling cash movement and funds management services. This ensures effective and efficient management of the cash of rural/community banks. c) Development of new innovative banking products. This is to enable more rural dwellers to have access to banking products purposely designed to meet their needs. d) Provision of inspection services. The provision of both on-site and off-site inspection services address the problems of inadequate bookkeeping, non-observance of internal control measures and lack of regular inspection of the rural/community banks. e) Provision of Information Technology support to computerize rural/community banks operations and ensure efficient handling of data/information which will result in quality customer service. f) Sourcing of funds for on-lending to the rural/community banks. h) Training of staff and directors of rural/community banks. This ensures that the staff and the management of rural/community banks possess the requisite skills to operate professionally. Importance of Microfinance Institutions A microfinance bank is one devoted to extending small loans, referred to as microloans, to individuals, businesses, and organizations in low-income regions, including under-developed countries where small amounts of money can go a long way. Some financial institutions are devoted entirely to microfinance, while others are part of larger companies, such as global investment banks. Ultimately, a microfinance bank provides credit to those who would otherwise be unable to access this form of capital. These loans foster the development of small businesses and provide tools to entrepreneurs to follow their dreams, all in an attempt to alleviate global poverty in vulnerable regions. ROLE OF INDUSTRIALIZATION IN ECONOMIC DEVELOPMENT OF THE COUNTRY Industrialization plays a vital role in the economic development of an underdeveloped country. The historical facts reveal that all the developed countries of the world broke the vicious circle of underdevelopment by industrialization. Pakistan being a developing country also wants to achieve higher standard of living for its masses. It has therefore, embarked upon various programmers of industrialization. The policies of privatization, deregulation and liberalization of the economy are being pursued. The role of industrialization in economic development is summed up as under. 1. Increase in national income. Industrialization makes possible the optimum utilization of the scarce resources of the country. It helps in increasing the quantity and quality of various kinds of manufactured goods and thereby makes a larger contribution to gross national product. (GNP)

2. Higher standard of living. Industrialization helps in increasing the value of output per worker. The income of the labour due to higher productivity increases. The rise in income raises the living standard of the people. 3. Economic stability. Industrialization is the best way of providing economic stability to the country. A nation which depends upon the production and export of raw material alone cannot achieve a rapid rate of economic growth. The uncertainties of Nature, the restricted and fluctuating demand of the agricultural raw material hampers economic progress and leads to an unstable economy. 4. Improvement in balance of payments. Industrialization brings structural changes in the pattern of foreign trade of the country. It helps in increasing the export of manufactured goods and thus earn foreign exchange. On the other hand the processing of raw material at home curtails the import of goods and thereby helps in conserving foreign exchange. The export orientation and import substitution effects of industrialization help in the improvement of balance of payments. In Pakistan, the exports of semi manufactured and manufactured goods showed favorable trend. 5. Stimulates progress in other sectors. Industrialization stimulates progress in other sectors of the economy. A development of one industry leads to the development and expansion of other industries. For instance the construction of a transistor radio plant, develops the small battery industry (backward linkage). The construction of milk processing plants adds to its line of production ice cream. cone cream plants etc.. 6. Increased employment opportunities. Industrialization provides increased employment opportunities in small and large scale industries. In an agrarian economy, industry absorbs underemployed and unemployed workers of agricultural sector and thereby increases the income of the community. 7. Promotes specialization. Industrialization promotes specialization of labour. The division of work increases the marginal value product of labour. The income of worker in the industrial sector is therefore higher than that of a worker in agricultural sector. 8. Rise in agricultural production. Industrialization provides machinery like tractors thrashers harvesters, bulldozers, transport, aerial spray etc, to be used in the farm sector. The increased use of modern inputs has increased the yield of crops per hectare. The increase in the income of the farmers has given boost to economic development in the country.

9. Easy to control industrial activity. The industrial activity compared to agricultural is easy to control. The industrial production can be expanded or cut down according to the price cost and demand of the product. 10. Large scope for technological progress. Industrialization provides larger scope for on the job training and technological progress. The use of advanced technology increases the scale of production, reduces cost of production, improves quality of the product and helps in widening of the market. 11. Reduction in the rate of population growth. Industrialization leads to migration of surplus labour from farm sector to the industries mostly situated in urban centers. In cities improved facilities of sanitation and health care are available. People through the adoption of family planning measures, reduce the rate of population growth. 12. Increased saving and investment. Industrialization increases the income of the workers. It enhances their capacity to save. The voluntary savings, stimulate industrial growth and by cumulative effect lead to further expansion of industry. 13. Provision for defense. If a country is industrialized, it can manufacture arms and ammunition necessary for the defense of the country. A nation which depends on other countries for the supply of ammunition will eventually suffer and may face defeat. The two wars with India should be an eye opener for Pakistan. 14. Lesser pressure on land. The establishment and expansion of industries lessens the excessive pressure of labour force from the agriculture sector. 15. Development of markets. With the development of industries the market for raw materials and finished goods widens in the country. 16. Increase in the Government revenue. Industrialization increases the supply of goods both for internal and external markets. The export of goods provides foreign exchange. The customs excise duties and other taxes levied on the production of goods increase the revenue of the State. The income tax received from the industrialists adds to the revenue stream of the Government which eventually is spent for the welfare of the people as a whole. More:

PROBLEMS AFFECTING INDUSTRIAL DEVELOPMENT IN WEST AFRICA The major problems confronting industries of member countries of ECOWAS are the following. 1. Gaps between targets and achievements: Except the periods 1970s the achievements or industrial outputs were below the targets. In many years the targets are much higher than the achievable level. 2. Underutilisation of installed capacity: A large number of industries in India are suffering from underutilisation of capacity. It may be due to many reasons like, raw material shortage, power failure, government policies, labour problems, demand problems etc. 3. Poor performance of the public sector: During the early years of planning the public sector has an advantage in industrial development. But large losses of public sector units is a serious matter and calls for immediate corrective measures. 4. Infrastructural constraints: It is said that one of the important constraints in the industrial development is the poor quality and quantity of infrastructure and high cost particularly power and transport. As a result the competitiveness of West African countries industries is lost. In other words, the infrastructure facilities for building up a sound industrial base are inadequate in West Africa. The sources of power, thermal, solar, atomic etc, are insufficient to meet the industrial requirements of these countries. The transport and communication facilities which are vital for the expansion of industry are costly and also do not fully meet the industrial and commercial requirements of the country. 5. Growth of regional imbalances: The industrial development in West Africa is mainly concentrated in few national and regional capitals of Accra, Tema, Abuja, Lagos, Dakar, and Cotonou and Lome as well other urban locations across ECOWAS member states while other remote or undeveloped regions lagged behind in industrial development. Thus regional imbalances increased. 6. Industrial sickness: In Ghana and of course many ECOWAS countries, a number of industries are plagued by sickness due to bad and inefficient management. Adequate attention was not given to the improvements in technology and quality of products. 7. High cost industrial economy: Another major issue related with the industrial sector is the hike in the cost of industrial products. Compared to the products of other countries Indian industrial products priced high. 8. Increasing capital-out put ratio: The industrial sector in India shows an increasing capital out-put ratio which definitely act as an obstacle in the development of industrial sector. 9. Creation of environmental problems: Liberalisation gives way for the establishment of many new industrial concerns. Some of them create environmental problems. In fact, there is the concern of large scale industrial production which creates environmental and demand problems in West Africa.

10. New challenges: The West African countries industrial sector faces new challenges from the globe. The recent global financial shock raises many problems to ECOWAS industries. Many trading partners of ECOWAS dump their products in the sub-regional market. It is a well known fact that many domestic but foreign owned firms have of recent times handled part of the production process of certain profit making MNCs from China, India, South Korea and Brazil. This is at the detriment of local industries that are to a large extent technologically unable to compete with the cheap imported products from these countries. 11. Narrowness of the market: The narrowness of home and foreign markets for the manufactured goods is also a major obstacle in the expansion and growth of industrial sector in Pakistan. The low purchasing power of the people, the production of substandard goods, the higher cost of production limit the size of market at home. The advanced countries, due to poor quality of the manufactured goods of the developing countries, are reluctant to purchase their manufactured goods. Pakistan, in order to avail of the economics of large scale production and enlarging home markets should establish import substituting industries. The quality of the products should also be improved to the international level so that the market opportunities in developed world are explored, developed and captured. 12. Poor quality of Industrial Labour: The industrial labour in most countries in West Africa like other workers is mostly conscious of its rights but not of duties. It may not be inferred that the labour is inherently incapable and inefficient in the performance of duties. The fact, however, is that they are not properly trained. The spirit of work is not inherent in them. The political parties patronize them to meet their own ends. The spirit of Japanese workers, love for work, love for the country, should be inculcated not only in the industrial labour but also in all the citizens of the sub-region. The change in the attitude towards work will increase production and these countries will attain rapid rate of economic growth in a short period of time. 13. Lack of technical know-how: Another problem which is standing in the way of rapid industrialization of the country is the lack of skilled persons. The capital intensive industries need highly trained technical personnel. The country at present is deficient of them. The import of technicians from the advanced courtiers is not only costly but also against the interest of the country

CAUSES OF INDUSTRIAL BACKWARDNESS IN PAKISTAN The causes of industrial backwardness in Pakistan are varied and complex. The Government of Pakistan since 1947 is trying to develop industries and infrastructure facilities for the growth of industrial sector, yet it has not achieved success to the desired extent. In the last over three decades. The main obstacles which have slowed and retarded industrial development in Pakistan are as follows: CAUSES OF INDUSTRIAL BACKWARDNESS 1. Controversial Industrial development strategies.

One of the major objectives in all the five year plans of Pakistan is to improve the balance of payments position by (1) Increasing export and (2) Production of import substitution goods in the country. The twin objectives of promoting export orientation and import substitution have not been achieved to the desired extent. The share of industrial raw material for consumer goods in the aggregate import instead of falling has risen. Similarly the percentage of capital goods in the total imports has increased. The slow growth in industrial sector is mainly due to rapid changes in the industrial development strategies. The planners have not yet been able to solve the central issues such as. (1) Sectorial balance between agricultural and industrial sectors. (2) Balanced regional development. (3) Growth V/S welfare strategy. (4) Small scale V/S large scale. (5) Capital intensive V/S labour intensive. (6) Public sector V/S Private Sector. (7) Rural V/S urban. (8) The policies of nationalization and denationalization of industries. (9) The absence of clear demarcation of industries between public and private sectors has landed the industrial sector in deep seated recession 2. Lack of capital. The second major problem of industrialization in Pakistan is the lack of capital. In capital intensive industries like steel and iron, chemical, automobile etc. the amount of capital required per worker is quite high. In industries like textile, carpet, sugar paper board etc, huge amount of capital is required to establish and expand these industries. 3. Narrowness of market. The narrowness of home and foreign markets for the manufactured goods is also a major obstacle in the expansion and growth of industrial sector in Pakistan. The low purchasing power of the people, the production of substandard goods, the higher cost of production limit the size of market at home. The advanced countries, due to poor quality of the manufactured goods of the developing countries, are reluctant to purchase their manufactured goods. Pakistan, in order to avail of the economics of large scale

production and enlarging home markets should establish import substituting industries. The quality of the products should also be improved to the international level so that the market opportunities in developed world are explored, developed and captured. 4. Poor quality of Industrial Labour. The industrial labour in Pakistan like other workers is mostly conscious of its rights but not of duties. It may not be inferred that the labour is inherently incapable and inefficient in the performance of duties. The fact, however, is that they are not properly trained. The spirit of work is not included in them. The political parties patronize them to meet their own ends. The spirit of Japanese workers, love for work, love for the country, should be inculcated not only in the industrial labour but also in all the Pakistanis. The change in the attitude towards work will increase production and the country will attain rapid rate of economic growth in a short period of time. 5. Lack of infrastructure facilities. The infrastructure facilities for building up a sound industrial base are inadequate in Pakistan. The sources of power, thermal, solar, atomic etc, are insufficient to meet the industrial requirements of the country. The transport and communication facilities which are vital for the expansion of industry are costly and also do not fully meet the industrial and commercial requirements of the country. 6. Lack of technical know-how. Another problem which is standing in the way of rapid industrialization of the country is the lack of skilled persons. The capital intensive industries need highly trained technical personnel. The country at present is deficient of them. The import of technicians from the advanced courtiers is not only costly but also against the interest of the country. 7. Promotes specialization. Industrialization promotes specialization of labour. The division of work increases the marginal value product of labour. The income of worker in the industrial sector is therefore, higher than that of a worker in agricultural sector. 8. Rise in agricultural production. Industrialization provides machinery like tractors, thrashers, harvesters, bulldozers, transport, aerial spray etc, to be used in the farm sector. The increased use of modern inputs has increased the yield of crops per hectare. The increase in the income of the farmers has given boost to economic development in the country. 9. Easy to control industrial activity. The industrial activity compared to agricultural is easy to control. The industrial production can be expanded or cut down according to the price cost and demand of the product.

10. Large scope for technological progress. Industrialization provides larger scope for on the job training and technological progress. The use of advanced technology increases the scale of production, reduces cost of production, improves quality of the product and helps in widening of the market. 11. Reduction in the rate of population growth. Industrialization leads to migration of surplus labour from sector to the industries mostly situated in urban centers. In cities improved facilities of sanitation and health care are available. People through the adoption of family planning measures, reduce the rate of population growth. 12. Increased saving and investment. Industrialization increases the income of the workers. It enhances their capacity to save. The voluntary saving, stimulate industrial growth and by cumulative effect lead to further expansion of industry. 13. Provision for defence. If a country is industrialized, it can manufacture arms and ammunition necessary for the defence of the country. A nation which depends on other countries for the supply of ammunition will eventually suffer and may face defeat. The two wars with India should be an eye opener for Pakistan. 14. Lesser pressure on land. The establishment and expansion of industries lessens the excessive pressure of labour force from the agriculture sector. 15. Development of markets. With the development of industries, the market for raw materials and finished gods widens in the country. 16. Increase in the Government revenue. Industrialization increases the supply of goods both for internal and external markets. The export of goods provides foreign exchange. The customs, excise duties and other taxes levied on the production of goods increase the revenue of the State. The income tax received from the industrialists adds to the revenue steam of the Government which eventually is spent for the welfare of the people as a whole. INTRODUCTION The industrial policy framework presents policy recommendations considered essential for industrial development with a focus on improving industrial competitiveness, especially with regard to industrial enterprises be they small, medium or large which are exposed or potentially exposed to international competition (within or outside the country). It is generally acknowledged that the Government cannot fully control industrial development nor can it be involved in direct productive activities. However, the

Government, in consultation with the private sector can formulate policies; pursue such policies, and through regular reviews and analysis of industrial trends and performance, make policy adjustments. The Government through its industrial policy can: 1. Improve the operating environment for private investments (both domestic and foreign) and sustainable industrial development. 2. Encourage new investments, in particular, foreign direct investments;

3. Improve competitiveness and enhance productivity through macro-economic management and industrial governance and by ensuring that the basic physical infrastructure, capital resources, human resources and knowledge resources are adequately developed and are of relevance to industrial development and competitiveness; 4. Direct and promote the diversification of economic activities, in particular, the diversification of industrial production; 5. Minimize major constraints and impediments to industrial development such as, administrative bottlenecks relating to the provision of government services, red tape and time delays, tax administration, commercial laws, labour relations etc. SMALL SCALE INDUSTRIES Food products and Beverages 1. Tobacco Products 2. Manufacture of Textile 3. Wearing, apparel, dressing/dying of fur 4. Tanning/dressing of leather & footwear 5. Wood and products of wood and cork 6. Paper and paper products 7. Publishing, printing & reproduction 8. Coke, petroleum products & nuclear fuel 9. Chemical and chemical products 10. Rubber and plastic products 11. Non-metallic mineral products

12. Basic metals 13. Fabricated metal products 14. Machinery and equipment n.e.c. 15. Office, accounting, computing machinery 16. Electrical machinery and apparatus n.e.c. 17. Radio, TV communication Parts (Antennas etc) 18. Medical, precision & optical instruments 19. Motor vehicles, trailers and semi-trailers(Buses Body etc) 20. Other transport equipment 21. Furniture, sports and athletic goods, other manufact. n.e.c 22. Recycling Role of Non Bank Financial Intermediaries The non-bank financial institutions acting as intermediaries play a crucial role in bringing together the saver and the borrowers. The intermediation process of these institutions helps the individuals to invest their funds safely and enables business firms to borrow funds without problems FUNCTIONS OF NON-BANKING FINANCIAL INSTITUTIONS Acting as intermediaries, the non bank financial institutions help the individuals business firms and the nation as a whole in the following ways: 1. The non-bank financial institutions help the individual investors by providing them triple benefits. 2. They help the business firms in securing funds at reasonable cost and in time. They take the risk of mobilising savings from numerous small investors. The business firm are, thus relieved of the problem of approaching small investors scattered throughout the country. 3. The non-bank financial institutions also help the different sectors of the economy according to the priorities fixed by Government from time to time. 4. By providing financial help on softer terms to the enterprises set up in backward areas, these institutions help in correcting regional imbalances in the country. 5. When the programmers of rapid industrialization get bogged down due to the inadequacy of finance, these non bank financial institutions render valuable assistance in the form of loans, underwriting services or direct subscriptions of shares ad debentures.

6. They provide technical, financial and managerial assistance to entrepreneurs. These institutions undertake various promotional activities such as the formation of project ideas, conducting viability studies, the implementation of the project etc. AGRICULTURE AS A MEDIUM, OF SOLVING UNEMPLOYMENT Unemployment problem can be solved in Ghana by initiating corporate agriculture system, improving marketing system, providing social security to farmers, subsidy. Agriculture is a sector, which can solve future unemployment situation in Ghana, but this is the most neglected field by politicians and government officials. 1. Introducing corporate agriculture system The Soviet method of agriculture may not fit. The possible solution could be corporate agriculture where corporate companies will invest their money and technology in agriculture and share the profits with farmers. The most important thing, which can improve agricultural scene in India, is water. For this, we need to build big dams. Agriculture in India needs more support from industries. Food processing is one. In India, only 2% of the agricultural output is processed. In developed countries, it is as high as 80%. This will give better returns to the farmers from their crops and can also eliminate middlemen since the industries will buy directly from farmers. Also, the government must invest in irrigation, technology, and more efficient, reliable and cost effective credit system. 2. Improving marketing system and providing social security The marketing system should also be improved. Social security will have to be brought in for every person in India. That will at least mean that people would not have to live in acute poverty when their crop fails or they lose their job. But at the same time, it should be realized that bulk employment will be generated by the services and manufacturing sectors. We can also help farmers in places where traditional crops have been a failure due to water scarcity, by helping them plant crops like Jatropha, which needs only a little amount of water, and also would directly help the corporate world as it helps in the production of biofuel. 3. Subsidizing farmers and implementing crop insurance system Other suggestion would be complete crop insurance and subsidizing the farmer rather than the consumer. The government must subsidize the farmers heavily, so that they are able to reduce the price of the food and it is available in the market at a cheap price rather than procuring from the farmers and selling it cheap to the public. Government needs to subsidize more initially. Better irrigation system needs to be laid out. We are good in terms of production but if an efficient system is laid out, it would be much better. Irrigation is the key. So

there has to be an increased effort on the part of the government in laying out a better infrastructure for agriculture. 4. Increasing storage facilities Government should also provide more storage facilities for the crop produced, as Indian granaries are overflowing and rotting while people who cannot afford the food are dying of hunger. We need to figure out a system through which we can store food better and process it better. 5. Tightening of agricultural credit system The agricultural credit system should be tightened so that farmers get credit only when they make informed decisions. In this way, farmers will not be in heavy debt and will not be forced to kill themselves.