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Global FINANCIAL MELTDOWN and India's Informal Economy

Rupika Khere


The global financial crisis, thought to have started in July 2007 with the credit crunch, when a loss of self confidence by US shareholders in the worthiness of sub-prime mortgages triggered a liquidity turmoil. By Sept 2008, the turmoil acquired worsened as stock marketplaces around the world crashed and became highly unstable. The crisis required a severe toll on the Indian casual market as well. The Self Employed Women's Association (SEWA) and the 'Central Trade Union' of India preferred a few key areas to examine the impact of the financial meltdown on its participants working as rag pickers or as marginal farmers. The preferred test was interviewed and examined through Fixed Group Discussions (FDGs). The overall objective of the statement is to deal with the sociable factors of living (viz. education, food intake and healthcare expenditure) being influenced by the drop in income habits and poor coping strategies of staff engaging in both these occupations. The UNDP survey critically analyses the conditions of the people involved in these occupations and also attempts to recommend appropriate policy actions from the inferences drawn from the analysis.



Agriculture is the only method of livelihood for more than two thirds of India's human population, though the sector contributes only 18 percent to the country's GDP. Agriculture also offers the largest quantity of informal workers (estimated at 98. 4 percent). Considering that a significant percentage of the indegent in India comprises of farmers with small or no landholdings, agriculture as a sector becomes an automated choice for such a study and thus forms the center of the survey. Further, rural homeowners that possessed shifted their concentration to metropolitan factories have reverted to agriculture for support. 5 districts from the express of Gujarat were targeted for inspection and an attempt for proportionate representation from different neighborhoods in the respondent account was made. For statistical convenience, 100 things were questioned and their suggestive reactions were also considered. The time of October 2008 (Diwali) was considered as the point for a comparative review of the conditions of the marginal farmers.


While hardly any of the damaged were unemployed, most experienced either trouble finding the same level of work or were working under more strict payment terms.

With the advancement of the financial meltdown, major changes were seen in the domain name of work- income proportion and the option of occupations. 52% respondents discovered that the magnitude of work at increased however the wage rate stayed pretty much the same while 43% farmers found it difficult to seek new work. The respondents were classified by income rings, and there is a visible switch in the figures towards the low income rings after Diwali. . A lot more than 80 percent respondent households reported that their financial condition (household income) worsened between Oct 2008 and March 2009. This also shows that households have been struggling to take benefit of the National Rural Employment Gurantee (NREG) plan to secure job. The FGDs disclosed many issues that had discouraged villagers from subscribing to the scheme. Aside from a general insufficient awareness of NREGS, there have been issues related to inefficient distribution of job credit cards and postpone in payments which worsened the problem further. Therefore, a new and more efficient program/policy was needed. Before understanding the impact the turmoil acquired on children's education, it's important to check out the respondents' education information. With practically 60% of the content being illiterate, the crisis got a toll on the training of their offspring and increasing the gravity of the problem.

Healthcare was damaged significantly, with homes unable to manage private health care facilities. The quantity of people reporting instances of depressive disorder, and mental and physical health problems increased as well. Cases of domestic conflicts/pressure increased marginally credited to financial complications. Fifty-two women reported such circumstances after Diwali, as against 44 in the preceding period. Respondents also tried out to slice transportation costs by shifting to public transfer. As much as 33 respondents reportedly resorted to public transportation after September 2008, as against eight in the time before. Also, more people stopped using transportation and resorted to walking.


An important and substantive part of the section of the record is focused on the suggestions and suggestions that the respondents wished to make to the Government and the NGOs. This type of an exercise was made productive through focussed group conversations (FDGs) where people have a tendency to voice their thoughts more under the realm of similar distress. Trying to generate alternatives from the view of the sect closest to the challenge would be much more successful than any program or insurance policy initiation predicated on common and evident goals of results. This is something every macroeconomist, in my view, needs to understand. Their suggestions to the federal government were as follows:

  1. Generate occupation, better income, encourage cottage market sectors (43%)
  2. Provide canal irrigation, seeds, fertilizers (30%)
  3. Provide comfort, curb inflation (14%)
  4. Provide subsidies, lending options at low rates, higher prices for produce (13%)

What this statement through the help of SEWA also does indeed is the fact it integrates neighborhoods to build up community based organizations to fortify and raise the tempo of coping strategies. For example, a solid group dominated by farmers would ensure licenses, subsidies, storage area spaces, usage of lending options and microfinance and implementation of irrigation programs. A model predicated on that of a labour union in a manufacturer which would ensure fulfilment of advancements in the work environment.

The farmers lacked the possession of an alternative solution skill which could've helped them to get jobs somewhere else (within the website of agriculture or elsewhere) to handle the problems. This phenomenon is detected across marginal occupations and SEWA has therefore brought an important advice to light. The slowdown may permit the government and other businesses to purchase skill building and organize large-scale skill-building programmes. This can be beneficial in the next ways:

  1. It will provide cash to individuals thereby reducing their current hardships
  2. The energy and time of unemployed staff could be usefully used to generate products and services of value within the programmes.
  3. It can help build a pool of multi-skilled employees able to handle such crises.

Out of the list of areas where these training programmes could be completed, I thought these would be most significant:

  1. Agricultural skills in the areas of drinking water harvesting (conservation) and seed production
  2. Agro and food processing
  3. Micro-enterprise development (Micro finance as the trust into the future). Government techniques that encourage such businesses should be increased. Specifically, access to money and credit with a gestation amount of 5-7 years at easier terms should be presented.
  4. Skills related to inexperienced and alternative renewable sources of energy, textiles and handicrafts (cottage sectors)

A good statement is one that also critiques (NOT criticizes) the prevailing reforms existing in the space of the challenge. NREGs have surfaced as the country's major employment programme. It's important to cite these tips as agriculture not only forms the heart of the statement but also the heart and soul of the entire country. With factor of the next points, this program could be made far better and useful.

  • Increasing knowing of the design among communities
  • Ironing out implementation spaces, such as irregularity in providing work to members with job cards, non-payment of work done under the NREGS, inconsistent syndication of job cards to people, and complications in procuring job cards and succeeding linkages
  • Services such as professional medical, childcare, old-age good care, hospitality, and travel and tourism
  • Works of general public interest, such as nursery raising, tree plantation, cleaning campaigns, recycling, water harvesting and tool maintenance (to be sponsored by the government)

Introducing schemes to make occupation for skilled labourers, since NREGS generally addresses the needs of unskilled labourers. (See training programs under skill development).

In conclusion from what I believe truly uplifted the weight of the statement was the initiatives taken by SEWA towards marginal farmers. Though SEWA is an NGO, it completely is aware of its role to the economy and works the function of an macroeconomist or the Government unofficially through the following:

  • Microfinance

To meet farmers' working capital needs, SEWA connected as much as 2, 736 farmers with various financing establishments, such as Loan company of Baroda, Dena Bank or investment company, State Standard bank of India and SEWA Loan company. Lending options amounting to Rs. 30, 763, 400 were disbursed to these farmers, reaching their working capital needs and lowering the occurrence of stress sales.

  • Market Linkages

In its bid to eliminate middlemen and empower makers, SEWA has tangled up with wholesale purchasers to enable immediate procurement of commodities, thereby reducing the impact of low market prices. A number of other benefits, apart from farmers being able to sell their produce at market prices have been noticed. Farmers are little by little learning to work collectively; procuring the produce from individuals, grading it, packing it and loading it onto transport vehicles. Farmers, who before relied on middlemen's evaluation about the level and price of the produce, and lacked the data to check it, is now able to value their produce themselves.


One of the main objectives of macroeconomics as a willpower is to review how government policy can reduce the frequency and seriousness of economical calamities. The UNDP survey of my choice employs a uniform framework of selection, evaluation and inference in the process of its research. As a student of macroeconomics, I solidly believe that this type of a chronological order is extremely important to adopt when the objective is to save lots of a drowning economy. Only once the conclusions of a report are systematically arranged would it not be possible to critically and microscopically analyze every single exogenous and endogenous changing presented by the statement. The job of the macroeconomist is to attempt to formulate basic theories that help to explain the data collected which is subjective of different schedules. In the report, October (the month of festivals) 2008 was decided on as the checkpoint, and the economical slowdown intensified, and the respondents were asked about various aspects of their life.

The pre 2008 and post 2008 agreement of data provides panoramic view to the macroeconomist who then carry out his job of explaining the two situations. Thus, as an example of how basic macroeconomics would function using its dependence of microeconomic rules, this report is extremely helpful. The add-on of this report as a good example of macroeconomics would be that it features the main element sectors of a casual overall economy which in a country like ours is quickly sidelined and was thus, urgently seeking help in policies that could uplift their conditions and integrate them into the economic system of the country.


South Sudan, has been the world's hottest nation increasing its independence as recent as 2011. Since it has been a new entity into the economic process, economical expansion in this country can be translated to monetary development in a number of ways, as seen in the situation of Waste material Pickers and Marginal Farmers in India. As the Global FINANCIAL MELTDOWN may not directly have struck the Indian people, its indirect outcomes have been already discussed before. Crisis has loomed South Sudan because the dawn of self-reliance, but the way that may be paved towards the economic development process as exercised in India can show good for its people:

  1. Towards securing occupation to all its residents by setting up of cooperatives as done by SEWA for the waste products pickers, to secure a flowed and reasonable standard of work.
  2. There is a dire dependence on capacity building to assure self reliance among individuals, as done by SEWA in an exceedingly systematic types of training and understanding.
  3. The establishing of various government bodies that would check out people first through method of emphasising on cultural security. This also demands lobbying (labour unions) to provide voice and visibility to the subdued voices.
  4. In the truth of farmers, since agriculture dominates South Sudanese and Indian economies, they require guidelines and initiatives that would enhance their skills and reduce the utmost reliance on agriculture, which remains on the mercy of the climate and the world market prices. They are the worst sufferers due to volatile conditions existing in the current economic climate- financial or political.
  5. In both situations of Marginal farmers and Misuse Pickers, just generating employment opportunities won't culminate into development. The enhancement of social sectors like education and health also requires urgent attention.
  6. Both economies should take a look at establishing women centric home help groups, as they are sidelined in the economic process. Their involvement through these teams can establish beneficial by making the tone of the vulnerable sections heard, and so direct policies onto this avenue.
  7. Since South Sudan is incredibly reliant on the olive oil industry, its crash sometimes appears with 98% being afflicted due to issues persisting in your community. Skill advancement and diversification becomes essential.
  8. Microfinance may also prove beneficial for the farmers, as done by SEWA. It linked as much as 2, 736 farmers with various loaning companies, such as Loan provider of Baroda, Dena Loan company, State Loan company of India and SEWA Bank. Lending options amounting to Rs. 30, 763, 400 were disbursed to these farmers, reaching their working capital needs and minimizing the occurrence of problems sales. This can showcase some type of economic development which would generate growth and so provide sustainability.
  9. Most of the people, especially the prone ones, don't have the required documents which would provide them to be beneficiaries for the many development insurance policies, thus hampering the process further. This is seen in the case of Sahebkhan Muhammadkhan Malik, of Sedla village who could not avail a loan for agricultural inputs. The federal government and different organisations should look at providing the required documents for these vulnerable sections, and thus give them an incentive to avail of federal government facilities like loans.


Economics can never be indie of interpersonal sustainability. The two must always go hand in hand to ensure a fair trade off. If either of the strands is dominant, the overall economy will get a toss. Perhaps, this is one of the main lessons that this assignment has trained me. I find the US Development Programme's statement on financial crisis and its effect on the informal sector to understand the other side of the storyplot. Where everything is so industrially oriented, these marginalized sectors of employment eventually collapse scheduled to lack of representation. As a student of macroeconomics, it's important to truly have a much larger view of the picture for a comprehensive comparative evaluation. This exercise familiarized me with the workings of economic organization which seeks to help its things. The organized order and movement when a report is planned helped me to arrange mine similarly. The article also provided deeper insights to the working of a global economic crisis and exactly how not just one sector is spared by its clutches. A thorough reading of the statement points out what aspects one must concentrate on while formulating coverage reforms to handle that crisis. In the process, an important step of understanding plan making was how you need to consider the current insurance policies from the viewpoint of those enduring or benefitting directly from them. Reading monetary studies frequently are something an interested learner of economics must develop and I will try an incorporate this sort of a behavior not only to understand economics better but to also understand the role of other cultural sciences which less difficult this technique.

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