Child Education In India Education Essay

Child Education In India Education Essay Education has continued to evolve, diversify and extend its reach and coverage since the dawn of human history. Every country develops its system of education to express and promote its unique socio-cultural identity and also to meet the challenges of the times. There are moments in history when a new direction has to be given to an age-old process. That moment is today. The country has reached a stage in its economic and technical development when a major effort must be made to derive the maximum benefit from the assets already created and to ensure that the fruits of change reach all sections. Education is the highway to that goal. Issues Prevelance of Child labour: All non-school going children are child workers in one form or the other. Agricultural child labour constitutes the core of the problem. Child labour policies and education policies have to be formulated and operated in tandem. Parents do want to send their children to be educated and poverty as a limiting factor is highly over-rated. Motivation and availability of infrastructure rather than poverty are the key factors. The paper underlines the strengths of formal education in eradicating child labour and forcefully argues for a legislation to provide for compulsory education.   The main argument against child labour and compulsory education is that it is necessary for the wellbeing of the poor as the state is unable to provide relief. The second argument, is that education would make the poor unsuited for the kind of manual work that is required to be done. The third argument is that certain industries would be forced to close down if they did not have the facility of the low wage child labour. The last argument against banning child labour and enforcing compulsory education is that the State should not be allowed to interfere in the parents rights who know what is best for their children and families. Lack of Coverage: Despite the regular expansion of the ICDS, the coverage of children for ECCE is still as low as 20 percent. This is an issue of both inadequate access and inadequate quality of service delivery. With ICDS continuing to be the main vehicle for ECCE, the GOI is proposing to expand the service further and universalize it within the next few years. While this is a welcome proposal, the risk is of expanding too fast and compromising on quality. Girl Child Education: The Indian government has expressed a strong commitment towards education for all; however, India still has one of the lowest female literacy rates in Asia. In 1991, less than 40 percent of the 330 million women aged 7 and over were literate, which means today there are over 200 million illiterate women in India. Laws Relating to Child Education in India Constitutional position of education in India While considering the various aspects of education with regard to state obligation, judicial interpretations, given to this obligation by various jurists are the primary source of learning. In the good old times, education was essentially an act of charity or philanthropy. Then, it was thought of as an occupation. Judicial dicta went so far as to consider it as an industry. Whether or not to perceive education as a fundamental right or not has been debated for a long time. The establishment and the administration of an educational institution for the imparting of knowledge to students is an occupation, protected by Article 19(1) (g) and additionally by Article 26(a), if there is no element of profit generation. Imparting education has come to be a means of livelihood for some professionals. It is considered as a mission in life for some altruists. Education was a State Subject in view of the following Entry 11, placed in List II State List:- 11. Education including universities, subject to the provisions of entries 63, 64, 65 and 66 of List I and entry 25 of List III. By the Constitution (42nd Amendment) Act 1976, the above-said Entry was directed to be deleted and instead Entry 25 in List III Concurrent List, was directed to be suitably amended so as to read as under:- 25. Education, including technical education, medical education and universities, subject to the provisions of entries 63, 64, 65 and 66 of List I; vocational and technical training of labour The Constitution of India has laid a directive before the state to make a provision of free and compulsory education for children below the age of fourteen years. 45. Provision for free and compulsory education for children: The State shall endeavor to provide, within a period of ten years from the commencement of this Constitution, for free and compulsory education for all children until they complete the age of fourteen years. However, the government has not been successful in providing adequate facilities of education for the under privileged children, located in the rural areas. The Supreme Court in the case Unnikrishnan vs. State of Andhra Pradesh (1993) ruled that the right to education is a fundamental right that flows from the right to life in Article 21 of the Constitution. Following this ruling, the 86th Constitution Amendment Act, 2002 added Article 21A, stating, The State shall provide free and compulsory education to all children of the age of six to fourteen years in such manner as the State may, by law, determine. The 86th Amendment also modified Article 45, which now reads The State shall endeavor to provide early childhood care and education for all children until they complete the age of 6 years. The state recently enacted the Right to Education Act, seeking to effect the 86th Constitutional amendment Judiciary and Education In the judgment of Unnikrishnan, a Constitution Bench of this Court framed a scheme that governs admissions to professional colleges. The main objective was to ensure that merit prevails in the matter of admissions, both in respect of what were called free seats as well as in respect of payment seats. This judgment was rendered on February 4, 1993. The scheme was to be effective from the Academic Year 1993-94 onwards. Review Petitions were filed by several institutions against the said judgment. They were dismissed by the Constitution Bench. The judgment of P.A. Inamdar and others vs. State of Maharashtra was a landmark in the field of educational law. Law reports are replete with rulings related to the education in its several aspects. Until the T.M.A Pai Foundation case, there were four oft- quoted leading cases concerning the field of education, namely, (i) Unni Krishnan v. State of Andhra Pradesh (1993) 1 SCC 645 (ii) St. Stephens College v. University of Delhi (1992)1 SCC 558 (iii) Ahmedabad St. Xaviers College Society v. State of Gujarat (1974)1 SCC 717 and (iv) Re: Kerala Education Bill, 1957, (1958) SCR 995. Right to Education Act The Right to Education Act seeks to give effect to the 86th Amendment of the Constitution of India. Salient provisions: The State shall ensure a school in every neighbourhood Every school shall conform to certain minimum standards, defined in the Bill Government schools shall provide free education to all admitted children Private schools shall admit at least 25% of children from weaker sections; no fee shall be charged to these children Screening tests at the time of admission and capitation fees are prohibited for all children Government schools will be managed by School Management The National Commission for Elementary Education shall be constituted to monitor all aspects of elementary education including quality. The Right to Education Act prescribes the Rights of Every Child as follows: Every child between the age of 6 and 14 years has the right to full-time free and compulsory education in a neighbourhood school. Non-enrolled children, of age group 7-9 years, have the right to be admitted in an age-appropriate grade within one year of the commencement of the Act, and children, of age group 9-14 years, have the right to be provided special programmes that will enable them to attend such grade within three years. Children with severe or profound disability, who are unable to attend a neighbourhood school, have the right to be provided education in an appropriate environment. A child cannot be held back in any grade or expelled from a school till Class VIII. Any expulsion requires an order of the School Management Committee (SMC), which will be given only after all other corrective measures have been exhausted, and parents/guardians have been heard. The local authority will take steps to enroll such a child in another neighbourhood school. The Act also prescribes the responsibility of the State as follows: The State shall ensure availability of a neighbourhood school for every child within three years. In case of non-availability, free transport or free residential facilities shall be provided. The state/UT government shall determine every year the requirement of schools, facilities, and their locations; establish additional schools as required; deploy teachers and create facilities for their training. The State shall develop a mechanism to monitor enrolment, participation and attainment status of every child, and take corrective steps wherever required. Information in this regard will be made available in the public domain, including on an on-line basis. School Admissions No school can conduct any screening procedure of any child or parents at the time of admission. Children will be selected for admission in a random manner. Capitation fees are prohibited. Provisions concerning School Management: All non-government schools have to be recognized by a Competent Authority or they must shut down. The Act specifies certain norms (such as teacher-student ratio, physical infrastructure etc.) to be fulfilled by all schools as a pre-requisite for being recognized. All State and aided schools are required to form School Management Committees (SMCs) with at least 75% of the members being parents/guardians, and the other members representing teachers, the community and the local authority. SMCs will manage the school, including the sanction of leave Provisions regarding Content and Process Schools and academic authorities formulating curriculum shall conform to the values enshrined in the Constitution. Schools should operate in a child- friendly and child- centred manner. No child shall be required to appear at a public examination before completing Grade VIII. Policies and Schemes Prominent Policies in the Context of Provision of Early Childhood Care and Education (ECCE) in India National Nutrition Policy (1993) which recognized children below six years as high-risk groups to be given high priority. National Policy on Empowerment of Women (2001), supported provision of childcare facilities, including crà ¨ches at work places. India also ratified Convention on Rights of the Child in 1992 and reaffirmed its commitment to children, which resulted in formulation of policy framework to prepare a National Charter for Children. National Commission for Children has also been set up. The Commission as visualized would protect/safeguard the rights of children with a strong legal base. National Plan of Action for Children (2005) included universalisation of ECCE as one of the goals. It specified care, protection and development opportunities for children below 3 years and integrated care and development and pre-school learning opportunities for 3-6 year olds. National Curriculum Framework (2005f emphasized two years of pre-schooling and considered ECCE as significant for holistic development of the child, as a preparation for schooling and as a support service for women and girls. It advocated play-based developmentally appropriate curriculum Integrated Child Development Services (ICDS) India has the distinction of having conceptualized and floated perhaps the worlds largest program for children, modeled on the definition which says that working with children means a more holistic view one of its components is child education, as early as in 1975. Known as the Integrated Child Development Services (ICDS), this program targets children, pregnant and lactating mothers and adolescent girls from a lifecycle perspective Non-formal preschool education has been one of its core components. Other Policies and Schemes à ¢Ã¢â€š ¬Ã‚ ¢ National Policy on Education, 1968 à ¢Ã¢â€š ¬Ã‚ ¢ National Policy on Education, 1986 à ¢Ã¢â€š ¬Ã‚ ¢ National Policy on Education, 1986 (As modified in 1992) à ¢Ã¢â€š ¬Ã‚ ¢ National Common Minimum Programme of the UPA Government, announced in May, 2004 Extracts relating to Education à ¢Ã¢â€š ¬Ã‚ ¢ National Curriculum Framework, 2005 à ¢Ã¢â€š ¬Ã‚ ¢ National Commission for Protection of Child Rights à ¢Ã¢â€š ¬Ã‚ ¢ Jawahar Bala Arogya Raksha à ¢Ã¢â€š ¬Ã‚ ¢ Rashtriya Madhyamik Shiksha Abhiyan (RMSA) à ¢Ã¢â€š ¬Ã‚ ¢ Incentives to Girls for Secondary Education à ¢Ã¢â€š ¬Ã‚ ¢ Information and Communication Technology in Schools (ICT @ Schools) à ¢Ã¢â€š ¬Ã‚ ¢ Primary Education Sarva Shiksha Abhiyan Suggestions Decentralized and holistic planning for children: Given Indias diversity and scale the planning process and designing of interventions for children have to be contextualized. This can only be possible through a decentralized and participatory approach to planning and implementation. The Education sector already has experience of this approach to some extent and the programs /services for younger children would need to learn from this experience and reach out to children in a more targeted and local specific mode. Priority to and Ownership of ECCE: Very recently, the total responsibility of ECCE has been shifted from Department of Education within the Ministry of Human Resource Development to a newly created Ministry of Women and Child Development. Though, it is too early to comment upon the implications of this decision, however, it is likely to generate a lot of discussion and debate about the issue of ownership and its logistic location with the education sector. Prescription vs. Practice: While, a favourable policy framework and appropriate curricular guidance is available in the country for ECCE; the reality is that there is a large gap between what is prescribed or suggested and what is practiced. In a study conducted by the NCERT (1998) it was found that almost all the ICDS centers observed adhered to teaching of 3 Rs ( reading, writing and arithmetic) and there was a virtual absence of any play activities. Typically, the activities of preschool education under ICDS are conducted for a period ranging from 45 minutes to two hours duration daily, with minimal play and learning material support and that too, largely in the absence of sufficient outdoor and indoor spaces, basic infrastructure facilities and competent workers. Preschool education in private/ public nursery schools, again, is largely a downward extension of primary education curriculum, with teachers often having no ECCE training. Training Inputs and Institutional Support: Effective preparation of teachers/service providers for ECCE is another issue, which is expected to determine quality. Corresponding to the range of ECCE programs and initiatives in India there is a variety of training provisions in ECCE, as well. These range from the two year integrated Nursery Teachers training program (NTT) which aims at preparing teachers for preschool stage (3-6 years) and for the first two grades (6-8 years) of the primary stage, In addition, the curriculum of higher/ senior secondary stage of education (+2) in Central Board of Secondary Education, National Institute of Open Schooling and many State Education Boards have also included early childhood education as an area of vocational education. Public Spending on Children: For the very first time, in the year (2004-05), the Ministry of Women and Child Development (MWCD) in Government of India undertook a child budgeting exercise to look at provisions and expenditures for children more holistically. This portends well for a more comprehensive approach towards planning and budgeting for children in the future. The public funds allocated to children are classified under four heads in the child budgeting exercise: ICDS Nutrition, Education, Health and Child Protection and others. As per the Constitution of India, child related provisions are in the concurrent list of responsibilities with the States having a prominent role in service delivery. However, most of the states spending are on recurrent items of expenditures, it is the funds which are made available through the Centrally Sponsored Schemes that provide for reform and quality improvement. Overall, there has been an increase in expenditure on children as a percentage of GNP from 2.66 % in 1993-94 to 3.26% in 2001-02 (DWCD, Annual Report, 2004-05). As indicated in Figure 13 below, in terms of relative contributions, both the central and State contributions show steady increases over time, especially since 1997-98, with the states contribution being significantly more dominant. Still the overall public expenditure is far less than it should be.

Unreachable Dreams in The Catcher in The Rye :: Catcher Rye Essays

Unreachable Dreams in The Catcher in The Rye      Ã‚   Many people find that their dreams are unreachable.   Holden Caulfield realizes this in J.D. Salinger's The Catcher in the Rye.   As Holden tells his story, he recounts the events since leaving the Pencey School to his psychiatrist.   At first, Holden sounds like a typical, misguided teenager, rebellious towards his parents, angry with his teachers, and flunking out of school.   However, as his story progresses, it becomes clear that Holden is indeed motivated, just not academically.   He has a purpose: to protect the young and innocent minds of young children from the "horrors" of adult society.   He hopes to freeze the children in time, as wax figures are frozen in a museum.   After interacting with Phoebe, his younger sister, Holden realizes that this goal is quite unachievable. Holden wants to be the Catcher in the Rye, then realizes it is an unreachable ideal.      Ã‚  Ã‚  Ã‚  Ã‚   Holden begins his story misguided and without direction.   After flunking out of the Pencey School, Holden decides to leave early.   Before he leaves, though, he visits his teacher, Mr. Spencer.   Mr. Spencer and Holden talk about his direction in life: "'Do you feel absolutely no concern for your future, boy?' 'Oh, I feel some concern for my future, all right. Sure. Sure, I do.' I thought about it for a minute. 'But not too much, I guess,'" (14).   After leaving Pencey, he checks into a hotel where he invites a prostitute up to his room.   He gets cold feet and decides not to have intercourse with her, though.   Later, Holden decides to take his old girlfriend, Sally Hayes, to the theater.   After taking her to the theater, Holden formulates a crazy plan which entails running away with Sally, getting married, and growing old together.   Sally thinks that he is crazy, and she decides to go home.   During his stay away from home, Holden drinks and smokes, showing even more misdirection.   However, when Holden returns home and talks to his sister, Phoebe, his direction becomes clear.   Ã‚  Ã‚  Ã‚  Ã‚   Holden wants to be the Catcher in the Rye to protect children from the world in which he is forced to live.   While talking with Phoebe, she asks Holden what he would like to be.   He responds saying:

What is a Distribution Channel? :: Organizations, Production, Shipping

A distribution channel is organizations joined together in the process of making products available to consumers. An effective distribution channel can help improve company sales while lowering costs. An ineffective distribution strategy can be very costly to a company and might even cause financial troubles. This paper will take a look at the logistics, production and shipping strategies of Colgate-Palmolive. This paper will also discuss the marketing channels and areas the Colgate Company can improve on. Logistics, Production and Shipping Having an effective logistics, production and shipping strategy can give companies an advantage over their competitors. Producing and getting products to customers can be costly. Having an effective strategy can help reduce costs and increase profits. Colgate works closely with suppliers in order to increase quality, cost effectiveness and innovation. The company only chooses to work with suppliers that share the same values as the Colgate-Palmolive company (Colgate, 2011). Over the years Colgate-Palmolive has had to take a look at the number of plants the company had and where those plants were located. The company sells products in over two hundred countries and has plants located in different regions around the world. Since 2004 Colgate reduced the number of plants they operated worldwide (Colgate, 2011). The company started to use contract manufacturing rather than doing its own manufacturing (Trunick, 2011). By making these changes the company has been able to control costs more and become more profitable. Products need to find a way from manufacturing plants to the customers. Colgate uses several ocean containers, truckload shipments and smaller truck shipments (Trunick, 2011). Shipping costs can be very costly. With some plants closing travel miles from the plant to the customer grew. Rising gas prices along with the extra miles caused costs to rise (Trunick, 2011). Marketing Channels According to Berry (2010) â€Å"in its most simplistic form, a marketing channel performs the work of moving goods from producers to consumers.† According to Quelch and Laidler (2011) â€Å"In 1987, traditional food stores sold 75% of oral care products, but by 1992 they accounted for only 43% of toothbrush sales and 47% of toothpaste sales.† The distribution strategy for Colgate is through large retail stores, grocery stores, drug stores, dentists and plastic surgeons. Colgate has been very successful in positioning Colgate products in store locations where they would gain customers attention (Khurana, 2010).

John Wilkes Booth and the Politics of Assassination

The reading assignment from chapter 27 from our text entitled, â€Å"John Wilkes Booth and the Politics of Assassination† written by James W. Clarke discusses the authors belief that Abraham Lincoln’s death was brought on by political ideologies and not because of mental health issues as some have widely claimed. The author believes that what were happening at that period in time were the breeding grounds for Booth’s drive to assassinate Lincoln.Clarke writes, â€Å"political context of the assassination facts such as Lincoln’s unpopularity in the North as well as in the South, the vicious opposition within his cabinet and Congress along with the controversy surrounding his re-election of 1864† (306) were the true reasons behind his motives. Clarke uses examples from Booth’s childhood as everyone viewing him with a positive view and that view was shared by many including his friends and family. He points to his happy and health childhood as f act to his mental stability.Booth’s education was exceptional and along with his aspirations of following in his fathers footsteps into acting made him a very stable and intellectual man. He was considered to have gaiety and a passion for life. Clarke goes on to discuss how at 14 Booth lost his father and soon after, 3 years, he began acting. But when he began he had very harsh reviews that were critical of his ability in acting or his inexperience. Clarke believes he took these in stride and pushed forward in earnest to make a name all his own.Because the South seemed to praise his acting abilities more than the North, some theorize that this changed his attitude and he began to favor Southerner in lifestyle and beliefs that directed him to assassinate. Clark contends that although Booth did favor Southern audiences, the Northern audiences soon began to appreciate the actor’s abilities. Clarke asserts that women loved him and men from all walks of life wanted his frie ndship because they saw him as a man with wit and magnetism.The author maintains that this is the evidence for his motives being political instead of being pathological. Political events of 1864 such as the Civil War and the horrors of that bloody war along with the hatred the nation felt for Lincoln motivated the actor. So this sympathy for the South and because of his passions of justice and duty gave way to Booth’s actions. I find this very difficult to swallow. In my eyes and from what I read, Booth was a very self centered person and a very passionate actor that helped to make him feel invincible.The proof was in Clarke’s article when over and over he kept discussing Booth’s physical attractiveness and popularity among women as well as men. I believe that in Booth’s mind the assassination was a performance and felt he would gain even more popularity by his actions. I believe Booth did have some mental issues because anyone who kills another, for what ever motives has to have some level of mental illness. I’m sure that many at the time considered killing Lincoln, but only one person actually did the act.Charlie Manson was politically motivated when he told his followers to kill, but that didn’t diminish the fact he was totally insane. The same I holds true for Booth. Many can put excuses to another person’s actions, and especially when that person has been dead for quite sometime, but the fact remains that murder is an abnormal act in society; it’s against the societal norm and anyone who kills for whatever reason has mental health issues. Reference: Roberts, R. & Olson, J. S. (1986). American Experiences. Glenview, Ill. : Scott, Foreman.

A Positive Approach to the Future

A Positive Approach Towards the Future The issue of mandatory school uniforms has taken on several debates over the past decade; it is believed that this issue will plague public schools for decades to come. Students who wear uniforms feel a sense of being superior with their fellow classmates. This feeling of being part of a group boosts morale and individual confidence, thus leading to higher grades. Children will be more focused in a uniform classroom. There is no more distraction as to what the other kids are wearing or who has the name brand shoes. Girls will be dressed appropriately and clothing will fit properly. This adds to the learning experience. There is no more competition. There is no more rivalry and the children are able to focus on their schoolwork and not on the latest trends ( Bodine 67-69). Former President Clinton made a state of the union address in 1996; in that address, the subject of mandatory school uniforms was mentioned. â€Å"If it means that teenagers will stop killing each other over designer jackets, then our public schools should be able to require their students to wear uniforms† (Williams). In fact, that year in Long Beach, California, the first district to implement mandatory uniform policies, assault dropped by sixty-seven percent, vandalism by eighty-two percent, and robbery by thirty-five percent. Overall crime was reduced by seventy-three percent the first year the policy was in place (Williams). This was a direct reflection of the uniform policy. Students were more disciplined and behaved in a more mature manner. These students took pride in themselves and others. With the lack of material items to fight over, students no longer felt the need to use aggression towards others, proving that school uniforms do in fact improve student behavior. Also when it comes to crime, a student wearing a school logo, is less apt to commit a crime outside of school while in uniform because it would be easier to track him based off of the school information on the uniform? This lowers the crime rate for the general public as well as the in school instances. Not only do mandatory uniform policies for public schools offer the potential for higher educational benefits and improved student discipline, school uniforms dissolve social boundaries between classmates. Students are no longer judged based off their appearance but by who they are on the inside. There is no more competition between social classes that these students may have otherwise felt and they work together as a team and share a common pride. All students will feel a sense of belonging. No longer will lower income children be labeled as poor based off of their clothing. All children will appear as equals in the classroom and will be treated as such. However, some may argue that uniformity takes away from the student's individuality. Many children, especially teens, express themselves through their personal styles and the way they dress. Sometimes children need to feel special or unique and dressing a certain way is how they accomplish this. Uniformity takes away from the First Amendment by taking away freedom of expression. If we take away the freedom of expression, we are taking away our children's creativity and conforming them into a society where free thinking is not accepted. However this is not the case. The uniform does not change who the child is on the inside or how he thinks creatively. Students will still be able to focus creative energy through activities such as art, music, writing or sports. There are several creative outlets besides the choice of clothing options. When it comes to our economy, we as Americans must pinch our pennies where we can. Many parents are faced with the dilemma of outfitting their children in the latest trends or putting money towards more important things like saving for their children's college education. Some families are unable to afford the popular named brand clothing that their children desires, which make the children, feel inadequate in school when they are forced to wear lesser brand clothes or second hand outfits. School uniforms would take away that hassle of finding bargains to ensure that their children feel confident in their attire. Uniforms are generally more durable than the average street clothes. Granted, the cost may be a bit more substantial in the beginning, but the uniforms will last longer which means there is less out of pocket expense for replacement articles. With uniforms, the parents may only have to purchase two or three sets compared to several pairs of bottoms and tops. Uniforms are more durable and can be washed more frequently compared to regular clothes. This makes them the better option not only for lower income families, but all families in general (Romero C4+). Critics claim that uniforms will cost the families more money in the long run because parents will be forced to buy the uniforms and regular clothing for their children to wear when they are not in school. The cost for parents may double that of just buying traditional school clothes. Although this is partly true, that yes, parents will be faced to make additional purchases for their children, in reality, they really won't be spending that much more money if any. Since uniforms are more durable, the parents only need to buy a limited supply and since the children will only be wearing their regular clothes outside of school, parents will not have to buy as many outfits. Most children wear out their clothes while in school. Since this is not an issue with the uniforms, the traditional street clothes will last longer, hence saving the parents money in the long run. Also without the constant competition in schools, children may not feel the need to have the latest brands and styles as they would if they were wearing the clothes to school on a daily basis around other social classes (King 3-5). With all of the advantages and disadvantages of implementing mandatory uniform wear into our public schools, there needs to be a compromise. Some schools have decided that it is best to make minor changes to the dress code policy. When it comes to school uniforms, there is a never-ending debate as to what the right approach and the wrong approach may be for our public schools. Works Cited Bodine,A.. aâ‚ ¬? School uniforms, academic achievement, and uses of researchaâ‚ ¬?. The Journal ofEducational Research 19 Feb. 2008: 67-73. Print. King, K. A. Should school uniforms be mandated in elementary school?. 2010: 3+. Print. Romero, E. aâ‚ ¬? School uniform countdownaâ‚ ¬?. Daily News Record, 16 Aug. 1999, C2+. Print. Williams, D. aâ‚ ¬? School uniforms: The raging debateaâ‚ ¬?. n. d. Web. 5 Aug. 2011.

Lust is Illusive Essay

Susan Minot’s short story, â€Å"Lust,† shares a tale of sexually pervading adolescent girl. The unnamed protagonist victimizes herself in fragmented recollections of sexual encounters with multiple partners. Debauchery down spirals her into a realm of self- languish. The narrator begins as a morally bankrupt adolescent and the text unravels a severely ambivalent sad teenage girl. The more of yourself that you passively give away the less of yourself you become. The protagonist is not developed by physical features. She is created by her relationships with others. Her feelings and actions also allow the reader to dig deeper into what kind of person she is. As a dynamic character she undergoes inner conflict. Once she recognizes her conflict with impulsive sexual conduct she possesses the power of change. At the beginning of the story she is emotionally vacant. When sharing she chose the objective style of storytelling. It was not the tradition style that bursts with details. With the minimal detail the narrator’s voice strengthened. Though her words are short it makes the readers anticipation grow. The quick to the point delivery gave the reader the general idea of her lifestyle. She distances herself from experiences. The narrator inconsistently tells the story in first and second person. Separating herself from the actions takes the blame off her. Dissociation shows when she describes her feelings after sex. â€Å"You make out the dim shape of the windows and feel yourself become a  cave, filled absolutely with air, or with a sadness that wouldn’t stop.† It may be possible that the narrator wants to feel nothing at all rather than sadness. Being empty with just air or with sadness is inevitable. Her hollowness engulfs all the regretted decisions. She victimizes herself to her partners. All the acts are initiated by the guys. Every guy that she mentions has the upper hand. It is about their likes and dislikes. It is never what she wants; she only wishes to please them. â€Å"You wait till they come to you [†¦] you’d do anything for them.† (282) She would do anything for them even be critiqued about her body appearance. When guys pursue her in a disrespectful manner she feels obligated to give them attention. She chooses to entertain them despite her knowledge of their intentions. She is overly dependent on males. She continues to self- victimize She does not realize that happiness is internal and to experience external happiness you have to be right within. There is a constant reference of peer pressure. She wants so badly to belong. Upon the transition of a new school everyone would like to be accepted. She is only fifteen and expressing her rebellion. She parties with the kids from school and they get into delinquent activities. She smokes cigarettes and goes and gets drunk. There is sadness the seeps through her text. She does all this as a coping mechanism to block out the spurts of sadness. With each guy there was a part of her that is lost. Male dominance is present. She compared a boy with multiple partners and a girl with multiple partners. The guy had a bright look and bloomed after every girl. He would proudly gloat about his stories and everyone would support it. There would be guys encouraging him to lure more girls for his endless stories. A girl is different, there is no shine. There is only regret. It once grew into a proud beautiful blossomed flower. Now after each boy the petals would be plucked. The flower left in sorrow hunched over surrounded with rotted petal. You were not yourself anymore. Her identity is lost. Her voice is lost. It is obsolete. The narrator is a sympathetic character. The generation of these adolescent  girls could very well identify with her. She evokes a little hope that there can be resurrected after disaster. Her actions are the reflection of an epic phase that will continue to be a struggle for generations to come. Though at first she takes no responsibility for her action she has realized that maybe she is the cause of her dissatisfying life. This story is a great coming of age example of arbitrary conquests and its outcome on teenage girls. She puts the nonchalance attitude to the side and voices her thoughts. Towards the end of the story the paragraphs become emotionally synced and detailed. Now you know her thoughts and she feels used, tired, cheated. The reader is left without a denouement of satisfaction. The narrative is concluded with unsettling sentences of the disappearance of herself. There is only speculation that she resigns after the conscious discovery of her tragic emotional state.

Recession in India Essay

We have compiled the said report which helps in understanding what corrective steps were taken which helped the banks to emerge out of the turmoil. Financial Crisis The financial crisis of 2007 to the present is a crisis triggered by a liquidity shortfall in the United States banking system caused by the overvaluation of assets. It has resulted in the collapse of large financial institutions, the bailout of banks by national governments and downturns in stock markets around the world. In many areas, the housing market has also suffered, resulting in numerous evictions, foreclosures and prolonged vacancies. It is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of U. S. dollars, substantial financial commitments incurred by governments, and a significant decline in economic activity. Many causes have been suggested, with varying weight assigned by experts. Both market-based and regulatory solutions have been implemented or are under consideration, while significant risks remain for the world economy over the 2010–2011 periods. The collapse of a global housing bubble, which peaked in the U. S. in 2006, caused the values of securities tied to real estate pricing to plummet thereafter, damaging financial institutions globally. Questions regarding bank solvency, declines in credit availability, and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during late 2008 and early 2009. Economies worldwide slowed during this period as credit tightened and international trade declined. Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st century financial markets. Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion, and institutional bailouts. | Background and causes The immediate cause or trigger of the crisis was the bursting of the United States housing bubble which peaked in approximately 2005–2006. Already-rising default rates on â€Å"subprime† and adjustable rate mortgages (ARM) began to increase quickly thereafter. An increase in loan packaging, marketing and incentives such as easy initial terms and a long-term trend of rising housing prices had encouraged borrowers to assume difficult mortgages in the belief they would be able to quickly refinance at more favorable terms. However, once interest rates began to rise and housing prices started to drop moderately in 2006–2007 in many parts of the U. S. , refinancing became more difficult. Defaults and foreclosure activity increased dramatically as easy initial terms expired, home prices failed to go up as anticipated, and ARM interest rates reset higher. Share in GDP of U. S. financial sector since 1860 Low interest rates and large inflows of foreign funds created easy credit conditions for a number of years prior to the crisis, fueling a housing construction boom and encouraging debt-financed consumption. The combination of easy credit and money inflow contributed to the United States housing bubble. Loans of various types (e. g. mortgage, credit card, and auto) were easy to obtain and consumers assumed an unprecedented debt load. As part of the housing and credit booms, the number of financial agreements called mortgage-backed securities (MBS) and collateralized debt obligations (CDO), which derived their value from mortgage payments and housing prices, greatly increased. Such financial innovation enabled institutions and investors around the world to invest in the U. S. housing market. As housing prices declined, major global financial institutions that had borrowed and invested heavily in subprime MBS reported significant losses. Falling prices also resulted in homes worth less than the mortgage loan, providing a financial incentive to enter foreclosure. The ongoing foreclosure epidemic that began in late 2006 in the U. S. continues to drain wealth from consumers and erodes the financial strength of banking institutions. Defaults and losses on other loan types also increased significantly as the crisis expanded from the housing market to other parts of the economy. Total losses are estimated in the trillions of U. S. dollars globally. While the housing and credit bubbles built, a series of factors caused the financial system to both expand and become increasingly fragile, a process called financialization. Policymakers did not recognize the increasingly important role played by financial institutions such as investment banks and hedge funds, also known as the shadow banking system. Some experts believe these institutions had become as important as commercial (depository) banks in providing credit to the U. S. economy, but they were not subject to the same regulations. These institutions as well as certain regulated banks had also assumed significant debt burdens while providing the loans described above and did not have a financial cushion sufficient to absorb large loan defaults or MBS losses. These losses impacted the ability of financial institutions to lend, slowing economic activity. Concerns regarding the stability of key financial institutions drove central banks to provide funds to encourage lending and restore faith in the commercial paper markets, which are integral to funding business operations. Governments also bailed out key financial institutions and implemented economic stimulus programs, assuming significant additional financial commitments. The crises culminated on Sept. 15th 2008 with Lehman Brothers filing for bankruptcy. It has been reported that JP Morgan helped drive Lehman into bankruptcy and kicked off the credit crises by forcing it to give up billions in cash reserves on the afternoon of Friday September 13, 2008. Growth of the housing bubble Main article: United States housing bubble A graph showing the median and average sales prices of new homes sold in the United States between 1963 and 2008 (not adjusted for inflation) Between 1997 and 2006, the price of the typical American house increased by 124%. During the two decades ending in 2001, the national median home price ranged from 2. 9 to 3. 1 times median household income. This ratio rose to 4. 0 in 2004, and 4. 6 in 2006. This housing bubble resulted in quite a few homeowners refinancing their homes at lower interest rates, or financing consumer spending by taking out second mortgages secured by the price appreciation. In a Peabody Award winning program, NPR correspondents argued that a â€Å"Giant Pool of Money† (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U. S. Treasury bonds early in the decade. Further, this pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with the MBS and CDO, which were assigned safe ratings by the credit rating agencies. In effect, Wall Street connected this pool of money to the mortgage market in the U. S. , with enormous fees accruing to those throughout the mortgage supply chain, from the mortgage broker selling the loans, to small banks that funded the brokers, to the giant investment banks behind them. By approximately 2003, the supply of mortgages originated at traditional lending standards had been exhausted. However, continued strong demand for MBS and CDO began to drive down lending standards, as long as mortgages could still be sold along the supply chain. Eventually, this speculative bubble proved unsustainable. The CDO in particular enabled financial institutions to obtain investor funds to finance subprime and other lending, extending or increasing the housing bubble and generating large fees. A CDO essentially places cash payments from multiple mortgages or other debt obligations into a single pool, from which the cash is allocated to specific securities in a priority sequence. Those securities obtaining cash first received investment-grade ratings from rating agencies. Lower priority securities received cash thereafter, with lower credit ratings but theoretically a higher rate of return on the amount invested. By September 2008, average U. S. housing prices had declined by over 20% from their mid-2006 peak. As prices declined, borrowers with adjustable-rate mortgages could not refinance to avoid the higher payments associated with rising interest rates and began to default. During 2007, lenders began foreclosure proceedings on nearly 1. 3 million properties, a 79% increase over 2006. This increased to 2. 3 million in 2008, an 81% increase vs. 2007. By August 2008, 9. 2% of all U. S. mortgages outstanding were either delinquent or in foreclosure. By September 2009, this had risen to 14. 4%. Easy credit conditions Lower interest rates encourage borrowing. From 2000 to 2003, the Federal Reserve lowered the federal funds rate target from 6. 5% to 1. 0%. [31] This was done to soften the effects of the collapse of the dot-com bubble and of the September 2001 terrorist attacks, and to combat the perceived risk of deflation. [32] U. S. current account or trade deficit Additional downward pressure on interest rates was created by the USA’s high and rising current account (trade) deficit, which peaked along with the housing bubble in 2006. Ben Bernanke explained how trade deficits required the U. S. to borrow money from abroad, which bid up bond prices and lowered interest rates. Bernanke explained that between 1996 and 2004, the USA current account deficit increased by $650 billion, from 1. 5% to 5. 8% of GDP. Financing these deficits required the USA to borrow large sums from abroad, much of it from countries running trade surpluses, mainly the emerging economies in Asia and oil-exporting nations. The balance of payments identity requires that a country (such as the USA) running a current account deficit also have a capital account (investment) surplus of the same amount. Hence large and growing amounts of foreign funds (capital) flowed into the USA to finance its imports. This created demand for various types of financial assets, raising the prices of those assets while lowering interest rates. Foreign investors had these funds to lend, either because they had very high personal savings rates (as high as 40% in China), or because of high oil prices. Bernanke referred to this as a â€Å"saving glut. † A â€Å"flood† of funds (capital or liquidity) reached the USA financial markets. Foreign governments supplied funds by purchasing USA Treasury bonds and thus avoided much of the direct impact of the crisis. USA households, on the other hand, used funds borrowed from foreigners to finance consumption or to bid up the prices of housing and financial assets. Financial institutions invested foreign funds in mortgage-backed securities. The Fed then raised the Fed funds rate significantly between July 2004 and July 2006. This contributed to an increase in 1-year and 5-year adjustable-rate mortgage (ARM) rates, making ARM interest rate resets more expensive for homeowners. This may have also contributed to the deflating of the housing bubble, as asset prices generally move inversely to interest rates and it became riskier to speculate in housing. USA housing and financial assets dramatically declined in value after the housing bubble burst. Sub-prime lending U. S. subprime lending expanded dramatically 2004-2006 The term subprime refers to the credit quality of particular borrowers, who have weakened credit histories and a greater risk of loan default than prime borrowers. The value of U. S. subprime mortgages was estimated at $1. 3 trillion as of March 2007, with over 7. 5 million first-lien subprime mortgages outstanding. In addition to easy credit conditions, there is evidence that both government and competitive pressures contributed to an increase in the amount of subprime lending during the years preceding the crisis. Major U. S. investment banks and government sponsored enterprises like Fannie Mae played an important role in the expansion of higher-risk lending. Subprime mortgages remained below 10% of all mortgage originations until 2004, when they spiked to nearly 20% and remained there through the 2005-2006 peak of the United States housing bubble. A proximate event to this increase was the April 2004 decision by the U. S. Securities and Exchange Commission (SEC) to relax the net capital rule, which permitted the largest five investment banks to dramatically increase their financial leverage and aggressively expand their issuance of mortgage-backed securities. This applied additional competitive pressure to Fannie Mae and Freddie Mac, which further expanded their riskier lending. Subprime mortgage payment delinquency rates remained in the 10-15% range from 1998 to 2006, then began to increase rapidly, rising to 25% by early 2008. Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people†¦ In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s. A 2000 United States Department of the Treasury study of lending trends for 305 cities from 1993 to 1998 showed that $467 billion of mortgage credit poured out of Community Reinvestment Act (CRA)-covered lenders into low and mid level income borrowers and neighborhoods. Nevertheless, only 25% of all sub-prime lending occurred at CRA-covered institutions, and a full 50% of sub-prime loans originated at institutions exempt from CRA. While the number of CRA sub-prime loans originated were less than non-CRA sub-prime loans originated, it is important to note that the CRA sub-prime loans were the more â€Å"vulnerable during the downturn, to the detriment of both borrowers and lenders. For example, lending done under Community Reinvestment Act criteria, according to a quarterly report in October of 2008, constituted only 7 percent of the total mortgage lending by the Bank of America, but constituted 29 percent of its losses on mortgages. Economist Paul Krugman argued in January 2010 that the simultaneous growth of the residential and commercial real estate pricing bubbles undermines the case made by those who argue that Fannie Mae, Freddie Mac, CRA or predatory lending were primary causes of the crisis. In other words, bubbles in both markets developed even though only the residential market was affected by these potential causes. Predatory lending Predatory lending refers to the practice of unscrupulous lenders, to enter into â€Å"unsafe† or â€Å"unsound† secured loans for inappropriate purposes. A classic bait-and-switch method was used by Countrywide, advertising low interest rates for home refinancing. Such loans were written into extensively detailed contracts, and swapped for more expensive loan products on the day of closing. Whereas the advertisement might state that 1% or 1. 5% interest would be charged, the consumer would be put into an adjustable rate mortgage (ARM) in which the interest charged would be greater than the amount of interest paid. This created negative amortization, which the credit consumer might not notice until long after the loan transaction had been consummated. Countrywide, sued by California Attorney General Jerry Brown for â€Å"Unfair Business Practices† and â€Å"False Advertising† was making high cost mortgages â€Å"to homeowners with weak credit, adjustable rate mortgages (ARMs) that allowed homeowners to make interest-only payments. â€Å". When housing prices decreased, homeowners in ARMs then had little incentive to pay their monthly payments, since their home equity had disappeared. This caused Countrywide’s financial condition to deteriorate, ultimately resulting in a decision by the Office of Thrift Supervision to seize the lender. Former employees from Ameriquest, which was United States’s leading wholesale lender,[60] described a system in which they were pushed to falsify mortgage documents and then sell the mortgages to Wall Street banks eager to make fast profits. [60] There is growing evidence that such mortgage frauds may be a cause of the crisis. [60] Deregulation Further information: Government policies and the subprime mortgage crisis Critics have argued that the regulatory framework did not keep pace with financial innovation, such as the increasing importance of the shadow banking system, derivatives and off-balance sheet financing. In other cases, laws were changed or enforcement weakened in parts of the financial system. Key examples include: * Jimmy Carter’s Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) phased out a number of restrictions on banks’ financial practices, broadened their lending powers, and raised the deposit insurance limit from $40,000 to $100,000 (raising the problem of moral hazard). Banks rushed into real estate lending, speculative lending, and other ventures just as the economy soured. * In October 1982, U. S. President Ronald Reagan signed into Law the Garn–St. Germain Depository Institutions Act, which provided for adjustable-rate mortgage loans, began the process of banking deregulation, and contributed to the savings and loan crisis of the late 1980s/early 1990s. * In November 1999, U. S. President Bill Clinton signed into Law the Gramm-Leach-Bliley Act, which repealed part of the Glass-Steagall Act of 1933. This repeal has been criticized for reducing the separation between commercial banks (which traditionally had a conservative culture) and investment banks (which had a more risk-taking culture). In 2004, the U. S. Securities and Exchange Commission relaxed the net capital rule, which enabled investment banks to substantially increase the level of debt they were taking on, fueling the growth in mortgage-backed securities supporting subprime mortgages. The SEC has conceded that self-regulation of investment banks contributed to the crisis. * Financial institutions in the shadow banking system are not subject to the same regulation as d epository banks, allowing them to assume additional debt obligations relative to their financial cushion or capital base. This was the case despite the Long-Term Capital Management debacle in 1998, where a highly-leveraged shadow institution failed with systemic implications. * Regulators and accounting standard-setters allowed depository banks such as Citigroup to move significant amounts of assets and liabilities off-balance sheet into complex legal entities called structured investment vehicles, masking the weakness of the capital base of the firm or degree of leverage or risk taken. One news agency estimated that the top four U. S. banks will have to return between $500 billion and $1 trillion to their balance sheets during 2009. This increased uncertainty during the crisis regarding the financial position of the major banks. Off-balance sheet entities were also used by Enron as part of the scandal that brought down that company in 2001. * As early as 1997, Federal Reserve Chairman Alan Greenspan fought to keep the derivatives market unregulated. With the advice of the President’s Working Group on Financial Markets, the U. S. Congress and President allowed the self-regulation of the over-the-counter derivatives market when they enacted the Commodity Futures Modernization Act of 2000. Derivatives such as credit default swaps (CDS) can be used to hedge or speculate against particular credit risks. The volume of CDS outstanding increased 100-fold from 1998 to 2008, with estimates of the debt covered by CDS contracts, as of November 2008, ranging from US$33 to $47 trillion. Total over-the-counter (OTC) derivative notional value rose to $683 trillion by June 2008. Warren Buffett famously referred to derivatives as â€Å"financial weapons of mass destruction† in early 2003. Increased debt burden or over-leveraging Leverage ratios of investment banks increased significantly 2003-2007 U. S. households and financial institutions became increasingly indebted or overleveraged during the years preceding the crisis. This increased their vulnerability to the collapse of the housing bubble and worsened the ensuing economic downturn. Key statistics include: * Free cash used by consumers from home equity extraction doubled from $627 billion in 2001 to $1,428 billion in 2005 as the housing bubble built, a total of nearly $5 trillion dollars over the period, contributing to economic growth worldwide. U. S. home mortgage debt relative to GDP increased from an average of 46% during the 1990s to 73% during 2008, reaching $10. 5 trillion. * USA household debt as a percentage of annual disposable personal income was 127% at the end of 2007, versus 77% in 1990. * In 1981, U. S. rivate debt was 123% of GDP; by the third quarter of 2008, it was 290%. * From 2004-07, the top five U. S. investment banks each significantly increased their financial leverage (see diagram), which increased their vulnerability to a financial shock. These five institutions reported over $4. 1 trillion in debt for fiscal year 2007, about 30% of USA nominal GDP for 2007. Lehman Brothers was liquidated, Bear Stearns and Merrill Lynch were sold at fir e-sale prices, and Goldman Sachs and Morgan Stanley became commercial banks, subjecting themselves to more stringent regulation. With the exception of Lehman, these companies required or received government support. * Fannie Mae and Freddie Mac, two U. S. Government sponsored enterprises, owned or guaranteed nearly $5 trillion in mortgage obligations at the time they were placed into conservatorship by the U. S. government in September 2008. These seven entities were highly leveraged and had $9 trillion in debt or guarantee obligations, an enormous concentration of risk; yet they were not subject to the same regulation as depository banks. Boom and collapse of the shadow banking system In a June 2008 speech, President and CEO of the New York Federal Reserve Bank Timothy Geithner  Ã¢â‚¬â€ who in 2009 became Secretary of the United States Treasury  Ã¢â‚¬â€ placed significant blame for the freezing of credit markets on a â€Å"run† on the entities in the â€Å"parallel† banking system, also called the shadow banking system. These entities became critical to the credit markets underpinning the financial system, but were not subject to the same regulatory controls. Further, these entities were vulnerable because of maturity mismatch, meaning that they borrowed short-term in liquid markets to purchase long-term, illiquid and risky assets. This meant that disruptions in credit markets would make them subject to rapid deleveraging, selling their long-term assets at depressed prices. He described the significance of these entities: In early 2007, asset-backed commercial paper conduits, in structured investment vehicles, in auction-rate preferred securities, tender option bonds and variable rate demand notes, had a combined asset size of roughly $2. trillion. Assets financed overnight in triparty repo grew to $2. 5 trillion. Assets held in hedge funds grew to roughly $1. 8 trillion. The combined balance sheets of the then five major investment banks totaled $4 trillion. In comparison, the total assets of the top five bank holding companies in the United States at that point were just over $6 trillion, and total assets of the entire banking system we re about $10 trillion. The combined effect of these factors was a financial system vulnerable to self-reinforcing asset price and credit cycles. Paul Krugman, laureate of the Nobel Prize in Economics, described the run on the shadow banking system as the â€Å"core of what happened† to cause the crisis. He referred to this lack of controls as â€Å"malign neglect† and argued that regulation should have been imposed on all banking-like activity. Financial markets impacts Impacts on financial institutions 2007 bank run on Northern Rock, a UK bank The International Monetary Fund estimated that large U. S. and European banks lost more than $1 trillion on toxic assets and from bad loans from January 2007 to September 2009. These losses are expected to top $2. 8 trillion from 2007-10. U. S. banks losses were forecast to hit $1 trillion and European bank losses will reach $1. 6 trillion. The IMF estimated that U. S. banks were about 60 percent through their losses, but British and eurozone banks only 40 percent. One of the first victims was Northern Rock, a medium-sized British bank. The highly leveraged nature of its business led the bank to request security from the Bank of England. This in turn led to investor panic and a bank run in mid-September 2007. Calls by Liberal Democrat Shadow Chancellor Vince Cable to nationalise the institution were initially ignored; in February 2008, however, the British government (having failed to find a private sector buyer) relented, and the bank was taken into public hands. Northern Rock’s problems proved to be an early indication of the troubles that would soon befall other banks and financial institutions. Initially the companies affected were those directly involved in home construction and mortgage lending such as Northern Rock and Countrywide Financial, as they could no longer obtain financing through the credit markets. Over 100 mortgage lenders went bankrupt during 2007 and 2008. Concerns that investment bank Bear Stearns would collapse in March 2008 resulted in its fire-sale to JP Morgan Chase. The crisis hit its peak in September and October 2008. Several major institutions either failed, were acquired under duress, or were subject to government takeover. These included Lehman Brothers, Merrill Lynch, Fannie Mae, Freddie Mac, Washington Mutual, Wachovia, and AIG. Credit markets and the shadow banking system TED spread and components during 2008 During September 2008, the crisis hit its most critical stage. There was the equivalent of a bank run on the money market mutual funds, which frequently invest in commercial paper issued by corporations to fund their operations and payrolls. Withdrawals from money markets were $144. 5 billion during one week, versus $7. 1 billion the week prior. This interrupted the ability of corporations to rollover (replace) their short-term debt. The U. S. government responded by extending insurance for money market accounts analogous to bank deposit insurance via a temporary guarantee and with Federal Reserve programs to purchase commercial paper. The TED spread, an indicator of perceived credit risk in the general economy, spiked up in July 2007, remained volatile for a year, then spiked even higher in September 2008, reaching a record 4. 65% on October 10, 2008. In a dramatic meeting on September 18, 2008, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke met with key legislators to propose a $700 billion emergency bailout. Bernanke reportedly told them: â€Å"If we don’t do this, we may not have an economy on Monday. † The Emergency Economic Stabilization Act, which implemented the Troubled Asset Relief Program (TARP), was signed into law on October 3, 2008. Economist Paul Krugman and U. S. Treasury Secretary Timothy Geithner explain the credit crisis via the implosion of the shadow banking system, which had grown to nearly equal the importance of the traditional commercial banking sector as described above. Without the ability to obtain investor funds in exchange for most types of mortgage-backed securities or asset-backed commercial paper, investment banks and other entities in the shadow banking system could not provide funds to mortgage firms and other corporations. This meant that nearly one-third of the U. S. lending mechanism was frozen and continued to be frozen into June 2009. According to the Brookings Institution, the traditional banking system does not have the capital to close this gap as of June 2009: â€Å"It would take a number of years of strong profits to generate sufficient capital to support that additional lending volume. † The authors also indicate that some forms of securitization are â€Å"likely to vanish forever, having been an artifact of excessively loose credit conditions. While traditional banks have raised their lending standards, it was the collapse of the shadow banking system that is the primary cause of the reduction in funds available for borrowing. Global effects A number of commentators have suggested that if the liquidity crisis continues, there could be an extended recession or worse. The continuing development of the crisis has prompted in some quarters fears of a global economic collapse although the re are now many cautiously optimistic forecasters in addition to some prominent sources who remain negative. The financial crisis is likely to yield the biggest banking shakeout since the savings-and-loan meltdown. Investment bank UBS stated on October 6 that 2008 would see a clear global recession, with recovery unlikely for at least two years. Three days later UBS economists announced that the â€Å"beginning of the end† of the crisis had begun, with the world starting to make the necessary actions to fix the crisis: capital injection by governments; injection made systemically; interest rate cuts to help borrowers. The United Kingdom had started systemic injection, and the world’s central banks were now cutting interest rates. UBS emphasized the United States needed to implement systemic injection. UBS further emphasized that this fixes only the financial crisis, but that in economic terms â€Å"the worst is still to come†. UBS quantified their expected recession durations on October 16: the Eurozone’s would last two quarters, the United States’ would last three quarters, and the United Kingdom’s would last four quarters. The economic crisis in Iceland involved all three of the country’s major banks. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history. At the end of October UBS revised its outlook downwards: the forthcoming recession would be the worst since the Reagan recession of 1981 and 1982 with negative 2009 growth for the U. S. , Eurozone, UK; very limited recovery in 2010; but not as bad as the Great Depression. The Brookings Institution reported in June 2009 that U. S. consumption accounted for more than a third of the growth in global consumption between 2000 and 2007. â€Å"The US economy has been spending too much and borrowing too much for years and the rest of the world depended on the U. S. consumer as a source of global demand. With a recession in the U. S. and the increased savings rate of U. S. consumers, declines in growth elsewhere have been dramatic. For the first quarter of 2009, the annualized rate of decline in GDP was 14. 4% in Germany, 15. 2% in Japan, 7. 4% in the UK, 18% in Latvia, 9. 8% in the Euro area and 21. 5% for Mexico. Some developing countries that had seen strong economic growth saw significan t slowdowns. For example, growth forecasts in Cambodia show a fall from more than 10% in 2007 to close to zero in 2009, and Kenya may achieve only 3-4% growth in 2009, down from 7% in 2007. According to the research by the Overseas Development Institute, reductions in growth can be attributed to falls in trade, commodity prices, investment and remittances sent from migrant workers (which reached a record $251 billion in 2007, but have fallen in many countries since). The has stark implications and has led to a dramatic rise in the number of households living below the poverty line, be it 300,000 in Bangladesh or 230,000 in Ghana. By March 2009, the Arab world had lost $3 trillion due to the crisis. In April 2009, unemployment in the Arab world is said to be a ‘time bomb’. In May 2009, the United Nations reported a drop in foreign investment in Middle-Eastern economies due to a slower rise in demand for oil. In June 2009, the World Bank predicted a tough year for Arab states. In September 2009, Arab banks reported losses of nearly $4 billion since the onset of the global financial crisis. U. S. economic effects Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of approximately 6 percent in the fourth quarter of 2008 and first quarter of 2009, versus activity in the year-ago periods. The U. S. unemployment rate increased to 10. 1% by October 2009, the highest rate since 1983 and roughly twice the pre-crisis rate. The average hours per work week declined to 33, the lowest level since the government began collecting the data in 1964. Effects of Recession on India There is, at least in some quarters, dismay that India has been hit by the crisis. This dismay stems from two arguments. The Indian banking system has had no direct exposure to the sub-prime mortgage assets or to the failed institutions. It has very limited off-balance sheet activities or securitized assets. In fact, our banks continue to remain safe and healthy. So, the enigma is how can India be caught up in a crisis when it has nothing much to do with any of the maladies that are at the core of the crisis. The second reason for dismay is that India’s recent growth has been driven predominantly by domestic consumption and domestic investment. External demand, as measured by merchandize exports, accounts for less than 15 per cent of our GDP. The question then is, even if there is a global downturn, why should India be affected when its dependence on external demand is so limited? The answer to the above frequently-asked questions lies in globalization. First, India’s integration into the world economy over the last decade has been remarkably rapid. Integration into the world implies more than just exports. Going by the common measure of globalization, India’s two-way trade (merchandize exports plus imports), as a proportion of GDP, grew from 21. 2 per cent in 1997-98, the year of the Asian crisis, to 34. 7 per cent in 2007-08. Second, India’s financial integration with the world has been as deep as India’s trade globalization, if not deeper. If we take an expanded measure of globalization, that is the ratio of total external transactions (gross current account flows plus gross capital flows) to GDP, this ratio has more than doubled from 46. 8 per cent in 1997-98 to 117. 4 per cent in 2007-08. Importantly, the Indian corporate sector’s access to external funding has markedly increased in the last five years. Some numbers will help illustrate the point. In the five-year period 2003-08, the share of investment in India’s GDP rose by 11 percentage points. Corporate savings financed roughly half of this, but a significant portion of the balance financing came from external sources. While funds were available domestically, they were expensive relative to foreign funding. On the other hand, in a global market awash with liquidity and on the promise of India’s growth potential, foreign investors were willing to take risks and provide funds at a lower cost. Last year (2007/08), for example, India received capital inflows amounting to over 9 per cent of GDP as against a current account deficit in the balance of payments of just 1. 5 per cent of GDP. These capital flows, in excess of the current account deficit, evidence the importance of external financing and the depth of India’s financial integration. So, the reason India has been hit by the crisis, despite mitigating factors, is clearly India’s rapid and growing integration into the global economy. The contagion of the crisis has spread to India through all the channels – the financial channel, the real channel, and importantly, as happens in all financial crises, the confidence channel. India’s financial markets – equity markets, money markets, forex markets and credit markets – had all come under pressure from a number of directions. First, as a consequence of the global liquidity squeeze, Indian banks and corporates found their overseas financing drying up, forcing corporates to shift their credit demand to the domestic banking sector. Also, in their frantic search for substitute financing, corporates withdrew their investments from domestic money market mutual funds putting redemption pressure on the mutual funds and down the line on non-banking financial companies (NBFCs) where the MFs had invested a significant portion of their funds. This substitution of overseas financing by domestic financing brought both money markets and credit markets under pressure. Second, the forex market came under pressure because of reversal of capital flows as part of the global deleveraging process. Simultaneously, corporates were converting the funds raised locally into foreign currency to meet their external obligations. Both these factors put downward pressure on the rupee. Third, the Reserve Bank’s intervention in the forex market to manage the volatility in the rupee further added to liquidity tightening. The transmission of the global cues to the domestic economy has been quite straight forward – through the slump in demand for exports. The United States, European Union and the Middle East, which account for three quarters of India’s goods and services trade are in a synchronized down turn. Service export growth is also likely to slow in the near term as the recession deepens and financial services firms – traditionally large users of outsourcing services – are restructured. Remittances from migrant workers too are likely to slow as the Middle East adjusts to lower crude prices and advanced economies go into a recession. Beyond the financial and real channels of transmission as above, the crisis also spread through the confidence channel. In sharp contrast to global financial markets, which went into a seizure on account of a crisis of confidence, Indian financial markets continued to function in an orderly manner. Nevertheless, the tightened global liquidity situation in the period immediately following the Lehman failure in mid-September 2008, coming as it did on top of a turn in the credit cycle, increased the risk aversion of the financial system and made banks cautious about lending. The purport of the above explanation is to show how, despite not being part of the financial sector problem, India has been affected by the crisis through the pernicious feedback loops between external shocks and domestic vulnerabilities by way of the financial, real and confidence channels. Effect on Banks The actual effect of recession was only realised in February 2008 in Banking Industry. Before this there were lot of questions and queries regarding whether the U. S. recession will have any impact on India or Indian banking sector. In Feb 2008, the markets suddenly crashed the actual picture came in front. The effects which came across the banking sector are as follow * Credit Card and loan settlements. As soon as the impact of recession was realized by the banking sector, the Indian banking system came into the mode of consolidation. Each and every bank started reviewing their NPA’s and the amount of lending they have done which is yet to be recovered. Bank concentrated more on retail loans and Credit Card payments. The first priority for bank was to recover such amount which was unpaid from their customers. The banks hired external agencies for calling up clients and requesting them to settle their respective dues. This in turn created a panic in the customers mind. The banks in order to recover their dues and make the process fast provided attractive offers to its customers. For e. g. By settling the entire amount by cash there were discounts which were given amounting to about 5% of the entire due amount. * Call money market. In the initial stages of recession there was lot of demand for short term cash amongst the bank as the bank needed to fulfil the requirement of CRR and SLR. The money which was lended by the bank were taking time to recover and therefore there was a sudden requirement of short term money. The interest rate which were use to be at 5-6% grow up to 14-15% for a time period of 11-15 days. These requirements by few banks were enchased fully by other banks which were low on lending. The banks like ING Vysya bank, Yes Bank, IDBI Bank were amongst the few who were lending through call money market to other banks. * Fixed Deposit Rates Before recession hit the market FD rates were at a sky high level. Lot of private sector banks as well as public sector banks were offering interest rates in long term period upto 11-12%. When the recession kicked in the money demand for long term had almost finished. This was because of the reason that banks were in the mode of consolidation and did not want to lend further till the time most of the money was recovered. The bank deposit rates came down to a level of 6-7% as there was ample liquidity in the banking sector because of funds being not given ahead as loans. * Private banks became unpopular. During recession looking at the bankruptcy of foreign banks there was panic in the mind of investors even in india. There were lot of question that were raised whether the private sector banks who take exposure in foreign securities are safe in investing or not. During this period only there was a news which came for ICICI Bank. ICICI Bank had taken direct exposures in securities which issued by Lehman Brothers and Merill Lynch. In fact even few of public sector banks had taken similar exposures but since public sector banks were backed up by the government, there was a comfort factor amongst the investors. If we look at what happened with ICICI Bank, the liquidity was ample and it was just a few percentage of exposure that has gone as bad debt but other private marked players like HDFC Bank and Kotak Mahindra Bank encashed on these opportunities and placed their canopies next to each and every branch and ATM of ICICI Bank. There was a lot of panic which was created within the investors and they wanted to park their funds in a safer bank. Many of them shifted to nationalized banks and others were diverted to other private banks. This not only hampered the image of ICICI Bank but also created a bad image of Indian Private Banks. They were much difficulties which were faced by these banks to get additional deposits from investors and even retain theri clients who were shifting toward nationalised banks. * Diversifying and churning of funds. While the recession was impacting the country and the banking system there were informations that were given to the investors that the government insures on Rs. 1 lakh for any particular individual. This was misinterpreted by lot of investors in what they believed was with respect to one particular bank. With these being public diversification started. Each investor to safeguard his/her money started opening many accounts in different banks and keeping the funds equal in all. There was a lot of churning which happened from private sector banks to public sector banks as there were lot of uncertainity about funds being saved in a private sector bank. Investor created portfolios in different nationalised banks because of which private sector banks faced decline in their interest earnings as well as corpus and faced losses. After a while this myth was broken by RBI governor that the government only ensures Rs. lakh in totality no matter how many banks an investor has. * Lending Choked. The banks private sector as well as public sector were uncertain with what more negative impact were forthcoming. This resulted in, banks not at all lending to retail and corporate which were related to infrastructure or real estate. The cycle of churning of funds had suddenly stopped. Many projects which were about to start or were half way completed we re forced to put their projects on hold as no additional funds were being provided. This created commotion in real estate market which resulted in decline of prices. Even on retail side many of the housing loans were rejected which propelled the negativity more. Even for Large Cap companies the banks were demanding additional securities in cash apart from normal tangible assets. Even for processing loans for investors who had excellent credit history, the banks put ahead lot of extra conditions and terms. This further created panic and investors postponed their financial goals and loans were not applied for. After a while many loan divisions of banks were shut down and the employees were shifted to other departments were asked to leave. This even further increased the liquidity with banks. * Banks Investment Primary earning for any bank is through lending. Loans were not being processed and since the banks were uncertain of what more negative impact will come the banks were desperately looking out for other avenues to make money. The most safest option available with banks was to invest in G-Secs (Government of India Securities). Many banks started heavily into govt. Securities and bonds. These securities were traded quite highly at that period. Other sources including were through reverse repo and short term lending to different banks. During this time period much more focus was given to income from wealth management as markets has been corrected and banks insisted on educating the investors to park their funds in the equity market. Though the banks were heavily investing in G-Secs and other bonds it was not enough for their survival. Sooner or later the banks had to lend where they make the maximum profit. * Unemployment During the time of recession many jobs were lost in all the sectors. The similar effect was seen in banking but it was not in totality but few departments specific. The maximum hits were taken by two divisions which suffered most during the recession time. The first being the Wealth management division of banks. Though the feeling was correct that the markets have come down and valuations are excellent, it was very difficult convincing the investors. This resulted in many job losses in wealth management department of all the banks as revenue was expected which was not possible to generate. The next division which suffered was the loan division. The lay off’s happened more as the departments closed down and were not functional at all. Most of the bank had outsourced the servicing part as it was cheaper compared to keeping the existing team operational. Close to 1100 jobs were lost in the matter of 3 months in the entire banking sector. There were lot of apprehensions in the mind of new jonnies and soon working for a retail bank became unpopular. * Nationalised Banks popularity During all these events the only player in banking who were waiting to claw back the market shares were the nationalised bank. There was enough panic in retail investor’s regarding their funds being safe and sound, which the nationalised banks encashed fully. Maximum number of promotional activities and advertisement were given by them in the news paper and new channels. Even the investors responded to them equally and more than willingly because the backing up of the government was more than enough to provide a relief factor. Even in terms of employment, soon the nationalised banks became very popular and the people who were asked to leave from private banks where looking out for safe options to enter again. They were not willing to take any more risk. With this the bank got best of the aggressive talent in cheap prices. What corrective measures were taken? Decrease in CRR and repo rates. RBI again cuts repo rates ; CRR to inject additional liquidity of Rs 20,000 crore January 2, 2009: On a review of current global and domestic macroeconomic situation, the Reserve Bank has decided to take the following further measures: Repo Rate To reduce the repo rate under the liquidity adjustment facility (LAF) by 100 basis points from 6. 5 per cent to 5. 5 per cent with immediate effect. Reverse Repo Rate To reduce the reverse repo rate under the LAF by 100 basis points from 5. 0 per cent to 4. 0 per cent with immediate effect. Cash Reserve Ratio To reduce the cash reserve ratio (CRR) of scheduled banks by 50 basis points from 5. 5 per cent to 5. 0 per cent from the fortnight beginning January 17, 2009. The reduction in the CRR will inject additional liquidity of around Rs. 20,000 crore to the financial system. It is expected that the reduction in the policy interest rates and the CRR will further enable banks to provide credit for productive purposes at appropriate interest rates. The Reserve Bank on its part would continue to maintain a comfortable liquidity position in the system. Background to announcement of present monetary stimulus by RBI: The global financial situation continues to be uncertain. Since the official recognition of recession in the US, the UK, the Euro area and Japan, the downside risks to the global economy have increased. Concomitantly, the policy initiatives in the advanced economies are geared towards managing the recession and defusing potentially deflationary trends. The US has reduced the Federal Funds Rate to 0 – 0. 25 per cent. Several other advanced and emerging economies such as Japan, Canada, Republic of Korea, Hong Kong and China too have reduced their policy rates. India’s financial sector has remained resilient even in the face of global financial turmoil that is so deep and pervasive. Our financial markets continue to function in an orderly manner. India’s growth trajectory has, however, been impacted both by the financial crisis and the follow-on global economic downturn. This impact has turned out to be deeper and wider than earlier anticipated. Concurrently, because of global developments coupled with supply and demand management measures at home, inflation is on the decline. Reflecting these developments, the Reserve Bank has adjusted its policy stance from demand management to arresting the moderation in growth. In particular, the aim of these measures was to augment domestic and forex liquidity and to ensure that credit continues to flow to productive sectors of the economy. Notably, since mid-September 2008, the Reserve Bank has reduced the repo rate under the liquidity adjustment facility (LAF) from 9. 0 per cent to 6. 5 per cent, reduced the reverse repo rate under the LAF from 6. 0 per cent to 5. 0 per cent and the cash reserve ratio from 9. 0 per cent to 5. per cent How it helped? With these measures of RBI there was ample liquidity which was created in the market which forced the bank to lend out to companies as the funds in the banks were lying ideal and making no money for the bank. This actually started the lending process of the banks. * Role of fiscal stimulus package by government. There is a relationship between budget deficits and the hea lth of the economy, but is certainly not a perfect one. There can be massive budget deficits when the economy is doing quite well – the past few years of the United States being a prime example. That being said, government budgets tend to go from surplus to deficit (or existing deficits become larger) as the economy goes sour. This typically happens as follows: 1. The economy goes into recession, costing many workers their jobs, and at the same time causing corporate profits to decline. This causes less income tax revenue to flow to the government, along with less corporate income tax revenue. Occasionally the flow of income to the government will still grow, but at a slower rate than inflation, meaning that flow of tax revenue has fallen in real terms. 2. Because many workers have lost their jobs, there is increased use of government programs, such as unemployment insurance. Government spending rises as more individuals are calling on government services to help them out through tough times. 3. To help push the economy out of recession and to help those who have lost their jobs, governments often create new social programs during times of recession and depression. FDR’s â€Å"New Deal† of the 1930s is a prime example of this. Government spending then rises, not just because of increased use of existing programs, but through the creation of new programs. Because of factors one, the government receives less money from taxpayers, while factors two and three, the government spends more money. Money starts flowing out of the government faster than it comes in, causing the government’s budget to go into deficit. * How it helped? With the government spending more the government securities started declining in performance. As more and more securities were being issued the interest rate on securities started rising which has a direct impact on the gsec return. This again closed one more avenue of investment for banks as they were investing heavily into them instead of lending it out to corporate. This in all diverted the funds of the bank to the needful and thus started the lending process again. Future outlook In India there is evidence of economic activity slowing down. Real GDP growth has moderated in the first half of 2008 / 09. The services sector too, which has been our prime growth engine for the last five years, is slowing, mainly in construction, transport and communication, trade, hotels and restaurants sub-sectors. For the first time in seven years, exports have declined in absolute terms for three months in a row during October-December 2008. Recent data indicate that the demand for bank credit is slackening despite comfortable liquidity in the system. Higher input costs and dampened demand have dented corporate margins while the uncertainty surrounding the crisis has affected business confidence. The index of industrial production has shown negative growth for two recent months and investment demand is decelerating. All these factors suggest that growth moderation may be steeper and more extended than earlier projected. There are also several structural factors that have come to India’s aid. First, notwithstanding the everity and multiplicity of the adverse shocks, India’s financial markets have shown admirable resilience. This is in large part because India’s banking system remains sound, healthy, well capitalized and prudently regulated. Second, our comfortable reserve position provides confidence to overseas investors. Third, since a large majority of Indians do not participate in equity and asset markets, the negative impact of the wealth loss effect that is plaguing the advanced economies should be quite muted. Consequently, consumption demand should hold up well. Fourth, because of India’s mandated priority sector lending, institutional credit for agriculture will be unaffected by the credit squeeze. The farm loan waiver package implemented by the government should further insulate the agriculture sector from the crisis. Finally, over the years, India has built an extensive network of social safety-net programmes, including the flagship rural employment guarantee programme, which should protect the poor and the returning migrant workers from the extreme impact of the global crisis. RBI’s policy stance Going forward, the Reserve Bank’s policy stance will continue to be to maintain comfortable rupee and forex liquidity positions. There are indications that pressures on mutual funds have eased and that NBFCs too are making the necessary adjustments to balance their assets and liabilities. Despite the contraction in export demand, we will be able to manage our balance of payments. It is the Reserve Bank’s expectation that commercial banks will take the signal from the policy rates reduction to adjust their deposit and lending rates in order to keep credit flowing to productive sectors. In particular, the special refinance windows opened by the Reserve Bank for the MSME (micro, small and medium enterprises) sector, housing sector and export sector should see credit flowing to these sectors. Also the SPV set up for extending assistance to NBFCs should enable NBFC lending to pick up steam once again. The government’s fiscal stimulus should be able to supplement these efforts from both supply and demand sides. What Industry experts think? Mentioned below is what the senior experts in banking think of how the banking sector survived the crisis. 1). Mr. Anil Kumar Gupta (Vice President) Wealth management division- North and east region ING VYSYA BANK LTD. â€Å"The banking sector is very strong in India. Especially with the help of a governing body like RBI monitoring all the banks in Indian. † â€Å" I would say that step’s that were taken by the RBI in terms of rate cuts made so much liquidity in banking system that they were compelled to lend out to corporate. The recession gets more dangerous if the spending cycle by the people of the country or the lending cycles by the banks are put on a hold. † 2). Mr. Manavjeet Awasty (Senior Vice President) CITI BANK LTD- North â€Å"The ratio’s that the banks need to maintain because of RBI like CRR and SLR are the life savers for any banking firm. During financial crisis the condition of bankruptcy comes only when liquidity is crunched. The ratio’s which are maintained makes sure that enough liquidity is available in the system. † When the turnaround comes Over the last five years, India clocked an unprecedented 9% growth, driven largely by domestic consumption and investment even as the share of net exports has been rising. This was no accident or happenstance. True, the benign global environment, easy liquidity and low interest rates helped, but at the heart of India’s growth were a growing entrepreneurial spirit, rise in productivity and increasing savings. These fundamental strengths continue to be in place. Nevertheless, the global crisis will dent India’s growth trajectory as investments and exports slow. Clearly, there is a period of painful adjustment ahead of us. However, once the global economy begins to recover, India’s turn around will be sharper and swifter, backed by our strong fundamentals and the untapped growth potential. Meanwhile, the challenge for the government and the RBI is to manage the adjustment with as little pain as possible. Conclusion To conclude, we would say that the Indian banking sector is very strong in terms of its maintaining the said regulations and to follow the rule implied by its governing body which is RBI. The necessary steps were taken during the financial crisis which helped the banking sector to emerge out of the crisis without any major disturbance.