Stages of capital formation:
There are mainly three stages of capital formation which are as follows:
1. Savings: The basic factor on which formation of capital depends is the ability to save. The ability to save depends upon the income of an individual. Higher incomes are generally followed by higher savings. This is because, with an increase in income, the propensity to consume comes down and the propensity to save increases. This is true not only for an individual but also for the economy as a whole. A rich country has greater ability to save and thereby can get richer quickly compared to a poor country which has no ability to save and therefore has limited capacity for growth in national income, given the capital output ratio.
It is not only the ability to save, but the willingness to save also counts a great deal. Willingness to save depends upon the individual’s concern about his future as well as upon the social set-up in which he lives. If an individual is far sighted and wants to make his future secure, he will save more. Moreover, the government can enforce compulsory savings on employed people by making insurance and provident fund compulsory. Government can also encourage saving by allowing tax deductions on income saved. In recent years, business community’s savings and government’s savings are also becoming important.
2. Mobilisation of savings: It is not enough that people save money; the saved money should enter into circulation and facilitate the process of capital formation. Availability of appropriate financial products and institutions is a necessary precondition for mobilisation of savings. There should be a wide spread network of banking and other financial institutions to collect public savings and to take them to prospective investors. In this process, the state has a very important and positive role to play both in generating savings through various fiscal and monetary incentives and in channelising the savings towards priority needs of the community so that there is not only capital generation but also socially beneficial type of capital formation.
3. Investment: The process of capital formation gets completed only when the real savings get converted into real capital assets. An economy should have an entrepreneurial class which is prepared to bear the risk of business and invest savings in productive avenues so as to create new capital assets.
1. Savings: The basic factor on which formation of capital depends is the ability to save. The ability to save depends upon the income of an individual. Higher incomes are generally followed by higher savings. This is because, with an increase in income, the propensity to consume comes down and the propensity to save increases. This is true not only for an individual but also for the economy as a whole. A rich country has greater ability to save and thereby can get richer quickly compared to a poor country which has no ability to save and therefore has limited capacity for growth in national income, given the capital output ratio.
It is not only the ability to save, but the willingness to save also counts a great deal. Willingness to save depends upon the individual’s concern about his future as well as upon the social set-up in which he lives. If an individual is far sighted and wants to make his future secure, he will save more. Moreover, the government can enforce compulsory savings on employed people by making insurance and provident fund compulsory. Government can also encourage saving by allowing tax deductions on income saved. In recent years, business community’s savings and government’s savings are also becoming important.
2. Mobilisation of savings: It is not enough that people save money; the saved money should enter into circulation and facilitate the process of capital formation. Availability of appropriate financial products and institutions is a necessary precondition for mobilisation of savings. There should be a wide spread network of banking and other financial institutions to collect public savings and to take them to prospective investors. In this process, the state has a very important and positive role to play both in generating savings through various fiscal and monetary incentives and in channelising the savings towards priority needs of the community so that there is not only capital generation but also socially beneficial type of capital formation.
3. Investment: The process of capital formation gets completed only when the real savings get converted into real capital assets. An economy should have an entrepreneurial class which is prepared to bear the risk of business and invest savings in productive avenues so as to create new capital assets.
Goods and Service Tax Book (Updated upto 20th January 2018)
GST Student friendly Book most relevant/Useful for CA Intermediate/IPCC, CS executive , CWA Intermediate and CA final.
Also useful for B.Com / M.Com / MBA/ BBA/UPSC/ SSC and Various Govt Exams.!!
This book is approved by Ministry of HRD Govt.of India as Students friendly book.
Click on link given to Purchase Book- https://goo.gl/ArNFJx
Author Name- CA Harshita Raichandani and CA Dhananjay Ojha
Unique features of This GST Book.
1.80+ GST chart included for quick revision of chapter.
2.Provisions presented in this book in simple manner.
3.Bullet and Heading given for Long term memorisation.
4.Updated upto 25th GST council recommendation {18th January, 2018}.
5.70+ Value added questions given with answer.
6.16 Chapters fully Coverage given.
7.Definitions of Technical term related with GST is given at one place.
8.Most useful for CA Intermediate/IPCC, CS executive , CWA Intermediate and CA final. ALSO useful for B.Com / M.Com / MBA/ BBA/UPSC/ SSC and Various Govt Exams.
Click on below Link to purchase Student friendly GST Book.
http://www.comgurukul.com/educational-books/gst-book/
GST (Goods and Services Tax) Book -A student friendly Book. - Bharat Gurukul
GST Student friendly Book most relevant/Useful for CA Intermediate/IPCC, CS executive , CWA Intermediate
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