EASEL CLASSES

Shrinkflation

In economics, shrinkflation is the practice of reducing the size or quantity of a product while the price of the product remains the same or slightly increases. In some cases, the term may indicate lowering the quality of a product or its ingredients while the price remains the same.
Shrinkflation is the practice of reducing the size of a product while the price of the product remains the same. So, this effectively increases the price per amount or per unit or per kg.
For example, recently 'Tiger' Biscuits size (quantity) was reduced slightly retaining the same price of Rs. 5.

Raising the price per given amount is a strategy employed by companies, mainly in the food and beverage industries, to stealthily boost profit margins or maintain profit margin in the face of rising input costs.

As you all know that inflation has increased in the last few months and so companies cost of production/input cost has also increased, but rather than increasing the prices companies have started reducing pack sizes just to disguise the price rise.

India's Trade Figures (2021-22) [B = Billion]
GDP = Rs. 236 lakh crore = $3147 B = $3.15 Trillion

Exports (Goods+Services) = $420 B + $250 B= $670 B = 21.3% of GDP

Imports (Goods+Services) = $612 B + $145 B = $757 B = 24% of GDP

Trade Deficit = $87 B = 2.76% of GDP.

# DIFFERENCE BETWEEN LOANS AND ADVANCES

The center of these two concepts is Money and Timing. Money is an integral part of any business. It is necessary for any company to have sufficient money or funds in their pockets to run the business for investment purposes. There may be situations arising when an individual or a firm may need funds to fulfill their obligations. This need is fulfilled by loans vs advances. Timing is another indispensable factor which is brought to light. For every person giving out money or “lends the money”, wants his money to grow and come back. This growth of money happens over ‘time’.

# WHAT IS A LOAN?
An amount that is in the form of debt given out by a financial organization to another firm or an individual in exchange for the future repayment of the same amount along with interest over a period.
The terms of a loan are mutually agreed by each party involved in the transaction before any exchange of funds take place. This contract typically includes the

1. The amount lent out,
2. The amount to be repaid,
3. The number of payments that shall be made,
4. The repayment period,
5. And collateral, if any.

OF LOANS:-
1. Based on Security
Secured Loan: The loan which is backed by collateral.
Unsecured Loan: The loan which has no asset/ collateral to be pledged. Comes with a greater interest rate as compared to a secured loan.
2. Based on Repayment
Time Loan: The entire amount of the loan (including interest) which is paid at a future specified data.
Installment Loan: A series of small amounts (each payment includes a part of interest and lent amount) distributed over a period. The amount can be either evenly distributed or as mentioned in the contract.
Demand Loan: The amount along with the interest is paid back to the lender upon his request or ‘demand’.
# WHAT ARE ADVANCES?
The source of financing provided by the banks to the companies, to meet their short-term requirements (less than one year). Contrasting to loans, advances are a credit facility. The terms of the advances are decided by the central bank (RBI in India), and the bank lending the amount.
are facilitated to the companies under:
1. Primary security: Hypothecation of debtors, promissory notes, etc. Here, the bank stands as a priority to be repaid the loan before any other private debt holders in the company
2. Collateral Loan: Mortgage of property (land, buildings, etc), other fixed assets like machines, etc
3. Guarantees: given by the partners, promoters, directors, etc

# Different types of bank advance:
1. Short term loan: The entire amount is given to the borrower at one time

2. Overdraft: a provision by the bank, wherein the customer can overdraw money from his/ her account until a specified cap

3. Bill Purchase: Advances granted by the bank upon pledging the bills

4. Cash credit: A provision by the bank, wherein a customer can advance money up to an asset pledged.