Economic Index and GDP of a Village

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We usually focus on GDP of an Entire country or State, but im quite curious to know if this can be adapted to as low as a “Village”.

To break down my thought process, People who live in Micro units, contribute to the living standards at their place of accomodation. It could be a Hut, a house, an apartment, a villa and so on. But their spending behaviour depends on the avaliability of services around atleast 1 KM around them, whether its food for sustainablity, fuel for commute, or leisure.

Generally saying a country has a team of people working together under a Ministry for economics or finance, and their army is spread across the country to find opportunities to improve GDP. But all that stands under MacroEconomics.  Now Wikipedia defines MacroEconomics as “a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and government spending to regulate an economy’s growth and stability. This includes regional, national, and global economies” ….. Sorry i reference an Unlikely source of info…. i.e Wikipedia.

But now lets look at a more serious source. World Bank defines MacroEconomics as “it  on the performance of economies – changes in economic output, inflation, interest and foreign exchange rates, and the balance of payments. Poverty reduction, social equity, and sustainable growth are only possible with sound monetary and fiscal policies.”

Looking at both definitions, Keywords such as Policies, As a whole, economies and more … clearly states it has a wider scope and a larger area to work upon. Now lets reverse our thought process towards MicroEconomics with the same 2 sources.

Wikipedia says “Microeconomics is a branch of mainstream economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms”.

World bank sadly doesnt have any official explanation of MicroEconomics, probably its not under their domain as a global lender.  So if Wikipedia says that microeconomics focuses more on behaviour of individuals and SMB firms and probably tallying it to the scarcity of resources. Then my biggest doubt is Where and how is the focus on IMproving of GDP, Buying power, Economic Indexes and How much money people actually end of saving (in cash or in bank) or even holding of assests.

Now before i get into the gist of my article, im no economical expert, i bunked most of my economics classes. but i do have ideas and thoughts which i keep researching upon and as usual my blog is my open space to rant, so if you want to judge me, being ignorant ; you are free to do so, but do advise me on

My main question is, have we ever considered “how can the village help us increase our earnings?” . Since the village is starting point of any money exchange and if we look at the grassroots, thats where we should start.  I will use my village of varca in Goa India as an example.

So you have the following categories

Village – Varca
State – Goa
Country – India.

While the country and state are definitely working on their indexes, but why not the village? So lets look at varca

The economical population is made of Men, Women, Seniors and Children. Each having an Economical Earning and Spending power and each depict their own buying behaviour. The Population of earners are broken down to :

  • SeaFarers
  • NRI s
  • Real Estate owners
  • Business Entreprenuers
  • Govt Employees
  • Private Sector Employees
  • Retired Pensioners

These people bring their earnings into the village whether by salary or earnings, or returns from their investment. ( i will not consider money coming from the grey market).. Now the town gets its own financial sources from

  • Tourism & Hotels (taxes, salaries to locals, purchases from local market, local services)
  • Above mentioned people (villagers earnings)
  • Donations to Religious Organisations
  • Sponsorship of Village Events by External Org
  • Govt Funding via MLA or Panchayat or Zilla Panchayat
  • Businesses across the village

Now the biggest question is , whether the amount earned is rotated within the village economies or does it go outside (to other villages, states or even to other countries) . i have heard that most of the hotel owners dont live in Varca or in Goa, but in delhi and others. So the money earned within Varca, immediately is transmitted to Banks outside Goa. So such contributions dont add up to the Economic Index of the village.  Also the biggest question of spending behaviours is that how many of the people will spend outside the village for needs and wants. With the advent of ecommerce, alot are purchasing directly online, causing money to go beyond the village.

Now this being the first introductory article, i do not have the figures and stats in earnings and expenses. But will definitely look into this as a project.  The Reason this is important for a village, is to study its rapid growth, population control, businesses that flourish or fail. Understanding how much is left into peoples wallets or savings will define their need of GodFathers (or kumparpon in Konkani) feeding them handouts.

Now the questions that need to be answered : 

  1. How much of money rotated within the village. Person to Person or Person to Banks within the village, or Person to organization within the village.
  2. How much of money is saved in cash in hand or cash in bank, or cash transacted within each other and retained in the village as savings, etc
  3. How much of more opportunity is created for ; a. More income generation, b. More income retention, c. More external source spending in the same village(for example tourists coming to varca and spending in local businesses), d. how much of external investments coming into the village in the form of businessess and more.
  4. How much of new infrastructure projects, housing and more can be accepted, without damaging the existing financial ecosystem.
  5. How to encourage the local to have a cost effective spending behaviour within the village than to online retailers
  6. How to encourage tourism (in the case of Varca), beyond just the beach? in the form of man made attractions?
  7. Creation of Startups, Job Opportunities for locals and more to bring back earnings back into the village?
  8. many more i guess which will crop up as sub questions to the above?

This article is just the beginning of a bigger study, but if the study is complete, it will help the village make better decisions in the longer run for leaders, businessmen or for the general public itself.  My Goal is to help you seed the thought on your own villages, even building complexes which are micro ecosystems by themselves.

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