Posts

Productivity ( IEM )

Posted by on




Topic includes 

- Productivity
- It's increment
- Its factors
- Controllable factors
- Uncontrollable factors
- Excise duty
- Sales tax
- Difference between sales and excise duty


Productivity


In engineering, we say that the ratio of output to input as efficiency or productivity.

In any production system we may call this ratio as the production efficiency or productivity. So when this ratio increases there is an increase in productivity.
“It is the ratio between the output of goods and services and the input of resources consumed in the process of production.”

A lower productivity indicates wastage of resources and time. It is vital to have a high productivity rate because resources like capital and time are scarce and should be exploited in the best possible way. Productivity can be calculated as the ratio of the volume of output to the volume of inputs.

Productivity = Output/Input

Productivity can be increased by:

i. Generating more outputs from same level of inputs.
ii. Producing same level of outputs with reduced level of inputs.

iii. A combination of both.

For the long term growth of the firm and the economy as a whole, it is impertinent that a high level of productivity is maintained. A high productivity means that the resources are utilised to the optimum, while minimizing wastage.
Factors of productivity

These factors may broadly be divided as follows:


1. Human:


Human nature and human behaviour are the most significant determinants of productivity.

Human factors may further be classified into two categories as given below:

(a) Ability to work – Productivity of an organization depends upon the competence and calibre of its people—both workers and managers. Ability to work is governed by education, training, experience, aptitude, etc. of the employees.

(b) Willingness to work – Motivation and morale of people is the second important group of human factors that determine productivity. Wage incentive schemes, labour participation in management, communication system, informal group relations, promotion policy, union management relations, quality of leadership, etc., are the main factors governing employees’ willingness to work. Working conditions like working hours, sanitation, ventilation, schools, clubs, libraries, subsidized canteen, company transport, etc., also influence the motivation and morale of employees.

2. Technological:


Technological factors exercise significant influence on the level of productivity.

The main technological factors are as follows:

(a) Size and capacity of plant

(b) Product design and standardization

(c) Timely supply of materials and fuel

(d) Rationalization and automation measures

(e) Repairs and maintenance

(f) Production planning and control

(g) Plant layout and location

(h) Materials handling system

(i) Inspection and quality control

(j) Machinery and equipment used

(k) Research and development

(l) Inventory control

(m) Reduction and utilization of waste and scrap, etc.

3. Managerial:


The competence and attitudes of managers have an important bearing on productivity. In many organizations, productivity is low despite latest technology and trained manpower. This is due to inefficient and indifferent management. Competent and dedicated managers can obtain extraordinary results from ordinary people.

Job performance of employees depends on their ability and willingness to work. Management is the catalyst to create both. Advanced technology requires knowledge workers who in turn work productively under professionally qualified managers. No ideology can win a greater output with less effort. It is only through sound management that optimum utilization of human and technical resources can be secured.

4. Natural:


Natural factors such as physical, geological, geographical and climatic conditions exert considerable influence on productivity, particularly in extractive industries. For example, productivity of labour in extreme climates (too cold or too hot) tends to be comparatively low. Natural resources like water, fuel and minerals influence productivity.

5. Sociological:


Social customs, traditions and institutions influence attitudes towards work and job. For instance, bias on the basis of caste, religion, etc., inhibited the growth of modern industry in some countries. The joint family system affected incentive to work hard in India. Close ties with land and native place hampered stability and discipline among industrial labour.

6. Political:


Law and order, stability of Government, harmony between States, etc. are essential for high productivity in industries. Taxation policies of the Government influence willingness to work, capital formation, modernization and expansion of plants, etc. Industrial policy affects the size, and capacity of plants. Tariff policies influence competition. Elimination of sick and inefficient units helps to improve productivity.

7. Economic:


Size of the market, banking and credit facilities, transport and communication systems, etc. are important factors influencing productivity.
Some other factors

The factors influencing productivity can be classified broadly into two categories:

(A) Controllable Factors.

(B) Uncontrollable Factor.

(A) Controllable Factors:

Controllable Factors are considered as internal factors. These are the factors which are in control of industrial organization.

Controllable factors are:

1. Material and Power:


Improved quality of raw materials and increased use of power have a favorable effect on productivity. An effort to reduce materials and energy consumption brings about considerable improvement in productivity.

It consist:


i. Selection of quality material and right material.

ii. Control of wastage and scrap.

iii. Effective stock control.

iv. Development of sources of supply.

v. Optimum energy utilization and energy savings.

2. Machinery and Plant Layout:


The size of the plant and the capacity utilization has direct bearing on productivity. Production below or above the optimum level will be uneconomical and will tend towards lower level of productivity. The arrangement of machines and position in the plant and the setup of the wore-bench of an individual worked will determine how economically and efficiently production will be ferried out.

3. Human Factors:


Human nature and human behavior are the most significant determinants of productivity. Human factors include both their ability as well as their willingness.

i. Ability to Work:

Ability to work is governed by education, training, experience and aptitude of the employees. Productivity of an organization depends upon the competence and caliber of its people (both workers and managers).

ii. Willingness to Work:

Motivation and morale of people are very important factors that determine productivity. These are affected by wage incentive schemes, labour participation in management, communication systems, informal group relations, promotion policy, union Management relations, quality of leadership, working hours, sanitation, ventilation, subsidized canteen and company transport etc.

4. Organization and Managerial Factors:


Organization factor include various steps taken by the organization towards maintaining better industrial relations such as delegation and decentralization of authority. These factors also influence motivation likewise the existence of group, with higher productivity as their goal is likely to contribute to the organization objectives.

The competence and attitudes of managers have an important bearing on productivity. Competent and dedicated managers can obtain extraordinary results from ordinary people. Job performance of employees depends on their ability and willingness to work.

Uncontrollable factors are:

1. Economic Political and Social Changes:


There are economic, social and political factor that affects the productivity.

i. Economic Factors like Size of the market, banking and credit facilities, transport and communication systems, etc. is important factors influencing productivity.

ii. Political Factors like Law and order, stability of government, harmony between states etc. are essential for high productivity in industries Taxation policies of the government influence willingness to work, capital formation, modernization and expansion of plants etc. Industrial policy affects the size, and capacity of plants. Elimination of sick and inefficient units also helps to improve productivity.

iii. Social Factors like Social customs, traditions and institutions influence attitudes towards work and job. For instance, bias on the basis of caste, religion, etc., inhibited the growth of modern industry in some countries. The joint family system affected incentive to work hard in India. Close ties with land and native place hampered stability and discipline among industrial labour.

2. Natural Resources:


Natural factors such as physical, geographical and climate conditions exert considerable influence on productivity, particularly in extreme climates (too cold or too hot) tends to be comparatively low. Natural resources like water, fuel and minerals influence productivity.

3. Government Factor:


Government policies and programs are significant to productivity practices of government agencies, transport and communication power, and fiscal policies (interest rates, taxes) influence productivity to the greater extent.

There are many ways by which productivity can be increased:


i. Adoption of up to date technology in machines and equipment.

ii. Implementing a proper system of managerial planning and control.

iii. Effective time management.

iv. Maintenance of work facilities in factories.

v. Standardisation and automation for mass production.

vi. Empower employees by providing training and an environment conducive for personal is well as organisational growth.

vii. Let workers participate in management.

viii. Provide a flexible work schedule instead of rigid working hours.

ix. Clear communication should be there between management and workers.

What Is Excise Duty?

The excise duty is defined as the tax levied by the government on the items that are produced within the country of India. The manufacturer of good is legally responsible to pay the taxes to the government of India when the finished products are transferred from the production house to the market. It is moreover called as production or manufacturing tax, since the tax is levied upon an item’s production and the manufacturer has to pay the tax. The end customer who purchases the product is not liable to pay this tax.

Excise Duty is an indirect tax levied on production of goods that are manufactured and produced within India. This type of tax is very importantly levied on manufactured goods within India.

Please Note: One should not be confused between excise tax and customs duty as excise duty is levied on goods produced inside the country of India whereas custom duty is charged on good produced abroad.

Excise Duty is levied on all types of goods, except for certain goods that are exempted. There are three types of Central Excise duties collected by the India Government specifically: Basic Excise Duty, Additional Duty of Excise and Special Excise Duty

What is Sales Tax?

Sales tax is a tax levied upon the end customer who is the final consumer of the product. Usually the MRP of a product consists of two parts one relates to the price of the product and the second related to the product tax. So at any time we make any purchase we pay sales tax as part of the product Maximum Retail Price (MRP). The retailer who sells the concerned product in the market collects this aforementioned amount from the buyer/consumer of the product and deposits the tax portion of the sale to the government.

Sales tax is a tax levied on sale or purchase within the various States of India. Different states charge different sales tax levels, whereas there is a Central Sales Tax (CST) levied on sale or purchase in the line of interstate trade. If the Goods and Services Tax-GST is introduced it would make more efficient most of the taxes including states taxes and excise tax. The Bill is probable to be placed in the winter session of parliament. It is envisaged that this would increase the GDP and streamline taxes in India.

Differences between Excise Duty & Sales Tax

Excise duty is on the production of goods whereas sales tax is levied on sale of goods.
Excise duty is paid by the manufacturer while the burden of sales tax is borne by the end consumer.
Excise Duty is payable on the removal of goods from factory or the manufacturing godown whereas sales tax is payable after only the sale has taken place in India.
Excise duty is levied on accessible value whereas Sales tax is based on sale price.


Comments

Post a Comment