(a) Efficiency of labour implies the quality and quantity of goods and services which can be produced within a given time and under certain conditions. In other words, productive capacity of a worker is termed as efficiency of labour. By ‘efficiency of labour’ means the productive capacity or productivity of labour.
The efficiency of labour depends on the following factors:
1. Climatic Factors: Climatic differences also affect the efficiency of labour. Working under extreme climatic conditions is always more difficult than working in the temperate zones.
2. Geographical differences: Locational differences also sometimes play a significant role. A person who has been born and brought up in the plains, will find it hard to display much efficiency if he is forced to work at high altitudes hilly areas.
3. Intellectual attributes: Mental attributes are also important. General education helps a worker in assimilating new skills and technical knowledge. Moral qualities also play a role in this connection. A worker is likely to be more efficient, the greater is his sense of discipline, self respect, self-sufficiency, punctuality etc.
4. Working conditions: A healthy and conducive work environment increases the level of efficiency. The facilities enjoyed by the worker determine labour efficiency to a significant extent. Employer-employee relations are also an important part of the work-environment. An employer, therefore, can contribute to labour efficiency by building a cordial relationship with his workers.
(b) Some of the quantitative credit control instruments adopted by the RBI are as follows:
1. Bank Rate Policy: Theoretically, the bank rate is that discount rate at which the central bank of any country rediscounts any bill of exchange submitted by any commercial bank to take loans from the central bank. In case of India, it generally indicates the interest rate at which the commercial hanks borrow credit money from the RBI.
2. Open Market Operations: This indicates the purchase and sale of Government securities or treasury bills by the RBI. At the time of inflation, the RBI sells Government securities in the open market to pump out some amount of money from circulation. Most of these securities are purchased by commercial banks and other financial institutions.
3. Cash Reserve Ratio Requirement: According to the RBI Act 1934, every commercial bank has to keep a certain minimum cash reserve with the RBI. The RBI is empowered to vary the CRR between 3 to 15 percent of total deposits of commercial bank. The RBI increases this CRR during inflation.
4. Statutory Liquidity Ratio [SLR]: Apart from the CRR, all commercial banks under the Banking Regulation Act 1949, are to maintain liquid asset in the form of cash in hand, cash with other banks, gold and unencumbered approved securities equal to not less than 20% of their total time and demand deposits with the RBI. This is known as statutory liquidity ratio. The RBI is empowered to raise this ratio upto 40% when the SLR is raised, the amount of loanable funds with the commercial banks declines. So, the process of credit creation by the commercial bank is checked.