Overview of Cement Industry in India

Wrote an article on the Overview of Cement Industry in India for my website. Click here for the full article.

Excerpts:

The cement industry is the most visible beneficiary of the housing and construction boom in the country. The importance of the housing sector in cement demand can be gauged from the fact that it consumes almost 70%-80% of the country’s cement.

I will be attempting the overviews for all industries. Stay tuned. Thanks

---

India's first online weekly on Personal Finance

Pictualize's Take on the Credit Crisis

The team at “Pictualize” comprises of Aakanksha Gaur, Anirudh Maitra & Vineesh Kumar who feel strongly about conveying through pictures. Take a look at their fabulous presentation on credit crisis.

Credit Crisis Pictualized

View SlideShare presentation or Upload your own. (tags: presentation comic)

---

India's first online weekly on Personal Finance

Get Real or Go Home

Sequoia Capital's presentation to its portfolio companies about how to try to survive an economic downturn. It's survival of the quickest or else you enter a death spiral, they say. Check it out!

Sequoia Capital on startups and the economic downturn

View SlideShare presentation or Upload your own. (tags: depression recession)

Hat tip: Webyantra

---

India's first online weekly on Personal Finance

Financial Crisis v/s Any Other Crisis

A crisis is a crisis. Be it financial, that is raging furiously these days, or a personal crisis.

All crisis originates with some excess/wrong doings/ mistakes on the part of an individual or a company. The financial crisis has its origins in the sub prime lendings in the US and it is engulfing all and sundry. Likewise, a personal crisis too is an offshoot of some mistakes. Like Pravin Mahajan killing his own brother and pulling the entire Mahajan family into a crisis. Or the Ayushi murder case.

Everybody loves distress stories And then the media goes overboard since it knows that and it feeds on the raging fire.

Here are my thoughts on what to do in these troubled times:

• Take it on your chin: Understand the reason and the direction from which the blow is coming and accept that blow. Instead of ducking issues or avoiding them. It will give you a perspective on how it is going to affect you and you can take some corrective actions. Like you could have gone for more allocation for liquid/gold funds. Or go for a SOS: Short only Strategy.
• Put some wax in your ears: Media goes overboard with distress stories and your blood pressure shoots up too. All those stories in the name of analysis/insights do not solve the problem. Remember, there is a difference between discussing a problem and solving a problem. In times like this, it's a boon to be able to withdraw!
• It's a catharsis: All crisis are lessons. Failures can be very good feedback if you are willing to look at it that way. It also gives you a perspective on past mistakes and the way out.
• What goes down, comes up: I love the "Sine curve". Sometimes it goes up and then goes down, only to go up again. It's a continuous loop.

I am an eternal optimist. Are you one?

More Updates

---

India's first online weekly on Personal Finance

Financial Crisis Blog Posts of Value

The financial crisis is big news. And the media generally goes on the overdrive on them. Here are some sane voices that I enjoyed reading. I'm sure you'll enjoy too.

1. Surviving the Financial Crisis: Even though you may not be part of the Financial industry, the crisis affects all. Zoho guys relive their experience of the DotCom bubble and share their experience
2. How the financial crisis affect you and me: Lekhni wears many hats. Here she says, "It's not about the investment bankers, it's about you. Their loss, directly or indirectly, affects you.
3. The regulation of Derivatives: Tyler Cowen has a primer on derivatives which is very insightful.

Updates for this post

India’s Equity Market Reform Article by John Echeverri-Gent

Ajay Shah has uploaded this article by John Echeverri-Gent on the Politics of market microstructure [pdf] about the reforms of the Indian equity market. It is forthcoming in a book: India's Economic Transition: The Politics of Reform, edited by Rahul Mukherji, Oxford, 2007.

Some excerpts out of the 30 odd pages:

• He examines the politics of equity market microstructure in India. It argues that officials in the Ministry of Finance generated much of the impetus for reform. Three factors motivated these officials to become agents of change. First, their experience made them acutely aware that public sector resources were inadequate to meet India’s developmental needs. Second, as the 1990s progressed they were increasingly aware of the global best practices that developedin the wake of technological change. Finally, the legal infrastructure that regulated Indian equity markets provided them tremendous authority over the exchanges. Under the Securities Contracts (Regulation Act) 1956, the Ministry of Finance enjoyed the power to grant or withdraw recognition to any stock exchange. It also had the power to direct the exchanges to make or amend their rules, supersede the governing body of any exchange, and suspend the business of an exchange.
• By 2001, reforms brought India up to par with the global standards for virtually every aspect of its equity market microstructure. The ‘open outcry’system that restricted trading to the floors of stock exchanges in India’s metropolises was replaced by screen-based, electronic order-book systems that instantaneously linked traders across the country through the world’s first satellite trading system. Virtually all trading took place on a dematerialized basis through a central depository. The deeply flawed account period settlement system was replaced by a T+2 rolling settlement that is one of the most efficient systems in the world, and badla or carry-forward trading gave way to a rapidly developing derivatives market. As a consequence of these changes, the total value of transactions in securities has grown dramatically over the last ten years from Rs 1.7 billion in 1994–5 to Rs 50.8 billion in 2003–4.
• All this is not to suggest that no problems remain. The micromarket structure of the primary market (despite its revival since 2003–4, in part because of the introduction of a screen-based book-building system) is still in need of reform. The share of household savings invested in securities is small and has declined since the early 1990s. The mutual fund industry remains underdeveloped, and the regulatory capacity of SEBI needs enhancement.
• Nonetheless, the transformation of Indian equity markets is a remarkably successful chapter in the story of India’s economic reform.Three factors help to explain this success. First, technological change in the form of electronic trading systems and the development of new financialproducts created substantial opportunity costs to maintaining the status quo. Second, in the context of India’s balance of payments crisis in 1991, officials in the Ministry of Finance were motivated by their growing awareness of global best practices to use their authority to modernize India’s capital market. Finally,India’s politicians and reformers in the Ministry of Finance had a relatively low ‘political cost-benefit ratio’ for reforming equity markets.
  

Go read the entire article here

Financial Literacy Series: Financial System

I have been busy working on the financial literacy programme for me and you. If you have come here without looking at this backgrounder post, It will be my request that you take a look at the introduction post too.

Before we discuss in detail the various instruments available in the financial market and their role and significance in personal financial planning, it would be helpful to have a brief overview of the financial system in India.

The Financial System Consists of
o Financial Market Segments,
o Players in the Financial Markets
o Financial Instruments

The financial system basically facilitates transfer of funds from the cash surplus economic units to those who need it, and does it in the most efficient manner.

There are three major types of economic units.
a. Households where personal finance is involved.
b. Business entities which resort to Financial management and we can refer it as business finance
c. Government where we come across fiscal and monetary policies.

Usually, the business entities and governments are fund deficit units and require funds to finance their capital and operational expenditure. The householders as a group are net savers and channelise their savings to the other units through the mechanism of the financial markets.

So you and me are surplus economic inits and the government and business use our money and make us look like beggars!!

This fund transfer from the surplus units to deficit units may be done in one of the two ways – directly or through financial intermediaries such as banks or insurance companies.

In case of direct transfer, the deficit units sell financial claims on themselves, which are purchased by the surplus units. An example is the debentures issued by a company. These debentures are sold at a price. These represent financial claims on the issuing company in the form of a promise to pay periodic interest and principal repayment. This method is more cost efficient as no intermediary costs are involved here.

However, deficit and surplus units may not be in a position to access each other directly. E.g. the households are interested in a wide array of assets, and evaluate investment vehicles based on their return, risk characteristics as well as tax treatment.

The corporate houses want to get the best possible price and keep the cost of funds as low as possible. Financial intermediaries (FI) such as banks and insurance companies help bring these two together. They pool funds from the investors, invest money on a large scale.

They are able to diversify their asset base that is rather difficult for individual investors. These intermediaries also gain expertise in the course of their business that enables them to give a better deal to the investors. , FI are able to reap the benefits of Economies of Scale, Lower Transaction Costs, and Reduction in Information Costs due to their intimate knowledge of finance.

The Government simply passes taxation legislation (bullies us) and gets load of money from us to fill its coffer and serve the social needs!

Financial markets can be over the counter (OTC) or organized. In case of an OTC market, the buyer and seller directly meet each other, may negotiate the price and strike the deal.

In case of organized markets (say securities exchanges or Stock markets), buyers and sellers give their price quotes and the exchange facilitates matching of buy and sell orders based on compatibility of price quotes. In fact, the same instrument may be traded either way. For example, if an investor buys units of a mutual fund directly from the fund, it is OTC. However, units of certain mutual funds are also listed and traded on the securities exchange.

Strategy for your Investment Portfolio

As Indian companies continue to emerge and gain prominence on the world stage, those companies who outperform will be those who make better resource allocation decisions. Companies that do this consistently over time will lead their industries. It is time for corporates to strategise their Portfolio Management for competetive advantage and outperformance.

I like the word "strategy". Sounds good, no! Whenever I'm doing nothing at office and want to feel smart, I start "strategising on my options to leverage the resources at hand". Roughly translated it means, "I'm taking a nap".

Jokes apart, this is what I read in dailies:

• The total value of M&A involving Indian companies was about $37 billion (Rs 160000 crore) in two months of 2007 as against $20 billion (Rs 86000 crore) in the whole of 2006. Is there some grand strategy there?
• LIC, the Insurance behemoth, is in the process of carving two separate entities for its "Credit Card venture" and "pension business". Why is LIC diversifying into credit cards?
• Jet and Sahara have finally decided to merge after 10 month of battle. Is there value in the deal?
• Tata outbids CSN in the Corus deal? Did they pay too much?
  

I often wonder at the strategy behind the decisions.

"Optimizing Corporate Portfolio Management", authored by Anand Sanwal, is a useful book whose main premise is that where an organization allocates its resources is what truly drives it strategy and financial returns. So while company leaders issue strategy in presentations or in speeches, this is really not what creates strategy - it is where money gets spent that determines this.

Anand explains, "Let's take a very simple example of a company which has $100 to invest and whose leadership says that their main strategy is to focus on customer loyalty. However, when you look at where they invest their money, you see that $75 is spent on customer acquisition and $25 is spent on initiatives focused on customer loyalty. So even though the stated strategy is customer loyalty, the true strategy is one of acquiring new customers if you look at the resource allocation."

The book offers a practical methodology to bring this powerful discipline to your organization. The book is targeted at any organization struggling to figure out how to better allocate resources - this is every company and any sub-organization within a company, e.g., Information Technology (IT), marketing, R&D, sales, operations, product groups, etc who manage discretionary resources.

The book can be used to help general managers decide which product they should invest in or which country/region deserves more investment versus another. It advocates treating all investments as part of a portfolio whose risk and reward must be balanced - similar to the way a person tries to manage their money as a portfolio of investments.

The book also features case studies of successful companies deploying this discipline including AmEx, Cisco, HP, TransUnion and the State of Oregon. The case studies demonstrate that the CPM discipline can be used across organization of all types, across industries and also across for profit and not for profit (government) organizations.

I enjoyed reading the book and learnt a lot from it despite the agonising title (for a novice like me) !

Web 2.0 tools for Finance professionals

"Spreadsheets and other essential tools for finance professionals are moving on to the Web, and as they do, they're acquiring new functionality to facilitate seamless collaboration and data exchange", Susan Kuchinskas says in the article published in BNet titled A Beginner's Guide to Web 2.0 tools for business

Three web 2.0 tools for finance professionals are:

Google Docs and Spreadsheets Google's Web-based word processing and spreadsheet applications are great for collaboration, and they're compatible with their Microsoft Office equivalents.
Zoho Sheet An online spreadsheet service that's compatible with all Excel documents. An application programming interface (API) is available for enabling seamless integration with many other software tools.
SalesBoom This hosted service started out as a customer relationship management product; today it has expanded to include commission and expense management. Limited customization options, but well-suited for smaller companies.

Read the entire article for tools for other business uses.

Optimizing Corporate Portfolio Management (CPM)

As Indian companies continue to emerge and gain prominence on the world stage, those companies who outperform will be those who make better resource allocation decisions. Companies that do this consistently over time will lead their industries. It is time for corporates to optimize their Portfolio Management for competetive advantage and outperformance.

"Optimizing Corporate Portfolio Management", authored by Anand Sanwal, is a useful book whose main premise is that where an organization allocates its resources is what truly drives it strategy and financial returns. So while company leaders issue strategy in presentations or in speeches, this is really not what creates strategy - it is where money gets spent that determines this.

Anand explains, "Let's take a very simple example of a company which has $100 to invest and whose leadership says that their main strategy is to focus on customer loyalty. However, when you look at where they invest their money, you see that $75 is spent on customer acquisition and $25 is spent on initiatives focused on customer loyalty. So even though the stated strategy is customer loyalty, the true strategy is one of acquiring new customers if you look at the resource allocation."

The book offers a practical methodology to bring this powerful discipline to your organization. The book is targeted at any organization struggling to figure out how to better allocate resources - this is every company and any sub-organization within a company, e.g., Information Technology (IT), marketing, R&D, sales, operations, product groups, etc who manage discretionary resources.

The book can be used to help general managers decide which product they should invest in or which country/region deserves more investment versus another. It advocates treating all investments as part of a portfolio whose risk and reward must be balanced - similar to the way a person tries to manage their money as a portfolio of investments.

The focus of the book is not on describing why CPM is important but in showing people how to implement a CPM strategy. It also features case studies of successful companies deploying this discipline including AmEx, Cisco, HP, TransUnion and the State of Oregon. The case studies demonstrate that the CPM discipline can be used across organization of all types, across industries and also across for profit and not for profit (government) organizations.

Anand beleives that the complexity of decision-making cannot be boiled down into two dimensions or some overly simplistic framework. Decisions within organizations require using data and are much more complex. CPM understands this complexity and is about providing a way to make better decisions in a more holistic, complete way.

Anand holds a degree in finance and accounting from the Wharton School of Business and a degree in chemical engineering from the University of Pennsylvania. He is currently handling the American Express’ CPM effort which spans the entire organization and captures over $4 billion of per annum discretionary investment spend. He is infact also the holder of a CPM patent.

So "Optimizing Corporate Portfolio Management" is a book from the horse's mouth and is a pragmatic approach on how to link capital allocation to strategic planning. Anand's approach to enterprise portfolio management is lucid for a beginner, practical for a practioner, and provides a lot of insights for the experts of CPM.

Personal Finance v/s Business Finance

We have a way of thinking in compartments. Me too. That's why I am always confused of putting personal finance and business finance together on this blog. I think I'm guilty of cramping too much in one blog and there should be two different blogs for each one of them. A third on government finance that includes Economics, Monetary poilcy, Budgets, etc.

But wait. Here's a post by Seth Godin which clears me of my guilt :) Read Marketer's guide to personal finance by Seth Godin.

Business Planning by Story telling

The best presentations have a story telling style behind it. And if you want to become an entrepreneur you have to write the story of your business. Popularly known as a Business Plan.

The Business Plan tells you and your investors whether the business makes any sense. It also tells the audience about your thoughts and abilities and whether you can make it all happen.

We know about the various elements of the Business Plan which are:

• Executive Summary, Company Description, Market Size, Technology description, Competetion, Sales Revenue generation, Finances, Management

There could be plans with slightly different headings but essentially they talk about as above. We might just focus on each of them separately but I'll start off where I most usually harp on: Finances

In this section of the plan you will try to explain how to set off your expenses with your revenues over a period of time. To me, this is very important. If you are not able to articulate that, it's time to rethink and maybe move away from the present idea to another one. Till you are able to build a model where you generate profits and build a sustainable enterprise.

One aspect of the Finances is deciding the right pricing. Head on to this article from Bnet for some insights. Determining the right pricing for your product/service

Financial Management for a Startup Firm

Himanshu would like me to be his first Guest Blogger and write some stuff on Finance.The reason, Himanshu says, is many people like him are techie guys but they are not so much aware about Finance.

Is it important for a startup to understand corporate financial information, evaluate corporate financial performance and understand the language of accounting and finance?

I feel that the idea of a startup is a romantic and sexy one till you start the start up. Once you are confident of your idea and think it’s time to make it happen, it’s time to do some reality checks.

Let us ask the “bringing back to Earth” questions with a financial angle. In fact the business plan of a startup firm should incorporate the source and application of funds, projected cash flows, Sales forecast, ROI, Breakeven analysis etc.

1. How much money is needed to launch the project? What are the short term working capital needs? Here you try to understand your capital requirements.
2. What return on investment can the business bring? This is the first question a VC would ask. You have to work on the ROI that your business can bring.
3. What could be the possible source of funds? Friends, relatives, VC or a Bank?
4. What are the projected Sales forecast and the likely expenses? You may do well to build a projected cash flow statement for the next 1-3 years.
5. When do you look to cover your initial costs? In other words, when do you break even?
6. Can you build a projected balance sheet for your business?

Difficult questions? Maybe yes, but if you are not prepared to answer them or face them, the startup may remain just a pipe dream.

If success was easy it would no longer be success. Admittedly, though finding the answers is not like rocket science, it looks entirely geeky to many of us.

There are no ready made answers. It follows after you are able to define your business, review your competitive environment and do a SWOT analysis for yourself.

And tools? Start with a pen and a paper, quickly graduate to Excel sheet or any other spreadsheet and you are on your way!! Getting started is all you need to worry about!! haven't we heard Goethe's couplet: Whatever you can do, or dream you can, begin it. Boldness has genius, power and magic in it.

Instruments of Monetary Policy in India

I have been trying to understand the Annual Monetary Policy and made my first attempts by asking what factors went into the policy. I asked myself two questions and attempted to put my own answers there. More I try to learn about the policy, the less I seem to understand. But I'm determined.

Actually this monetary policy is nothing but controlling the supply of Money. The big Daddy, I mean the RBI takes a look at the present levels and also takes a call on what should be the desired level to promote growth, bring stability of price(low inflation) and foreign exchange. The factors that decide the desired levels were discussed in my last post.

This brings me to my third question:
What are the instruments of this monetary policy that the RBI has and can use?

We hear of repo rate, reverse repo, CRR in the papers. Are they the only weapons RBI has? No, I found abook on Macro Economics by DN Dwivedi which lists out the following:
A. Quantitative measures:

1. Open Market operations: Here, the RBI enters into sale and purchase of government securities and treasury bills. So the RBI can pump money into circulation by buying back the securities and vice versa. In absence of an independent security market (all Banks are state owned), this is not really effective in India.
2. Bank rate policy: Popularly known as repo rate and reverse repo rate, it is the rate at which the RBI and the Banks buy or exchange money. This resuts into the flow of bank credit and thus effects the money supply.
3. Cash Reserve ratio (CRR): This is the percentage of total deposits that the banks have to keep with RBI. And this instrument can change the money supply overnight.
4. Statutory Liquidity Requirement (SLR): This is the proportion of deposits which Banks have to keep liquid in addition to CRR. This also has a bearing on money supply.

B. Qualitative measures:

1. Credit rationing: Imposing limits and charging higher/lower rates of interests in selective sectors is what you see is being done by RBI.
2. Change in lending margins: Or is the risk weightage assigned for the various lendings.??
3. Moral suasion: We hear of RBI's directive of priority lending in Agriculture sector. Seems more of a directive rather than persuasion!!

I'm beginning to make sense of the jargons I get to read in the papers. Do you have a question? And if you're still confused about the whole thing and wonder what's the fuss all about, take a break! (I'm taking one, too!!!)

Your Behaviour is based on Economics

My curiosity for Economics continues. I discovered this amazing 10 part series by Walter Williams and I promise that once you go through the pages, you'll find Economics real fun.

In part 3, for example, he describes three aspects of economic behaviour ( production, consumption and exchange) and touches on "exploitation". The excerpts:

Say you offer me a wage of $2 an hour. I’m free to either accept or reject
your offer. So what can be concluded if I’m seen working for you at $2 an hour?
One clear conclusion is that I must have seen myself as being better off taking
your offer than my next best alternative. All other alternatives were less
valuable, or else why would I have accepted the $2 offer? How appropriate is it
to say that you’re exploiting me when you’ve given me my best offer? Rather than
using the term “exploitation,” you might say you wish I had more desirable
alternatives.

By no means do I suggest that you purge your vocabulary of the term
“exploitation.” It’s an emotionally valuable term to use to trick others, but in
the process of tricking others, one need not trick himself. I’m reminded of
charges of exploitation Mrs. Williams used to make early on in our 44-year
marriage. She’d charge, “Walter, you’re using me!” I’d respond by saying,
“Honey, sure, I’m using you. If I had no use for you, I wouldn’t have married
you in the first place.” How many of us would marry a person for whom we had no
use? As a matter of fact, the problem of the lonely hearts among us is that they
can’t find someone to use them.

Economics for Dummies: By A Dummy

I am both intrigued and fascinated by Economics. Maybe because Economics is the only field in which two people can get a Nobel Prize for saying exactly the opposite thing. Or is it that Economists get to do it with Models!!

So even though I'm a dummy with Economics, I've been busy reading and trying to fathom some aspects. Honestly, my interests have soared high after I discovered a treasure trove of Economics in the form of a friendly blog by Ajay Shah

To start with I'll atempt to ask and answer three basic questions about economics: Why, What and Where?

Why? : Economics provide a framework for taking decisions by the Goverments and the Management of firms. While it studies the production, distribution and consumption of products and services, Economics also studies human behaviour to address issues of demand and supply. To me, this makes Economics an important subject to get serious about. Despite the horrible jargons and graphs. Incidentally, I don't have any problems with the curves!!! :))

What? : Economics can be analysed in two ways, Micro Economics and Macro Economics. The macro-economic environment ( tax, monetory and fiscal policies, etc ) defines the setting within which the firms operate. The micro-economic environment(eg. cost analysis, marginal analysis, etc) provides the conceptual underpinning for the tools of financial decision making. Simple, no?

Where? : This one is easy. Just head to Ajay Shah's Blog (some gems: 1, 2, 3, 4, 5) , the Indian Economy Blog or Alex Thomas's Blog. You'll learn much more from them rather than any thing else because there you don't find the intimidating mumbo jumbo of Economics. And I found this amazing series on Economics for the citizen, which is very useful.

Enough for a day. I'll come back with more on this "interest"-ing subject!!

Overview of Merger and Acquisitions

I did not know anything about the Mergers & Acquisitions untill a week ago when our Prof at the Exec. MBA asked us to do a small project on M&A and present it before the class. This was to be a part of the internal assessment for our Business Environment project.

This M&A is really picking up speed. As against M&A deals of arounf $20 billion in 2006, Indian companies have already notched up M&A deals worth $37 billion in two months of 2007. And it's just the beginning. The Investment Bankers are going to have a great time.

The Union budget has visualised setting up an IFC in Mumbai. Read the details in Ajay Shah's Blog. Some reports say that Financial services is going to be the next growth driver for the Indian Economy.

So don't you want to see what M&A is all about. Here's an overview:

Mergers & Acquisitions: A Presentation

We have to make a presentation for one of our MBA subject and the topic given to us is Mergers & Acquisitions. The attempt till now has worked as under and it's an overview of the topic with an Indian perspective. Your comments will make it better and win brownie points for us. Don't be selfish, please. I'm the one here:)

Live India Budget 2007-08

Union Budget as it unfolds. Some key jottings. If you have questions, please let me know.

Fiscal deficit for 2007-08 pegged at 3.3 per cent of GDP at Rs.1,50,948 crore. Revenue deficit at Rs.72,478 crore which will be 1.5 per cent. Total expenditure during 2006-07 estimated at Rs.6,80,521 crore

Personal income tax: Token relief to the taxpayers. Exemption limit increased to Rs 110,000, for women Rs 145,000 and for senior citizens up at Rs 195,000. Deduction: Medical insurance to be increased to Rs 15,000; and for senior citizens Rs 20,000. Dividend distribution tax rate raised to 15%. ESOP under FBT.

Indirect Taxes: Peak customs duty rate cut to 10%; Central Sales Tax rate to be reduced to 3%

A high-powered committee report aimed at making Mumbai a world class financial centre submitted.

E-governance allocation to be increased from Rs.395 to Rs.719 crore.

Now you can own foreign stocks through Indian mutual funds: The finance minister says that Indian investors to be allowed investment in overseas capital markets through mutual funds. Mutual funds to set up Infrastructure Fund schemes.

Insurance companies to launch a senior citizens scheme in 2007-08. Reverse mortgage scheme for senior citizens.

Bonds worth Rs 5,000 crore to augment NABARD to be issued, says FM. These bonds will enjoy tax benefits.

FM announces package for agriculture:
National Agricultural Insurance Scheme to be continued for Kharif and Rabi this year.
Duty on lift irrigation, agricultural sprinklers and food processing equipment reduced from 7.5 per cent to five per cent.
Special Purpose Tea Fund to rejuvenate tea production:
Food mixes to be fully exempted from excise duty.
Rs. 100 crore allocated for National Rainfed Area Authority.
One hundred per cent subsidy for small farmers and 50 per cent for other farmers for water recharging scheme.
World Bank signed agreement for revival of 5,763 waterbodies in Tamil Nadu, Loan component Rs 2,182 crore. To have a command area of four lakh hectares.
Similar agreement with Andhra Pradesh in March for recharge of 2,000 bodies, Command area 2.5 lakh hectares
Farmers' credit likely to reach Rs.1,90,000 crore as against the targeted Rs.1,75,000 crore during 2006-07

As part of a full-fledged war on rising prices, futures trading on staples wheat and rice have been suspended in all commodity exchanges with immediate effect.

Saving rate of 32.4 per cent, investment rate of 33.8 per cent will continue, says the FM.

Read the detailed highlights on Rediff. But I did not see any initiatives on Infrastructure!

Reviews, Tips, Calculators with an Indian perspective.

India Budget 2007: The GDP Angle

After some efforts, I'm beginning to understand the Union Budget jargon. One of the oft repeated term used is GDP. For example all the growth is measured in terms of GDP growth. Fiscal deficit targets are measured in percentage terms of GDP (target for 2006-07 was 3.8%) Gross Domestic Product, we all know. But I'll probe a bit further to understand the budget better.

GDP is the monetary value of all the finished goods and services produced within a country in a specific time period. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory. In a simple formula representation, GDP = Consumption+ Government Expenditure + Investments+ Net Exports. But it does not include Black money and that is why the existence of a parallel economy!

Now I was trying to relate my newly gained knowledge as a layman and I found it similar to the game of cricket. The game has its components of batting, fielding, bowling and a certain attitude. Likewise the GDP has its components as mentioned above and is measured by relating to various sectors like Industry, Infrastructure, Services and Agriculture.

So while we are famed for our batting (services), have a positive attitude (Industry) and are improving our bowling (Infrastructure), fielding (Agriculture) is an area of concern. There is a deceleration of agricultural growth in our country and while the other sectors are growing faster, agriculture with 2.7% growth drags us down.

I would expect the FM to boost the agriculture sector (Fielding) and allied sectors like horticulture, food processing, fisheries, etc (Running, diving, running between the wickets). I would also expect him to bolster the bowling attack ( I mean the Infrastructure sector) where we have much scope of improvement.

Not to forget on building on our strengths too!


Reviews, Tips, Calculators with an Indian perspective.