When South Meets East!

Hi all:

Now it was time for a typical South Indian to visit East to attend his relatives. I have spent my whole life so far in the Southern part of the country such as Tamil Nadu and Bangalore. There's one famous site named indiastat.com which always gives the live population index of the country. I always used to wonder how is it possible to have a population of more than 1.3 Billion. But all my confusions broke away when i visited Kolkata.. To my surprise i found the statistics of indiastat.com to be true when i was in Howrah. Daily i used to see thousands and thousands of people walking around the area of Howrah. To me it seemed to be a ant's world, wherein one ant follows the other in search of food and shelter.

In my life i had never seen such clumsy roads filled with mutilated and old-fashioned buildings filled with innumerable people. There was a huge difference in the lifestyle of a South Indian and a East Indian. I say this beacuse a South Indian always likes to have his own space of living, but East Indians are denyed with this luxury. One thing which is common across all states in India would be its people. No matter what happens people tend to live happier than ever before. A South Indian would always prefer to eat fast-food sitting in McDonalds or Pizza Hut, but Kolkata wasis prefer road side vendor selling fast-food items(..which even i liked it- for a change). There were a N number of things which i noticed during my week stay in Kolkata. After my visit i also realized as to how difficult should be for all the marketers who try to reach out the entire country through their advertisement campaign. Hats Off to them!!!

Finally i ended my trip in a happy note with my NET PROFIT also increasing by 1000%. My next destination would be my favourite place- New Delhi.

Budget-o-Nomics 2007-2008

Well, Budget 2007-2008 presented on Feb 29, 2008 by our Hon. Finance Minister Shri. P.Chidambaram saw many twists and turns. Many economists had to say this as a political budget and some declared it as a "aam aadmi ka budget". But in my point of view, this budget was a kind of balancing act done by our Finance Minister. Increasing the B.E.L in the Income Tax to 1.5 Lacs, No effects on the corporate tax rate structure were some of the moves which made the Budget felt an aam aadmi budget. On the other hand, giving a statement that "I want retail investors to stay long in the market rather than short", Chidu also had in mind the fluctuation which the stock market is facing. Saying this he hiked the STCG tax rates to 15%, an hike of 5%. But the increase in this rates saw the Bombay Stock Exchange index SENSEX fell upto 7% for the next two working days. On the same note by waiving of Rs.60000 Crore of all the small and marginal farmers, certainly that showed a poilitical move. Following are some of the key highlights of Budget 2007-2008.

Proposals:

1. Complete waiver worth Rs.60000 Crore of all loans overdue on December 31, 2007 and which remained unpaid until February 29, 2008 for three crore small and marginal farmers.
2. One time Settlement (OTS) scheme for other farmers for all loans that were overdue for the same period; rebate of 25% against payment of the balance of 75% under OTS.
3. Rs.3780 Crore multi-sectoral development plans for 90 minority concentration districts.
4. National Program to be launched for the elderly.
5. Mid-day meal scheme to be extended to upper primary classes in all blocks.
6. 6000 high quality model schools to be opened.
7. 3 IITs in Andhra Pradesh, Bihar and Rajasthan and 16 central universities to be established.
8. Rs.750 crore allocated for upgrading 30 ITI’s
9. Allocation under Indira Gandhi Old Age Pension Scheme up from Rs.2392 crore to Rs.3443 crore.
10. Equity, loan support to Central PSUs

Direct Taxes:

New Income Tax Slabs:
0-150000 - NIL
150000-300000 - 10%
300000-500000 - 20%
Above 500000 - 30%

1. Exemption Limit for women hiked to Rs.1.8 Lakh
2. For Senior Citizens, limit up to Rs.2.25 Lakh
3. No Change in Corporate tax and surcharge
4. Banking Cash Transaction tax goes.
5. 125% weighted deduction on payments for outsourced research.
6. Tax on Short Term Capital Gain hiked to 15%
7. Commodities transaction tax introduced
8. Creche Facilities, guest houses off FBT
9. Senior Citizen Saving Scheme 2004, Post Office Time Deposit Account come under Section 80C
10. 5 Year Tax holiday for new hospitals in Tier- II and Tier – III towns
11. Reverse Mortgage stream of revenue received by senior citizens not considered income
12. 150% deduction on R&D expenditure of seed producers and farm implements manufacturers
Indirect Taxes:

1. Cenvat rate reduced from 16% to 14%
2.Excise duty on 2, 3 wheelers cut by 12%
3.Excise duty in small cars down to 12%
4. Excise duty on buses, chassis cut to 12%
5. No excise duty on coconut water, tea, coffee mixes and puffed rice
6. Breakfast cereals to cost less, non- filter cigarettes to cost more.
7. Anti-AIDS drug off excise net.
8. Excise duty on Pharmaceutical product slashed.
9. Duty on some writing, printing paper cut.
10. Service Tax Net widens.
11. No change in peak rate of customs duty
12. Customs duty on certain life saving drugs cut.
13. No import duty on steel, aluminum scraps
14. Customs duty on project imports cut
15. No customs duty on bactofuges
16. No import duty on rough cubic zirconia
17. Duty on polished cubic zirconia cut from 10% t0 5%.
18. Select parts of set top boxes off custom duty.

Enjoy,
Piuesh Jain

Being an Entrepreneur

What takes up to being an Entrepreneur?
Five keys ways to unleash the hidden potential for innovative thinking in your business and achieve high levels of success.

THINK TWO GENERATIONS AHEAD:
Envision your company 50 or even 100 years from now, even if you don’t foresee your product or service lasting that long. Such forward-looking reflection creates an umbrella for long-term innovation to occur. Working back from your 50 or 100 year vision plan in 10 year increments, ask and answer the critical “who, when, what, where, why and how” questions about your business. For instance, who will be your target demographic; what will your core products and business focus be; where will be your office and facilities are located; when will key business milestones be achieved. Why will your business matter 10, 15 or 50 years from now and how are you going to achieve your business goals.

CONFRONT & PARTNER WITH THE UNCONSCIOUS:
Experts suggest that of all the experiences, knowledge and data stored in our minds, we are only “conscious” of and actively use just 10% of it. The other 90% resides in our “unconscious”- it’s this part of our mind we can tap into for valuable some aspect of your leadership process that you want to improve. The more you write about a problem, the more you will tap your unconscious for innovative ideas solving it.

AIM TO INCREASE ENERGY, NOT JUST EFFICIENCY:
Do a quick energy audit of your employees to understand what energizes them and fuels their personal growth. If you understand what energizes them, you’ll be able to implement actions that motivate your employees and increase productivity. Ask every employee to identify the three things that energize him or her most about their jobs. Also ask them to identify the things they’re not currently doing that would energize them. Then match your employees to the energizing activities that best fit their talents and skills and needs. Also ask your staff to identify the three things that steal their energy. Help your management tam reduce the activities that de-energize the workplace.

ESTABLISH THE FREEDOM TO INNOVATE:
Creativity drives change. So tap into your employees’ intuitive side by ritualizing “ingenuity time” on the job. Utilizing creative techniques can often help people see issues more clearly. Set aside enough money for your team to compete for an industry related contest. It will keep your top people on their toes. Encourage people to draw a diagram or depiction of their business problem or challenge in the form of a character or situation. Then ask that they sketch the conclusion they envision that would resolve the matter. Seeing their problem put to life often helps people envision the best solution.

START TAKING RESPONSIBILITY:
Any problem you are directly involved and which you wish to solve required reflection on your role and responsibilities related to that problem. While you may not be the primary cause of the problem, reflecting on your role will help you better understand and acknowledge how you may have contributed to it. When you have a problem employee, start the fix by asking yourself: “What changes do I have to make in myself to help this person perform better?” You may not always identify something that need changing, but the mere matter of asking and spending some time on reflecting will make you a better leader.
Source: www.entrepreneur.com; www.economictimes.com ;www.google.com

Dutch Disease

Dutch disease is an economic condition that, in its broadest sense, refers to negative consequences arising from large increase in a countries income. Dutch disease is primarily associated with a natural resource discovery, but it can result from any large increase in foreign currency, including foreign direct investment, foreign aid or a substantial increase in natural resource prices. This condition arises when foreign currency inflows cause an increase in the affected country's currency.

This has two main effects for the country with Dutch disease:

1. A decrease in the price competitiveness, and thus the exports, of its manufactured goods

2. An increase in imports In the long run, both these factors can contribute to manufacturing jobs being moved to lower-cost countries. The end result is that non-resource industries are hurt by the increase in wealth generated by the resource-based industries.

The term was coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of natural gas in the 1960s.

The "Core Model"

The classic economic model describing Dutch Disease was developed by the economists W. Max Corden and J. Peter Neary in 1982. In the model, there is the non-traded good sector (this includes services) and two traded good sectors: the booming sector, and the lagging sector, also called the non-booming tradable sector. The booming sector is usually the extraction of oil or natural gas, but can also be the mining of gold, copper, diamonds or bauxite, or the production of crops, such as coffee or cocoa. The lagging sector generally refers to manufacturing, but can also refer to agriculture.

A resource boom will affect this economy in two ways. In the resource movement effect, the resource boom will increase the demand for labor, which will cause production to shift toward the booming sector, away from the lagging sector. This shift in labor from the lagging sector to the booming sector is called direct-deindustrialisation. However, this effect can be negligible, since the hydrocarbon and mineral sectors generally employ few people. The spending effect occurs as a result of the extra revenue brought in by the resource boom. It increases the demand for labor in the non-tradable, shifting labor away from the lagging sector.

This shift from the lagging sector to the non-tradable sector is called indirect-deindustrialisation. As a result of the increased demand for non-traded goods, the price of these goods will increase. However, prices in the traded good sector are set internationally, so they cannot change. This is an increase of the real exchange rate.

Effects of Dutch Disease
In simple trade models, a country ought to specialize in industries that it has a comparative advantage in, so theoretically, a country rich in natural resources would be better off specializing in the extraction of natural resources. In reality, however, the shift away from manufacturing can be detrimental.

If the natural resources begin to run out or if there is a downturn in prices, competitive manufacturing industries do not return as quickly or as easily as they left. This is because technological growth is smaller in the booming sector and the non-tradable sector than the non-booming tradable sector. Since there has been less technological growth in the economy relative to other countries, its comparative advantage in non-booming tradable goods will have shrunk, thus leading firms not to invest in the tradable sector. Also, volatility in the price of natural resources, and thus the real exchange rate may prevent more investment from firms, since firms will not invest if they are not sure what the future economic conditions will be.
There are also many other harmful effects often associated with Dutch disease, such as corruption and protectionist policies for affected lagging sector industries. However, these effects can most accurately be described as part of the broader resource curse.

References:

www.investopedia.com
ww.wikipedia.com

www.google.com