Financial Planning Wisdom: Give man a fish.. You feed him for a day .. Teach him fishing you feed him for lifetime.
Debt waivers are like giving man a fish . It feeds him for a day. On the other way, increasing economic productivity is teaching a man, fishing . With that , he could be feed for lifetime.
Growth of debt leads to lack of economic growth. They are inversely proportional. On the other way, lack of economic growth or productivity will result to indebtedness.
Debt of farmers is a result of rising costs of agricultural inputs and falling prices of agricultural produce. Both the rising costs of production and decline in farm prices are certain outcomes of trade liberalization and economic reform policies driven by agribusiness corporations.
1. Deregulation of Inputs
Deregulation of the input sector, the entry of seed MNC’s, and the creation of seed monopolies has increased the costs of inputs and the risks of crop failure. In 2002, farmers of Bihar lost Rs. 400 crore due to the failure of an MNC’s hybrid corn. Farmers of Andhra Pradesh and other States ran into losses of Rs. 100 crore due to the failure of Cotton Seed supplied at Rs. 300 / kg by public sector farms, which costs them Rs. 1600/kg while they bought them from an MNC. In spite of the high costs, that MNC’s Cotton performed miserably in the first commercial planting in 2002. The deregulation of the input sector has allowed seed MNC's into Indian agriculture for the first time.
In India's history, our seed security and sovereignty was based on the time tested and adapted farmers varieties, which accounted for 80% of the seed supply. In addition, these varieties tested in the public sector seed farms for our diverse agro climatic zones are appropriate for our socio-economic conditions.
MNC's have been selling untested, ill adapted, high cost seeds which need high cost chemicals and intensive irrigation and is practically unfit for Indian Environment.
II. Deregulation of Imports leading to failing prices of agricultural produce
The second leak in the farmers income is the collapse in farm prices due to deregulation of trade. This leading to dumping activities from developed countries. The level of dumping has increased since 1995 when the W.T.O came into force, even though the proclaimed aim of W.T.O is to "reduce distortions in trade." While the full cost of U.S wheat in 2001 was $ 6.24/bushel, its export price is $3.5/bushel. In the case of soybean, the cost was $6.98/bushel; the export price was $4.93/bushel. For maize, the full coast was $3.47/bushel; export price was $2.28/bushel. The cost of production of rice was $18.66/bushel and it was sold internationally at 14.55/bushel. From 1995 to 2001 dumping jumped from 23% to 44% in the case of wheat, 9% to 29% in the case of soybeans, 11% to 33% in the case of maize, from 17% to 57% in the case of cotton. Removing of Quantative Restriction in this dumping activity made the Indian farmer vulnerable to the distortion of international prices. Annual looses of farmers cross Rs. 1.2 trillion/ year.
Well 60,000 crore is a big money, as debt waiver. However, the losses are bigger than that. The question is how many fishes we can give and how far it will solve the real problem.
Isn’t that making them economically productive, and concentrating in their growth (teaching them fishing), is a better option?
Monday, March 3, 2008
Sunday, March 2, 2008
Union Budget 08: Good news for PE market?
Tax on short-term capital gains is increase to 15%. This would have a distinct impact on the market buoyancy. There would be less speculative buying for a short period. Infact, this could effect much of emotional buying and selling activity in Capital market to certain extent. Atleast, there would be more rationality and less guesswork. Lesser chances for index to go up and down in a topsy-turvy manner.
Is it good news for private Equity Market?
Private equity is somewhat more structured and rational investment option. It is an asset class consisting of equity investments in companies. These are not traded on public stock exchanges. Investments typically involve a transformational, value-added, with active management participation on strategic level.
Private equity firms generally receive a return on their investments through one of three ways: an IPO, a sale or merger of the company they control, or a recapitalization. Unlisted securities may be sold directly to investors by the company (called a private offering) or to a private equity fund, which pools contributions from smaller investors to create a capital pool.
The private equity market in India, which attracted $2.2 billion in investment capital in 2005 and $3.5 billion in the 2006, will reach at least $7 billion in 2010. That estimate — described as a conservative projection of India's upside private equity market potential — is among the findings in a new Bain & Company (US Business consulting firm) study, "India Private Equity Outlook ."
Most of the early stage startups, access equity investment options rather than loans. These equity investments may come in different formats. As a business planner, I have found, the consensus is, investment that adds value, is more accepted by early stage entrepreneur’s then investment where you have to give collaterals.
I might be biased, as I do business planning for living .However, the fact is , most of my clients, don’t go to banks for lending, rather they sell off some equity, to bring in money in the venture.
Is it good news for private Equity Market?
Private equity is somewhat more structured and rational investment option. It is an asset class consisting of equity investments in companies. These are not traded on public stock exchanges. Investments typically involve a transformational, value-added, with active management participation on strategic level.
Private equity firms generally receive a return on their investments through one of three ways: an IPO, a sale or merger of the company they control, or a recapitalization. Unlisted securities may be sold directly to investors by the company (called a private offering) or to a private equity fund, which pools contributions from smaller investors to create a capital pool.
The private equity market in India, which attracted $2.2 billion in investment capital in 2005 and $3.5 billion in the 2006, will reach at least $7 billion in 2010. That estimate — described as a conservative projection of India's upside private equity market potential — is among the findings in a new Bain & Company (US Business consulting firm) study, "India Private Equity Outlook ."
Most of the early stage startups, access equity investment options rather than loans. These equity investments may come in different formats. As a business planner, I have found, the consensus is, investment that adds value, is more accepted by early stage entrepreneur’s then investment where you have to give collaterals.
I might be biased, as I do business planning for living .However, the fact is , most of my clients, don’t go to banks for lending, rather they sell off some equity, to bring in money in the venture.
Wednesday, February 27, 2008
Outlay or outcome, what is important?
Outlay:
“Bharat Nirman will be a time-bound business plan for action in rural infrastructure for the next four years.”
- Dr Manmohan Singh, PM, India
http://www.bharatnirman.gov.in/download.pdf
The idea of Bharat Nirman in the earlier Budget 2005 , is trying to attack rural poverty by giving them employment and stability through rural infrastructure and irrigation. The National Rural Employment Guarantee Scheme, which consolidates the ongoing food for work programs, is perhaps the single biggest government outlay, amounting to roughly Rs 11,000 crore to the ailing rural areas.
Outcome:
Statistics of rural suicides in different States reveal an aggregate of 312 suicides everyday, or roughly one every 30 minutes.
What is important?
The problems of the farmers were quite comprehensive. There was little credit available. What was available was very costly. There was no advice on how best to conduct agriculture operations. Income through farming was not enough to meet even the minimum needs of a farming family. Support systems as if free health facilities from the government were virtually non-existent. The problems are multiplied with the international policies in Post WTO regime. Subsidized raw material coming from different countries, are adversely affecting the living standards of our farmer, by bringing their raw materials in competitive scenario.
Investments in agricultural R&D have the highest rates of return in terms of agricultural growth, but today the situation is that India hardly invests 0.5% of agricultural GDP into agriculture research. As a result, as much as almost 40% of vacancies for Scientists in the Agricultural Research System remain vacant and the growth impetus to agriculture seems to be waning. Agriculture research needs more resources and commensurate institutional reforms, if it has to be a catalyst for making our agriculture globally competitive.
Similarly, irrigation projects have lingered for years without completion due to paucity of resources. The additional irrigation created has always lagged behind the targets in recent years by as much as 40-50%. The management of irrigation systems and the pricing of water (and power for irrigation) is in such a sorry state of affairs and it appears to be a huge waste of resources.
The Finance Minster himself has acknowledged this in his Budget speech, but has not offered any solution. Without fixing this problem, I am afraid, just pouring in more money in outlay, will not be sufficient. It may simply disappear as water disappears in sand and there would be no substantial outcome.
“Bharat Nirman will be a time-bound business plan for action in rural infrastructure for the next four years.”
- Dr Manmohan Singh, PM, India
http://www.bharatnirman.gov.in/download.pdf
The idea of Bharat Nirman in the earlier Budget 2005 , is trying to attack rural poverty by giving them employment and stability through rural infrastructure and irrigation. The National Rural Employment Guarantee Scheme, which consolidates the ongoing food for work programs, is perhaps the single biggest government outlay, amounting to roughly Rs 11,000 crore to the ailing rural areas.
Outcome:
Statistics of rural suicides in different States reveal an aggregate of 312 suicides everyday, or roughly one every 30 minutes.
What is important?
The problems of the farmers were quite comprehensive. There was little credit available. What was available was very costly. There was no advice on how best to conduct agriculture operations. Income through farming was not enough to meet even the minimum needs of a farming family. Support systems as if free health facilities from the government were virtually non-existent. The problems are multiplied with the international policies in Post WTO regime. Subsidized raw material coming from different countries, are adversely affecting the living standards of our farmer, by bringing their raw materials in competitive scenario.
Investments in agricultural R&D have the highest rates of return in terms of agricultural growth, but today the situation is that India hardly invests 0.5% of agricultural GDP into agriculture research. As a result, as much as almost 40% of vacancies for Scientists in the Agricultural Research System remain vacant and the growth impetus to agriculture seems to be waning. Agriculture research needs more resources and commensurate institutional reforms, if it has to be a catalyst for making our agriculture globally competitive.
Similarly, irrigation projects have lingered for years without completion due to paucity of resources. The additional irrigation created has always lagged behind the targets in recent years by as much as 40-50%. The management of irrigation systems and the pricing of water (and power for irrigation) is in such a sorry state of affairs and it appears to be a huge waste of resources.
The Finance Minster himself has acknowledged this in his Budget speech, but has not offered any solution. Without fixing this problem, I am afraid, just pouring in more money in outlay, will not be sufficient. It may simply disappear as water disappears in sand and there would be no substantial outcome.
Friday, February 22, 2008
Isn’t this the right time, to plan, on shifting to India?
Isn’t this the right time, to plan, on shifting to India?
Ony of my US friend and successful entrepreneur, Anthony Mitchell from Seattle, wants to Shift back to India. Anthony helps Indian companies to expand their presence in the U.S. market through traditional marketing campaigns, institution building and management training, and through acquisitions of U.S. businesses that have not made strong tie ups with Indian ITeS service providers. For additional information, see: http://www.internationalstaff.net .
He recently wrote some thought provoking articles on the Job transformation scenario of India middle managers in high tech companies :
Customer Relations Managers Face Job Transformations - Part 2
http://www.ecommercetimes.com/story/47057.html
Customer Relations Managers Face Job Transformations - Part 3
http://www.ecommercetimes.com/story/47784.html
He also wrote something about how middle managers will upgrade their skills to face this job transformation . Test Your Global IT Business Skills,
http://www.ecommercetimes.com/story/38358.html
India has emerged as a significant player in the international landscape. The perception of the outsider about India ‘as a land of opportunity’ is obviously creating positive image to engage more investor in the ‘Indian Economic Development’ process. We are moving towards better life standards collectively. Data wise, we are having significant growth which I suppose , will continue ,while we move towards next Union Budget which is the ‘Nation’s largest Financial plan’ on 29th Feb, 2008.
However, there are lots of question, about whether the economic growth is trickling down to the agricultural sector. Farmer suicide has become common phenomenon, largely due to inability of paying back of loans, which shows again that economic development is limited to certain key sectors of population. We still do not show a good picture on terms of ‘Human development Index’. Apart from certain ritual exercise on certain significant days, the thinking on ‘nation building’ is rare.
There are few, who pinpoints conceiving and implementing economic liberalization, as only element for India’s recent growth. They had to be reminded, that we did not choose the starting up of economic liberalization process. We were forced to do so, due to our sad economic state at 1991.
The fact is , India is one of the oldest civilization in the world , and during time ,it had its own process of material growth, which was not dependent in any key people or policy . We had cycles of spiritual and material growth throughout the history. There are foreign invaders who came, destroyed, and ruled. However, India continued its spiritual and material journey, without bothering about who came and who went away. As Vivekananda, pointed out that the greatest quality of India, is its tolerance. Sri Aurobindo said it as “Unity without uniformity” which is better described as India’s tolerance to all sorts of culture, nationalities, and communities and how they are united together without loosing their own identity. Due to this , India was prosperous earlier, and it will be the world’s most powerful nation, within a decade .It is destined to be so.
So, welcome back again to India … the land of prosperity and peace. Spirituality and materiality. For all the Indians, who have shifted abroad in search of prosperity. In addition, to all the others, who wants to come to India, for search of prosperity.
Ony of my US friend and successful entrepreneur, Anthony Mitchell from Seattle, wants to Shift back to India. Anthony helps Indian companies to expand their presence in the U.S. market through traditional marketing campaigns, institution building and management training, and through acquisitions of U.S. businesses that have not made strong tie ups with Indian ITeS service providers. For additional information, see: http://www.internationalstaff.net .
He recently wrote some thought provoking articles on the Job transformation scenario of India middle managers in high tech companies :
Customer Relations Managers Face Job Transformations - Part 2
http://www.ecommercetimes.com/story/47057.html
Customer Relations Managers Face Job Transformations - Part 3
http://www.ecommercetimes.com/story/47784.html
He also wrote something about how middle managers will upgrade their skills to face this job transformation . Test Your Global IT Business Skills,
http://www.ecommercetimes.com/story/38358.html
India has emerged as a significant player in the international landscape. The perception of the outsider about India ‘as a land of opportunity’ is obviously creating positive image to engage more investor in the ‘Indian Economic Development’ process. We are moving towards better life standards collectively. Data wise, we are having significant growth which I suppose , will continue ,while we move towards next Union Budget which is the ‘Nation’s largest Financial plan’ on 29th Feb, 2008.
However, there are lots of question, about whether the economic growth is trickling down to the agricultural sector. Farmer suicide has become common phenomenon, largely due to inability of paying back of loans, which shows again that economic development is limited to certain key sectors of population. We still do not show a good picture on terms of ‘Human development Index’. Apart from certain ritual exercise on certain significant days, the thinking on ‘nation building’ is rare.
There are few, who pinpoints conceiving and implementing economic liberalization, as only element for India’s recent growth. They had to be reminded, that we did not choose the starting up of economic liberalization process. We were forced to do so, due to our sad economic state at 1991.
The fact is , India is one of the oldest civilization in the world , and during time ,it had its own process of material growth, which was not dependent in any key people or policy . We had cycles of spiritual and material growth throughout the history. There are foreign invaders who came, destroyed, and ruled. However, India continued its spiritual and material journey, without bothering about who came and who went away. As Vivekananda, pointed out that the greatest quality of India, is its tolerance. Sri Aurobindo said it as “Unity without uniformity” which is better described as India’s tolerance to all sorts of culture, nationalities, and communities and how they are united together without loosing their own identity. Due to this , India was prosperous earlier, and it will be the world’s most powerful nation, within a decade .It is destined to be so.
So, welcome back again to India … the land of prosperity and peace. Spirituality and materiality. For all the Indians, who have shifted abroad in search of prosperity. In addition, to all the others, who wants to come to India, for search of prosperity.
Sunday, February 17, 2008
Business Risk= Business Execution – Business Planning?
Risk management is a structured approach to managing uncertainty through, risk assessment and developing plans to manage it, and mitigation of risk using managerial resources. The plans include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk. However, there is another non-standard way to manage risk. That is the way, entrepreneurs manage risk. Alfred Hitchcock, the famous director also used to manage risk in that way.
More information about Hitchcock style of managing risk, and application of it, in our Business and daily life, is available in AIL online course category “Entrepreneurship and Business Planning”. Please use this link if you are interested to enroll for this course.
http://allindialive.org/course/category.php?id=13
More information about Hitchcock style of managing risk, and application of it, in our Business and daily life, is available in AIL online course category “Entrepreneurship and Business Planning”. Please use this link if you are interested to enroll for this course.
http://allindialive.org/course/category.php?id=13
Friday, February 15, 2008
1 minute in planning is 10 minutes saving in execution ?
Fifth year plan is a system, originally invented by former USSR, were a series of centralized exercise, are done for rapid economic development. India has implemented this planning process, after its freedom, and we are going through XI five year plan (2007-2012).
There is a lot of debate on whether these five-year plans, and their benefit, could be trickled-down to the people of India, on the level of execution.
At least, it could be on the level of saving time. Think the situation we would be facing in executing any national development projects, on a nation as big as India, without a proper planning process.
Isn’t it, 1 minute in planning is 10 minutes saving in execution?
There is a lot of debate on whether these five-year plans, and their benefit, could be trickled-down to the people of India, on the level of execution.
At least, it could be on the level of saving time. Think the situation we would be facing in executing any national development projects, on a nation as big as India, without a proper planning process.
Isn’t it, 1 minute in planning is 10 minutes saving in execution?
Thursday, February 14, 2008
Should we educate to Plan or Plan to Educate?
A Thiagarajan, Deputy Chief operating officer of a MNC bank, and an Independent writer (http://www.boloji.com/writers/athiagarajan.htm) have some interesting insights, on the AIL Daily wisdom topic ‘Do need education on planning’ ?. I am, quoting his response below.
“Yes, we do need education in planning to change the misconception about what a plan is: I am quite convinced about it. My 35 years experience in the banking sector confirms this. About 30 years ago, when I was looking into SSI sector as a field officer, an appraiser and as a manger, it was obvious. This is proved by the thriving business of consultants. We also saw some initiatives by banks - where institutions like IIT subsequent to which the banks helped with the non_technical aspects evaluated the first generation entrepreneurs who were technically qualified. This initiative did no go for long because of the priorities being different for banks .Quite often; very many ventures did not fare well for lack of the planning part”
I also received a lot of response, who had a similar message, and there was a consensus that we should educate to plan.
However, before that it is also important that we plan to educate more people. We see, Prime Minister Manmohan Singh termed the 11th five-year plan as “India’s educational plan” and emphasized on the fact that over 19 per cent of the total central gross budgetary support would be spend on the sector during the plan period.
“We have increased the outlay on education from 7.7 per cent of the total central gross budgetary support in the 10th five year plan to over 19 per cent in the 11th plan,” Singh said addressing the 20th convocation ceremony of Goa University. “The actual outlays have been raised five-fold. This is an unprecedented increase in allocation for education in the history of our country,” he said.
For further details, you can check this link http://www.freshnews.in/11th-five-year-plan-will-be-indias-education-plan-pm-19825
What would be our priority? Should we educate to plan, or plan to educate?
“Yes, we do need education in planning to change the misconception about what a plan is: I am quite convinced about it. My 35 years experience in the banking sector confirms this. About 30 years ago, when I was looking into SSI sector as a field officer, an appraiser and as a manger, it was obvious. This is proved by the thriving business of consultants. We also saw some initiatives by banks - where institutions like IIT subsequent to which the banks helped with the non_technical aspects evaluated the first generation entrepreneurs who were technically qualified. This initiative did no go for long because of the priorities being different for banks .Quite often; very many ventures did not fare well for lack of the planning part”
I also received a lot of response, who had a similar message, and there was a consensus that we should educate to plan.
However, before that it is also important that we plan to educate more people. We see, Prime Minister Manmohan Singh termed the 11th five-year plan as “India’s educational plan” and emphasized on the fact that over 19 per cent of the total central gross budgetary support would be spend on the sector during the plan period.
“We have increased the outlay on education from 7.7 per cent of the total central gross budgetary support in the 10th five year plan to over 19 per cent in the 11th plan,” Singh said addressing the 20th convocation ceremony of Goa University. “The actual outlays have been raised five-fold. This is an unprecedented increase in allocation for education in the history of our country,” he said.
For further details, you can check this link http://www.freshnews.in/11th-five-year-plan-will-be-indias-education-plan-pm-19825
What would be our priority? Should we educate to plan, or plan to educate?
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