Smaller enterprise are much greater in number

In most economies, smaller enterprises are much greater in number. In the EU, SMEs comprise approximately 99% of all firms and employ between them about 65 million people. In many sectors, SMEs are also responsible for driving innovation and competition. Globally SMEs account for 99% of business numbers and 40% to 50% of GDP.

In India, SME constitute an important segment . The contribution of SSIs alone has been greater than 7% to GDP and 40% to Industrial production. It is the second largest provider of employment after agriculture. SMEs also contribute to 35% to total exports directly and a significant amount of exports indirectly through large trading houses or third parties. The SMEs are dominant players in some of India’s major export sectors namely Textiles and Garments, Leather products, Gems and jewelry, Handicrafts among others. They also contribute substantially in industrial goods segments in sectors such as electricals, engineering, rubber and plastics.

Addressing participants in the award ceremony for SME sector in 1st Sepetembor,2008, the Indian Prime Minister, Dr Manmohan Singh, elaborated the importance of the SME sector for employment generation.

"The very positive contribution that this sector makes to employment is of utmost importance to our vision of shared and equitable growth. This sector provides employment to over 42 million people. It contributes about 45 per cent of the total manufacturing output and nearly 40 per cent of India's exports. It is the capacity of this sector to generate economic activity at the local level that prompted Gandhiji to give the pride of place to Khadi. He dreamt of an India comprising of self contained villages using local raw materials, local skills, serving local markets and providing employment to people locally near the places where they live," said Singh.

The Prime Minister further elaborated the resilience and the adaptability of this sector in the wake of a changing economic scenario.

"This sector has shown continued dynamism in terms of growth in the number of enterprises, production and the capacity to contribute to manufacturing output and exports. There were apprehensions about the impact of liberalization on the growth of this sector. However, experience during the past decade has amply demonstrated that this sector cannot only survive competition, but can also grow faster than the overall manufacturing sector. This demonstrates the high degree of resilience, entrepreneurial skills and the capacity for adaptation of people operating in this important sector," he added.

This again shows the importance of the SME in the growth of Indian economy, and also its unique contribution on employment generation.

New RBI Governer ? Good news for Indian SME ?

The RBI wants inflation down at 7 percent by the end of the 2008/09 fiscal year in March. It stepped up monetary tightening aggressively in June and July as inflation, driven by high fuel and commodity prices, headed for double digits.

The benchmark lending rate is at 9.0 percent, its highest in seven years, and the central bank has also tightened banks' reserve requirements to stop surplus cash stoking prices.

The effect of tightening monetary policy had directly fall on the interest rate of Loans where both SME's and household got effected. The tightening monetary policy has also showered its curse on the growth of the SME Sector.

While economists expected Dr. Subbarao to keep the central bank's anti-inflation stance with tightening monetary policy, as a Bank regulator it is yet to experience what would be his stance on opening up the Banking sector to more foreign Banks.

Further,there are real concerns about how he would handle the relationship between the finance ministry and the central bank as the government heads towards national polls due by May, with India's budget pressured by subsidies and policies such as a loan waiver for poor farmers.

While the central bank has gained greater independence in recent years, the finance minister has often urged banks to keep their interest rates steady to ensure credit flow for development, even as the RBI was raising them.

Dr Subbarao's task will be tricky. Long term, the government wants the $1 trillion economy to grow 8-10 percent a year to reduce poverty and create jobs but it has slowed from annual rates of 9 percent or more in the past three years.

At the same time, as elections loom, policy makers are concerned inflation will be a ballot box issue as it hits India's millions of poor the hardest.

The challenge is the growth rates have to go up to 10 percent to fight poverty and deprivation. At the same time, inflation will have to be kept under control given the political expectations in numerous elections coming up. Inbetween , Dr Subbha rao has to really do a lot of balancing act to make the both side of equation, in a stable condition. Once this balance is achieved , it could be really good news to SME's.

Increasing sources of risk capital

Sources of risk capital is extremely limited in low income countries . Infact , that is the reason at first place , that those countries are denoted as low income countries. There should be an initiative taken to increase the supply of such financing .As , risk capital is the basis of entrepreneurial ecosystem in a particular domain and demography.

The Investor could invest by using an wholesale approach , establishing a private equity like vehicle which will be managed by Independent Investment Management Firms , which could be selected on a competitive basis. Thus it will develop the capacity of Investment manager to successfully invest risk capital in small business in low income countries.

Indian Mathematics in Vedic Period ( 1500 BCE -400 BCE)

Ancient Indians were involved in different forms of Mathematical study.The effort on understanding the deeper patterns of quantity,structure,space and change, in the Mathematical framework, reached its extremity in the Vedic period. Though there are other great Mathematicians who came after wards and followed the tradition.

The religious texts of the Vedic Period provide evidence for the use of large numbers . By the time of the last Veda, the Yajurvedasamhita (1200-900 BCE), numbers as high as 10¹² were being included in the texts. For example, the Mantra (sacrificial formula) at the end of the annahoma ("food-oblation rite") performed during the asvamedha ("horse sacrifice"), and uttered just before-, during-, and just after sunrise, invokes powers of ten from a hundred to a trillion:

"Hail to śata ("hundred," 10²), hail to sahasra ("thousand," 10³), hail to ayuta ("ten thousand," 10⁴), hail to niyuta ("hundred thousand," 10⁵), hail to prayuta ("million," 10⁶), hail to arbuda ("ten million," 10⁷), hail to nyarbuda ("hundred million," 10⁸), hail to samudra ("billion," 10⁹, literally "ocean"), hail to madhya ("ten billion," 10¹⁰, literally "middle"), hail to anta ("hundred billion," 10¹¹, lit., "end"), hail to parārdha ("one trillion," 10¹² lit., "beyond parts"), hail to the dawn (uśas), hail to the twilight (vyuṣṭi), hail to the one which is going to rise (udeṣyat), hail to the one which is rising (udyat), hail to the one which has just risen (udita), hail to the heaven (svarga), hail to the world (loka), hail to all."

This shows the rigor on the collective study on Mathematics in the Vedic Age, which is prominently known for its spiritual study.Further, Satapatha Brahmana (9th century BCE) contains rules for ritual geometric constructions that are similar to the Sulba Sutras.

The Sulba Sutras (literally, "Aphorisms of the Chords" in Vedic Sanskrit ) (c. 700-400 BCE) list rules for the construction of sacrificial fire altars. Most mathematical problems considered in the Śulba Sūtras spring from "a single theological requirement," that of constructing fire altars which have different shapes but occupy the same area. The altars were required to be constructed of five layers of burnt brick, with the further condition that each layer consist of 200 bricks and that no two adjacent layers have congruent arrangements of bricks.

According to ( Hayashi 2005 p. 363), the Śulba Sūtras contain "the earliest extant verbal expression of the Pythagorean Theorem in the world."

"The diagonal rope (akṣṇayā-rajju) of an oblong (rectangle) produces both which the flank (pārśvamāni) and the horizontal (tiryaṇmānī) produce separately."

Since the statement is a sūtra, it is necessarily compressed and what the ropes produce is not elaborated on, but the context clearly implies the square areas constructed on their lengths, and would have been explained so by the teacher to the student.They contain lists of Pythagorean triples , which are particular cases of Diophantine equations . They also contain statements (that with hindsight we know to be approximate) about squaring the circle and "circling the square."

Baudhyana (c. 8th century BCE) composed the Baudhayana Sulba Sutra, the best-known Sulba Sutra, which contains examples of simple Pythagorean triples, such as: (3,4,5), (5,12,13), (8,15,17), (7,24,25), and (12,35,37) as well as a statement of the Pythagorean theorem for the sides of a square: "The rope which is stretched across the diagonal of a square produces an area double the size of the original square." It also contains the general statement of the Pythagorean theorem (for the sides of a rectangle): "The rope stretched along the length of the diagonal of a rectangle makes an area which the vertical and horizontal sides make together."

The main objective of the Sulvasutras was to describe the constructions of altars and the geometric principles involved in them, the subject of Pythagorean triples, even if it had been well understood may still not have featured in the Sulvasutras. The occurrence of the triples in the Sulvasutras is comparable to mathematics that one may encounter in an introductory book on architecture or another similar applied area, and would not correspond directly to the overall knowledge on the topic at that time.

In all three Sulba Sutras were composed. The remaining two, the Manava Sulba Sutra composed by Manava (fl. 750-650 BCE) and the Apastamba Sulba Sutra, composed by Apastamba (c. 600 BCE), contained results similar to the Baudhayana Sulba Sutra.

The tradition Sulba Sutras also proved the fact that the religious ritual carried out in the Vedic times had wide usage mathmetical principals for perfecting the material requirement of the rituals.

SME finance gap - The reason SME requires to build good Business Plan

A substantial portion of the SME sector may not have the security required for conventional collateral based bank lending, nor high enough returns to attract formal venture capitalists and other risk investors. It stands in between the two extreme zone of risk averse investment and risk prone investment. In addition, markets may be characterized by deficient information (limiting the effectiveness of financial statement-based lending and credit scoring). This has led to claims of an "SME finance gap" – particularly in emerging economies.

There have been at least two distinctive approaches to try to overcome the so-called SME finance gap.

The first has been to broaden the collateral based approach by encouraging bank lenders to finance SMEs with insufficient collateral. This might be done through an external party providing the collateral or guarantees required. Still ,it is seen that, to convince both the external party and the Bank , SME would require good business plan .

The major obstacles a SME faces are mainly in the form of:

• lack of satisfactory business plans, accounting and other information;

• inadequate assets for use as security; and

• insufficiently high levels of profitability, gearing, liquidity, stability, and other business-financial performance criteria on the part of funding applicants.

The second approach has been to broaden the viability based approach. Since the viability based approach is concerned with the business itself, the aim has been to provide better general business development assistance to reduce risk and increase returns. This often entails a detailed review and assistance with the funding agency.

A common aim or feature of the viability based approach is the provision of appropriate finance that is tailored to the cash flows of the SME.

Although the returns generated by this approach in less developed countries may never be attractive to Western venture capitalists, they can be significantly better than conventional collateral based lending – whilst at the same time being less risky than the typical venture capitalist project. Some investors have promoted this approach as a means of achieving wider social benefits, while others have been interested in developing it largely in order to generate better financial-economic returns for shareholders, other investors, employees, and clients.

In the past, a significant obstacle to applying this approach in less developed countries has been getting the information required to assess viability plus the costs of transferring and providing business development assistance. However, in the last several years improved information and communications technology have made the process easier and cheaper. As technology and information sharing etc. continue to improve, the approach could become significantly more cost-effective and attractive to established financiers with viability based approaches and to consultants providing business plan development assistance to SMEs in other, more mainstream areas.

With higher profitability than traditional SME finance and lower risk than traditional venture capital, this might even be dubbed the new "Growth finance sector".

Emerging Market , Private Equity , International Financial Corporation

Emerging market is a new destination for successful PE funds. Most of the SME of Emerging Asian market is drawing a substantial ammount of PE funds. At the same time,Private equity is becoming an increasingly important sector globally, in emerging markets. In fact, the past year was a remarkable one for emerging markets private equity: fund raising for the asset class tripled, driven largely by a strong rise in exits and cash returned to international investors. The numbers were up for all regions.

Perhaps even more telling, the picture that is taking shape today is fundamentally different from before: private equity in emerging markets is no longer considered an exotic asset class. Private equity professionals are breaking down the borders of investing by bringing innovation in investment, and recognizing that globalization is transforming the private equity business.

Emerging market is also redefining International Financial Corporation (IFC) role in the sector

Over the past 20 years, IFC's had experienced that there is a strong relationship between fund performance and development impact, and that the quality of the fund manager is the main driver of performance. Consequently, IFC's current investment strategy for funds has a strong focus on experienced teams with a proven good track record. It also seeks managers who add commercial value to the companies in which they invest, rather than just supplying capital.

Agricultural Consumption in Power Sector of Haryana

HSEB found it increasingly difficult to meet the demand and provide adequate
supply of electricity: by 1997, the state witnessed a peak shortage of 11% and energy
deficit of 25%. No generation capacity had been added within Haryana after 1990 and
the State became increasingly dependent on imported power. However, the
transmission system reportedly deteriorated over the years because of lack of adequate funds for expansion and rehabilitation and poor operational efficiencies.

The transformer failure rates were high due to overloading, the quality of power supply was poor and the non-technical losses were excessive.Financially, the HSEB was incurring huge losses. As of 31st March 1998, the accumulated financial loss had reached Rs. 16079.7 million and continued to grow due to non-remunerative tariffs, high technical and non-technical losses and poor revenue collection. HSEB’s poor financial health affected such basic functions as system maintenance, expansion and rehabilitation and led to large outstanding current liabilities.

At the same time the phenomenal growth in agriculture consumption is also a area of concern for HSEB as agricultural consumption was subsidized. The phenomenal growth is demonstrated by the growth in the number of electric pumps-sets/tube-wells. On March 31, 1970 the number of electric-operated tube-wells was 68,226. Within a decade this number rose to 204,340, representing a 300% growth in ten years. The number of agricultural connections grew further to 0.35 million by the early 1990s. Agricultural connected load has followed the same pattern of growth, registering an average increase of 8% per year between 1970 and 1990. Such a growth in the agricultural load is the result of a deliberate policy to promote agricultural production in the state through green revolution. It is interesting to note that between 1970 and 1990 the average pump size per connection, calculated from the connected load and the number of connections in a year, remained practically constant at about 4.7 kW per connection. Since then, the average connected load has increased continuously, reaching 5.8 kW per pump in March 2000.

Consequently, the electricity consumption increased from 1328 MU in 1982-83 to
2543 MU in 1989-90 and further to 4570 MU in 1999-2000.There are at least four main reasons for such a significant rise in the average estimated consumption per connection:

1) First, the number of unmetered connections has increased. At present, only about
20% of the agricultural connections have meters and even some of these meters are
defective. Consumption of unmetered connections and connections with defective
meters is estimated by the utility and it is a matter of debate whether the estimated
agricultural consumption is overstated.

2) Second, in absence of a meter, the consumer has the freedom to consume as much
power as he wishes and it is likely that he would consume much more than his metered
counterpart. The tariff differential between a metered connection and a flat rate
connection is such that a flat-rate connection becomes economically rational for a
consumer if he can consume much more power than a metered connection.

3) Third, the data on connected load may be inaccurate depending on whether or not
the records are updated by the utility. It is generally believed that flat rate consumers increase their pump size without declaring the higher pump rating, because their charges increase proportionately with the pump rating.

4)Fourth, irrigation requirement increases with need to increase in agricultural
production and area under irrigation. It can also increase as the ground water level falls.

All these factors could have influenced the electricity consumption in Haryana.

Unless meters are installed, the true consumption is difficult to establish.