Tuesday, November 13, 2012

After a long time I am writing on my blog. This time on a Diwali day, market is gloom Mahurat session ended in red and Economy is in bad state, IIP nos. are disappointing, manufacturing growth is negative and in all this gloom I am again writing here to initiate a discussion to understand what is more important or rather what requires our attention Growth or Inflation.

Government has started taking steps towards the revival but the saying suggest "aag lahgne ke baad khadda nahi khoda jata". The best possible way to bring back the growth is bringing foreign investment in the country. FIIs are that capable of holding the growth but FDI is and will be the main source of the growth. Government has allowed allowed FDI in Multi Brand retail, increased the FDI limit in Single Brand retail and in aviation as well as in Insurance but still the sentiments have not changed. The reason behind this is implementation of these steps taken by the government, even after taking the decision to allow FDI, the RBI has not incorporated this change in their system.

RBI governor is in a dilemma what to prioritize, Growth or Inflation. RBI has given priority to the growth. Interest rates are still high though the RBI has provided liquidity in the system but that is not enough. When the country is facing a threat of credit degradation, they must take step for improving the economy and allow growth.

What is more important here is to provide a one window clearances for such investments in India. FDI limit is different in different sectors but it is important that we provide easy and fast clearances to such investments.

In my views RBI should lower the interest rate in their next review which will allow the industry to borrow and start looking for the growth.

Monday, December 20, 2010

3G Technology : A new price war?

3G Technology has been rolled out by 2 operators in India and there is a possibility of a new price war scenario in this space. Last years when DOCOMO reduced calling rates to 1p/sec a new low pricing war started. Even the established players like Airtel, Vodafone and Idea have slashed their calling rates.

With introduction of 3G the same price war scenario is expected. DOCOMO has rolled out 3G during Diwali and now Airtel is ready, but in all these cases the price war is very unlikely. There are 3 reasons for it.

First reason is 3G license were very costly and plus installation cost were huge. Which will actually restrict telecom operators from reducing their rates.

Second reason is that with the emergence of so many mobile handset companies the price of handsets are decreasing significantly and selling of mobile handsets are increasing but around 70% mobile handsets do not have 3G technology built in. so in a whole group of Mobile holders only 25%-30% are potential customers.

The third reason is that the Government has allocated 3G licenses to 2-3 operators per circle. and the operators who has received 3G licenses are established players in the market. DOCOMO has cash with them to function 3G effectively and they are experienced too. Vodafone though facing legal battle for tax, still can run 3G with foreign money. Airtel too has a good debt payment record and thus their will be less problem for them to raise money and repay it. Reliance is in some pain but the policy of Reliance group is that they do not do charity.

With all these reason I think There is NO possibility of Price war after 3G starts functioning fully.

Saturday, August 21, 2010

A Strange Problem : money saving

India, A country where elders always advise their sons & daughters to save money. And after the recent global meltdown it is quite obvious that its a good habit. Now, even Americans have started saving money but according to economists there it is a matter of concern as in this recovery phase if people won't spend, the recovery would be slow and which may depress many people and which may create another slowdown.

But how Saving can be a problem as it helps one to use his saving in need. Economists are right about the fact that people should spend which helps to rotate economic cycle and helps to create more jobs. But they are missing a point, If people start spending like before it may shorten the economy cycle. and may be again in few years we see another depression. If people save some money, the recovery would be little slow but it will help the economy build it self with greater strength.

I think government can address both this issues. Government should direct all the employers small or big, deposit salaries of all their employees in a bank account. Bank will create savings account for all the employees and they will deduct 10% of their salary and allow them to spend or take credit on remaining 90%. This process will serve 3 purposes, it will help government to track black money, help banks to track defaulters, and help the economy to sustain itself for a longer period.

This is just an opinion. have a thought.

Friday, March 19, 2010

First Hollywood, then Bollywood and now its Sportywood

This word 'wood' is something amazing with whoever it attaches gets famous or we can say it is attached to only those things which are famous and provides entertainment and remarkable. English film industry known as Hollywood, world’s largest movie making industry Indian film industry known as Bollywood, then came the famous Tiger woods who provided good entertainment to media and gave a chance to those alleged mistresses to appear on TV and news is that they all might take part in Fashion show, great. Provides opportunity to its stakeholders to be famous and get entertained.

3 years back when BCCI had started IPL we thought this will be another cricketing affair but today when we check IPL is more than cricket it is mixture of cricket and entertainment. DJs are played at all the match venues. Filmstars buying teams and those who could not afford associating themselves with one or the other team and even the cameraman focuses on filmstars time to time while match is going. This is something incredible.

Now it’s a trend in India that for every other sport event organizers call one or the other filmstars to entertain people. Recently at Commonwealth Boxing championship organizers has arranged music show to entertain viewers.
These systems open a new gate for the entertainers top associate themselves with sports and earn more limelight. Now, with the ongoing IPL we will see more such incidences. Good for viewers that for a ticket for one game they are getting entertained. JAI HO SPORTYWOOD……

Budget 2010: Mind numbers

You all must be surprised that after almost 20 days why am I analyzing and writing about the Union budget, but this budget is so interesting that I can’t resist myself from writing about it. Highlight of budget says that Income tax exemption limit has increased and the tax structure has changed these are positive news. But at the same time FM has increased export duty, hike in Petrol prices and increase in stamp duty on land registration and building construction.

In all if we see there are so many thing which can affect common man in his day to day life such as increase in petrol prices which will indirectly help to take the inflation higher or even excise duty hike will indirectly increase the burden on common man but, there is something positive about this budget and it is that it gives the indication that government is looking for growth. Government has not rolled back any stimulus which is really positive for the industries and one more important thing government has did is that they have increased tax slab. The change in the tax slab is not too high but even a small increase in one’s earning results in more spending and we will see this in near future.

When a person tends to earn X money he used to save X/4 money and when his salary increases and becomes X+5000 he try to spend those money and it helps the economy. Even 100 bucks from an individual helps the economy to pick up and here we are talking about nearly 20% Indians it’s huge.

These all are evident from the fact that Indian stock exchanges are showing positive signs. After these stock exchanges has became the face of the economy we try to convince ourselves that the economy is picking up after every high at stock exchanges and these further improves the sentiments and helps people to append more which results in pick up in economy. With this global condition is showing positive signs which further helped stock exchanges to move further.

In all I can say the Union Budget is not only about numbers but it is more than that. It gives the indication what government priorities are and what they going to do in future.

Wednesday, April 1, 2009

American Recovery and Reinvestment Act: Is Pendulum is swinging the other way?

24th Feb 2009, US president Barak Obama made his first speech to the Congress. He started with very strong point motivating the whole country and conveying the steps his government has taken to fight this Financial Crisis. The speech was very good. We can say that this is the speech which is the need of the hour. Government has made the Law name ‘American Recovery and Re investment Act’. With this act Government of US will start spending in those areas which generates most jobs in the market including Infrastructure and Education.


According to this plan US citizens will receive a tax cut that will reflect in the pay checks from April 1st. This is a very good sign. US government is putting money in the people’s hand so that they can spend this extra money and which will generate demand which will help to revive the economy.


But one thing which raises eyebrows across the world is that from now on their will be no tax benefits for those companies who outsource their work to other countries. Is this the indication of a swing of pendulum from open economy to Protectionism? Human psychology suggests that whenever Pendulum is on the right side people will love to see it on Left and vice versa. When economy was booming every one in Russia was crying for open economy and now when world is under the biggest crisis everyone seems interested in Protectionism including the most liberal and open country in the world in terms of its economic decisions.


After the 1929 financial crisis when Economists found the reason for the crisis was a closed economy and under spending nature for people. In other words we can say that the US economy was not that encouraging that people would think of starting their own business, taking some risk which stopped them from asking more and spending more and this was the reason for the 1929 financial crisis. After then US economy was open for all and we have seen its fruitful results. In fact US taught other countries to open their economy allow your businesses to expand beyond their country which will help them to grow, which will allow country to gain foreign exchange. This step will bring in competition and it will help consumers with choices. And when you have different choices people will start spending as with these choices they get tempted to spend.


Protectionism can not be a solution for any countries growth. If you check India where the internal demand is so strong that even in such high crisis time Indian economy has not affected much. Before 1992 when Indian economy was not that open and even having Democracy, government was working with the socialist thinking. Even during that such protectionism has not helped India to make its mark on the global Finance chart even after having such a great internal diversity and internal demand. Such protectionist steps will not help US as US has no great internal demand, and such stopping of outsource sing will affect the other countries such as Europe and China which largely dependent on export of their medical and hardware stuffs respectively to US. The best way to tackle this financial crisis is to injecting money in the market and allowing people to spend more. And for this it is very important that all the countries in the world start working together and for that open economy is very important.


Even the WTO chief Lamy Pascal has urged US president not to become Protectionist and lead other countries to tackle such a financial turmoil. Even today while having a press conference at London US president Barak Obama has said that we should not become protectionist. now we can only hope that this pendulum swing the other way and again the world economy start flourishing.





Tuesday, March 31, 2009

Apology

Hello Friends,

In Recent times many things has happened at the economic front, the Financial market is down and but with current rally in market there is a hope that this troubled times will over soon even this financial down turn is extending the blame game has started but you guys are wondering why there is no topic at all and for that I would like apologies that because of some personal reasons I was unable to write on any topic but now I am assuring you that I will again start writing on important Financial issues.

With this I would like to tell you that from here onwards I will write on some Financial issues for which there is no daily news or update but these are very very essential in future economics, market.

I hope you all will encourage me by sending your comment on these topics. If there is anything wrong so please correct me.

Thank you and again Sorry for such a long break.

Manan Bhatt