Sunday, May 13, 2012 - , , 0 comments

Important Foreign Visitors to India in ancient times !



‎*MEGASTHENES(Greek)
-ambassador of Selecus I of Syria 
- came to court of Sandrokattes (Chandragupta maurya)
- Described Social and administrative conditions under the Mauryas










- , , 0 comments

Economic Survey 2011-12




Summary of Economic Survey  2011-12



Ø  Indian economy…estimated to grow by 6.9% in 2011-12…due to weakening industrial growth….indicates a slowdown compared not just to the previous two years….when the economy grew by 8.4%/….but also from 2003 to 2011...except 2008-9 economic downturn, when the growth rate was 6.7 percent.

Ø  The Economic Survey 2011-12, presented by the Finance Minister, Sh Pranab Mukherjee in the Lok Sabha, however predicts 7.6% GDP growth in 2012-13 and 8.6% in 2013-14



  
Ø  With agriculture and services continuing to perform well, the slowdown can be attributed almost entirely too weakening industrial growth.
- , , 1 comments

Foreign Institutional Investors (FII)



( Swapnil Patil & IAS OUR DREAM to be credited for this great work... )


What is FII?




FII is nothing but Foreign Institutional Investors. Below entities are called FIIs
1. Pension Funds
2. Mutual Funds
3. Insurance Companies
4. Investment Trusts
5. Banks
6. University Funds
7. Endowments
8. Foundations
9. Charitable Trusts
10. Asset Management Companies
11. Institutional Portfolio Managers
12. Trustees
13. Power of Attorney Holders



Advantages
  • Enhanced flows of equity capital

  • FIIs have a greater appetite for equity than debt in their asset structure. The opening up the economy to FIIs has been in line with the accepted preference for non-debt creating foreign inflows over foreign debt. Enhanced flow of equity capital helps improve capital structures and contributes towards building the investment gap.

  • Managing uncertainty and controlling risks.

  • FII inflows help in financial innovation and development of hedging instruments. Also, it not only enhances competition in financial markets, but also improves the alignment of asset prices to fundamentals.

  • Improving capital markets.

  • FIIs as professional bodies of asset managers and financial analysts enhance competition and efficiency of financial markets.

  • Equity market development aids economic development.

  • By increasing the availability of riskier long term capital for projects, and increasing firms’ incentives to provide more information about their operations, FIIs can help in the process of economic development.


  • Improved corporate governance.


  • FIIs constitute professional bodies of asset managers and financial analysts, who, by contributing to better understanding of firms’ operations, improve corporate governance. Bad corporate governance makes equity finance a costly option. Also, institutionalization increases dividend payouts, and enhances productivity growth.




Disadvantages
  • Problems of Inflation: Huge amounts of FII fund inflow into the country creates a lot of demand for rupee, and the RBI pumps the amount of Rupee in the market as a result of demand created.

  • Problems for small investor: The FIIs profit from investing in emerging financial stock markets. If the cap on FII is high then they can bring in huge amounts of funds in the country’s stock markets and thus have great influence on the way the stock markets behaves, going up or down. The FII buying pushes the stocks up and their selling shows the stock market the downward path. This creates problems for the small retail investor, whose fortunes get driven by the actions of the large FIIs.

  • Adverse impact on Exports: FII flows leading to appreciation of the currency may lead to the exports industry becoming uncompetitive due to the appreciation of the rupee.

  • Hot Money: “Hot money” refers to funds that are controlled by investors who actively seek short-term returns. These investors scan the market for short-term, high interest rate investment opportunities. “Hot money” can have economic and financial repercussions on countries and banks. When money is injected into a country, the exchange rate for the country gaining the money strengthens, while the exchange rate for the country losing the money weakens. If money is withdrawn on short notice, the banking institution will experience a shortage of funds.
*****************************************************************





What is the relation between FDI and FII?



**FII generally means portfolio investment by foreign institutions in a market which is not their home country. These institutions are generally Mutual Funds, Investment Companies, Pension Funds, Insurance House's is a short term benefit to the country and the rules and regulations to enter the Indian Market are not much, the fluctuations in the stock market is generally due to the FII Investments , cause the rules are eased the investor can leave the market at Any point of time. 
**There investments are in the stock market whereas FDI is generally a long term commitment to a particular company in a sector in terms of equity investment by some foreign entity.







** Therefore we could see Lehman investing 15% in say Unitech, now that would be FDI. However if Lehman has bought shares of Unitech though secondary markets (stock trading market) it would have been an FII. FII funding is a paramount maker of stock markets and there selling or buying moves the stock in a day. FDI also have to follow a high rules and regulations to enter the market and the subs. given to such players are huge in term of taxes .FDI have long term commitment and hence we see flight of capital in terms of FII outflows but not generally in FDIs. 
**The Economy high and low depends on the FDI's Investment where as the Stock mark fluctuations are generally because of FII



****************************************************************


What is IPO ?




*Initial public offering ....jb koi compony pahli bar apne poduct ko public ko pahli bar offer karti hai to usko IPO bolte hai .


*it can be used by small or big compony to increase their capital.


*many companies that request for initial public offering make their finance from the lone by the bank ..



*****************************************************************
WHICH IS BETTER FOR INDIA FDI or FII ?

The article looks like having a good discussion on FDI and FII ,
 even though old article( 2006 April).


India doesn't need FDI

 It won't be an exaggeration to say Nimesh Kampani, Chairman, JM Morgan Stanley, knows the Bombay Stock Exchange like the back of his hand.


Kampani was one of those who propelled the stock exchange boom in the early 1980s when Reliance Industries founder Dhirubhai Ambani entered the world of equities.


Nimeshbhai, as he is popularly known, is media-shy and a man of few words. For a change, he agreed to a rare and exclusive interview with Managing Editor (National Affairs) Sheela Bhatt in New Delhi and discussed what can bring about changes in India.

The world is saying India will grow, India will become a big power. What are the hidden risk factors in this hype?
There is too much liquidity across the globe. Rich people all around have so much cash in hand that they are looking for markets that are growing. How many places in the world are registering growth? Europe doesn't have much of it. Only Asia is attractive.
The US is showing one to three per cent growth in most sectors. The US economy is developed. People there have cash in hand to spend. People in the US want to consume using credit cards.
Our risk factor lies in liquidity. Too much liquidity of those consumer economies is chasing Indian stocks. Because there is an absence of growth in their domestic markets. Their money is welcomed in India but the risk of withdrawal comes along with that.
If withdrawal of money happens it can very well bust Indian stocks.
In the last five years, $45 billion investment has come to the Indian markets from foreign institutional investors. Today, the market value of their money should be around $120 billion.Who will buy when they will rush in to sell?
Right now, one lot is selling and the other lot is buying. Those who bought shares at much lower price of say, Rs 80 are selling at Rs 800 and booking profit. The newcomers, on the other hand, are buying at Rs 800 with confidence in market. The new buyers will like to wait for the next five years for the stock prices to go further up.
We know Japan has invested $5 billion in the Indian market. Much of it is retail money. These days, as soon as new public issue opens, it gets filled up within the first few hours.


Why is it so?
Because Japan has saved money for years. Investors there get zero or negligible interest. At some places, bank charges them for keeping deposits. In our banks, on the contrary, we get four per cent, at least. The Japanese are tired of dead investment. So they are looking out.
In the last one year, the Japanese have got return of 48 per cent in the Indian stock exchange. They had started with $1 billion. Now it has reached $5 billion. Nomura Securities and others invested in it. They take index stocks. When an investor does not know the country well, he tends to buy index shares only.
The Japanese and the Koreans have invested. Recently I met 30 parliamentarians fromDenmark. I made a presentation to them on India's future. Thereafter, two of them came and talked about investing in Indian stocks.



What can go wrong in realising your dreams of India?
Politics. If something happens to this government and there is instability at the Centre, it can affect our growth.
In 2004, between May 13 and 18, the stock index plunged when Sonia Gandhi delayed her decision to announce (Dr Manmohan) Singh's name as the prime minister. The market picked up only when the announcement was made.
The investor does not like political uncertainty. They are afraid of power in the hands of Left parties or the so-called Third Front because all they want is a stable government. These days people say Dr Singh is the weakest prime minister but the stock market does not think so. Dr Singh may be weak politically but he is the best prime minister as far as the country's economy is concerned.
The prime minister along with Finance Minister P Chidambaram, Commerce and Industry Minister Kamal Nath and Deputy Chairman of Planning Commission Montek Singh Ahluwalia are too good for Indian markets.

China has not grown with the help of FII investment. Your comment.
Yes. China has grown with the help of bank money, or people's money. China has got four prime banks owned by the government. These banks' non-performing assets is approximately above 30 per cent. Can you imagine about Rs 6 lakh crore (Rs 6 trillion) is disappearing from the total deposits of Indian people kept in the Indian banks?
Indian banks have deposits worth around Rs 20 lakh crore (Rs 20 trillion).
Chinese banks have more than what Indian banks have. Out of that money, 30 per cent has vanished. Its savings rate is around 40 per cent. The question is: Where has people's money gone? It has gone into building infrastructure. They have issued loans to whoever came to the bank. To build infrastructure, they were fast to disburse money. Now, they are writing off those loans. In India, bad debts of banking industry stands at a meagre 1.75 per cent.
China went ahead full steam without taking care of the accounting and financial niceties. India is a democratic country. Here, journalists and Parliament would ask questions about fiscal management. About 30 per cent of bad debts won't be allowed.
A friend of mine was in China recently. He was travelling along a road lined with houses on both sides. After 15 days, when he returned along the same road, he saw those homes had disappeared and a bigger road was being built. That is China. There the government can evacuate you in no time.


Many of us feel the Sensex boom helps only a few people. Indian slums are growing as ever.
Slums will not go away in the next two decades. You need wealth to distribute it. We need to create wealth in private hands. In China, government created wealth. In India, we are following a different route. The Indian process will be a slow one.
Recently we at Morgan Stanley, handled the issue of China Construction Bank. It is the first government-owned bank in China to go public. It was heavily subscribed. MeaningChina is now adopting discipline in fiscal management.
Recently, China collected around $8 billion from the US and Hong Kong and other places and wrote off old bad debts. Now, it has begun repairing its balancesheet.
Therefore, we need huge investment in infrastructure before we can even think of removing slums. We cannot tackle poverty until we raise money to finance infrastructure. I always believe that more roads, more construction and development of tourism are sure-shot ways to create huge employment.
Do you find deficit financing a big issue for Indian fiscal management?
I don't think it's an issue. India's deficit is under control. The problem lies with the states and not with the Centre. India's combined deficit is 10 per cent. States should improve financial management. Gujarat and Tamil Nadu are the best managed states as the governments there are excellent in financial management. They are developing their states' resources impressively.
If you are asked to take one creative decision as finance minister, what will that be?
I will go to Parliament and ask for permission to create fiscal deficit. I want to spend $50 billion on infrastructure! Here deficit financing is justified because I am not spending on people. Rather, I am creating assets. People will get employment and that should justify deficit planning. You need political guts and courage to do it.
Planners would fear that if tax does not rise, inflation will increase and savings would pump in more money. This, in turn, will increase liquidity. But all depends on the management of spending on infrastructure.
Spending on infrastructure will increase internal mobility of our people. I feel tourism and infrastructure are the areas where the Indian government should be involved. All other areas can be developed with private money.
Does India need more foreign direct investment?
India doesn't need FDI. To get FDI, you have to install infrastructure first. China is getting 10 times more FDI than India because they have invested in roads and bridges and airports.

Why do you say India doesn't need FDI?
You need infrastructure to manage incoming FDI. You need clear policy.
FDI is not needed in India because we are getting more money from the FIIs. We are getting around $12 billion from them.
They are buying in secondary markets and that money gets into the Indian economy. While India gets around FDI worth $5 billion, China gets around $50 billion. They don't have our types of stockmarkets. So FIIs are absent there. In India, when FIIs pump in $12 billion, it means a few Indians have sold their shares to them (the FIIs), so that free cash gets invested somewhere within India by Indians.









That money goes into land, buying of new stocks and into banks.
The fundamentals of money are that it goes where it gets sound returns. Therefore, if you keep up our policies and make them fair, India should not worry which way it gets money. Mittal Steel, Reliance, Tata, Vedanta and other Indian companies are going to invest more than Rs 2 lakh crore (Rs 2 trillion) in the coming years.
FDI is not a big issue because Indians are in now a position to raise big money and invest inIndia. The government should see that people get returns.

  Source : http://www.rediff.com/money/2006/apr/03minter.htm

*********************************************************************************************************************************
  • FII players pull out their money from stock-market even for slightest good/bad rumors and invest in in different country. 
  • That's why it's called 'Hot money' -was responsible for 1997 Asian financial crisis {2 marker in GS Mains Paper-I, 2007}
  • In 2007, the 2 marker appeared because that year SEBI made some regulation in FII investment via participatory notes to control the hot-money. 
  • Also, there were allegations that Pakistan might use it for 'financial-terrorism' using FII via Participatory notes.
  • Although there are tools such as Tobin Tax, to control the flight of hot-money. But still, For development, Governments want and prefer FDI and not FII. Because It's hard to pull out FDI once invested.
- , , 0 comments

Micro Financial Sector (Development and Regulation) Bill, 2011


The Union Cabinet cleared the Micro Financial Sector (Development and Regulation) Bill, 2011, which will bring the microfinance industry under the regulatory ambit of RBI.
As per the Bill all microfinance institution (MFIs) will now have to be registered with the RBI, which will decide the interest rate that MFIs can charge. Also it would be mandatory for micro finance institutions (MFI) to be registered with the Reserve Bank and have a minimum net-owned funds of Rs 5 lakh. A Micro-Finance Development Council will be set up to advise the government on formulation of policies, schemes and other measures required in the interest of orderly growth and development of the sector with a view to promote financial inclusion. The bill has gone soft on the issue of interest rates charged by the MFIs though the MFI sceptics were expecting the capping of the rates.


The Bill will be now sent to Parliament for consideration.


Why a need for this Bill?
The Bill was drafted in the backdrop of issues faced by the microfinance borrowers in Andhra Pradesh. Micro-lenders have been accused of aggressive lending and recovery practices and high interest rates, which attracted calls for regulation.


What is Microfinance?
Micro finance services” means one or more of the following financial services involving small
  1. Amounts to individuals or groups:
  2. Providing micro credit;
  3. Collection of thrift;
  4. Remittance of funds;
  5. Providing pension or insurance services;
  6. Any other services as may be specified.
Source : gktoday.in
- , , 1 comments

IMPORTANT AMENDMENTS IN THE INDIAN CONSITUTION

(Copied from : IAS Our Dream)

The first Amendment Act to the Indian Constitution was made in the year 1951 
According to it, Articles 15, 19, 85, 87, 174, 176, 341, 342, 376 were amended and Articles 31A and 3IB inserted and Ninth Schedule was added.

The Constitution (24th Amendment) Act, 1971: 
**It affirmed the power of the Parliament to amend any part of the Constitution. 
**After this amendment, the President is bound to assent to Constitution Amendment Bill. 
**Education was transferred to the Concurrent List by this amendment.
Education was transferred to the Concurrent List 


(Concurrent list consists of 52 items. Uniformity is desirable but not essential on items in this list: Marriage and divorce, transfer of property other than agricultural land,education, contracts, bankruptcy and insolvency, trustees and trusts, civil procedure, contempt of court, adulteration of foodstuffs, drugs and poisons, economic and social planning, trade unions, labour welfare, electricity, newspapers, books and printing press, stamp duties)


- , , , 0 comments

From Golaknath through the era of Emergency to Minerva...in short ..!!!


In 1967, in Golak Nath vs. The State of Punjab, a bench of eleven judges (constituted for the first time) of the Supreme Court deliberated as to whether any part of the Fundamental Rights provisions of the constitution could be revoked or limited by amendment of the constitution. This question had previously been considered in Shankari Prasad v. Union of India and Sajjan Singh v. State of Rajasthan. In both cases, the power to amend the rights had been upheld on the basis of Article 368. Chief Justice Subba Rao writing for the majority (five judges dissenting) held that:
* A law to amend the constitution is a law for the purposes of Article 13.
Article 13 prevents the passing of laws which "take away or abridge" the Fundamental Rights provisions.
Article 368 does not contain a power to amend the constitution but only a procedure.
* The power to amend comes from the normal legislative power of Parliament.
Therefore, amendments which "take away or abridge" the Fundamental Rights provisions cannot be passed.




The Kesavananda case (1973)

Six years later in 1973, thirteen judges of the Supreme Court, including then Chief Justice Sikri, heard arguments in Kesavananda Bharati v. The State of Kerala and thus considered the validity of the 24th, 25th and 29th amendments, and more basically the correctness of the decision in the Golak Nath case. 
This time, the court held, by the thinnest of margins of 7-6, that although no part of the constitution, including fundamental rights, was beyond the amending power of Parliament (thus overruling the 1967 case), the "basic structure of the Constitution could not be abrogated even by a constitutional amendment".

However nine judges (including two dissentients) signed a summary stating that "the view of the majority" in the case was
1. Golak Nath's case is overruled.
2. Article 368 does not enable Parliament to alter the basic structure or framework of the Constitution.



The Emergency (1975)
In 1975, shortly after the imposition of the Emergency, a bench of thirteen judges was hastily assembled to hear the case of Indira Gandhi v. Raj Narain. Presided over by Chief Justice A.N. Ray, the court had to determine the degree to which amendments were restricted by the basic structure theory. On November 10 and 11, the team of civil libertarian barristers–again led by Palkhivala–continuously argued against the Union government's application for reconsideration of the Kesavananda decision. Some of the judges accepted his argument on the very first day, the others on the next; by the end of the second day, the Chief Justice was reduced to a minority of one.


On the morning of November 12 Chief Justice Ray tersely pronounced that the bench was dissolved, and the judges rose. The doctrine could thus famously be applied in Indira Gandhi vs. Raj Narain to the 39th Amendment of 1975, which attempted, among other provisions, to pass legislative judgment over the election of Indira Gandhi in 1971.
Extending the doctrine (1981)

The doctrine was expanded in the Minerva Mills case of 1981. In Minerva Mills Ltd. v. Union of India,Palkhivala successfully moved the Supreme Court to declare that Clauses (4) and (5) of Article 368 of the Constitution are invalid. These clauses had been inserted as a response by the Gandhi government to the decision in the Kesavananda case by the Constitution (Forty-Second Amendment) Act, s. 55. The clauses read:

(4) No amendment of this Constitution (including the provisions of Part III) made or purporting to have been made under this article whether before or after the commencement of section 55 of the Constitution (Forty-second Amendment) Act, 1976 shall be called in question in any court on any ground.

(5) For the removal of doubts, it is hereby declared that there shall be no limitation whatever on the constituent power of Parliament to amend by way of addition, variation or repeal the provisions of this Constitution under this article.
The Court held that since, as had been previously held in the Kesavananda case, the power of Parliament to amend the constitution was limited, it could not by amending the constitution convert the power into an unlimited power (as it had purported to do by this amendment). The court went on to invalidate the amendment of Article 31-C by the Forty-second Amendment.This view of Article 31-C, but not the basic structure doctrine, was questioned but not overruled in Sanjeev Coke Mfg. Co v Bharat Cooking Coal Ltd.

- , , 0 comments

Neonatal mortality


Union Minister for Health & Family Welfare recently said that in order to strengthen neonatal services in the country, funds are provided to States for establishing and running Special Newborn Care Units (SNCU), Newborn Stabilization Units (NBSU) and Newborn Baby Care Corners (NBCC). 

Funds have also been allocated to States for implementing Janani Shishu Suraksha Karyakram (JSSK) which provides for free care and transport of sick newborn for first 30 days of birth. As per SRS 2010 report of Registrar General of India, Neo-natal Mortality Rate is 33 per thousand live births in India.


 IMPORTANT DEFINITION
  • Perinatal mortality only includes deaths between the foetal viability (22 weeks gestation) and the end of the 7th day after delivery.
  • Neonatal mortality only includes deaths in the first 28 days of life.
  • Postneonatal mortality only includes deaths after 28 days of life but before one year.
  • Child mortality includes deaths within the first five years after birth.


What basically is Neonatal mortality ?
**Early neonatal mortality refers to a death of a live-born baby within the first seven days of life, while late neonatal mortality covers the time after 7 days until before 28 days. 
**The sum of these two represents the neonatal mortality. Some definitions of the PNM include only the early neonatal mortality. 
**Neonatal mortality is affected by the quality of in-hospital care for the neonate. Neonatal mortality and postneonatal mortality (covering the remaining 11 months of the first year of life) are reflected in theInfant Mortality Rate.

Various contributing factors for neonatal mortality include 
(a) Home delivery by unskilled persons 
(b) Lack of essential new born care for asphyxia and hypothermia 
(c) Poor child care practices 
(d) Lack of early detection of sick newborn 
(e) Inadequate/Delayed referral mechanisms 
(f) Inadequate infrastructure in govt. hospitals for specialized care of sick newborn.

 The medical causes of neonatal deaths  in India are Infections (29%) such as Pneumonia, Septicemia and Umbilical Cord infection; Prematurity (24%) i.e birth of newborn before 37 weeks of gestation and Asphyxia (19%)  i.e. inability to breathe immediately after birth that leads to lack of Oxygen.


What is Perinatal Mortality Rate ?
The PNMR refers to the number of perinatal deaths per 1,000 total births. It is usually reported on an annual basis. It is a major marker to assess the quality of health care delivery. Comparisons between different rates may be hampered by varying definitions, registration bias, and differences in the underlying risks of the populations.
PNMRs vary widely and may be below 10 for certain developed countries and more than 10 times higher in developing countries . The WHO has not published contemporary data.

What is SRS (Sample Registration System)?


 **The Sample Registration System (SRS) is a large-scale demographic survey in India for providing reliable annual estimates of birth rate, death rate and other fertility & mortality indicators at the national and sub-national levels.
**The field investigation consists of continuous enumeration of births and deaths in selected sample units by resident part time enumerators, generally anganwadi workers & teachers, and an independent survey every six months by SRS supervisors.
**The data obtained by these two independent functionaries are matched.
** The unmatched and partially matched events are re-verified in the field and thereafter an unduplicated count of births and deaths is obtained.
**The sample unit in rural areas is a village or a segment of it, if the village population is 2000 or more. In urban areas, the sampling unit is a census enumeration block with population ranging from 750 to 1000.
**At present, SRS is operational in 7,597 sample units (4,433 rural and 3,164 urban) spread across all States and Union territories and covers about 1.5 million households and 7.27 million population.

Source : IAS Our Dream