Thursday, October 31, 2013

MSMEs Definition in India

Definition of  Micro, Small and Medium Enterprises (MSMEs) under the MSME Development Act, 2006  on the basis of their capital investment: 

The manufacturing MSMEs are defined as;
Micro (less than Rs. 2.5 million), Small (between Rs. 2.5~ 50 million) and Medium (between Rs. 50~100 million)
The corresponding thresholds for service MSMEs are: 
Micro (less than Rs. 1 million), Small (between Rs. 1.0~ 20 million) and Medium (between Rs. 20~50 million)

Number of MSMEs in India

MSME Census (2006-07) reported that there were 36.17 million MSME units employing over 80 million people producing a gross output of Rs. 13.5 trillion. 
Accordingly for year 2011-12, the corresponding figures projected by Ministry of MSME are 44.7 million units, employing 101 million people with gross output exceeding Rs. 18.3 trillion

Please add your comments if any;

Friday, October 18, 2013

THE LAW OF ATTRACTION: It Works beautifully

Calm Your Mind

Meditation takes awareness and a willingness to keep going. The good news is that it is not possible to fail! As you continue, it will begin to feel more natural, and cool things will start to happen. Being still happens in a moment, but it may take some time before that moment comes. Remember,it is a great gift to yourself

In other words, meditation is a letting go of resistance, of whatever may arise: doubt, worry, feelings of inadequacy or endless dramas and desires. Every time you find your mind is drifting, daydreaming, remembering the past or planning the future, just come back to now, come back to this moment. In meditation, paying attention is both the key and the practice. To be with what is; nothing else is going on.

One way to become more focused is to label the thoughts. If you drift off into thinking, silently repeat, "Thinking, thinking." Ed likes to repeat, "Monkey mind, monkey mind," when meaningless thoughts appear. If you get distracted, simply label it, "Distraction, distraction." You can also see thoughts like clouds in the sky, just moving through the sky without stopping, or like birds and watch them fly away. Everything comes and goes—nothing stays, no matter how strong or insistent the thought or feeling may be. There is no need to struggle; meditation is really your best friend.

Breath Awareness Meditation

Sit comfortably with a straight back so you can breathe easily and freely. Hands are resting in your lap. Eyes are closed or lowered. Take a deep breath and let it go.

Now simply focus on the natural in and out flow of your breath without trying to change it in any way. Let your breathing be normal and relaxed; your attention still and focused.

If you find you are getting distracted or caught up in thinking, simply label your thoughts as distraction or thinking and let them go, or see them as birds in the sky and let them fly away. Do your best to do this for at least 10 minutes. Just breathing and being.

When you are ready, take a deep breath. Gently open your eyes.

Read more:

Thursday, October 17, 2013


What is the debt ceiling?

The debt ceiling is a self imposed limit for US Government borrowing. How much the US can borrow is set by legislative procedure. Both houses must vote and determine a limit. Currently, that limit is nearly $17 trillion. That limit ran out in May 2013 but the US Federal Reserve has managed to run the economy without borrowing more by using some other measures. However, the Treasury Secretary has said that these measures will be exhausted by Thursday and the Government will need to borrow more. With only a few hours to go the Government must vote to increase debt ceiling.

Why does the US keep hitting the debt ceiling?
Between 1940 and January 2013, the debt ceiling was raised 94 times. During President Reagan’s term, the ceiling was raised 18 times – the maximum. And so far, during President Obama’s term, it has been raised 6 times. You probably remember reading about frequent debt ceiling debates in the recent past. What has lead to this recent frequency of increasing the debt ceiling?

While US has been borrowing for a long time, the recent events can perhaps be traced back to the financial crisis of 2008. (Read a detailed explanation of that crisis here) After the 2008 sub prime crisis exploded, the US economy was weak and the Government had to revive it. It decided to dole out money through stimulus packages. But the Government didn’t have enough money in its kitty for these packages so it decided to print dollars. Failing companies were given money to survive; people were given money to spend. At that time, the crisis was controlled.

But the doling out of money was just a temporary solution. It only prevented a further fall. The fiscal stimulus did not help promote industry, did not help create jobs. All this while, while the US Government did not earn much by way of income, it still had the same level of spending to do to keep up the people’s standard of living. Remember that the country also fought two expensive wars during this period. All this lead to a widening deficit.

How does the US Government fund the widening deficit? It can raise taxes or cut spending but both are not very popular. It can also print money but it has already printed a lot and printing more can cause inflation. The last option, also the cheapest for the US, is to borrow and so the US borrows more and more. Who does it borrow from? From its own people (internal debt) and from other countries (external debt). The Government issues bonds to its people and to other countries and raises dollars. Right now, the US is a AAA rated sovereign. That means, it is has the best credit rating. People and countries believe that the US will not default in repaying borrowed funds. Because of this rating the US is able to borrow funds at a low cost. Countries like China that export heavily to the US tend to accumulate huge dollar reserves. They lend those dollars back to the US in exchange for treasury bonds.

Today, the US has borrowed so much that it repeatedly hits the debt ceiling.

To put it in numbers, here’s a look at the US economy (2012 numbers):
Total Revenues: $2.45 trillion (mostly taxes)
Total expenditure: $3.54 trillion (social security, defense, medicare, interest and other expenses like crude oil etc)
Deficit: $1.09 trillion
Accumulated Public debt: $16.68 trillion

Why is it so nail biting this time?

The US hit the debt ceiling in May 2013. But the Fed has managed to run the economy without borrowing more by using some other measures. However, the Treasury Secretary has said that these measures will be exhausted by Thursday. In order to raise the debt ceiling, the House must vote. But this time around, the Government is at an impasse. The Republicans and Democrats are at war over Obamacare. Neither party is willing to negotiate. The Government has been shutdown for the past few weeks because the two parties could not agree to a Budget. Read more about that here.

According to Moody's Analytics, a two-week shutdown would cut 0.3% off US GDP, while a month-long outage would knock a whole 1.4% off growth.

As revenues continue to deplete, the need to borrow more will only increase.

What happens if the debt ceiling is not raised?
If the debt ceiling is not raised, it means the US will not have money to bridge the fiscal deficit. It will not have money to pay its bills. This also increases the risk of default. A default means the US is not able to repay the principle and interest on its borrowings. If the US defaults, it will hamper its credit rating. Rating agency Fitch has already issued a warning on the US credit rating.

Apart from this, it would also send a signal to the rest of the world about a weakening US economy. A blip in the US economy, also called the world’s biggest buyer, will have an impact on world economy. So far, the US economy and therefore the US dollar was the single strongest currency in the world. Nowquestions are being raised about the efficiency of the US dollar as the universal currency.

We are back to the game of wait and watch. Hope this helps in putting some perspective into that game. Till next time, Money Happy Returns!

Wednesday, April 24, 2013

Markets and Elections

Globally, elections are key events and are followed minutely bu investors and market participants. Markets always hope for stable and progressive governments. As the general election near, there is a period of nervousness in the markets. In India, the upcoming general elections are scheduled in May 2014. As the current year is a pre-election year, all the political developments are tracked closely by the market participants.
During most of the pre-election years, equity markets have traded flat with positive bias, except for the year 1998, when the markets traded flat with negative bias as there was extreme uncertain political environment due to unstable government at the centre. Even in 2009 pre-election period had witnessed highly volatile markets with downward bias, though all the global markets witnessed turbulent meltdown due to the US sub prime crisis.
While the reforms are still to show any significant impact on the economic growth, as the election period nears, the pick up in the government spending should lead to revival in the economy.
Also as the political parties prepare for the elections, the election linked spending by the political parties and the spending by the election commission could also drive momentum in the econmoy.