TRIVIA

1. INFLATION : It is the general rise in the level of prices over time in general or for a particular set of goods and services. High rates of inflation are caused by the high rates of growth which has an increase in the overall demand (real or apparent) and with currency appreciation. Inflation is basically measured on the basis of a number of indices like CPI(Consumer Price Index) , Cost of living Index, Producer Price Index, Commodity Price Index. A very small amount of inflation can be viewed as beneficial to the economy. With generally increasing prices, it is quite easy to adjust the relative prices. Inflation may compel producers to buy goods sooner or later depending on growth rate so Inflation is a kind of booster to the economy.
   

Closure of Reliance Petrol Stations

Reliance Industries , headed by Mukesh Ambani is heading for a closure of its gas fuel stations across the country citing less profits. Reliance Industries , which ventured in all sectors like health care, mobiles, digital electronics, footwear, jewelery etc, started its network of fuel stations for vehicles five years back . Though the price of a litre of petrol and diesel were a bit more than the price in other gas stations, the reliance gas stations were very popular among local taxis as it provided both CNG and LPG gas filling options. Is Reliance losing its ground in this sector or is it regaining lost ground?

SMARTEST UNKNOWN INDIAN ENTREPRENEUR

In an interesting article in Forbes titled ‘The Smartest Unknown Indian Entrepreneur’ , Sramana Mitra profiles Sridhar Vembu, the founder and CEO of an Indian firm called AdventNet. The firm today, is a ‘100%, bootstrapped, $40-millio-a-year revenue business that sends $ 1 million to the bank every month in profits’. But we have never heard of Sridhar Vembu, founder and CEO of Adventnet that launched a productivity suite called ZOHO. Vembu maintains a low profile which fortifies his entrepreneur image and is cheap as hell. But we know that frugality is a virtue ad among entrepreneurs, a tremendous one.
So, what does he do is the question you get in your mind.He sells network management tools. He has a staff of 600 in Chenai, India and a mere 8 in Silicon Valley further cutting his costs. His staff doesn't include the alumni of the prestigious institutes or from the ivy league adding to his cost advantage.
Vembu says, "We hire professionals who others disregard. We dont look at colleges,degrees, grades. Not everyone in our country has come from a socio economic background that helps him/her to study in the top most schools. But many are very smart regardless. Agreed that their resumes' are not marketable as others',but they can code just as well as the others , Often well."
Vembu has first done a network management product , then he has come out with ZOHO a productivity suite. No doubt that Vembu is a rare species in India and is one of the few entrepreneurs who had a big vision and executed his plans flawlessly.

ADVANTAGES OF ENTREPRENEURSHIP

Every successful entrepreneur brings about benefits not only for himself/ herself but for the municipality, region or country as a whole. The benefits that can be derived from entrepreneurial activities are as follows:

1. Enormous personal and financial gain.
2. Self-employment, offering more job satisfaction and flexibility of the work force.
3. Employment for others, often in better jobs
4. Development of more industries, especially in rural areas or regions disadvantaged by economic changes, for example due to globalisation effects.
5. Encouragement of the processing of local materials into finished goods for domestic consumption as well as for export
6. Income generation and increases economic growth.
7. Healthy competition encourages high quality products.
8. More goods and services available.
9. Development of new markets.
10. Promotion of the use of modern technology in small-scale manufacturing to enhance higher productivity .
11. Encouragement of more researches/ studies and development of modern machines and equipment for domestic consumption.
12. Development of entrepreneurial qualities and attitudes among potential entrepreneurs to bring about significant changes in the rural areas .
    
13. Freedom from the dependency on the jobs offered by others.
14. The ability to have great accomplishments
15. Reduction of the informal economy
16. Emigration of talent may be stopped by a better domestic entrepreneurship climate.

Source : www.tsummit.org

ANGEL INVESTNG

Angels are the earliest of the early stage investors. For budding entrepreneurs, who wish to start their own enterprise, Angel Investors are the people to look out for. They invest in the about to start enterprises with a decent amount of the total investment that is required to kick off the enterprise. Generally, Angel Investors are said to be the bridge between stage where the enterprise is self funded to he stage where the business requires Venture Capital. For many entrepreneurs, angels provide capital and also valuable guidance and strategic assistance that is very invaluable.
Angel Investors bear high risk as they invest in the starting ground of a new enterprise and the risk involved is much higher than that in Venture Capital.This is because Angel Investors lose heavily when the newly started enterprise fail at a very early stage professional angel investors seek investments that have the potential to return at least 10 or more times their original investment within 5 years, through a defined exit strategy such as plans for an IPO(Initial Public Offer) or an Acquisition. But the rate of return on the investment would be very low as the growth period for a new business takes time to become successful . Angel Investors mostly invest in the areas of retail, entertainment ,internet, education,pharma and any any other leading cutting edge technologies in any field which appears to be a safe bet.

Scenario in India : In India, the Angel network is slowly developing as small scale investments in IT and Retail sectors pioneering the way to future prospects of investments in India.Usually, Angel investors are good old venture capitalists or retired personnel and other small and medium size financial institutions who would want their money to work on its own.
Indian Angel Network is India’s first & largest Angel network with successful entrepreneurs and high profile CEOs interested in investing in early stage businesses across India, which have potential to create disproportionate value.
http://www.indianangelnetwork.com/

Microfinance

Microfinance services are financial services that poor people desire and are willing to pay for. The term also refers to the practice of sustainably delivering those services. It refers to a movement that envisions a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers. Microfinance encompasses any financial service used by poor people, including those they access in the informal economy, such as loans from a village moneylender. In practice however, the term is usually only used to refer to institutions and enterprises whose goals include both profitability and reducing the poverty of their clients. Microfinance services are needed everywhere, including the developed world. However, in developed economies intense competition within the financial sector, combined with a diverse mix of different types of financial instituitions with different missions, ensures that most people have access to some financial services. Efforts to transfer microfinance innovations such as solidarity lending from developing countries to developed ones have met with little success. Microfinance can also be distinguished from charity. It is better to provide grants to families who are destitute, or so poor they are unlikely to be able to generate the cash flow required to repay a loan. This situation can occur for example, in war zone or after a natural disaster.

Evolution of Microfinance in India

•Microfinance has been in practice for ages ( though informally). •Legal framework for establishing the co-operative movement set up in 1904. •Reserve Bank of India Act, 1934 provided for the establishment of the Agricultural Credit Department.
•Nationalisation of banks in 1969. •Regional Rural Banks created in 1975. •NABARD established as an apex agency for rural finance in 1982. •Passing of Mutually Aided Co-op. Act in AP in 1995.

Status of Microfinance in India

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•There is considerable gap between demand and supply for all financial services in India. •Majority of poor are excluded from financial services. This is due to, inter-alia. Bankers feel that it is fraught with risks and uncertainties, h.high transaction costs.3. Unfavourable policies like caps on interest rates which effectively limits the viability of serving the poor. While MFIs have shown that serving the poor is not an unviable proposition there are issues that have constrained MFIs while scaling up. These include

• 1.Lack of an appropriate legal vehicle
  
• 2.Limited access to equity
• 3.Difficulty in accessing low cost on-lending funds.
• •Limited access to Capacity Building support which is an important variable interms of quality of the portfolio, MIS, and the sustainability of operations.
• About 56 % of the poor still borrow from informal sources
• 70 % of the rural poor do not have a deposit account
• 87 % have no access to credit from formal sources.
• Less than 15 % of the households have any kind of insurance.
• •Negligible numbers have access to health insurance (0.4 %) and crop insurance (0.2 %).

Reliance Capital launches Microfinance Initiative

Anil Ambani group’s financial services arm Reliance Capital on Monday launched its microfinance initiative here with tie-ups for two States, which, it said, would be followed by a national rollout soon. Reliance Capital is joining hands with two Gujarat-based microfinance institutions — MAS Financial Services and Vardan Trust — as part of its initiative to enhance penetration of microfinance in the country. The initiative was launched by group chairman Anil Ambani’s wife Tina Ambani, who handed over the first disbursement cheques.Reliance Capital said it planned to fund MFIs in Gujarat and Maharashtra in the first phase, and subsequently have a national presence. “Our vision is to provide access to finance at the grassroots level by partnering with MFIs, serving the rural and semi-urban areas. This initiative is in line with the group’s commitment to play a serious role in bringing value to the lives of the underprivileged and the aged in India,” Ms. Tina Ambani told reporters. “The initiative envisages lending to MFIs, which would then be on-lending finances to self help groups, individuals and joint liability groups as per their norms,” Reliance Consumer Finance’ Deputy CEO K. V. Srinivasan said.

MFI --> Microfinance Institute

Sources : www.microfinance.in/presentation/sou.ppt

Comments from the Opposition

The communist Party of India(Marxist) Polit Bureau said the party was opposed to the privatisation measures announced in the budget and demanded that they should not be taken forward. They also said that a proposal to hand over major railway stations in New Delhi, Mumbai, Patna and Secunderabad to private players for development has been made in the budget. Private players were also going to be involved in setting up diesel and electric locomotive and coach factories. Outsourcing and privatisation of on-board cleaning in super fast mail and express trains were also announced.
The CPI (M) said States that have faced discrimination particularly in north-eastern states and Jammu and Kashmir, which was bound to give rise to discontent. The targets set for 2008-09 for new lines, gauge conversion, doubling and electrification were too low given the substantial financial resources available. Similarly, the outlaws and targets set for enhancing safety and security in the Railways have not matched the claims made in the Minister's speech. There is no room for complacency on this count given the still high number of railway accidents and Railways becoming target of terrorist attacks.
Describing it as "very disappointing," the Deputy Leader of the BJP in the Lok Sabha, Vijay Kumar Malhotra, said that MPs from different States staged a walk-out during presentation of the budget. Without giving any specifics, he alleged that Mr. Prasad made announcements every year on new trains but a majority of them do not start operation. He also claimed that not one unmanned crossing had been converted into a manned crossing over the last one year. He said that incidents of crime in trains had been on the rise and there was lack of cleanliness in stations and trains.

New Telecom Player - VIRGIN MOBILE

Virgin mobile which has its operations all over the world, has launched its mobile services in India through pact with TATA Teleservices. Tata Tele which offers sim based CDMA (Code Division Multiple Access) servicehas tied up with virgin to expand its operations in India.
British billionaire Sir Richard Branson launched Virgin Mobile in India on Sunday aiming to tap the huge number of young people in the world's fastest-growing cellular market.The flamboyant tycoon was lowered by wires down the face of a 35-storey hotel in Mumbai, unveiling the Virgin logo in mid-air, to herald the firm's entry in a tie-up with India's sprawling
tea-to-steel Tata Group.
Virgin will not be entering India as a MVNO(MobileVirtual Network Operator) as feared by other major telecom players in India. An MVNO is an operator that does not own any infrastructure, network or spectrum , but leases these to offer services. Virgin operates as an MVNO in all other big markets like US, UK ,Canada . But with the news of Virgin planning to start its operations in India, the cellular operators association had written a complaint to the telecom authorities.
To begin with, Virgin mobilewill be launched in 50 cities an later spread its presence, though it offers the services on the handsets provided by TTSL in the range of Rs.2000-5000, however, the customer is freeto buy a handset of their choice as virgin offers sim based CDMA services.

Terms of mention :
CDMA : Code Division Multiple Access
MVNO: Mobile Virtual Network Operator
SIM : Subscriber Identity Module