Bihar is back..!

Its official: Bihar is the fastest growing state in India ,clocking a growth rate of 11% in 2008-09. Moreover, the state has been maintaining a growth rate of about 10 % since 2004. The event is closely correlated with change in government at the state. It is a reflection of what good governance and pragmatic leadership can do to the fortunes of a state. There has been drastic improvement in the law and order condition and this government has given strong emphasis on infrastructure development. The govt has spent close to 36000 crores on various projects compared to just 25000 crores during the entire Lalu's regime of 1990-2005. The chief minister has led from the front in attracting investments from different business houses.

The state has also seen a marked increase in new entrepreneurial activities. Many youths have resorted to starting their own ventures and it has given rise to positive dynamism which is driving the state forward in the 21st century. However, the state has still to do a lot of catching up and it will take time before this great state gets to occupy its rightful position in India. The winds of change have begun to blow and and its just a matter of maintaining the momentum through right policy decisions.

inching towards mobile banking..!!

Mobile banking has become a buzzword in many western economies. It envisages an infrastructure based on information technology whereby payments for small ticket items like cinema or plane ticket can be made through one's mobile phone. Moreover, money can be transferred from one person to another across geographies. It will offer sweeping advantages as it will reduce transaction costs and increase the speed of flow of money. Thus , a person in London will be able to send money to his parents in a remote village in India just by the use of mobile technology.

However, there are some demerits which can derail the phenomena of mobile banking. The task of ascertaining the identity of the customer can prove to be difficult and as such the technology can be misused by terrorists for funding of clandestine operations. Secondly, it can instigate fraudulent tendencies with regard to flow of capital in a country like india whose currency is not capital account convertible.

Moreover, the increased velocity of money transfer due to mobile banking can create unlimited amount of credit and thus it may severely hamper the duty of RBI with regard to taming of inflationary expectations by controlling credit.

The unique identity project recently launched by the government can be used along with mobile banking to ensure inclusive growth by ensuring the transfer of credit to the desired target segment through mobile phones and thus getting rid of middlemen.

investment mantras..!

Equities are back and with it comes the thrill and accompanied pressure of producing above average returns. Business pundits have come up with lots of advice about new investment avenues. Most of them are pure common sense and some of them can be easily deciphered if we use little of our grey cells. However, a systematic approach based on pure fundamental analysis can easily produce returns of the the order of 30 to 50 % in 2010. Lets look at some of them.

The solution to the last years's financial crisis has created excess liquidity in the system. Most of them will be absorbed in the commodities. We can already see such signs in the prices of gold and crude oil. Secondly, as the world economy recovers and especially Chinese demand for raw materials to power its throttling growth rate, we can safely assume commodities will easily produce handsome returns in the next year. So , it won't be foolish to invest in steel and other metals.However, gold appears to be overvalued and its time to book profits . The world financial system is not going to break down and thus this rush to gold is pure panic driven without driven by strong fundamentals. Finally, infrastructure stocks like power and real estate will do well for quite sometime. However, we need to be cautious as real estate assets often get caught in vicious cycles of counter productive bubbles which result in irrational pricing . Similarly, all this hype around power sector needs to be closely examined before we land up into another type of dot-com bust.

india: dirt capital of world..!

There was a statement made by our environment minister about a month ago that if there were a Nobel prize for filth, India would surely get it. This statement is an accurate reflection of the real situation prevailing in India. Most of our cities are the dirtiest in the world . Municipal corporations exist in name only and the problem of waste management is tackled on an ad hoc basis. In many cases large heaps of solid waste keep lying outside many of our cities and they become breeding grounds for harmful pathogens along with the release of harmful gases like hydrogen sulphide and ammonia. It has an adverse impact on the health conditions of our fellow citizens.

Most of our tourist destinations are not maintained properly and tourists often complain about foul smell around these places. For example, Varanasi is a very famous tourist destination in India but the the mountain of filth in which the city is submersed doesn't leave much scope for happy memories in the minds of visitors. It appears that its in our DNA thereby which we attract dirt and filth and we don't realize it unless we have seen what goes behind the word "cleanliness" in western countries . Our poverty and illiteracy can't be used as an excuse to justify our present state and we need to take serious steps before we get branded as a country of filth.

the big three..!!

It refers to 3 big global IT companies namely IBM, HP and Sun Microsystems. These 3 companies have earned a place for them in computer technology sector. However, Sun has faltered in recent years and talks are underway for its acquisition by Oracle Corporation.

IBM can be considered as the pioneer and founder of this industry. It has been recognized as a leader in a number of technology segments ranging from Mainframes to nanotechnology. IBM has a very strong research and development division which conducts basic as well as applied research . However, the company seems to be suffering from too much investment in expensive R&D . The company finds it difficult to convert its research knowledge into commercially viable products. Recently, IBM sold its computer hardware business to china based Lenovo in the face of increased competition . It has strong presence in server business, enterprise based software applications and other technology products. This company which used to enjoy monopoly position in most of the business segments has seen its share falling on account of new entrants.

It is present in about 150 countries of the world with employee base at 3,45,000. The company will have to face big challenges in the coming years. The software companies from India like TCS and Infosys have started to give IBM a run for its money in the segments like business integration and IT infrastructure . The absence of significant number of cash cows puts tremendous pressure on the revenues of the company in times of uncertainty. It needs to get its business focus right and target funds in the right areas rather than engaging in useless investments in different directions.

HP appears to be a company which has a clear strategy to power its growth in the 21st century. The company has gone through several transition phases in its 70 year old history. Initially, it became a leader in the instrumentation technology and used to manufacture instruments like frequency meter, medical equipments and other power equipments. It was the first company to manufacture hand held calculator. It ventured into computer hardware business in mid eighties and in a small period of time became a household name. It acquired Compaq in 2001 and thus consolidated its position in the hardware segment. It has leadership position in desktop, laptop, printers, scanners etc. It accounts for 80 % of the printing/imaging segment and this segment ensures abundant cash flows for the company to fund its new projects.

It has research and development division which conducts mainly applied research in areas of its business interests. HP has tie ups with major universities in US and Europe for conducting basic research. It has grown in leaps and bounds under the leadership of Mark Hurd who has been instrumental in getting HP back on track after the bad phase of 2000-2003. As a whole, the company seems to be heading in the right direction and it has the potential to dominate the information technology sector.

its all in your mind..!

There is nothing called absolute picture of this world. Each person is entitled to his own viewpoint. Some views may appear more intelligent and insightful but they exist only in our minds. An event may evoke different responses depending upon our state of mind. Sometimes, we often come up with different plausible explanations for certain events indicating that mind has a very important to play in modern sciences.

It has an important role to play in modern finance. For example, the very thought of boom in business cycle tempts us to overspend and this in turn fuels consumption activity resulting in higher sales for companies. It leads to improved macroeconomic figures which in turn makes us think that we are in some big time boom. This continues until this vicious cycle yields due to lot of unproductive expenditures. It causes fear psychosis whereby consumers reduce their consumption expenditure and postpone their major investments. This in turn adversely affects the sales of companies and that results in downturn and poor macroeconomic figures which makes consumers believe that economy has landed in a sharp recession. It continues till consumers begin to feel that they can no longer postpone their expenditures and the increased spending leads to optimism in the markets and this fuels the next upturn in the economy. So remember, its all in our mind..!!

creating new states..!

The demand for granting statehood status to Telangana has strengthened in recent years. There have been massive protests by local population led by their leader Mr Chandrashekhar Rao. The issue remains unresolved due to lack of consensus among the political community. Moreover, political parties seems to be non committal towards the issue. In some cases, it has given them new issue which can be used as a carrot at the time of elections .

Similar demands have also been made people in Vidarbha region of Maharashtra. There has been demand for dividing UP into three smaller states for better governance. The struggle in Darjeeling region of west bengal is not hidden from anybody. Many of our states have population which are much more than many European countries and its really difficult to administer such big states. For example, the population of UP is 3 times that of Britain. The end result is inadequate administration and endless corruption. In some cases ,people from separate cultural histories have been clubbed into a single state. The legitimate aspirations of these populations must be respected. There are instances where resources are spent in a arbitrary fashion resulting in uneven development.

Finally, smaller states ensure efficient governance and improved allocation of resources. So, we shouldn't shy away from creating new states.