What is An Cryptocurrency?

Cryptocurrency is a form of digital money that is designed to be secure and, in many cases, anonymous. 

It is a currency associated with the internet that uses cryptography, the process of converting legible information into an almost uncrackable code, to track purchases and transfers.

From the available sources, it is know that BITCOIN is the the first cryptocurrency since 2009. But we also hear that there have been 1000 types of currencies on the round while BITCOIN is still dominating the markets, it went all the way up to $20,000 a coin before crashing to $9000 a coin in Jan 2018.

  

What’s wrong with Great Indian Economy in the recent past?

Why is that Indian Rupee weakening against American counterpart?  Simple answers are, Current Account Deficit crisis; Global Economy owes; Central Government mismanaged the credits & debits!!! But I am skeptical about the reasoning therefore I tried to capture the larger picture of the current crisis.

Let’s learn what Current Account Deficit means. It’s an imbalance between country’s total imports and exports. Deficit do occur when total imports exceeds total exports of the country. This situation makes a country a net debtor to the rest of the world.

Substantial current account deficit is not necessarily a bad thing for certain countries. Developing counties may run a current account deficit in the short term to increase local productivity and exports in the future.

So what is Fiscal Deficit? Apparently Fiscal Deficit is also a catalyst to the economic cues. When government’s expenditure exceeds its revenue then there is a possibility for deficit and this can be accumulated over the years. Obviously, financial accumulation becomes a burden for the government.

Petrol, diesel & cylinder subsidies, social welfare schemes and rural employment guarantee programs are not only the reason for the recent fiscal deficit. There are few other factors involved too.

Both external & internal influences bombed the current meltdown.

a.       Syrian Civil War and proclaimed chemical weapons against its own people triggered Western war against Syria. So what? Fear of US war against Sriya, creates instability to India’s oil import from Arab countries. Therefore the oil imports soaring and a barrel crude oil breaching $120 which is abnormal.

b.      US Government’s announcement of withdrawing economic package boosted the investor around the globe to venture into US markets rather than debt driven Indian markets.

c.       India’s exports taken a beating due to declining markets for textile and jewelry especially polished diamonds.

d.      Raising inflation is one another factor; spending patterns were realigned to invest in the gold which is a good hedging tactics against soaring inflation. Therefore very less investors/risk takers in the market which is causing liquidity crunch.

So what is the way out? The options available to us are very limited.

a.      Economic package by the government will help reduce the liquidity crunch. But this is again a burden.

b.     Revalue the Indian Rupee. Is it viable?

c.      Make alternate for the crude oil and explore other possible options. Reduce dependency on oil import which is a major chunk, approx. 40% India’s import.  

d. Remove subsidies for petrol, diesel and LPG. No government will dare to do this unpopulous  measure.

Can the options work out? So the fate hangs. God only knows!!!

"Tortoise Economy"

 

An economy that is growing slowly or not at all over time. The classic example of a tortoise economy is the Japanese economy during the Lost Decade in the 1990s. During that time, interest rates remained near 0% while economic expansion was non-existent.

The phrase "tortoise economy" was first popularized by Robert Reich in his description of the U.S. economy during the financial crisis that began in 2007-08. In the years following the recession, U.S. growth remained slow, and interest rates were very low.

The Wolrd's Billionaires - Frobes

My Last Word on Budget 2011

SUSTAINING GROWTH

Fiscal consolidation
Proposal to introduce the Public Debt Management Agency of India Bill in the next financial year. Remarkable step ahead to tackle and contain inflation at earlier stages.. 

Subsidies
Government to move towards direct transfer of cash subsidy to people living below poverty line in a phased manner for better delivery of kerosene, LPG and fertilisers. Task force set up to work out the modalities for the proposed system.
Real good effort by the Govt - One will have to wait and watch..

INVESTMENT ENVIRONMENT

Foreign Direct Investment
Discussions underway to further liberalise the FDI policy. Good news reason being your multi brands will pinch you much lesser than present ..

Foreign Institutional Investors
SEBI registered mutual funds permitted to accept subscription from foreign investors who meet KYC requirements for equity schemes. Allows healthy competition, essential for the economy..

Financial Sector Legislative Initiatives
Amendments proposed to the Banking Regulation Act in the context of additional banking licences to private sector players. Expect more administrative cost informs of AQBs, that okay as long as no compromise on service.. 

Public sector banks and Rural banks are asked to maintain 8% Tier I CRAR & 9%
CRAR respectively – This will help the floating interest rates to claim down. More loans @ lesser rates…
Housing Sector Finance
Existing housing loan limit enhanced to 25 lakh for dwelling units under priority sector lending. Good news for those looking for Home Loan..

AGRICULTURE
Initiative on Vegetable Clusters
Removal of production and distribution bottlenecks for items like fruits and vegetables, milk, meat, poultry and fish to be the focus of attention this year.

Allocation of 300 crore to promote higher production of Bajra, Jowar, Ragi and other millets, which are highly nutritious and have several medicinal properties.
Mega Food Parks
Approval being given to set up 15 more Mega Food Parks during 2011-12.
At last some good news for farmers, where their hard work pays-off.. 
STRENGTHENING INCLUSION
National Food Security Bill (NFSB) to be introduced in the Parliament during
the course of this year. Much debated but curial Bill that servers BPL..
Unorganised sector – Pension
Eligibility for pension under Indira Gandhi National Old Age Pension Scheme
for BPL beneficiaries reduced from 65 years of age to 60 years. Those above 8 years of age will get pension of 500 per month instead of 200 at present.
Exactly you cant ask them more when they don't earn.. 

Some Other Initiatives – For Defence Personnel
A lump-sum ex-gratia compensation of 9 lakh for 100 per cent disability to be
granted for personnel of Defence and Para Military forces discharged from service on medical ground on account of disability attributable to government service.
Jawans are going to get benefited out of it,,, real good effort…
Census 2011
To enumerate castes other than Schedule Castes and Schedule Tribes in Census 2011, 'caste' to be canvassed as a separate time bound exercise.
Looking to grow beyond boundaries.. 
IMPROVING GOVERNANCE
UID Mission From 1st October, 2011 ten lakh Aadhaar numbers will be generated per day.
Generating unique identity. hum huh…good I would say but remember unlike our PAN.. 
TAX PROPOSALS
Tax Reforms
Direct Taxes Code (DTC) to be finalised for enactment during 2011-12. DTC proposed to be effective from April 1, 2012.
Remember up to 2 lakhs nil tax, this might be enhanced during the next financial year.. 
Direct Taxes
Exemption limit for the general category of individual taxpayers enhanced from 1,60,000 to 1,80,000 giving uniform tax relief of 2,000. Good though..

Exemption limit enhanced and qualifying age reduced for senior citizens. Higher exemption limit for Very Senior Citizens, who are 80 years or above. Welcome move.. 

Current surcharge of 7.5 per cent on domestic companies proposed to be reduced to 5 per cent. Remember next time you are billed check for 5%..

Additional deduction of 20,000 for investment in long-term infrastructure bonds proposed to be extended for one more year. Invest more and get exempted form tax.

Service Tax
Standard rate of Service Tax retained at 10 per cent, while seeking a closer fit between present regime and its GST successor. Fair enough at least not increased.. 

Hotel accommodation in excess of 1,000 per day and service provided by air conditioned restaurants that have license to serve liquor added as new services for levying Service Tax. Most importantly. definitely pinches your pocket..

Tax on all services provided by hospitals with 25 or more beds with facility of central air conditioning…everything seems to be on the rising that's okay.. 

Service Tax on air travel both domestic and international raised.
Frequent flyers. you are attention please.. 

Services provided by life insurance companies in the area of investment and
some more legal services proposed to be brought into tax net.
Next time when you sign-in a proposal remember to note fine prints..

What is meant by Z-Score?

A bankruptcy predictor based on the formula derived by Dr. Edward Altman.
According to the Altman model, a Z-Score of 3.0 or higher indicates that the company is most likely safe based on the financial data; a score below 1.8 means that the firm is probably headed for bankruptcy.
It is belived that the Z-Score has been shown to have 90% accuracy of prediction of bankruptcy in the first year of the forecast, and 80% accuracy in the second year.
So next time when you hear about Z-Score, remember Bankruptcy.

What's the big deal about S-band?

The S-band spectrum, which is part of the Devas-ISRO deal, is extremely valuable for mobile broadband services, in terms of usage as well as money. The frequency, also known as 2.5 Ghz band, is globally used for providing mobile broadband services using fourth generation technologies such as WiMax and Long Term Evolution (LTE).

This frequency band is unique because it has a substantial amount of spectrum (190 MHz) that can be put to use for mobile services. All other spectrum bands up to 3.5 GHz include significantly smaller amounts of spectrum for terrestrial mobile communication, or are not available.

In India, of the 190 Mhz, the Department of Space was given 150 Mhz — 30 years ago — for Broadcast Satellite Service and Mobile Satellite Service. Twenty Mhz was recently given to Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd for offering broadband spectrum. BSNL and MTNL were asked to pay Rs. 12,847 crore for their 20 Mhz. But Devas is getting access to 70 Mhz in the same band for just over Rs. 1,000 crore.

Bonanza

Globally, this frequency band has been put up for auction in many countries and has fetched governments billions of dollars. In 2009, three operators together paid $HK 1.53 billion for 90 MHz of radio spectrum in the 2.5 GHz band. A few months ago, Finland-based mobile operator TeliaSonera launched 4G mobile services based on LTE technology in this band. Operators in several other countries such as Brazil and South Africa are on the verge of using the S-band after the World Radiocommunications Conference 2000, held under the aegis of the International Telecommunication Union, designated the 2.5 Ghz band for mobile services.

Harmonious usage

The usability of spectrum depends on how harmonious it is with global usage. That is because mobile device makers and network equipment manufacturers can focus on developing products for a specific radio frequency for every country. If each country were to have its own plan for using spectrum, then telecom networks and devices would become very complex and expensive.

So if most countries are moving towards adopting 2.5 Ghz for telecom services, India will lose out if the satellite agency continues to hold on to it. The Telecom Regulatory Authority of India has already recommended that it would like to review the usage of this frequency band by the incumbents and refarm it for commercial mobile services.

Liquidation value

Liquidation literally means turning a business's assets into readily available cash.

The Liquidation value is the estimated amount of money that an asset or company could quickly be sold for, such as if it were to go out of business. In a normal growing profitable industry, a company's liquidation value is usually much less than the current share price. In a dying industry, the liquidation value may exceed the current share price. This usually means that the company should go out of business.

There are actually two types of liquidation value, depending on the time available for the liquidation process:

1. Orderly liquidation value. This assumes that the enterprise can afford to sell its assets to the highest bidder. It assumes that the seller can take a reasonable amount of time to sell each asset in its appropriate season and through channels of sale and distribution that fetch the highest price reasonably available.

2. Distress liquidation value. This is an 'emergency' price. This assumes that the enterprise must sell all its assets at or near the same time, to one or more purchasers. For obvious reasons, the Distress Liquidation Value will always be lower than the Orderly Liquidation Value.

Payback Period

The Payback Period (PP) is perhaps the simplest method of looking at one or more investment projects or ideas. The Payback Period method focuses on recovering the cost of investments. PP represents the amount of time that it takes for a capital budgeting project to recover its initial cost.

The Payback Period Calculation is as follows:

The Costs of Project / Investment

PP = ----------------------------------------

Annual Cash Inflows

The PP concept holds that all other things being equal, the better investment is the one with the shorter payback.

Price to Earnings ratio ( P / E ratio)

The Price to Earnings ratio (P/E ratio) is a valuation ratio of a company's current share price compared to its per-share earnings.

The P/E ratio is used for measuring market performance and can be calculated as:

P/E ratio = Market Value Per Share / Earnings Per Share

For example, a company that earned $10M last year, with a million shares outstanding, had earnings per share of $10. If that company's stock currently sells for $100 per share, it has a P/E of 10.

Net Present Value ( NPV)

The Net Present Value (NPV) of an investment (project) is the difference between the sum of the discounted cash flows, which are expected from the investment, and the amount, which is initially invested. It is a traditional valuation method (often for a project) used in the Discounted Cash Flow measurement methodology, whereby the following steps are undertaken:

1. calculation of expected free cash flows (often per per year) that result out of the investment

2. subtract /discount for the cost of capital (an interest rate to adjust for time and risk)

The intermediate result is called: Present Value.

3. subtract the initial investments

The end result is called: NPV.

Alternative Method of Calculating NPV is,

Where,

t - the time of the cash flow

r - the discount rate (the rate of return that could be earned on an investment in the financial markets with similar risk.)

C_t - the net cash flow (the amount of cash, inflow minus outflow) at time t (for educational purposes, C₀ is commonly placed to the left of the sum to emphasize its role as the initial investment.).

So NPV is an amount that expresses how much value an investment will result in. This is done by measuring all cash flows over time back towards the current point in present time.

If the NPV method results in a positive amount, the project should be undertaken.

Internal Rate of Return (IRR)

The internal rate of return (IRR) is a metric used by firms to decide whether they should make Investment It is an indicator of the efficiency of an investment, as opposed to net present value (NPV), which indicates value or magnitude.

In Simple words, The Internal Rate of Return ( IRR) is the discount rate that results in a net present value of zero for a series of future cash flows. It is a Discounted Cash Flow (DCF) approach to valuation and investing just as Net Present Value (NPV). Both IRR and NPV are widely used to decide which investments to undertake and which investments not to make.

The IRR is the true interest yield expected from an investment expressed as a percentage.