'Startup 20-20' held at FMS-Baroda, MSU

A 5-day Workshop in Entrepreneurship Development by I Create India at FMS-Baroda, MSU

National Symposium on PEOPLE CONNECT organized by FMS-Baroda,MSU

FE@CAMPUS MASTERMIND: Runner-up entry by Mohit Marakna to question for Feb 25-March03

Question: Recently, the Companies Bill was passed with mandate on CSR spending. Is mandatory CSR good?
Response:
The Companies Bill, 2011 mandates that companies will have to s pend two percent of their net profits in previous three preceding financial years towards Corporate Social Responsibility.It also says that CSR spend would be mandatory for companies having a net worth of Rs.500 crore or more, or a turnover of Rs.1000 crore or more or a net profit of Rs.5 crore or more in a financial year. According to me, mandatory CSR is not a good step as " THE BUSINESS OF BUSINESS IS BUSINESS " and a company's main motive is to maximise profits in a socially responsible manner and CSR on their part has to be voluntary. The argument is that, if a company instead of spending 2 percent of net profit on CSR is creating an equivalent number of jobs around it then it is no less than a CSR activity. Also this mandatory requirement is like an additional tax imposed or an unnecessary burden on the companies in this globally competitive environment. Lastly, quoting noted economist Milton Friedman's view which says, " There is one and only one social responsibility of business: to use its resources and energy in activities designed to increase its profits so long as it stays within the rules of the game....[and] engages in open and free competition, without deception and fraud."

What is “fiscal deficit” and why does it matter?

1. Fiscal Deficit: The fiscal deficit represents the difference between the total expenditure of the government and the revenue receipts plus loan recoveries that it generates. This in simple terms shows how much of the expenses are actually generated by the revenue that the government is able to raise through different sources like taxes and even non tax efforts. A sharp rise in expenditure or a slowdown in tax collections or even both these events can lead to a rise in the fiscal deficit for the country. In the year 2010-11 the fiscal deficit was Rs 3,73,000 crore which is expected to go up to Rs 5,10,000 crore in the financial year 2012-13, according to Budget estimates.

2. Higher borrowings

Since the fiscal deficit by itself represents the difference between the cash flows of the government the deficit has to be bridged through borrowings. So it is a simple explanation that when there is a rise in the fiscal deficit, there will be a corresponding rise in the borrowings of the government. Thus, in 2010-11 the fiscal deficit gave rise to a total borrowing of Rs 3,73,000 crore which went up to Rs 5,10,000 crore in 2012-13. More borrowing by the government means more money being printed to bridge the deficit.

3. Higher interest rate

When the government has to borrow so much, there is pressure on its finances. Lenders will ask for more interest on loans to the government. The large amount of borrowings also makes the situation such that there is competition among different borrowers. These borrowers issue offer debt securities to the limited number of buyers. The only way they could attract lenders would be by offering a higher rate of interest.

4. Inflation

When the government and companies issue such securities to lenders, there is more money floating in the economy. RBI has to print more money and increase the overall supply of money. This adds to inflation. The higher amount of inflation also leads to a situation where interest rates remain high. For faster growth, there is a need to have low interest rates. However, with inflation remaining high, RBI cannot make rapid or deep cuts in interest rates. This slows economic growth.

Management Quiz at VCCI 2013 by FMS-B

VCCI President Ms. Avi Sabavala and Quiz-Master Mr. Dhaval Thakkar with final 12 teams on stage.

Budget: 10 terms we should know

There are many terms that an individual hears at the time of the Union Budget. Knowing what they mean could be helpful to understand the impact on the economy.

Here are ten such top terms (in no particular order) to look at:

Disinvestment

The process of selling the stake of the central government in companies that it controls or in some cases where it has a small holding refers to disinvestment. The amount that is raised by selling the stake is then applied for either meeting normal expenditure of running the government or for special projects like giving additional capital to banks. This has become a significant source of revenue for the government and in 2012-13 the government put an estimate of Rs 30,000 crore on the amount that would be raised through disinvestment.

Subsidies

These are the amounts spent by the government to provide goods and services to the people of the country at prices that are lower than the market rates. There are various areas in which the subsidies are spent and this includes food, fertilisers, petroleum products and in the year 2012-13 it was estimated that the amount spent on subsidies would be Rs 1.9 lakh crore.

Tax revenue

The amount that the government raises through levying taxes is known as the tax revenue. The taxes through which the amount is raised includes income tax, corporation tax, excise duty, customs duty and service tax. In the year 2012-13 it was estimated that the total tax revenue would be around Rs 7.7 lakh crore.

Plan expenditure

This is the expenditure that is incurred by the central government in consultations with the Planning Commission for projects and in areas related to the achievement of the goals set out in the 5 year plans. The expenditure here is expected to result in creation of better infrastructure and facilities across the country. In 2012-13 the total plan expenditure was estimated at Rs 5.2 lakh crore.

Non-plan expenditure

This is the amount spent by the central government for the day to day running of the country and it is based on what the priorities of the government are. Expenses like salaries, pension, administrative costs, defence expenses, subsidies are all under non plan expenditure. A total of Rs 9.7 lakh crore was estimated to be spent under the non-plan expenditure in 2012-13.

Debt servicing

The amount of debt servicing of the country that is mentioned in the Union Budget consists of the total of the capital repaid during the year along with the interest payments made on loans. This shows the amount that is spent in managing the debt of the country. In 2012-13 the debt servicing expense was estimated at Rs 4.44 lakh crore or 34 per cent of the total revenue expenditure of the government.

Revenue deficit

This is the difference between the revenue expenditure of the government and the revenue receipts that are earned during the year. It shows how much the regular expenses are more than the regular receipts. In 2012-13 the revenue deficit was at Rs 3.5 lakh crore or 3.4 per cent of the GDP.

Fiscal deficit

This is the difference between the total expenditure of the government in a year and the revenue receipts and the recoveries of loans. This also represents the amount that the government will have to borrow to fund its shortfall. The lower the revenue deficit the better it is for the country and in the year 2012-13 the fiscal deficit was estimated at Rs 5.13 lakh crore or 5.1 per cent of the GDP.

Primary deficit

This is the amount that is arrived at when the fiscal deficit is reduced by the interest payments for the year. It shows the amount of the deficit that arises on account of the activities other than the interest payments and a large difference between the fiscal deficit and the primary deficit is a worrying sign that interest payments have become very large in the economy. In 2012-13 the primary deficit was estimated at Rs 1.93 lakh crore or 1.9 per cent of the GDP.

Deductions

This refers to the amounts that will be allowed as a reduction from the total taxable income of the taxpayer. The final tax is calculated on the taxable income after considering the deductions so this helps to reduce the taxable income and consequently the tax to be paid and hence deductions are eagerly awaited by all taxpayers so that they can make the most out of it.