Can an embargo control Facebook in China

Air China was honored by Facebook for the optimal use of social network for international marketing by a company in Greater China. It utmost shocking that though Facebook has been banned in China since 2009 the airline is doing wonders on the digital platform. Other state owned rivals China Southern Airlines, China Eastern Airlines along with privately owned Hainan Airlines also use Facebook to join up with international commuter. 

Social media has become a strategic tool for Chinese airlines to persuade international travellers. About 60% of fliers used foreign carriers for their trips to and from China in 2013. Air China has more than 1,53,000 Facebook followers and has had more than 2,00,000 interactions with users since it opened its page in June 2013.

In 2012 guest at popular Asian restaurants in Sweden were encouraged to “Check in” with the carrier on Facebook as they sat to eat, which would make them eligible to win plane tickets to Asia.

Oil prices and its consequences

Oil prices and its consequences

 
In June 2014 the price of Brent crude was up around $115 and in January 2015 it has fallen to $52. During decade oil prices were bouncing around $100 per barrel since 2010 because of soaring oil consumption in countries like China and conflicts in Iraq. Companies started production of oil from difficult to drill places.  To take advantage of high prices many companies started using state of art technology like fracking and horizontal drilling to extract oil from shale formations in North Dakota and Texas. Even Alberta’s (Canada) gooey oil sands were heated to extract usable crude. It added 4 million new barrels of oil per day since 2008. (75 million barrels of oil per day is the global oil production)

Up till now the new production of crude oil by US does not have effect on the supply. Not to forget other conflicts like civil war in Libya, Iraq conflict and sanctions on Iran. More than 3 million barrels per day production was affected because of these conflicts.

But by mid 2014 below events happens and suddenly production increased:

• Libyan crude exports rose as two key export terminals Es Sider and Ras Lanuf were resumed from disruption of rebels.
• Iraq production of oil came back online

On the contrary demand of oil decreased because of below reasons:

• Oil demand decreased in China and Germany
• USA, the world biggest oil consumer saw big cutbacks in industrial oil use after recession and increase in use of fuel efficient cars

On the other hand demand of oil decreased due in USA, Europe and Asia because of economic slowdown and switch over sustainable energy. In late 2014 the supply of oil was greater than demand and in September prices started to fall.

OPEC control prices by either cutting production or increasing production. At the crucial meeting in Vienna on November 27 countries like Venezuela and Iran wanted to control prices by reducing production in order to breakeven on their budgets.

But Saudi Arabia wanted to keep price to fall as it did not want to repeat history. In 1980, in order to control price it reduced production but Saudi Arabia lost the market share. Saudis have now decided to go for low price option as this is short term phenomenon. The government has massive foreign exchange which would helpful to finance deficits.

OPEC (world’s largest cartel) did not take any steps to reduce production. Higher oil prices were desperate for big OPEC economies like Saudi Arabia and Iran to control the budget. Saudi Arabia did not took any stringent steps to control falling crude price as it thought that it would give undue advantage to US oil boom.

Effects of falling prices on economies:

a) Russia which is highly dependent on oil and gas production with oil revenues making 45 percent of government budget will ruin the economic system in country. Many economists believe that Russia’s economy will shrink by 4.5 in 2015 if oil stayed at $60 barrel. In an attempt to stop people from selling off rubbles Russia’s central bank have increased interest rates from 10.5% to 17.5%.

b) Iran’s economy just began to recover after many years of recession. In order to balance budget Iran needs price of crude above $100 since it is much harder after western sanctions.

c) Venezuela which is highly reliant on crude sales may face potential meltdown. It is 10^th largest oil producer and accounts for 95% of its export earnings. As inflation increased up to 60%     mass anti-government protest were flared up. Scarcity of basic products is increasing including medical supplies. One of the analysts at Nomura suggested that it needed crude prices up to $200 per barrel to balance its budget

Economies of Scale

Uber's pricing mechanism became hot news during the recent hostage crisis in Sydney, Australia. According to reports the rates were increased to highest when demand of taxi increased among frightened citizen of Sydney. This pricing model is common worldwide.




In 1999, when internet was a big deal, Coca Cola experimented with a smart vending machine that would automatically raise cola prices in the summer heat. The new machine was to be fitted with a sensor to gauge the outside temperature as well as a chip that would connect to the internet.

Decline in Birthrate

The total fertility rate – the number of children the average woman will have in her lifetime based on current trends – fell to just 2.3 last year from 3.6 in 1991 India’s birth rate declined dramatically in the last two decade. India, which is set to become the world’s most populated country in the next decade, has been trying for decades to curb population growth.

Factors affecting decline in birthrates are :

• Cash incentives to women who undergo sterilization. 
• Increase in female literacy

Cash incentives given to women who undergo sterilization is around Rs. 600.

As per 2011 census effective literacy rates (age 7 and above) in 2011 were 82.14% for men and 65.46% for women.

Earn money from Stress

People nowadays are in so much stress that they are awaiting for when weekend would come and rush for movie. The era is coming back when Bollywood movies used to earn a good profits. Than came an era of video cassette affected. Today though DVD players and computers has become like a necessity commodities people prefer to watch in theater rather than on watching small screens. Even audience has become mature that family wouldn’t be hesitant to watch movie like “Ragini MMS 2”

How to avoid pessimistic people

I think in today’s professional world there are many people who always keep complaining this is happening for his/her mistake. If he/she has told me earlier it could be avoided. But now time has come not to grow individually but to grow as team. We must have heard many a times from maestro Sachin Tendulkar phrases like “it was good for the team”, “runs were badly needed for the team” etc. if you keep in mind that I will grow and let others let them down by keeping them in dilemma than he/she would be thinking of short term. Because it is universal truth actions and reactions are equal and opposite. A day will come all the ill-will would have repercussions. I think following are ways through which we generate positive vibes and keep us away from pessimistic people:

1. We should always keep distance from pessimistic people.

2. Avoid and ignore pessimistic people.

3. If people are not able to solve problem than take initiative and do not stop until you reach your objective.

4. If some junior comes to us with problem than first ask them what would you do to solve the problem. It would test problem solving skill.

5. If pessimistic people start scolding unnecessary for the initiative taken by us which is essential for solving the problem (they might scold us at that very moment when initiative is taken or in different situation where we have not done any mistake, than understand downfall has started for pessimistic people)  than just try to explain them and do not listen to their reply.

Budget of India

Understanding the Budget process

The budget is prepared by the Finance Minister with the assistance of number of advisors and bureaucrats. The Finance Minister seeks the view of the industry captains and economists prior to preparation. Various accounting and finance related organisations send in their opinions and suggestions .The budgeting exercise in India remains mainly the domain of bureaucrats to participate and influence the outcomes. Normally, the budget-making process starts in the third quarter of the financial year.

The budget has four stages viz.,

(1) Estimates of expenditures and revenues,

(2) First estimate of deficit,

(3) Narrowing of deficit and

(4) Presentation and approval of budget.

Stage 1: Estimates of expenditures and revenues Part A: Estimates of Expenditure The process begins with various ministries providing initial estimates of plan and non-plan expenditures. The ministries discuss the plan expenditures with the Planning Commission. The Planning commission allocates resources for continuing plan programmes and decides on the new programmes that can be undertaken on the basis of a tentative estimate or resources available, that is provided to it by the finance ministry. The financial advisors of the ministries prepare the non-plan expenditures. The expenditure secretary consolidates them and after intensive discussion with financial advisors, budget estimates are set for the ensuing fiscal year. The majority of the non-plan expenditure is accounted for by interest payments, subsidies (mainly on food and fertilisers) and wage payments to employees. Part B: Estimates of Revenue

Apart from estimating the expenditure, an assessment of expected revenues likely to flow into the government treasury has to done as a concurrent exercise. Revenue receipts are of two types - Capital and current receipts. 2. Capital receipts include repayment of loans given by the government, receipts from divestment of public-sector equity and borrowings - both domestic and external. Current receipts include mainly, tax revenues, receipts by way of dividends from public-sector units and interest payments on loans given out by the central government. The amounts to be received by way of tax revenues is estimated on the basis of existing rates of taxation and taking into consideration the likely growth and inflation rate over the ensuing fiscal year. On the capital receipts side, targeted amounts to be realised through divestment of public sector equity and amounts to be realised by way of repayments of loans is made. All the estimates are provided to the revenue secretary.

STAGE 2: First estimates of deficit After the estimates of revenue and expenditure are made, they are matched together. This provides the first estimate of expected shortfall in revenue to meet projected expenditure. The government then, in consultation with the chief economic advisor, decides on the optimum level of borrowings to meet this deficit. The figure of external borrowings is known as much of the external borrowing by the government consists of bilateral and multilateral assistance which is known by the time budget exercises are undertaken. The level of domestic borrowing depends partly on the desired level of fiscal deficit that the government targets for itself. A part of the revenue gap is left unfilled to be met through the issue of ad hoc treasury bills.

STAGE 3: Narrowing of the deficit

After the targets for the fiscal deficits and the overall budget deficit is decided, any remaining shortfall is filled through a revision in tax rates if feasible , keeping in mind the fiscal incentive structure the government wishes to put in place to stimulate the growth in different sectors. Following the initial plans, if any changes need to be made adjustments are made to the expenditure; usually the plan expenditure has to be modified. The non plan expenditure comprises of interest payments, subsidies and administrative expenditure. Due to the political sensitivities involved in reducing subsidies, non-plan expenditure of the government is inflexible about changing it and it

3 is the plan expenditures which get the axe after pre-emption have already been made for non-plan expenditure.

STAGE 4: The Budget

The presentation of the Budget for the ensuing fiscal year (beginning April 1) is usually done on the last working day of February. The Indian constitution has made the Parliament supreme in financial matters. The Union government, under Article 112 of the constitution, is required to lay an annual financial statement of estimated receipts and expenditure before both Houses of Parliament. It can levy taxes or disburse funds only on approval in both houses of Parliament. However, the proposal for taxation or expenditure has to be initiated within the Council of Ministers--specifically by the Minister of Finance. The Finance Minister presents before the Parliament, a financial statement detailing the estimated receipts and expenditures of the central government for the forthcoming fiscal year and a review of the current fiscal year. Under Article 114 of the Constitution, the government can withdraw money from the Consolidated Fund of India only on approval from Parliament and so it has to get the Appropriation Bills approved by Parliament. This authorises the executive to spend money. Article 265 of the Constitution prohibits the government from collecting any taxes without the authority of law. Therefore, the government comes up with the Finance Bill. The Bill may levy new taxes, modify the existing tax structure or continue the existing tax structure beyond the period approved by Parliament earlier. The bills are forwarded to the Rajya Sabha for comment. The Lok Sabha, however, is not obligated to accept the comments and the Rajya Sabha cannot delay passage of these bills. The bills become law when signed by the President. The Lok Sabha cannot increase the request for funds submitted by the executive, nor can it authorize new expenditures.

The proposals in the budget come into force on April 1. Between the presentation and effective date there is a gap of 1 month during which the Lok Sabha can review and modify the government's budget proposals. This does not happen most of the time and the Parliamentary scrutiny of proposals and the passage of the budget gets completed

In May, well after the commencement of the new fiscal year. Since the proposed budget has to be effective from April 1, the government usually seeks an interim approval to meet emergent expenditures that have to be incurred pending the approval of the budget. This is called the vote-on-account and the sanctions given by the passage of the vote-on-account get automatically overridden once the Budget is approved by Parliament. Other budgets The Indian Railways, the largest public-sector enterprise, and the Department of Posts and Telegraph have their own budgets, funds, and accounts. The appropriations and disbursements under their budgets are subject to the same form of parliamentary and audit control as other government revenues and expenditures. Dividends accrue to the central government, and deficits are subsidized by it like other government enterprises. State Budget Each state government has its own budget, prepared by the state's minister of finance in consultation with appropriate officials of the central government. Primary control over state finances rests with the state legislature. However, State finances are which latter reviews the state government accounts annually and reports the findings to the state governor for submission to the state's legislature. Because of its greater revenue sources, the central government shares its revenue received from personal income taxes and certain excise taxes with the states. It also collects other minor taxes, the total proceeds of which are transferred to the states. The division of the shared taxes is determined by financial commissions established by the president, usually at five-year intervals. The central government also provides the states with grants to meet their commitments. Budget documents

The Union Budget comprises various documents. The first one is the speech of the Finance Ministry, which he reads in the Lok Sabha. The Budget speech provides the direction in which the government wishes to move in the coming financial year, the growth targets and the major thrust areas. The Finance Minister spells the broad tax policy measures in his speech. The speech lists the problems being faced by the country on the economic front and indicates the government’s response to them. The speech also summaries the various expenditure and tax proposals The other important documents are:

1. Key to Budget

This document provides an understanding of the budget documents

2. Budget Highlights

This statement gives the key features of the budget

3. Annual Financial Statement

Annual Financial statement is the main document. This statement shows the receipts and payments of the government under the three parts in which government accounts are kept.

(1) Consolidated Fund- Resources raised by the government through taxes, loans, dividends from PSUs and banks form the Consolidated Fund.

(2) Contingency Fund- It is imprest at the government’s disposal to meet unforeseen expenditure.

(3) Public Account- The amount collected by the government acting as a banker .e.g. PF, small savings collections.

4. Finance Bill

The Finance Bill includes the tax proposals and the tax rates .It provided the fine print of the budget

5. Memorandum

Explanatory Memorandum provides a quick overview of tax provisions contained in the Finance Bill.

6. Budget at a Glance

Budget at a Glance provides an overview of government finances. It’s more like a balance-sheet of the Union. It gives a broad break up of tax revenues, other receipts, expenditure-plan and no-plan allocation of outlays by ministries and resource transfer to states and Union Territories. Progress towards implementation of Budget proposals announced in previous years are listed in the Implementation Budget

7. Expenditure Budget Expenditure Budget Volume I and II explains the provisions made. While Volume I explains the provisions ministry-wise, Volume II analyses expenditure trend over the years with regard to Plan and non-Plan expenditure. 8. Receipts Budget Receipts Budget gives details of revenue receipts and capital receipts and explains the estimates so as to make them intelligible to an ordinary citizen. It also include trend of receipts over the years and details of external assistance

9. Customs & Central Excise

This document gives the customs and excise notifications

10. Implementation of Budget Announcements

This contains status of implementation on initiatives announced by the Finance Minister in the Budget Speech

11. The Macro Economic Framework Statement

The Macro-economic Framework Statement, as enjoined by the Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act), contains an assessment of the growth prospects of the economy with specific underlying assumptions. It contains assessment regarding the GDP growth rate, fiscal balance of the Central Government and the external sector balance of the economy 12. The Medium Term Fiscal Policy Statement The Medium-term Fiscal Policy Statement, as enjoined by the FRBM Act sets forth a three year rolling target for specific fiscal indicators along with underlying assumptions. The statement includes an assessment of sustainability relating to balance between revenue receipts and revenue expenditure and the use of capital receipts including market borrowings for generation of productive assets.