Posts Tagged ‘accounting’
India’s overall growth of gross domestic product (GDP) at factor cost at constant prices, as per advance estimates was 8.5 per cent in 2010-11, representing an increase from the revised growth of 8 per cent during 2009-10, according to the monthly economic report released for the month of July 2011 by the Ministry of Finance. The index of industrial production (IIP) rose to 8.8 per cent in June 2011, year-on-year, on back of manufacturing and within that, the capital goods sub-segment. During April-June 2011-12, the IIP growth was registered at 6.8 per cent as compared to 9.6 per cent during 2010-11.
India has entered the club of top 20 exporters of goods and reclaimed its position among top 10 services exporters in 2010. India’s goods exports rose by 31 per cent in 2010, helping it to improve its world ranking moving up two places to 20 from 22 in 2009.
India’s FDI gathered momentum with the inflows growing by 310 per cent in June 2011 to touch US$ 5.65 billion. It is the highest monthly inflow during the last 11 years. The total FDI stood at US$ 16.83 billion during January-June 2011, nearly 57 per cent higher than the US$ 10.74 billion received during the same period last year.
The eight core infrastructure industries grew by 5.2 per cent in June 2011 as compared to the growth of 4.4 per cent in June 2010. In addition, exports in terms of US dollar, increased by 46.4 per cent during June 2011. On the back of such facts, India’s GDP is projected to continue to grow at a brisk pace of 8.8 per cent in 2011-12.
India has been ranked at the second place in global foreign direct investments (FDI) in 2010 and is expected to remain among the top five attractive destinations for international investors during 2010-12,
Non-resident Indian (NRI) inflows in the first quarter of 2011-12 has witnessed a rise of 38 per cent as compared to the same period in 2010-11. NRIs invested US$ 1.54 billion in various NRI deposit schemes during April-June 2011.
India’s foreign exchange (Forex) reserves have increased by US$ 1.6 billion to register US$ 318 billion during the week ended August 19, 2011, according to data released by the Reserve Bank of India (RBI). The increase in Forex is largely attributed due to valuation changes.
The Government has approved fund raising worth Rs 60,950 crore (US$ 13.24 billion) by companies through external commercial borrowings (ECB) or foreign currency convertible bonds (FCCB) for infrastructure projects in the financial years 2009-2011.
India’s merchandise exports have registered an increase of nearly 82 per cent during July 2011 from a year ago to touch US$ 29.3 billion, according to a release by the Ministry of Commerce and Industry. Exports during April-July 2011 reached US$ 108.3 billion, up 54 per cent over the same period a year ago.
The Indian automobile industry, the seventh largest in the world, has currently estimated to have a turnover of US$ 73 billion, accounting for 6 per cent of its GDP, and is expected to record a turnover of US$ 145 billion by 2016. India’s automobile industry is expected to grow by 11 to 13 per cent in the fiscal year ending March 2012, according to Pawan Goenka, President, SIAM. The Indian automakers sold 143,370 cars in June 2011, added SIAM.
Demand for two-wheelers has increased by 16 per cent in June 2011 to over 880,000 units, as compared to 761,000 units in June 2010, according to data released by six of the eight domestic two-wheelers manufacturers.
The growth of Indian agriculture and allied sector was a top agenda in Budget 2011-12 presented by Mr Pranab Mukherjee, the Union Finance Minister. He has estimated that the agriculture and allied sector would grow by 6 per cent in 2011-12.
Software as a Service (SaaS) is estimated to grow by 20.7 per cent in 2011 amounting close to Rs 538 crore (US$ 116.85 million) as compared to 2010 where it was close to Rs 445 crore (US$ 966.60 million), according to IT advisory firm Gartner Inc.Approximately 75 per cent of SaaS delivery can be regarded as cloud services as per Gartner, which is on its way to exceed 90 per cent by 2015. Customer relationship management (CRM) is the largest market for SaaS, which is expected to reach Rs168.83 crore (US$ 36.67 million) in 2011 to represent 32 per cent of the total CRM market.
Growth Potential Story
India’s consumption growth story is expected to maintain its course of about 14 per cent growth over the next three years driven by three factors-inclusiveness, mix changes and specific consumption categories, as per senior analysts Vijay Chugh, Ashvin Shetty and Shariq Merchant in the report ‘The Indian Consumer: a robust operator in an uncertain world’.
India will emerge as the second largest steel producer by 2013 with an installed capacity of 120 million tonnes (MT), riding on high levels of growth, construction, housing, real estate, automobiles and agriculture, according to Mr Beni Prasad Verma, Steel Minister. The demand for steel in the country is growing at an average of 10 per cent, which may even exceed to 12 per cent in the near future.
The number of millionaire households in India will grow from 2,86,000 to 6,94,000 between 2011-2020, at a growth rate of 143 per cent, as per a study by the Deloitte Center for Financial Services. Among emerging markets, India is likely to have the highest per capita wealth among millionaires with US$ 4.25 million — placing it ahead of the US. In comparison to other BRIC (Brazil, Russia, India and China) nations, India is likely to experience the largest growth at 405 per cent in total wealth held by the millionaires.
Countries around the world have accepted the importance of converging accounting standards and are well on their way towards implementing them. Most countries have adopted IFRS standards and are in various stages of adoption at the end of this financial year.
The Implications of IFRS Convergence for Indian Companies
Investments in India are valued at lower of the cost of fair trade value under Indian accounting standard – one of the divergences from IFRS. After implementing IFRS, only fair value will be calculated. The differences of our Indian accounting Standard with IFRS are minor with respect to IAS – 2 inventories, IAS – 7 cash flow statements, IAS – 20 accounting for government grants and disclosure of government assistance, AS – 33 earnings per share, AS 36 impairment of assets, AS – 38 intangible assets etc, therefore the transition to IFRS for Indian companies is certainly easier.
Benefits of IFRS for Indian Companies
Ease of Investments
Overseas investors will choose economies with IFRS compliant financial statements.
Higher Confidence Levels
Organizations will operate with the confidence of having a common accounting system perceived as stable and transparent.
IFRS will eliminate barriers to cross border listings and will be beneficial for investors who ascribe a risk premium if the underlying financial information is not prepared in accordance with international standards.
Mergers & Acquisitions Made Easier
Trans border acquisitions and mergers will be easier for both parties in as far as redrawing of documents is concerned.
Companies have adopted IFRS from FY10 to make available comparative figures in the annual report. Successful transition requires a planned procedure well in advance. Several large listed companies have moved to the new standards and those in transition are actively incorporating the changes, in the beginning of the new financial year.
Various types of accounting systems are in existence and they help maintain business records. Primarily the goal of a business is to maximize profitability and minimize expenses. Towards this end, every business organization expand will the business and increase its sales while reducing operating expenses. Accurately tracking the progress of this exercise and maintaining meticulous records is served through accounting systems.
Initially, the purpose of accounting was to simply track business activity and maintain up-to-date profit & loss details periodically or on a given day. Today, accounting systems also involves requirements of tax authorities, investors, government regulations and the management. In this complex scenario selecting the right accounting system is crucial.
The double entry system has gone through much refinement over the years. Double entry system is the only method that fulfils all the essential objectives of a systematic accounting process. It takes care of the two fold aspect of each business transaction.
The single entry system ignores the two-fold aspect of transactions as compared to the double entry system. In the single entry system, the personal aspects of transactions, in other words the personal accounts, alone are recorded. The method simply ignores the impersonal aspects of a transaction excluding the cash. It does not have any safeguards regarding the accuracy of posting and is not at all safe from fraudulent practices because it lacks safety measures necessary in recording cash transactions and therefore, considered imperfect.
The age old question of terming accounting as an art or science rises even today. Accounting documents, in no way, establish a cause and effect relationship. The fact is, it only provides a procedure when strictly followed help accomplish the objectives of accounting. In which case, accounting is art, and not science. And, the art of bookkeeping is as old as the art of trading and commerce itself.