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MARCH 1, 2015 | A FINNICHE INITIATIVE
In Focus
Opinion
Indian Railway Budget— Positive intent but execution is the key | 2
Union Budget 2015 | 4
Term of Week Swaps | 6
Personality Arvind Panagriya |11
Tech World TV innovation beyond
bend and curve |12
Do write to us at: finniche.imt@gmail.com
March, 1 | 2015 | Volume 36
The farewell party for the batch 2013-2015 was organized
amidst much delight at
completing their PGDM and with optimism looking at the future. We wish them good luck in their future endeavors. Our students participated in the NDTV budget show in Delhi for a discussion on the post budget analysis covering aspects related to personal finance. Indian Railway Budget— Positive intent but execu-
Club FinNiche releases its weekly magazine FinXpress, with the In Focus talking about
tion is the key
the ‘Indian Rail Budget—Positive Intent but execution is the key’. The Opinion gives an overview of ‘Union Budget 2015’’.
Union Budget 2015
The term of the week is ‘Swap’, which is a derivative in which two counterparties exchange cash flows of one party's financial instrument for those of the other party's
financial instrument . Do have a look at the market section, Tech world which brings to Swaps
you about ‘TV Innovation Beyond Bend and Curve’ and Personality of the week, Arvind Panagriya. Club FinNiche welcomes any comments, suggestions or criticism regarding the magazine. Please do write to us and share your ideas.
Arvind Panagriya
TV innovation beyond the
Happy Reading! Regards The Editorial Team Club FinNiche
bend and curve
Disclaimer: FinXpress takes no responsibility for the opinions expressed in the magazine.
- By Shreyans Dhariwal
Every Rail Budget comes with a revelation of
network and improving the efficiency. Most
dozens of new trains,
increased ticketing
of this investment will be funded by long term
price, laying of new tracks. But this time the
loans from various financial institutions and
picture was different, with Railway Minister
multilateral agencies.
Suresh Prabhu diverging from the vogue of 8.5 lakh crore Investment to be done for next five years out of which 85% is for decongestion of network and improving efficiency.
‘Operation
such
announcements
and
focussing
on
Some of the key points of the Budget are—
execution of strategies and long term goals for
No increase in Passenger fares
improving
Freight rates for coal increased by
the
existing
track
network,
redevelopment of stations and improving the
6.3%, cement by 2.7%, urea by 10%
overall efficiency of railway management.
Trillion for 2016
5
Plan Budget goes up by 52%to Rs 1.1
Minutes’
Passengers can now book tickets 4 months in advance from a previous of
launched to book tickets in 5
2 months
mins.
‘Operation
5
Minutes’
is
being
launched to book tickets in 5 mins. 77 projects worth 96,182
Open Wi-fi to be available in around 400 stations
crore for capacity expansion
are planned.
CCTVs to be installed in special women coaches for safety
Ordering of food from IRCTC site while booking tickets
Mr. Prabhu emphasised on the chronic under-
investment in railways for several years
for railway related queries and 182 for
which has led to congestion and overutilisation. This cycle needs to come to an end. The
budget
has
the
potential
to
security issues
be
transformational - by increasing capacity and
85%
was allocated
for
decongestion of
Policies for
station redevelopment
needs to rebuilt and worked upon
budget was the 8.5 lakh crore investment in Railways for the next five years, out of which
6608km of track to be electrified and track capacity to be increased by 10%
and focusing on transparency and efficiency on operational side. The major highlight of the
77 Projects worth Rs 96,182 crore for capacity expansion
improving technology on the supply side, improving quality of service on demand side
138 to be nationwide helpline number
All railway projects to be moved to EPC model
Incredible Rail for Incredible India to be launched
Successive reduction in oil prices last year is
key drivers of
adopting medium term
one of the main reasons behind keeping the
strategy, building partnerships, leveraging
passenger fare stable, but this may change in
additional resources, setting standards and
future, so the government has to do the
revamping management practises. Along with
planning and speculation in a manner to keep
these goals and drivers he also picked 11
positive
the fiscal deficit at minimum level. Due to
thrust
budget
increase in freight charges for coal and cement
operational capability of Indian Railways.
wherein shares of domestic
an increase of cement manufacturing cost by
railway companies surged
Rs 7-10 per bag of 50 kg is expected, also rise
Prabhu’s speech did not elaborated on the
up to 11%.
in electricity tariff throughout the country can
contingency plans for mitigating the risks
be seen because 70% of the energy demand is
evolving from the heavy investment for 5
met by Thermal power plants and for these
years. He needs to implement the long term
plants coal is the prime fuel for generating
strategies in effective and planned manner to
electricity.
avoid risks and uncertainties of failure. Also
Market
showed
response
to
the
With no increase in passenger fares, budget is looked upon as populist in nature.
Increase in freight charges for cement and coal may
areas
to
empower
the
overall
with a massive investment strategy, they With major bulk commodities largely being
should bring in technologies from foreign
transported by railways in India and track
players in the Indian market to provide a
already has capacity utilisation in excess of
digital facelift and provide a modern, fast,
lead to rise in cement cost
100%,
and
secure and consumer friendly environment to
and electricity tariff.
expansion
utmost
the Indian users. Around 5000 crore has been
improvement of
in
capacity
efficiency became
important strategies for implementation. Shifting gears towards IT
allotted for IT and research. Among one of its strategies, government has built up an
support for innovation and re
In his speech Mr. Prabhu also talked about
innovation council called Kayakalp for the
-engineering.
setting
customer
purpose of innovation and re-engineering in
travellers,
the existing business models of Indian
goals
experience, Set major goals, drivers and thrust areas for operational
excellence of Indian Railways.
expansion
for
safer of
improving journey
infrastructure
for
and
making
Indian rail financially self-sustainable. With
Railways.
- By Mohammed Zakir Ahmed
Finance Minister Arun Jaitley on Saturday
Wealth tax replaced by 2% additional
announced the Union Budget 2015 that put
surcharge.
forth boosting growth before painful reforms,
Rs 246,727 crore allotted to defence.
Corporate Tax cut from 30% to
slowing the rate of fiscal deficit cuts and also
Investments in infrastructure to go up by
25%. Service tax increased to
seeking to put domestic and foreign capital
Rs 70,000 crore
14% from 12.36%
into action. In his first full year budget, Jaitley
Rs 33,152 crore allocated to health sector
said India’s economy was about to take off.
Mudra Bank, with Rs 20,000 crore capital,
Modi backed Finance Minister by tweeting that
to
the budget would further reignite their growth
promoted by SC/ST
engine.
be
set
up
for
promoting
SME’s
Deduction on pension hiked to Rs 150,000 from Rs 100,000
Fiscat deficit to be decreased to 3.9%. 3% target in next 3
The budget was expected to be a test of
Service tax rate hikes to 14% from 12.36%
years.
nationalist willingness to reform a $2 trillion
10 years imprisonment for concealment of
economy with bloated public sector and weak
income and assets
private investment, the budget fell short on
AIIMS, IIT’s and IIM’s to be established in
structural reforms and contained target which
different states
for few sounded unrealistic. It drew a mixed
Visa on arrival to be increased to 150
from economists. Some feel it is a path to an
countries in various stages.
investor friendly India, whereas others see a lost
opportunity
in
tackling
structural Jaitley promised higher investment in India’s
problems.
roads and railways, offering tax cut to global companies and tighter rules to get Indian
Here are few features from the budget:
businessmen to invest at home rather than
Corporate tax cut from 30% to 25 %.
stash wealth abroad. Jail sentences of upto 10
Fiscal Deficit decreased to 3.9% this year. years warning was given to tax evaders. Jaitley targets 3% in next 3 years.
MNREGA allocation to be increased by Rs He forecasted growth acceleration 8-8.5% in 5000 crore, its highest ever.
Rs 1000 crore allotted to Nirbhaya fund for with Modi’s call to” Make in India”. The tax womens safety.
fiscal year, up from 7.4% this year on terms changes and tougher enforcement would raise
5 ultra-mega power projects with capacity by $2.5 billion next year. of 4000MW to be established.
Jaitley forecasted inflation at 5% by end of Rating agency Moody’s gave budget a cool March much against RBI’s 6% target and create reception, saying it was cool for India’s credit a room to cut interest rates. He also pushed and left stabilising government finances at Visa on Arrival to be provided
deadline by a year to 2017/18 for cutting fiscal mercy of economic growth. Moody’s rates
for 150 different countries in
deficit to 3%.
India at lowest notch of investment grade.
future
The
budget concentrates on a
years of "My proposals... lay down the roadmap for
economic policy making including monetary accelerating growth, enhancing investment, AIIMS, IITS and IIMS to be
policy overhaul, a bankruptcy code and the passing on the benefit of growth process to the
established in new states to
creation of a public debt management agency. common man, woman, youth and child. People
promote education
He scrapped the distinction between direct and who urged us to undertake 'big bang' reforms portfolio
investors
to
encourage
foreign also say the Indian economy is a super giant,
investor. He also simplified regulation of which moves slowly but surely," Jaitley told financial markets.
parliament as he wrapped up a 90-minute speech.
- By Arihant Jain
Interest Rate Swap Plain Vanilla Interest Rate Swap is the most
a market rate and the contract rate specified
common interest rate swap. In this swap,
valued by using expected forward rates to
Company X agrees to pay Company Y a
forecast
periodic fixed rate on a notional principal
discounting these expected cash flows at the
A swap is a derivative in which
over the tenor of the swap. In return,
corresponding spot rates, consistent with
two counterparties exchange
Company Y agrees to pay Company X a
forward rate expectations.
cash
party's
periodic floating rate on the same notional
financial instrument for those of
principal. Both payments are in the same
the
financial
currency. Therefore, only the net payment is
Currency Swap A currency swap exchanges both principal
instrument. The benefits in
exchanges. Most exchange rate swaps use the
and interest rate payments with payments in
question depend on the type of
London
the
different currencies. The exchange rate used
financial instruments involved.
reference rate for the floating leg of the swap.
in currency swaps is the spot exchange rate.
Finally, since the payments are based in the
The valuation and application of currency
same currency, there is no need for the
swaps is similar to the interest rate swap.
exchange of principal at the inception of the
However, since the principles in a currency
swap. This is why it is called notional
swap are not the same currency, they are
principal.
exchanges at the inception of the currency
flows
other
of
one
party's
Interest Rate Swap
Interbank
Offered
Rate
as
Volatility Swap
the
net
cash
flows
and
then
swap so that they have equal value using the
Currency Swap Commodity Swap
in the forward rate agreement. So swap can be
Valuing Interest Rate Swaps There are two basic ways of valuing interest
spot exchange rate. Also, the periodic cash
rate swaps:
they are in the interest rate swap.
flows throughout the swap are not netted as
1. Valuing an Interest Rate Swap with Bonds Valuing an interest rate swap in terms of bond positions involves understanding that
Commodity Swap Firms may enter into commodity swap when
the value of a floating rate bond will be equal
they agree to pay a fixed rate for the multi-
to the notional amount of any of its specific
period delivery of a commodity and receive a
settlement dated when the next payment is
corresponding floating rate based on the
set to the market (floating) rate. With this the
average commodity swap rates at the time of
value of interest rate swap can be determined
delivery.
as the difference between present value of the fixed leg payments and the present value of the floating leg payments.
Volatility Swap A volatility swap involves the exchanging of
2. Valuing an Interest Rate Swap with FRAs
volatility based on a notional principal. One
At settlement, the payment made on a
side of the swap pays based on a per specified
forward rate agreement is the notional
volatility while the other side pays on
amount multiplied by the difference between
historical volatility.
INDIAN MARKETS
The Market was muted in the
The Indian Budget revealed by the Fin. Minister Arun Jaitley was a mixed bag. The core objective was to cut the fiscal deficit to 3.9% of the GDP, and to keep inflation below 6%. Some of the major reforms that were listed are bringing a new bankruptcy code, setting up a public debt management agency, public contract resolution of disputes bill, autonomous bank board bureau to improve management of public sector banks. The market reaction was somewhat muted in the beginning but picked up .
start but responded positively during the close of the day .
BSE rose by 141.38 with Nifty
Open
High
Low
Close
SENSEX
29411.23
29560.32
28882.02
29361.50
NIFTY
8913.05
8,930.25
8,753.30
8901.85
rising by 57.25 points.
Top gainers were
Talbros
BSE SENSEX
Automotive, Lokesh Machines,
and SIPROJECTS
CNX NIFTY
COMMODITIES Commodity
Unit
Rs / Unit
% Change
Gold
10 grams
26477.00
0.95
Silver
1 kg
36736.00
0.94
Crude Oil
1 bbl
3067.00
1.09
EXCHANGE RATES INR/ 1 USD
61.6440
INR /1 EURO
69.0917
INR/ 100 JAPAN YEN
51.5085
INR / 1 POUND STERLING
95.4593
INTERNATIONAL MARKETS
Open
High
Low
Close
NYSE Comp
11,078.54
11,100.24
11,062.12
11,062.79
NASDAQ
4,985.03
4989.25
4960.88
4963.53
S&P 500
2,110.88
2,112.74
2,103.75
2,104.50
FTSE 100
6,949.73
6967.24
6929.84
6946.66
CAC
4,905.77
4951.48
4903.09
4951.48
DAX
11,337.11
11,401.66
11,301.34
11,401.66
NIKKEI 225
18,844.28
18,865.39
18,714.64
18,797.94
SSE 50
2,476.42
2498.72
2466.83
2474.56
Hang Seng
24,902.61
25,101.96
24,815.03
24,823.29
Budget 2015: Coal auction to bring revenue windfall for states, says FM Jaitley Finance minister Arun Jaitley said that auction of coal mines is one of the top three achievements of the government in its nine months’ period, it would bring several lakhs of crores of rupees to the kitty of coal-bearing states. 19 coal blocks are recently auctioned in the
first lot by the government. The money from e-auction proceeds, he said, could be used for creation of long-awaited community assets and for the welfare of the people. The companies that had bagged the 19 blocks on offer include Reliance Cement, GMR Chhattisgarh, Hindalco, Sunflag Iron and Steel, Jaiprakash Associates, Jaiprakash Power Ventures, OCL Iron and Steel, Bharat Aluminium, Essar Power MP, Jindal Power and UltraTech Cement. Arvind Kejriwal-led Delhi govt. slashes power charges by half, waives water tariffs beginning March 1 Less than two weeks into office power charges were slashed by half and waived water tariffs by, the Arvind Kejriwal-led Delhi government. This begins from March 1 for a majority of
consumers. Manish Sisodia, deputy chief minister told reporters that, every household with a metered connection consuming 400 units of power will be charged half the existing tariff, and water consumption up to 20,000 litres will be free. Swine flu affects over 19,000 lives The total number of deaths due to swine flu was 1041 and the total number of people affected were 19046, according to the data collected by the health minister. HP Nadda, health minister, on Friday admitted that the country is facing a shortage of laboratories for testing swine flu and had assured that efforts were being made to set up such facilities in all states.
Cafe Coffee Day IPO likely to fetch $1 billion India’s biggest home-grown coffee chain, Café Coffee Day is al set for a market debut that could value it at almost $1 billion. It aims to list 20% stake, roughly raising $200 million, within the next quarter. Café coffee day hired investment banks Kotak Mahindra capital and Citi group and plans for IPO at the end of April.
TRAI proposes significant slash in roaming charges for SMS and calls In an amendment released by Telecom Regulatory Authority of India (TRAI) to Telecommunication Tariff Order, 1999 to cut short the roaming charges of SMS and voice calls for the subscribers in the country. The draft submitted by TRAI is looking at a 35%
decline in the voice call charges and 80% drop in the SMS tariff. In view of the lack of competition witnessed in the present national roaming services market, the Authority is of the opinion that the best way forward is to prescribe cost based ceiling tariffs for voice calls while on national roaming,” TRAI said in a draft amendment to its Tariff Order of 1999. “Through the Amendment Order, the Authority intends to reduce the ceiling tariffs for national roaming services Apart from this, TRAI now also allows the subscribers to port their existing number from one state to another, which will help the customers to retain their current mobile number. Researchers break internet speed record, hit 1Tbps
A record breaking speed of 1Tbps during the tests of 5G data connections, was achieved by UK researchers. University of Surrey's 5G Innovation Centre (5GIC) researchers say that it is thousand times faster than the current data connections. BBC news reported that “At 1Tbps, it would be theoretically possible to download a file 100 times the size of a feature film in about three seconds. The speed is more than 65,000 times faster than average 4G download speeds ”. Another temple attack in US spreads concern among Hindus A Sanatan Dharam temple was vandalized in Washington state with windows broken and the word "Fear" painted on it, less than a fortnight after another temple was attacked. It is
the second attach and Hindus nationwide are highly concerned. The first attack was on February 15, the Hindu Temple Cultural Centre in Bothell city, about 35 km from Seattle, found a swastika painted on it and "Get Out" scrawled in large letters with spray paint. In the US, white supremacists have adopted the Nazi swastika as an ideological symbol. It was shocking for the hard-working, harmonious and peaceful US Hindu community numbering about three million, who had made (a) lot of contribution to the nation and society, to receive such signals of hatred and anger.
Sep 30,1952.
Rajasthan University Ph.D– Princeton University.
Arvind Panagriya, a native of Jaipur, is an Indian-American Economist and the current Vice-Chairman of NITI AYOG. He did his Ph.D degree from the Princeton University. Panagriya is an editor of India Policy Forum, a jounal that is modelled on Brookings Papers on Economic Activity. He has written both technical and policy papers. His technical papers have appeared in American Economic Review, Journal of International Economics. His policy papers have appeared in Foreign Policy, Foreign Affairs , World Economy. He writes weekly column for Economic Times and also features on a show called “Transforming India with Arvind Panagriya”. He has written/edited ten books. His last book was “India-An Emerging Giant” was published in 2008. Some of his previous
books include-” The Economics of preferential trade agreement” and “Lectures on International Trade” . In the past he has been a Chief Economist of Asian Development bank. He has also served in the capacity of professor of Economics and CO-Director, Center For International Economics, University of Maryland. He has also worked for World Bank, IMF, UNCTAD and WTO in various capacities. Arvind Panagriya is known to be a free market economist and a supporter of Gujarat model. He is also perceived to be close to economist Jagdish Bhagwati. Together they have coined the term “Gujarat Model” and “Kerala Model, in their book India’s Trust with destiny , to be used as metaphor for growth by private entrepreneurship and state driven development. In News Recently Arvind Panagriya, came in the news when he said that India would like to switch to strategic planning to achieve long term goals. While giving an interview to Doordarshan, he said that the planning horizon should be of 7-8 years instead of 5 years. In an interview given to Indian Express,soon after taking charge of Niti Ayog as ViceChairman, he also said that Niti Ayog would focus on labour reforms and Small and Medium Size Enterprises.
- By
Shikha Sharma
TV innovation beyond the bend and curve
Curved
and
bendable
screens, giant sets, and attempts to improve smart TVs

Major television manufacturers are hoping new flashy features
will
help
revive
sales
Samsung at CES presented another bended sources at fresh 4K determination, it even "SUHD" TV lineup for 2015, which are Smart changes over lower determination substance to
TVs controlled by the organization's own a level of clarity that is very nearly like Ultra particular Tizen OS. However no evaluating or High Definition. View the whole screen at the accessibility points of interest were uncovered. same separation from your eyes, considering The organization did notice that the Tizen- clearer review of pictures on the corners of the based brilliant TVs will emphasize more than screen also. 700 applications.
Samsung's most astounding and ideal curve
The "S" is said to speak to the top-end savvy (4200R*) gives the best survey experience from TV models from the company.Samsung's an ordinary review separation of 3~4 meters. progressive Curved TV takes you into the new Equivalent survey points on the whole screen universe of immersive review and makes you gives preferred
differentiation over
level
feel just as you are right amidst the activity. screen TVs. Decreased light reflection and The TV screen is bended at the right points to obstruction gives clearer and undistracted give you the ideal survey distance.The Curved survey. Clubbing the new environment with Screen encompasses the viewer's faculties, competitive touch experience made it feel like giving an upgraded feeling of profundity and using two different operating system on the a hoisted immersive experience.Auto Depth same screen. Samsung is opening another time Enhancer parts every casing into numerous of Curved TV with a definitive immersive regions and after that naturally advances the review experience. With the dispatch of differences for every zone to add more world's initially Curved UHD TV, Samsung is noteworthy profundity to the scenes.
mixing its inventive Curved structure element
Samsung's creative UHD Up-scaling preparing with its UHD TV innovation. With this upgrades telecast TV shows and films and in dispatch,
we
addition feature on interest and then some. powerful
item
are
further
portfolio
That implies not just does it handle UHD stimulation section.
increasing in
the
our home