The IIT Business Buzz Second Edition by The IIT Business Buzz

MARCH

ED TORS

Welcome to the second edition of The IIT Business Buzz!

We are the students of different IITs coming together to make a meaningful platform to highlight the rich business cultures across the IITs.

We recognized that IITians are usually known for their technical prowess. However, numerous students are inclined towards different domains within business-related fields and alumni who have made massive contributions to various fields while working in business-related roles.

This inspired us to create a Pan-IIT business magazine to portray such individuals' expertise on a global scale.

The first edition of The IIT Business Buzz was very well received and viewed by many diverse readers from students to notable personalities across 12 countries.

We had an extremely enriching experience while creating the second edition of this magazine. While preparing the different sections, we got the opportunity to deal with distinguished business leaders, including Mrs. Toshi Prakash and Mrs. Apurva Jalit. The interaction gave us great insights into their journey, vision, and future plans. We’re extremely grateful to them for supporting this initiative. We were able to connect with highly talented students across the different IITs, which enabled the high-quality content within the magazine.

We hope that this can be a starting point for further collaborations between the IITs, facilitating the creation of a holistic business environment. We have put in a lot of effort while preparing this magazine, and sincerely hope you enjoy it.

Best Regards,

Rohil Shah and Vikram Mehta.

Co-Founders & Chief Editors of IBB.

FROM THE

INTERVIEW WITH HEAD OF PRODUCT OF xto10x T

Q: You’ve been a part of many firms in your career. What have you learned from working at them?

A: When I started my career, I was a CS engineer, so I loved my first job. I enjoyed it for a while. I was working with TCS on HP servers: brilliant learning opportunities: learned a lot about the processes TCS has. After this, I wanted a career switch around 2008. I wanted to get into web-based products, which were rare at the time, and I switched to Lehman in 2008, where I had a bit of a hiccup there, and I learned so much. From a learning POV, I couldn’t have asked anything better. I was hit, by a company that I admired, it had a brilliant set of tools. It was a great space, a great team, and suddenly the company is no more. Going through that makes you strong. Teaches you how to recover from situations like this. I didn’t have to think about it twice, because now I had confidence in my skills. My next opportunity was on payment gateways. I worked with RBS, where the gateways would handle European and online POS transactions. At the time, POS transactions weren’t that big in India (2008-2010), but I got to see how high volume, low latency systems work. I grew as a team leader in the company. Thereby learned about management, how to do tech design and architecture. The experience paid off, when I joined Nestaway, where for the first time I integrated the payment gateway, so I could get people to pay their rents online. In the end, it sorta all comes back when you look at it in retrospect, but when you’re making that decision, it’s a lot about your gutfeel, it’s a lot about how confident you are in your own capabilities, how strongly you have built that. I have that zeal to learn, and I’ll find a way to learn and ensure I am good at it.”

At GS, I spent 5 years: brilliant firm, brilliant experience. Worked in multiple different teams, learned crazy large architectures, and those learnings really pay back when I’m thinking about products today, what scale I want to take them to, how to build a mega behemoth system. This really helped me when I was working at Locus. Locus is an enterprise SaaS product, I spent 5 years there to build 5 products from scratch, and enterprise products deal with extremely high volumes. Even if your first job is not in PM, please note all the learnings you have are relevant for a PM profile. In the end, PM means getting things done. If it’s a startup, you have to figure out how to get everything done. You need not have the time or skills to develop the code and get the design and sell it too, but you need to ensure that it gets done.

What kind of skills are necessary to be a good product manager? What have you done to inculcate them in yourself?

The basic definition of “product management” itself, see it’s a type of management, so you’ll need the skill sets of management. But it’s a culmination of business, design and engineering, so three Venn diagrams; the intersection is where PM lies. Generally, you’ll be good in one of them. I was a developer, so I knew I was good at engineering. I could relate to what engineers go through. I also realized the importance of design, the importance of a good user experience. Generally, when you are building your product, you want your users to engage with it, you want your users to do something, so that maybe you learn something about them and show relevant data points and realize: “Oh, this person is interested in purchase a mobile phone”. Until and unless you realize that, you will be only throwing random data at them. What I didn’t have was the business part of the Venn diagram. Explored a couple rules, development, PM, a couple things here and there, and I realized that PM is what I want to do, but for this, I needed to understand how business works, how to make a sale, what’s a CAC, what’s an LTV, basic business metrics of this domain that you’re entering into. If you already have experience, great. If you do not, put in the effort to build it. A follow-up on this, as PM is a nascent career, there isn’t exactly a roadmap you can have, how do you suggest students interested in PM go about it?

It depends on what role you are entering into. There is a reason there aren’t that many schools or workshops that say “If you have these skillsets, you’ll be a great PM”, because what you are entering into drives a lot of your growth curve. What company are you joining? Is it a small company? Are you building it from scratch? So that is how your learning curve will go, but one of the things you can definitely do is learn the basics of it. Basics of prioritisation, basics of stakeholder management, of what people have already done, there a lot of material available. PM is also a skill set that you learn by seeing people who did it well, how they went about it. So learn from other people, their blogs, their podcasts, the content they publish, and this process never ever stops. Even today, I know that if I don’t spend that day per week, spending the entire day focused on what is happening in the market, what are the new trends, what is and isn’t working, and going deep into my competitors and the rest of the ecosystem. I know that I will very soon be not the best person at my job, so you always have to learn. ple over coffee, make it a conversation piece.

What would you say is the role of consuming media or consuming entertainment in any product manager’s career?

One aspect that i would suggest is going behind the scenes and understanding what is happening and why it is happening. For example, o you understand, as a product manager, you should develop that eye to understand, why are hashtags there, why is there a like button, what does it help with. Simple stuff, like “Why is a story getting more importance over a normal feed? Why is Instagram taking off IGTV even though it is so popular. So not just consumption of the media itself, but do understand, develop that eye to go one step first D

While consumption is great and gives you a lot of uptrends in the market - my suggestion would be to go one level deeper and build that eye slowly. It takes a while to come, but it’s interesting to build that eye, because in the end that’s what helps you get those levers in your own product management career.

You've

worked in startups of different scales, like building Nestaway from scratch or leading product teams in GS and Lehmann Brothers, what are the unique challenges one has to face when working to build a product vs working to scale it?

The entire orientation is different. In the early vs later stages of a product: in the early stages, you are vying for survival. You are laser-focused on small markets and ensuring you get an acquisition and retain your customers. When you are scaling, you think of the lever you will pick up: geographical scaling, larger deal sizes, larger clients, etc. First, you pick the right scaling lever, and then your entire company should be aligned with these levers that give you the maximum output. For example, geographical scaling needs the GTM, sales pipeline, teams in various geographies are aligned, they know you. Your product is sorta ready to make a sale in those geographies, your reseller partners, your marketing is also strong there, and that’s where you try to direct the overall growth of the product and company. Scaling generally is a bit more exciting because you get to try out multiple things. In the end, I always go with an experimental method, that’s my natural way of doing things. I’ll do so with clients, a couple of users, test the market etc.

How has your experience at xto10x been like? Could you tell us a bit more about it?

I think it has been phenomenal. For one, xto10x is in a space with a high need: We have so many startups and companies coming in, but nobody has the time or energy to share their learnings even if they want to. There were barely any SaaS enterprise products in the Indian ecosystem, xto10x solves that gap. I love that we can help the startups scale, we get to talk to a lot of founders, understand their pains, meet a lot of personalities and we can see the difference between great founders and founders who need a little work. One of the biggest learnings I’ve had, if I ever do a startup is: how your first team hires for complementary skillsets, how much diversity in skills you’re bringing in. I’m also building products that will hopefully help improve culture in most companies. People want to always solve a problem, they are willing, but they don’t know what to solve exactly, and that’s where products help. Ensure that teams stay aligned, which can be difficult with a lot of work to do. How do you envisage the Indian product space shaping the future?

I believe the quality of work we do in the overall startup ecosystem individually has been producing things at a much higher quality than some of the European markets.

At the moment I feel we are beyond many of the Asian markets, I think there is some way to go in how we present, sell and market our products and our work. I think as a population we don’t like to show things. I think it is just a matter of time when the overall ecosystem becomes a competitor for the Silicon Valley also. I personally believe there is much more scope for us to grow in the right directions, grow from all the learnings of Silicon Valley also

We need to develop the skillsets that we aren’t that great at. I don’t think we do a great job at collaborative work. I think our communities need to do a much better job. I know that the conference culture, meeting folks, having an ecosystem of folks where you can just brainstorm ideas and validate certain concepts is way easier in the Silicon Valley and that brings the network effects. That brings the collective knowledge towards your push. I don’t think we do a great job in India for that, and I believe that once we solve these couple of things I think it’s going to be a win-win honestly game for us

AN INTERVIEW WITH

APURVA JALIT AVP PRODUCT MANAGER AT Tell far,

us a little about your journey so how did you end up in PM?

I started off coming from a technology background, I did my engineering in Computer Sciences, then worked for 3.5 years in network security with Air Tight Networks (now acquired by Arista), my role there was very core – building device drivers and writing shell scripts, I was mostly concentrating on building products and not really thinking about why am I building that something.

I read a book by Rashmi Bansal called ‘I Have a and I realised I was always very keen on marrying two areas of social impact and technology. While reading the book I came across a rural technology business incubator at IIT Madras which is headed by Prof. Ashok Jhunjhunwala who has been a guide and a mentor to a lot of start-ups. I got in touch with him and I don’t know what I was looking for, but he gave me an opportunity to come and work with him. I had a few ideas that I wanted to try out, so I took that chance with a basic stipend, and I worked with him on several projects as a Project Associate, noticeably in projects of solar energy in rural India and a QEEE program run by Smriti Irani, a GOI led project. I spent around 2 years there and while I was working on a few ideas of my own. I was both the tech and the brains of the operations. So, here I was out of the pure development mode I was earlier into, and into something that is looking at end-to-end, from the conceptualisation of the idea to actually implementing it, and that led to the realisation that I enjoy this part more than I enjoy development. I wanted to grab a product management job and see how things are to get the idea of the basic 101s, I wanted to try things out now but with a team which does it professionally, so I took up a job at Directi, where I worked on Flock and learnt some things there with an amazing set of people and then there came a time when I came across Chalo and here as well I had the opportunity to marry the two goals I had – social impact and technology. Dream’,

Your past experience brings up another noticeable trend that we observe with companies looking out for people with a tech background to hire as a PM. Your thoughts on that?

I believe it’s a misconception. While it definitely helps a lot to have an understanding of both worlds but that also became a problem to me sometime later. I think the importance of the asset of knowing the tech side of things in PM varies and depends of the nature of the product as well. It will be a great asset if I am working products that developers use, for example building browser stacks for tech people, or if you are building AWS.

We see PMs who are more like Account Managers as well so to speak for products which aren’t tech heavy an are more on the business side of things.

But I think if you can communicate well with your development team, and know what kind of language they us, it is just as fine. I think it helps but there is so much you can do without it also.

How important do you think is an MBA when it comes to making the switch to PM as a domain?

It is not at all essential to do an MBA. To me MBA was honestly a step to figure out what to do next. The problem with PM also is that not many companies are open to give you a chance. It is essentially a chicken and egg problem. You cannot do a product course which lands you a product job, and until you have a product experience, people don’t give you jobs. It is then a question of where do you break it and MBA is also not a product special course, so what it tells people is that if you have done MBA from a good college, I can take a bet on you.

To me MBA was just a way to break my pure development track to diversify. I looked forward to my MBA because it gave a platform to interact with a pool of smart people who came from different backgrounds. And I got to know how differently we all were wired since the same problem could be solved by development in a different way, by marketing in a different way, by psychology in a different way and so on. Taking the step to become a Project Associate is not a lot of people do. Would love to know more about it. I would interact on the side with a lot of start-up founders at IIT Madras. So, I would work with them on their small problem statements. Given I had a tech background, I could help them in architecting their tech solutions. Apart from this, IIT Madras also had their own projects, for example I worked on a solar tech for rural villages to transform them into completely solar enabled independent entities.

I think it gave me great resources to work with, mentors to help me along the way and these incubators which give the tools and the time to pursue it which I could not get in my engineering college at that time.

How did you narrow it down from “I want to build a start-up” to “I am interested in this one component of it – PM”?

I asked myself what do I enjoy doing the most. I went through an extensive list of tasks while building my start-up and in this gambit of figuring out things, I realised I enjoyed the user interaction the most and if that was the essence of what I enjoyed in those 100 things I did, so I thought why not do this as full time. I asked myself what do I enjoy doing the most. I went through an extensive list of tasks while building my start-up and in this gambit of figuring out things, I realised I enjoyed the user interaction the most and if that was the essence of what I enjoyed in those 100 things I did, so I thought why not do this as full time.

Directi

was a group of companies and now with Chalo, what were the differences in these companies, what was your journey through them?

At Directi, I was working on Flock, an enterprise messenger. I joined after my MBA as a Associate Product Manager. Flock at that time was in a phase where it had found a market fit and was heading into the fast growth phase with Slack giving us a tough competition in the market, and we were trying to see where we could bring our product in and make it more successful. We had a team of 10-12 PMs on just Flock.

And we had people in this team who had experiences of working in the domain and were well adept to face the challenges ahead. I had a great opportunity as an APM to learn from different product managers here. Since it was a B2B business we had a very structured way to speak to our clients. We had UX researchers, UX designers, UI designers, etc. So Directi had a set machinery evolved from their experiences which worked for them. Here since we were in the growth phase, the work was mostly about how seemingly small optimisations could give you great gains. So, it was all about experimenting fast and implementing them.

I made the switch to Chalo after 1.5 years at Directi, reason being I found a much exciting problem statement at Chalo which aligned with my principles. Now, I was the first product manager here, so I did not have any team to guide me, I did not have any process that would enable me to do what I was doing there.

The product was working well but it needed to expand to other cities and also build on new features. Chalo had completed four years but a few pivots changed our value propositions as well along the way. As a product person, I had to figure out about what should I solve. The leadership team here had a great vision, three of the four founders here were cofounders of Carwale also which had a great exit. So, I had the comfort of knowing that we are in the right place. And I could figure my problems at my own pace and do things on my own which gave me a great learning curve

We still do not have a structure to a lot of our processes but we traded those for speed since we can’t not grow. Without speed a start-up will be killed and it won’t be able to generate value.

But I think what has helped me through this journey are the connections I have made – my colleagues at Directi, the management, my ISB classmates, I have had insightful conversations with all of them to kind of create what we have here at Chalo.

THE IMPORTANCE OF IRRELEVANT ALTERNATIVES: DECOY EFFECT The decoy effect concerns itself with the decision-making biases of individuals. The fundamental idea that the choices we make in life are more relative than absolute, sums up the idea in a layman sense. Ideally, the situation wherein the decoy effect can be observed has three observable choices: the target, the competitor and the decoy. And at least two entities: the one who makes the choice and the one who presents the choices. Target is the choice the one who presents the choices wants you to make, while the competitor is the choice that competes with the target to be chosen. Now if in this battle of choices, a third choice - the decoy is introduced with the sole purpose of being dominated by the target by at least two factors and, being better than the competitor on at least one of them. This creates a cognitive bias for the one who makes the choice in thinking that the target is the best choice to make among the three. What lies at the crux of this phenomenon is the concept of Asymmetric Dominance. Coined by Chris Puto, Joel Huber and John Payne in their paper ‘Adding Asymmetrically Dominated Alternatives: Violations of Regularity and Similarity Hypothesis’, it is a groundbreaking study since it contradicted the assumption of the Regularity Principle, which in essence said that the inclusion of an additional option could not increase the chances of the pre-existing options getting selected.

With asymmetric dominance, the similarity hypothesis proposing that new entrants to a market “cannibalize” the market share of items most similar to it was also challenged. Remember the Porter’s 5 Forces Model*? The threat of substitute products can be then argued to be based on this hypothesis.

So decoys are used to trick us into thinking we made the correct choice when we haven’t, but how are we tricked? Turns out there are a number of theories that concoct to give us the answer. Nudge theory, Loss Aversion theory, Paradox of Choices with the simple argument that decoys make us feel justified to make the target choice work behind the curtains to produce such an effect.

Now, let’s look at a couple of anecdotes to illustrate this marketing tact in practice.

Dan Ariely, a well-known behavioural economist, decided to unearth the phenomenon of asymmetric dominance by surveying his students on two different tests causally related to the subscription pricing of The Economist.

In the first variant, the students had to choose between a web-only option and a print-only option for double the price. As rationally predictable, a substantial 68% of the takers chose the cheaper option. In the alternative test, the survey-takers had an additional alternative to choose from, in which they could get the web-andprint subscription for the price of the print-only service. It is precisely here where our rational expectations fell by the wayside.

Contrarily, it was observed that a measly 16% now chose the cheaper web-only alternative, with 84% opting for the combined web-and-print option, which was double the price of the more affordable alternative. Thus, the print-only option was the decoy in this scenario, and the combined web-and-print alternative was the perceivable target.

Education Tidbit: The Economist published Dan's ground-breaking finding in a story aptly titled, "The importance of irrelevant alternatives." The Australian's subscription pricing model is also tailored to make the most of the decoy effect, with the core premise being the same.

Another demonstration of what economists term the asymmetric dominance theory in their parlance is the pricing strategy of the notable coffee juggernaut Starbucks.

Starbucks employs the decoy effect in relation to the size and price of their coffee. In this example, the Venti (the big cup) serves as the target, and the Tall (relatively minor variant in their product mix) is the opponent.

The Grande (medium-sized cup) is significantly costlier than the Tall variant but is larger, rendering it slightly superior to the Tall variant. On the flip side, even though the Venti costs marginally more than the Grande, it contains more coffee, making it the most optimal choice per unit.

Thus, the Grande serves as the decoy and is asymmetrically occupied by the Venti and the Tall variants.

It might come as a shock to many but individuals who rely on intuitive thinking fall prey to the symbolic bait of the decoy more in comparison to their counterparts.

Thus, the next time you think you've made a beneficial purchase, think again and try to dissect that with your newfound knowledge of the decoy effect.

Q-COMMERCE

The pandemic and the stringent lockdowns placed in the previous years have seen businesses increasingly going digital and catering to consumers and their changing purchasing trends right at their doorstep. E-commerce and the direct-to-consumer business strategy has enabled businesses to reap a slew of benefits through enhanced connectivity with their customer network.

has had unprecedented growth with its unique business model, wherein the product ordered is delivered within 10-30 minutes of delivery. Also known as ondemand delivery, the model works by maintaining micro-warehouses known as “dark stores” in major cities.

Dark stores in essence are micro-supply brick and mortar warehouses located in a radius of 2-3 kilometres depending on the demand in a particular area.

These stores primarily cater to online deliveries which helps in maintaining stock keeping units (SKUs), cutting costs and enhancing the functioning of the supply chain. While the E-commerce sector witnessed an overall significant growth during the pandemic, the quickcommerce sector witnessed a spike in groceries and pharmaceuticals only.

There are mainly three purchase patterns seen in the e-commerce sector: The stock up, the top up and the unplanned purchases. The stock up purchases is the recurring purchases for the relatively non-essentials for a long duration of use.

The top-up purchases are the daily essentials purchases that have been and still are dominated by the kiranas, and unplanned as the name suggests are the unpredictable purchases we make.

While stock up behaviour is fairly predictable, what is interesting is that top-ups and unplanned purchases make up for 60-65% of the consumables purchase share which in turn quite easily shows why the Q-commerce boom happened.

ONLINE QUICK COMMERCE MARKET MARKET GMV IN CY(CY 2020-2025E, BY SCENARIO Quick Commerce

CAGR % (2021-25E)

+....%

+133%

CY2020

CY2021

2.6%

6.7%

CY2025E 10 to 17.5%

Source: Redseer

Base Case

Conservative Scenario

+92

~ 3.1 Bn

Aggressive Case

~ 0.8 Bn

+105

~ 5.3 Bn ~ 1.5 Bn

E-commerce and the direct-to-consumer business strategy has enabled businesses to reap a slew of benefits through enhanced connectivity with their customer network.

Analysing individual consumer behaviour and trends in the general demographic enabled companies to understand the target market better, carry out effective marketing campaigns, improve personalization with respect to region and variation in trends and gain more control over its supply chain with demand forecasting, which in turn aided to better warehousing, procurement and transport.

With the rising tide of e-commerce during Covid 19 and the upsurge of the market value of e-commerce to US$ 200 billion by 2027, the FMCG sector has been shining out the most with a growth rate of 33 per cent. The dynamic lifestyle of urban dwellers demands a much more efficient and speedy delivery mode.

For e-commerce to replace the offline grocery and essentials shopping experience, businesses will have to improvise in a way that enables customers to place purchases and pick up orders within the nick of time.

The consumables section of e-commerce is projected to grow to ~US$ 1Tn by 2025. The four cornerstones of this growth being the willingness and the ability to pay the premium by the metro and tier 1 cities, the convenience of athome delivery, a growing concern among the populace for a healthier lifestyle and the consumption of newer items brought on to the Indian market through global experiences.

SHIFT OF PURCHASE PATTERNS AND DARK STORES THE BIRTH OF Q-COMMERCE Quick Commerce

+80

RISE OF E-COMMERCE

THE PANDEMIC

The

MAJOR PLAYERS IN INDIA

huge

industry The

pandemic

development

majorly

the

catalysed

the

quick-commerce

Grofers delivery

industry. In 2020 the estimated market

and

value

the

quick-commerce

industry

started firm

change

out

that its

was

inventory-based

sustainability

issues.

of 12 to 13 per cent. The ease of access

rebranded

Blinkit

venture

into

the

industry,

time

Dunzo,

Swiggy

essentials

and

provided to

medicines

quick

snowballing

and

other

availability

commerce

popularity

has

during

led the

pie.

rounds

from

shift

consumer

value-seeking

seeking

which

played

behaviour

conveniencekey

role

the

upsurge of quick-commerce.

model model It

which

looks

brands Zepto

Backed

until

investors

millions,

companies

sustainable

find

process

with

just

establishment

with

the

marketing

pose

and

significant

stores” are feasible only in tier-one cities and require huge establishment capital.

While

seems

are

the

quick-commerce

lucrative,

the

business

profitability

and

viability seem uncertain.

funding

about viable

this

involved of

The backbone of this industry, the “dark

now

commerce

when

costs form

that

due

has

quick

and

pivot

the

barrier to any new market entry.

competing for a piece of this expanding

post-pandemic world, which experienced huge

initial

hyperlocal

made

business

was US$ 49 billion with a growth rate

groceries,

sunk

time

A NEW ENTRANT

and

ambitious Considering

strategy.

the

barriers

entry,

any

new entrant in the market should focus The

presence

inventory results

Recent

and a

dark

stores

quicker

and

inventory

costs

inventory

developments

technology

lowers

maintenance

the

usage

the

turnover.

blockchain of

AI-driven

management

THE FLIP-SIDE OF Q-COMMERCE

and

This

burgeoning

industry

doesn’t

gaining

other

and

players

geographical

exist

competitive by

edge

expanding

areas

and

over newer

optimizing

the

delivery time.

without its own set of challenges. As the price-driven Indian market continues to operate

with

recommendation systems serve as major

the

drivers for the industry.

questionable.

viability

minimal of

such

delivery a

The profitability of the business can be

charges,

business

optimized

seems

delivering

high-margin-

small-packet products.

Simple user

experience in Quick

Commerce

Faster product delivery in Quick Commerce owing to the Micro-Fulfilment Centre based model

Traditional e-Grocers

Planned monthly

weekly stocking-up

Searches multiple

Multiple deal discovery

Completes paymen

Order flow from centralized warehouses to customers

websites and apps for

and variety offerings

Searches Coupon

Delivery time

AOV- $ 12-15

deals

: 6hrs- 2 day Low reliability on timelines

Quick Commerce

Unplanned urgent

Directly opens preferred

No addiitonal deal

consumption

app to purchase

dicovery activity reuiired

Routines daily/ weekly

for the goal oriented

needs

customer

Completes payment AOV

Orders flow from mini-warehouse / MFCs in

neighbourhood or local kirana to custome

$ 6

Delivery Time: 20-45 min High reliability on timelines

Additional purchase after

stocking-up

Source: Redseer

GROWTH AND THE FUTURE As the sector continues to grow immensely, the India Brand Equity Foundation (IBEF) estimated the sector to grow from US$ 46 billion to US$ 111 billion in 2025. Investors are heavily investing in quick-commerce start-ups.

While Swiggy pumped a hefty

amount of US$ 700 million in Instamart, Zepto has churned out another funding worth US$ 100 million while it was valued at US$

570

million.

Similarly,

Zomato-backed

BlinkIt,

Mumbai

based

start-up

Dunzo

funded

Reliance

and

several

companies have ventured into this expanding horizon as the quick-commerce industry continues to grow and flourish.

other

Neobanks

The Traditional Banks Challenger Top 20 of 2020

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Neobanks are financial organizations that operate entirely online and do not have any physical branches. They also provide standard banking services such as money loans and transfers, credit and debit cards, brokerage, and other financial services. Customers may use a mobile app or a website to access all of these services at their leisure. Whether or not a neobank has a banking license determines whether it may provide financial services independently or through a partner bank. We'd want to clear up a misunderstanding about the difference between neo banks and digital banks here. The border between the two is razor-thin; the digital bank is usually an online-only partner or a subsidiary of a traditional bank. On the other hand, Neo-bank is a self-contained FinTech firm that operates without a physical presence.

The most exclusive feature of neobanks is that they're exclusively online and have no physical branches. This affects many aspects and imparts its differences with traditional banks. The account opening process becomes hassle-free, and there is no need to visit any branch! Even while the process of opening a traditional bank account is less complicated than before, there is still a lot of paperwork and form-filling to be done, and some banks even need consumers to visit a bank office to create a deposit account. Neo banks save much money because there are no physical branches to maintain. As a result, there are no withdrawal fees or yearly or monthly maintenance charges.

Apart from that, Neo banks offer a better client experience thanks to advanced technology. Unlike traditional banks, where problems sometimes hamper net banking websites and mobile apps frequently lag, the application and websites are highly responsive. Disbursing funds to suppliers and other stakeholders is time-consuming, exhausting, and complex. Neo banks de-mystify the whole process by lowering the amount of human labour necessary and offering uniform platforms to track money flow. Other services to MSMEs, such as taxation, budgeting, and accounting, are also provided at a reduced rate.!

Neobanks disrupted the industry due to these advantages and user freedom, and many customers who were dissatisfied with traditional bank services soon switched to new, digital-only products. Despite this tremendous growth and expanding client base, investors are increasingly pressuring neobanks to change their focus from development to sustainability and profitability. The fundamental idea of a neo bank is a low-cost, asset-light business strategy. After years of massive marketing spending to drive neobanks' expansion, they suddenly find themselves in a scenario where their capacity to create a consistent revenue is being put to the test. According to Accenture's Digital Banking Tracker, the average cost per client for neobanks in the UK ranges from $26 to $65 - compared to a staggering $230 for conventional banks. However, the difference in revenue per user is significant: $12 for neo banks against $360 for traditional banks, with lending making up the majority of the difference. Essentially, this indicates that modern banks in the United Kingdom lose $6-20 per client on average.

The LTV/CAC ratio explains this: the more significant the resultant value, the more money a neo bank may produce per new client. Let's understand it more clearly.

Customer Life-Time Value (LTV) is the average revenue earned by a single customer over a given length of time. To keep the LTV/CAC high, it's pretty intuitive for LTV to be as high as possible. However, many neo banks find this problematic. For example, the largest neo banks, such as N26 and Monzo, rely on low debit card interchange fees to generate income, resulting in an extremely low LTV. At the same time, neo banks that provide lending services, like SoFi, are feeling better, even though they are still competing with traditional banks for most high-quality loans.

Customer Acquisition Cost (CAC) is the entire cost of acquiring new customers divided by the number of new customers. Again, it's intuitive to keep CAC as low as possible to make LTV/CAC high. Most neobanks still outperform traditional banks in CAC, with an average CAC of $33 compared to $225 for conventional banks, but it's still too expensive compared to income earned per user. Which, in any case, reduces profitability.

On the other hand, Traditional banks have successfully improved their products and attracted new consumers in the digital realm over time. As a result, neo banks' CAC increases, indicating that more effort should be put in to acquire new consumers. Top neobanks, therefore, are finding it hard to persuade customers to transfer their primary bank accounts from traditional banks by upgrading their applications and expanding the options available.

1) INTERCHANGE-led Business Model The most profitable bank accounts are primary bank accounts for three reasons: They signify a more considerable number of transactions and higher payment volumes. Typically, such accounts have a larger quantity of money put in them. These are the accounts from which people get their paychecks and make regular payments. Neo banks get more money from interchange fees when they become their consumers' primary bank account.

All of this pushed even the largest neo banks to seek new revenue streams from paid subscriptions, loans, referral commissions, and expanding their product offering to include savings and investment products. The following are the five most effective and deployed neobank business models: A neobank is paid every time a consumer uses the neobank's card as a payment method

Best example - Chime

It presently has almost 12 million users. When a user uses their Chime Visa Debit Card to purchase, Visa charges the merchant an interchange fee, around 1.5 per cent of the total transaction price. Chime receives a tiny portion of this total.

2) CREDIT-led Business Model Some neo banks start with a credit card or similar product and then offer a bank account later.

Best example - Nubank

It presently has over 40 million users. Every time customers swipe their credit cards in-store or make an online payment, it earns money. Furthermore, the bank earns profit on its clients' carrying credit-card balances depending on the interest rates charged on such accounts.

3) ECOSYSTEM-led Business Model Neobanks can now develop their ecosystem easily equivalent to regular banks, who spend a lot of money and struggle in this area, thanks to the emergence of APIs.

By combining all services in one spot, neobanks are paving the road to generate cash by becoming a one-stop shop for consumers' financial requirements. The most effective value-added services might be brought in-house with time, boosting profit potential.

Best example - Monzo

Monzo, a large neobank located in the United Kingdom, focuses on creating an ecosystem around its primary offering. In 2018, this neobank partnered with TransferWise, an online money transfer provider, to allow Monzo app users to conduct international money transfers directly from the app. Monzo partnered with PayPoint later that year to allow clients to deposit cash at any PayPoint facility in the UK. Instead of building its own savings solutions, Monzo has teamed with other banks and asset management businesses such as OakNorth, Shawbrook, and ParagonSave to provide Monzo consumers savings accounts. Most recently, Monzo announced intentions to allow customers to access their credit score for free within the Monzo app, collaborating with Experian.

4) ASSET-led Business Model

According to this concept, neobanks make money through offering savings accounts and securing relatively affordable deposits.

Best Example - Marcus

Marcus by Goldman Sachs, one of Wall Street's most well-known companies in investment banking, expanded its products into consumer banking in 2016. Marcus, like other neobanks, does not offer an extensive range of services to customers, but it does offer high-yield savings accounts, high-yield certificates of deposit (CDs), and no-fee personal loans.

Marcus has $96 billion in deposits as of October 2020, making it one of the most significant online savings accounts and offering some of the highest CD rates. Although this online bank does not have any physical facilities, it does have a mobile banking app.

5) PRODUCT EXTENSIONS Product extensions that break down boundaries between financial domains are another neobank business model. According to some predictions, product expansions from major IT businesses will be the primary drivers here.

Best example - Robinhood

Robinhood is an online discount brokerage that provides a commission-free investing and trading platform. Robinhood Gold, a product expansion of its primary product, was introduced in 2016. Users can utilize this service to access deposits, professional research, Nasdaq Level II market data, and margin investments. Gold memberships start at $5 per month and may go up to $50 per month. The price is determined by the quantity of the money borrowed on margin by traders. In Q1 FY 2021, revenue from Robinhood Gold surged by 396.5 per cent to $39.2 million, accounting for roughly 8% of total revenue.

CHALLENGES

In general, neobanks encounter three challenges on their way to sustainable profitability:

Customers' lack of belief in neobanks -

Customers hesitate to pick a neobank as their primary bank strongly indicates this. As a result, neobanks are finding it challenging to develop long-term relationships with consumers, increase the volume of their deposits, and increase their engagement ratios. Banks that have been around for a long time are now catching up with their digitization strategy.

Traditional banks have recently begun to invest extensively in strengthening their IT infrastructure, making it tough to compete with them, even for the most profitable neobank business models. As many branches were shuttered owing to COVID regulations, the pandemic further fueled banks' ambitions to win this digital race.

Entering the banking sector, Big Tech (Apple, Google, and others) poses a threat. Apple, for example, provides the same commodity services (such as payments, debit cards, and credit cards) as neobanks and the same kind of benefits (in terms of a digital, easy, and fluent offering). This danger may be more significant for neobanks than incumbent banks.

These barriers can potentially obstruct the neobanks' profitability in the following years: some may cease to exist, while big banks may acquire others.

There is, however, a way out of this stalemate: neobanks should reposition themselves, that is, identify a sector in which they can achieve sustained profitability and stop competing with central banks.

A ALL

B O U

T CRYPTO

What is crypto and how does it even work?

Iprobably f you haven’t been living under a rock, you would have come across “scary” words

like cryptocurrency, blockchain, NFTs, and other mumbo jumbo. We are supposedly in the middle of a crypto revolution, and it only makes sense to learn more about the same. So what exactly is crypto or cryptocurrency? The fundamental principle on which most cryptocurrencies are built on is a decentralized network based on blockchain technology. Therefore, in order to understand crypto we need to understand what blockchain is.

A blockchain in essence, is a distributed database that is shared among the nodes of a computer. The information that is stored in this database is in the form of blocks and each block has a certain storage capacity which when reached is unable to store any more information. This block is now linked to the previously filled block, and in this way a chain of blocks containing data is formed. The beauty about this lies in the fact that this data structure inherently makes an irreversible timeline of data when implemented in a decentralized nature, and therefore, makes the alteration of data nearly impossible. Each block in the chain is given an exact time stamp when it is added to the chain.

Hence, blockchains are used in cryptocurrency systems to maintain a secure and decentralized record of transactions. A cryptocurrency is a digital form of cash that’s exchanged with the help of addresses and ledgers. To hold cryptocurrency, users require a wallet with a unique address allocated to it. When users wish to transfer money, they insert the wallet address and send the required amount. These transactions are recorded on a ledger, called a Blockchain. It also provides extra privacy as the ledger does not store intimate details. However, who verifies these ledgers? Here, the concept of miners comes into existence. Essentially, miners help maintain these ledgers through the concept of ‘proof of work.’ Miners use their computer’s graphical and computing power to verify the transaction. In return, they receive rewards in cryptocurrency, which they can sell on exchanges to receive cash

THE NEED FOR CRYPTO Now that we have understood what crypto is, a question that is naturally invoked is “What is the need for crypto?”

The killer unique selling point ( S ) about crypto is the decentralized platform it offers to its users. Information in a blockchain is not stored in a central location, instead this information is copied and spread across a network of computers. On addition of a new block, every computer in the network updates it blockchain and the change is thus re ected everywhere. U

This makes it almost impossible for hackers to hack because once a hacker tampers with a copy of the sequence of blocks, other users on the platform can compare the adulterated information stored in the block (which will transcend into a different hash code) of the tampered copy with their own. Another reason why crypto proves to be useful is that with crypto, the participation of a third-party member becomes redundant which essentially translates to cost reductions by eliminating friction in transactions. Also, all crypto transactions are secure, private, and efficient. However, the most profound facet of crypto perhaps is the inclusivity it has to offer in terms of participation in it. Anybody regardless of their race, culture, or gender has the ability to use crypto. There are an estimated 1.5 billion amount of people who do not have bank accounts or any means of storing their money or wealth, and crypto seems to be the surefire way of addressing this issue in the form of something like a bitcoin wallet, the keys to which can be stored easily. Conclusively, crypto has a lot to offer, from greater user privacy to nominal processing and transactional fees.

WHAT IS CRYPTO TRADING? Let's move on to crypto trading now. Trading currency? Seems a little quirky doesn't it? Well, it is exactly what it sounds like. Currency is traded in the crypto "market." The transactions are stored on a blockchain after getting verified by miners, who then earn awards in the forms of these cryptocurrencies, which is also how new tokens come into circulation. It seems a handful, doesn't it? Let's break it down piece by piece. By now, we know what a blockchain is - a database of "blocks" that stores all the transactions in the crypto world. This framework has advanced security features and is generally accessible to every trader on the network, so there is complete transparency.

Blockchain technology has unique security features that regular computer files do not have. Think of it this way - it's a long chain of blocks linked together by complex algorithms that are very difficult to tamper with. A block recording your transaction is added whenever you make a legitimate transaction. Note that this is a simplified version of what happens, and there are many technical details we don't want to get into. So this was about how the transactions are recorded. At a personal level, you'll need an account in an exchange platform where the trading takes place, and your wallet, which is the entity that communicates with the blockchain on your behalf, to verify a transaction. Essentially, when you want to send cryptocurrency to another user, you send it from your wallet to theirs using an exchange platform. This transaction has to be verified and added to the blockchain first, which is where miners come in. Remember the "complex algorithms" that act as links between blockchain blocks? Miners attempt to verify a transaction. This happens in a two-step process - in the first, it is confirmed that the sender has enough balance, and in the second, the key unique to the sender is verified. After a multitude of these verifications (500+ in bitcoin), a block is created, and the miner attempts to solve these algorithms to link this new block to the existing blockchain. Once they generate a link, the block is added to the chain, and the transaction is broadcasted to the network. There! A trade (multiple trades, really) has been completed successfully. The miner then earns awards in the form of tokens that they can inject directly into the crypto market.

Cryptocurrencies aren't volatile to many economic and political concerns that affect traditional currencies. However, market capitalization and press affect the movement to some extent.

INCENTI E ISS ES V

Obviously, any major attack on cryptocurrencies would immediately devalue the currency, creating a losing situation for everyone, including the attacker. Still, it is essential to think through what kinds of attacks we might see in the future. Some of the more recently identified attacks are reasonably subtle, hard-to-detect, and may become increasingly prevalent over time.

THE DO

UBL

E SPEND ATTAC

This happens when miners deliberately create forks. While searching for a valid block, insert the hash of a block on the blockchain that is not the last block. Suppose in a transaction Elon Musk transfers some bitcoin to Sundar ichai. This transaction gets added to the blockchain as part of block c1. Sundar only ships the purchased goods to Musk once another block c has been appended to c1. P

When Musk has the goods, he could try the following attack Try to find a valid block c extending c0, another block c extending c , and a third block c5 extending c . Musk does not put transaction T in any of these blocks. If Musk successfully creates these three blocks before any other miner extends c , then he rips off Sundar c1 and c are orphaned, and Musk’s payment to Sundar gets cancelled, while the goods have already been sent. This is called the double-spend attack, especially when Musk puts a payment to Bezos in block b , promising the same coins to Bezos that he already promised to Sundar. The probability that Musk succeeds in his double-spend attack depends on how much computational power he has. :

THE

51%

ATTAC

When a single entity controls more than 50 of the computational power in cryptocurrency, cryptocurrency is not intended to work. Such an entity can effectively act as a centralised authority, defeating the whole purpose of Bitcoin. Although the entity cannot outright steal bitcoins from another user’s account, it can freeze the assets of any user that it wants by forcing any blocks involving that user to be orphaned. Such an attack is known as a 51 attack. %

SE FISH INING L

A miner is supposed to announce a valid block to everyone as soon as he finds one, but he can opt to keep it a secret if he desires. What is the incentive for Musk to withhold a block and forego the corresponding reward? The intuition is that Musk can trick all of the other miners into working on the wrong computational problem (extending the last publicly announced block, not Musk’s secret block). This strategy is called block withholding. Meanwhile, Musk can work privately on extending his block. This trick boosts Musk’s fraction of the valuable computation being done and hence can boost his expected reward. This is known as selfish mining.

ALL A B O U T CRYPTO

Depending on the creator, these coins can have a fixed number or be inflationary, like fiat currencies. Some experts see cryptos as a defensive tool against inflation. Unlike the endless supply of fiat currencies, cryptos like Bitcoin have a fixed number of coins, specifically 21 million, to be mined and traded. Due to growing interest and demand, which pushes their prices exponentially higher, these coins regularly double or triple their current value as soon as buying interest rises. Due to this factor, cryptocurrencies have become popular in circles as a tool to become a “Millionaire” overnight. On the other hand, some compare these coins to assets like gold, providing tremendous annual returns.

Cryptocurrencies have been used in authoritarian and underdeveloped countries to carry out transactions. Dissidents use them to transfer funds, thus bypassing the government. Countries with unstable and highly inflationary currencies also see a rise in cryptocurrency transactions as they serve as more valuable tools for trade. However, most businesses and institutions in developed countries refuse to accept cryptos due to their wild and unpredictable nature when it comes to business. Significant corrective phases can wipe out the 50-90% value of certain coins within days. This fear is also one of the leading causes of significant corrections in these coins. As soon as market sentiment worsens, people start booking their profits, causing the downfall to accelerate.

Though, stable coins like Tether (USDT) can offset these disadvantages due to minimal fluctuations in their prices. Experts see stable coins as the future of digital payments due to their feasibility and viability. There is no fear of unpredictable movements pegged to some physical asset and no transaction fees while transferring money. Generally, banks and other financial institutions can charge a hefty percentage of the payment for sending money overseas, but transferring stablecoins can quickly solve this problem. Stablecoins can become the source of low-cost, inclusive, and high-speed digital payment methods.

THE TRANSITION TO A DIGITAL CURRENCY

ryptocurrencies, popularly known as coins or cryptos, have engulfed the whole world into its spell through their novelty and potential. Cryptocurrencies have genuinely demonstrated their ability to transform from a fringe interest of tech stalwarts to the potential of destroying the current banking & financial system. Financial institutions are scrambling to gauge the power of these digital coins. Various countries have developed additional regulations concerning these currencies. Impressed by its viability, some federal banks, like those of the USA and India, plan to launch a decentralized version of the Dollar and Indian rupee, respectively.

Besides cryptocurrencies, there are certain coins called ‘Stablecoins,’ that are pegged to some asset like the US Dollar or Gold. Stable coins do not have rapid fluctuations in their price, making them popular for trading purposes. Generally, people buy them from fiat currency and then exchange them for obtaining the required cryptocurrency. There exist various cryptos, ranging from Stablecoins to privacy to metaverse coins. Coins like the Monero, also called private cryptocurrencies, carry a step further by increasing the blanket of privacy. Monero does not allow observers to decipher the transaction amounts, address balances, or transaction histories.

Cryptocurrencies have also paved the way for the rise of Defi (Decentralized Finance). Essentially acting as the digital equivalent of legacy institutions like Banks & other corporate financiers, Defi projects and coins aim to provide financial solutions digitally. Financial services such as lending, borrowing, trading, etc., can be carried out without a central command. Along with Defi, “Smart Contracts” have risen to aid these projects. Smart contracts are contracts that execute themselves when certain conditions are met. Most Defi projects exist on the Ethereum blockchain due to its lower transaction time than Bitcoin Blockchain. Defi can potentially transform the financial services space by facilitating these services without the aid of a central authority, thus removing the notion of corruption and malpractices altogether. Although states have side-lined cryptocurrency from their laws and regulations for the past few years, presently, they cannot overlook the rising wave of cryptocurrency sweeping worldwide. India also kept a lax attitude towards cryptocurrencies. However, as soon the prices of Bitcoin exploded in 2021, it led to a significant rise in people trading and owning these digital currencies. Budget 2022, however, transformed the crypto landscape by taxation and announcements of RBI's digital rupee. Nevertheless, the government still wants to discourage the usage of private cryptocurrencies; that is why they announced a 30% tax on profits gained in crypto. Also, to bring such assets under the tax net, the finance minister proposed a 1 percent TDS (tax deducted at source) on transactions in such asset categories above a certain threshold. Losses in cryptocurrencies cannot offset the income gained through other sources. Along with these ordinances, the RBI announced the launch of India's own digital currency by the following year based on Blockchain technology, thus making currency management effortless. Considering the various prospects of cryptocurrencies, certain fallacies also need to be addressed before incorporating them into the current financial system. Firstly, cryptocurrencies are anonymous and untraceable, making them lucrative to criminal organizations, authoritarian regimes, and rogue states. In addition, concerns about the worldwide application of decentralized finance exist.

We can essentially create a barrier that could lead to fragmentation, loss of policy effectiveness, and class division.

Cryptocurrencies and Defi systems are the faces of decentralized finance. Now, billions of dollars are being traded without the purview of central banks, making them prone to tax evasion, fraud, and malpractice. Small countries with weak financial institutions are prone to financial instability. In small countries, central banks will be unable to set accurate monetary policies due to no control over the money supply.

Criminal organizations use cryptocurrencies to carry out illicit activities. Drug cartels are increasingly using cryptocurrencies to receive payments in exchange for the supply of drugs. Terrorist organizations like Al-Qaeda thrive on these methods of payment in order to continue their operations in the Middle East and Africa. Rogue states like North Korea use cryptos to bypass the financial sanctions imposed by the USA & other western powers. Previous wars such as the Iraq-US war were won by the USA with the help of threatening sanctions which stopped the inflow and outflow of US Dollars into the countries, thus paralyzing their international trading activities.

Besides this, the mining of cryptocurrencies has evolved into a complex task as time has passed. As the volume of transactions increases on the blockchain network, there is a requirement for more miners. Miners use their computer’s computing power to verify transactions. However, miners need to use a wide array of graphical chips to make these transactions profitable, which requires much power.

Countries still rely on power from conventional sources such as Coal and Petroleum. These resources are non-renewable and generate a lot of waste and toxic gases, thus contributing to climate change. Although cryptocurrency proponents say that renewable energy will help resolve this issue, there is still a lack of infrastructure and resources to replace nonrenewable sources.

The cryptocurrency space is still evolving, and much remains to be done. However, the possibilities are immense, to the extent that the risks are carefully overseen. The key to building a brighter future is cooperation—between the private and public sectors domestically and national authorities and organizations internationally.

Digital money must be regulated, designed, and provided in a way that allows countries to maintain control over monetary policy, financial conditions, capital account openness, and foreign exchange regimes. Payment systems must grow increasingly integrated, not fragmented, and help all countries guard against a digital divide.

FUTURE After the Indian government announced to issue digital currency in 2022-23 in it’s annual budget, the future of cryptocurrency has become hazy in the country. Despite the announcement of 30% taxation on the transfer of virtual assets, the legalisation of the same is unclear.

However, RBI is expected to introduce and regulate a central digital currency, whose specifications and decentralised nature are unknown. However, it still remains difficult to keep a record of cryptocurrencies in India therefore, hence underground work is still expected in the same.

Despite its uncertainty, cryptocurrency is growing both in popularity and usage globally. Several cryptocurrencies apart from Bitcoin and Ethereum like Litecoin, Binance Coin, Solana, Cardano are rising in popularity and usage. With such a rising market and popularity, it is unlikely that cryptocurrencies are going anywhere in the coming few years.

BUDGET

ANALYSIS

20 22

Amidst the backdrop of a global pandemic, the GOI pursues its Roosevelt moment with aggressive infrastructure policy and a more liberal market.

As India proceeds to assess the chronic illness of its financial systems, it carefully treads along a fine line where it weighs the pros to provide tax relief to the Populus in a high inflationary environment or to power through the disruption by investing in critical infra.

With the fiscal deficit raising eyebrows from analysts across rating agencies, India is navigating a fragile period.

As we address all these, we ask ourselves, "Is India finally leaving its short term policies and preparing for an uncertain future?"

Navigating the unpredictable: India's budget Story The past couple of years have been quite noisy, be it the aftermath of the endemic or the general unease among the populous yearning to return to their 'normal' lives.

The crisis of such a scale laid bare the robustness of our public systems, be it healthcare or the inclusion of misfortunate groups in mainstream education.

Though the private sector has undoubtedly witnessed a steady recovery same couldn't be said about the underlying economics of our nation, but that is about to change.

For years India had been plagued by populist policies, especially for budgets near the onset of an election. Yet, the 22' had almost none of those, i.e. no *personal income tax breaks, no loan exemptions, and so forth.*

Instead, the budget strictly addressed the *Achilles heel* of India's growth story, i.e., deteriorating public infrastructure.

The preparation for India @100, when 50% of our population will live in urban areas, is a sign of the forward-thinking brought to bear. In this regard, the focus on infrastructure, rail and road connectivity and town planning are welcome measures.

Despite the widespread agitation over farm laws, the budget excludes any direct incentives to farmers.

The budget further reduces food and fertiliser subsidies by more than 25% each since fiscal spending on these subsidies was higher than projected in that year's budget estimates, as the government had to step up support for the people, in the form of free food grains and fertiliser subsidies.

Higher commodity inflation in farm chemical inputs, leading to shortages, was another factor that pushed the government to increase fertiliser subsidies more than once last year.

Hence, spending on the fertiliser subsidy in FY 2021–22 saw a whopping increase of more than 76% from the original Budget allocation to the revised estimate. However, the new budgetary allocation cut means that government expenditure on subsidies for crucial agricultural chemical inputs such as urea, diammonium phosphate and potash is likely to decline in the coming year.

Hence, spending on the fertiliser subsidy in FY 2021–22 saw a whopping increase of more than 76% from the original Budget allocation to the revised estimate.

Under the aegis of PM Gati shakti, the budget allocation on CAPEX witnessed an increase of 35%.

Besides the generic infrastructure improvements, Gati shakti aims to increase logistical efficiency by establishing a *Unified Logistics Interface* platform. In our opinion, this is not a budget to be viewed in isolation but a logical next step in the road map for new India that began over five years ago. Privatization, ease of doing business, PLI schemes, a clear semi-conductor strategy, certainty in policies, departure of government from business and a reduced role in litigation are already at play.

That being said, we must also highlight the ‘*cost’* of this large scale CAPEX spending, i.e. the fiscal deficit.

The revised fiscal deficit in 2021–2022 stands at 6.9% as opposed to the budgeted 6.8% despite the revised govt expenditure being ₹37.10 trillion, which is around 8.2% higher than the budgeted ₹34.83 trillion; this has primarily been accredited to the surging tax collection which stands at ₹25.16 trillion as opposed to the budgeted ₹22.17 trillion.

***Now here comes the dicey part. The

Nonetheless, it leaves one unsatisfied in the aftermath of last year's catastrophe.

Aimed at improving access to quality mental health counselling and care services, the government seeks to establish 23 tele-mental health COE with NIMHANS being the nodal centre. However, there is no prima-facie budgetary allocation to scheme this year, yet the silver lining remains that we’re finally addressing mental health in our budgets.

Budget 2022 proposes several policy changes, including the introduction of Digital Rupee, setting up digital banking units, replacing SEZ Act with new legislation, and various measures for promoting IFSC as one of the favoured global financial serviceoriented destinations.

The budget also aims at amending the Insolvency Bankruptcy code, all in the backdrop of promoting ease of business. For the first time, the government plans to include sovereign green bonds for funding green infrastructure. It could act as a much-needed incentive as India makes aggressive strides towards a lowcarbon economy.

The budget clarifies the much-debated crypto ban by introducing a flat 30% income tax with an additional TDS of 1%.

budget proposes a relatively high fiscal deficit

6.4%,

which,

although

reduction from 6.9%, remains significant considering that the largest purchasers of sovereign

paper,

i.e.

RBI,

already

overstocked.***

Here we’d like to mention that interest payments take the most significant chunk out of all the govt expenditures (~20% of GDP).

Amidst the global financial uncertainties, it should come as no surprise that this ***debt-fueled spending has raised concerns over the risk of sovereign rating downgrade from the existing BBB- to junk status by the officials at Fitch.***

Unlike the anticipated ₹1.75 lakh crore, the revised disinvestment target for FY 21-22 stands at ₹78,000 crores; therefore, the upcoming LIC IPO at ₹90,000 crores would be crucial in ascertaining the direction of the country’s financial health.

In the wake of the covid-19 pandemic, though the total healthcare expenditure has been upped by 16%, the statistical analysis of currently allocated 86,000 Cr, from 73,000Cr in the previous financial year shows that the actual rise in capital allotted is 0.1 per cent of GDP.

Much of the shortfall in allocation may be attributed to higher spending in the preceding fiscal year due to the "unbudgeted" vaccination campaign.

Nonetheless, the taxing framework (coupled with the volatility associated with such investments) might discourage small investors from transacting in such assets.

Rajan Bajaj (founder Slice) puts it as *"The new regulations of 30% tax seems to be bad for crypto traders but amazing for Bitcoin maxis, they can put INR in Bitcoin & don't have to worry about tax as anyway they don't want to take it back Like a lottery ticket purchase, but you don't ever want to win & get INR back"*

As an ending note we'll leave you with a remark from Shaktikanta Das, the current governor of the Reserve Bank of India, from a press release issued on **February 10th**.

“*We are living in a world of Knightian uncertainty in the absence of determinate knowledge about the next mutation of COVID-19. The ability to forecast the economy's future course is so contingent on the evolution of the virus that one prognosis is as good or as bad as the other and as ephemeral. If the last two years of living with the virus have taught us anything, it is to remain humble, but grounded in selfbelief, never losing confidence and optimism. As the great Lata Mangeshkar – whom we lost recently – sang in her immortal voice: “aaj phir jeene ki tamanna hai”. Together with the spirit behind the next line of this beautiful song, she has conveyed an eternal message of optimism.”*

Industry Analys Google has been the hypergiant of the internet since its inception in 1996. Even as a concept, it was revolutionary: An efficient search engine that could help you browse whatever you want. Over time, it would improve and expand, becoming the most-visited domain in the world starting from 2010 when it overtook Yahoo. Google had established itself as the internet’s default website to visit, with billions of visits every month by this point. So it was an absolute gut-punch for internet enthusiasts to realise that the most visited website in the world was NOT Google. It wasn’t any competitive search engine, no. It was a very young social media website.

TIKTOK DOWNLOADS

TIKTOK WAS IN THE MAKING LONG BEFORE 2016

300

The central format of Tiktok is that of short-form videos

arranged

appropriate

system

recommendations. The first part was easy to come up with: old-timey clickbait and viral videos are a Downloads(mm)

testament to this.

The likes of Sneezing Panda, Keyboard Cat and even bigger hits like Chocolate Rain would never have received the attention they did without the short-form video format being pushed. The latter point has been a problem for decades now.

Since these videos are about entirely different and

random

topics,

challenging

200

100

recommend

similar videos to any kind of audience, and this is where Tiktok’s ancestors began.

The

most

course,

significant

Vine.

Vine

ancestor

was

founded

Tiktok in

is,

June

2012

immediately acquired by Twitter in October 2012. The most significant feature of Vine was that the videos

uploaded

may

only

seconds

long, forcing creators to create content that was quick, snappy and easy to understand. In other

words,

was

the

perfect

recipe

2016

2019

2018

2017

2020

2021

generate Source: CapitalIQ; Pitchbook; McKinsey analysis

trending videos. And that’s exactly what Vine did.

Even today, hundreds of Vines have evolved and integrated with modern meme culture in new and immortalised ways. Then why didn’t Vine surpass Google? This answer is less fun than the others; it is also more apparent. Vine wasn’t making a profit. To understand this, let’s look at how social media websites make money.

The best way that social media websites make money is through advertising. Websites place advertisements funded by interested investors, usually in-between content. This model did not work for Vine: users would never watch a 30-second commercial just to watch a 7-second clip for the 10th time. This resulted in Twitter stopping the creation of new Vines in 2016, followed by the app being shut down completely the same year. By now, though, Tiktok was born, but it still had to solve the problem Vine had failed to answer efficiently: how to manage to make viral content without massive losses?

TIKTOK USERS

TIKTOK REVENUE

1000

Revenue($mm)

MAUs (mm)

1200

500

800

400

0 Q1

2018

2019

Source: CapitalIQ; Pitchbook; McKinsey analysis

2020

2021

2018

2019

Source: CapitalIQ; Pitchbook; McKinsey analysis

2020

2021

sis : Tiktok ENTER: MUSICAL.LY Musical.ly was a Chinese social media website where creators would make shorter lip-synced videos. It was initially released in 2014, and users could make videos between 15 seconds and 1 minute in length. As it turns out, this format was perfect for making the optimum social media experience, and Musical.ly received over 200 million users by the end of May 2017.

TikTok's parent company, ByteDance, noticed this fact and acquired Musical.ly in 2017, borrowing along with them a large amount of their format and content.

WHY TIKTOK? Tiktok inherited Vine’s and Musical.ly’s experiences and constructed an app perfect for trapping the consumers into rabbit holes of content. More than anything we may have discussed so far, the most significant selling point of Tiktok is its appropriately-named “algorithm”.

In the context of social media, the word “algorithm” refers to the complex internal process involved when a video or a suggestion is put either in your recommendations or your feed. TikTok's algorithm is astoundingly good, able to predict user interests within 30 minutes of content consumption and getting better every second.

This occurs because of Tiktok’s unique format of content viewing: rather than users selecting what videos to watch, Tiktok asks its users to scroll through a never-ending stream of content and makes proper adjustments to the next video in the scroll-list.

These adjustments are made based on how much time is spent on each video, whether or not the video received a like and many more subtle criteria. Since the average TikTok video is 47 seconds, the earlier 30 minutes of content translates into 38 detailed pieces of information from a user.

This, combined with Tiktok’s database of similar users gives the app a supreme understanding of the user’s likes and dislikes, in some cases even better than the user themself!

This superior understanding of how users act, combined with the learning from Vine and Musical.ly have made Tiktok the perfect storm, able to top visiting statistics all over the world. Since August 2021, Tiktok has been the world’s most visited website, beating the likes of Facebook and Twitter consistently. It had 1 billion+ users worldwide as of Q2 2021 and has been growing exponentially. With most of its viewers being under 30, Tiktok is here to stay for at least a few more years.

THIS IS THE CLINCHER! Tiktok’s monstrous popularity is largely from OUTSIDE China. Inside China, Douyin owes to over 600 million users in 2021, putting the overall TikTok+Douyin brand squarely above any competing domain. Another thing we must note is that TikTok is banned in a number of countries including China India, Indonesia, Bangladesh, Iran and Pakistan.

A net total of 3.56 billion users don’t get access to Tiktok, which only points to its popularity in the remaining 4.3 billion people.

TIKTOK RANKING OVER TIME 1

ank

8 Nov 2020

Jan 2021

Mar 2021

May 2021

Time

Jul 2021

Sep 2021

Nov 2021

INNOVATIONS

AND BUSINESS

CULTURES

ACROSS IITs

iit (bhu) varanasi

The I-DAPT-HUB foundation at the IIT BHU collaborated with the US National Science Foundation (NSF) for joint research in the field of Data Analytics and Predictive Technologies (DAPT). The research focuses on solving societal challenges of both the countries and scaling up the Science and Technology relationship between the two nations. IIT BHU signed an agreement with Niigata University, Japan, to work towards cooperation in education, joint research and student exchange programmes between the two universities and countries.

This eponymous section of the book entails the major happenings in the business world across IITs. We aim to bring our readers up to date with all things business in these technical institutes, thereby underscoring the recent business developments in such settings.

IIT BOMBAY

IIT Bombay, being one of India’s best institutes is always known for doing something out of the box. Finance Club is a part of the Undergraduate Academic Council in IIT Bombay and it is the hub for all the Finance related activities happening in IIT Bombay. Finance Club is responsible for raising awareness about finance and for further nourishing students’ interest in the different domains.

Finance Club went ahead and conducted a plethora of events like Cryptonite. Cryptonite ‘22 was a four-day blockchain and cryptocurrency summit organized from January 7th to 10th, 2022. We had over 3000+ registrations from colleges across India and abroad and received press coverage from several media houses like The Free Press Journal and YourStory.

The summit included various events, including keynote sessions, panel discussions, hackathons, competitions, and interactive sessions with companies that offered interns to students of IIT Bombay. We collaborated with leading blockchain companies like Woodstock Fund, Buidlers Tribe, Polygon, Polytrade, and NFTically, with cash prizes worth 15,00,000+.

Jay Chaudhry, CEO and founder of a cloud-based information security firm and alumnus of IIT-BHU, has donated $1 million for IIT's Entrepreneurship Center with a focus on student, faculty and entrepreneurship development. IIT BHU received a donation of Rs 5 crore from Naresh C Jain for the development of the new school of decision science and engineering. The 1994 batch alumni contributed Rs 1.33 crore for the institute's research excellence fellowship programme. The fellow program is set to recognise and encourage engineering faculty members to research core areas.

In its quest to widen the horizons of the business culture and foster a rich business ecosystem, the Business Club IITBHU organised BASH 4.0 (Business Associates' Special Hours), the club’s flagship Business Conclave. Riveting competitions in the domains of Consulting, Product Management, and Finance organised. The competitions turned out to be a massive success witnessing Pan-India participation of over 1500 people across different domains.

IIT guwahati

IIT Guwahati launched a two-year MBA programme, marking the start of School of Business IITG. The programme is holistic in nature comprises classroom teaching, case studies, projects, and internship in the industry.

IIT Guwahati held the 6th edition of the prestigious “Research & Industrial Conclave (RIC)” between 20th-23rd January 2022 jointly organized by students, the Academic Board, and the IITG Research Park. RIC aims to build productive links between Industry and Academics. It is a constructive platform for researchers from diverse fields to connect, interact, and share cutting-edge technologies to encourage feasible adaptation.

Conducted in partnership with Composer, a Canada-based startup, Investomania was a quantitative investment strategy-making competition. Three sessions were conducted for the students before the session to acquaint them with the basics of finance and the further processes required for the strategy-making process. The competition was a huge success, and the student feedback registered reflected the same. IIT Guwahati has signed a new Memorandum of Understanding (MoU) with the South Dakota Mines to advance research into 2D materials and biofilms. The collaboration enables both institutions to share resources and leverage research funding opportunities while joining multi-disciplinary teams at both institutions to maximize complex problem-solving.

IIT KANPUR IIT Kanpur followed suit from its sister IITs and introduced the policy of deferred placements. This policy

caters

students corporate

who jobs

the

opt

increasing for

and

percentage

entrepreneurship

campus

over

placements

allowing them to seek campus placements a year or two after their degree completion in case the start-up that they venture into fails. These startups,

however,

have

specific

pre-requisites

that

must be met, including a certification from the Startup

Incubation

Cell

the

Institute

incubate the applicant.

Further, the maximum number of students of a

The Finance and Analytics Club, IITK, organised

particular batch who can avail of this opportunity

its flagship event, Non-Core Weekend, which saw

has been kept to 1% of the total batch strength.

prominent speakers like C. Rangarajan (former

The Institute will also offer new 4-year BS and 5-

RBI

year MS programs in Statistics and Data Science.

Founder)

Admissions in these programs would be based on

Revolution, Wealth Management and Blockchain.

governor)

and

speak

Mukesh

about

Kalra

topics

(ET

Money Fintech

the JEE Advanced score.

The tenth edition of ESummit , the flagship event The introduction of the new department comes

of Entrepreneurship Cell IIT Kanpur, under the

after an increasing role of Data Science, Machine

theme

Learning, and Artificial Intelligence in a plethora

exciting talks and panel discussion from eminent

of fields, including commerce, finance, education,

personalities, along with workshops and exciting

healthcare and manufacturing.

competitions.

Tenets

Tenacity

also

witnessed

IIT kharagpur IIT Kharagpur witnessed an eventful year, as the National Digital library of India, developed by IIT Kharagpur and sponsored by the Ministry of Education won the prestigious World Summit Award 2021 in the learning and Education Category. NDLI is a repository with approx. 4.5 crore items containing books, articles, videos, lectures, etc.

The objective of this project is to bring together metadata and resources from all other digital libraries and other relevant sources and make it accessible in 10 languages free of cost. The NDLI has over 20 million users as of January 2019.

IIT

MADRAS

’ “Disruption

IITM s annual Entrepreneurship Conclave E Summit 2022 themed

Veins”

is around the corner with major events like

Startup

Showcase,

Lecture

series

Trading

simulation

contests,

and

conclave

aims

nurture

from Case

eminent study

Entrepreneurship

entrepreneurs,

competitions.

among

students

The and

validate startup ideas. The Department of Civil Engineering, IIT

“

Madras, and N TEL have started a 4-week course, Design ThinkingA

Primer.”

It aims to rigorously analy e problem-solving methods for

manufacturing,

sale,

and

marketing

products.

Anyone

with

background in engineering can enroll in the course online.

Other notable events at IIT Kharagpur include the annual Techno-

management Fest Kshitij which was conducted during the first week

IITM has recently signed an Mo

of March, with a plethora of innovative events regarding business,

in areas of consultancy, R

quant, and tech. The Indian Case Challenge, Code battle, Sandrover,

policy

Stratathon, and several workshops were conducted during the fest.

partnerships, IITM has joined with Larsen and Toubro to promote

advisory,

&D,

and

training.

with Tata Motors for collaboration

scalability of technological solutions, Adding

the

list

research on developing low-cost, high wavelength 5

across rural India. It aims to create a 5

industrial

connectivity

Base Station and a single

box solution that simplifies connectivity systems.

Furthermore, a research team from IITM has proposed a new beamforming

technique

conventional reconstructed

for

transmit scans

ultrasound beam

and

has

scanners.

problem the

potential

integrated with existing ultrasound scanners.

can

create to

overcome

the

high-resolution be

successfully

FUN CROSSWORD

ACROSS

1. Index used by the Bombay Stock Exchange

8 1

2. Integration of Technology and financial services

3. The amount of business that a company does in a period of time

4. An American company that operates an online marketplace for accommodation

5. An amount paid by a third party to an owner of a

product or patent for the use of that product or patent

The process by which a business owner starts a

company with minimum external capital

12 3 4

DOWN

7. An agreement by which two companies combine and operate as a single entity.

8. A situation where a company does not have enough money to run its operations

9. A B2B e-commerce platform founded in 2016 in

India

10. Rent paid for borrowing assets or money

11. Company against which IRDAI imposed a fine of INR 24 lakh in May 2021

12. Type of bond that is unsecured by collateral

SCRAMBLE While reading the magazine, you might have come across a few terms you haven't heard of before. So why not test out your business vocabulary?

Given below are five words, chosen from the various articles you just read! Find them with the help of the given clues, and fill them in their boxes. Finally, unscramble the highlighted letters to find a bonus word! 1

1. Removing funds from a bank account, savings plan, pension, or trust.

2. When a person or a company is unable to satisfy their financial obligations to creditors as loans mature.

3. Activities that a business engages in to encourage the purchase or sale of a product or service.

4. Distributed database that is shared among the nodes of a computer network.

5. A cognitive bias due to which customers are more likely to alter their preferences between two options.

6. A set of instructions for completing a task or solving a challenge.

7. When the current price of an underlying asset, also known as the spot price, is higher than the futures market pricing.

SECTION guess the brand A picture might say a thousand words but can you guess which company we're referring to through these 2 images?

MEET THE TEAM

Aditya

Kulkarni

Bhavya

Sikarwar

Disha

Lalwani

Gaurav Raj

Lakshya

Singh

Parth Rathod

Pradhyumn

Jain

Yuti Patel

SPECIAL THANKS BUSINESS CLUB

IIT BHU

FINANCE & ANALYTICS CLUB

IIT KANPUR

IIT BOMBAY

FINANCE & ECONOMICS CLUB

BUSINESS CLUB

FINANCE CLUB

IIT KHARAGPUR

FINANCE CLUB

IIT ROORKEE

IIT GUWAHATI

IIT MADRAS

MEET THE TEAM

ROHIL SHAH

ADITYA ANIL

KAPDI

VIKRAM MEHTA

AKSHAT MEHTA

VIVEK ARYA

ANUJ

CHOUDHARY

GUNIKA TANGRI

HARSH ASHRAWALA

MANHAR JOSHI

NAMAN JOSHI

OM SUBHAM

PATIL

PRINCE

SANSKRITI SRIVASTAVA

SHUBHI SINGH

SUYASH

TRIPATHI

BHAVYA MALHOTRA