August 2016 edition
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FROM THE EDITOR
The Financial Bulletin Money Matters Club IBS, Hyderabad Estd.—2005
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Dear Readers, It gives me the immense pleasure to come up with the August 2016 issue successfully. This issue reflects the ideologies of RBI and the possibilities of the new RBI governor. It also talks about the issues with start ups in India, The sudden ups and downs of stock markets in India due to Brexit and gives a glimpse of the European Union. Brics issue still moves on with the India’s position in it and the effect on global economy.
Happy reading.
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Archit Athani Newsletter Coordinator
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Who will be the successor to ‘Ram’s’ throne in RBI By Juhi Tayal, IBS Hyderabad
Raghuram Rajan, left many Government officials
Was basically in charge of monetary policy,
and investors by decision to further discontinue as
financial markets, economic research and statistics
RBI
at RBI. Also held positions at IMF
Governor
for
the
second
term
(announced on June 18,2016). Finance Minister,
(International Monetary Fund).
Arun Jaitley said the Government that Rajan’s post
Some more include- Ashok Lahiri(64),
would be hired soon. And that currently there were
Vijay Kelkar(74), Ashok Chawla(65), Subir
seven names on a list of possible candidates.
Gokarn(56).
Some most probable candidates mentioned were as under: Urjit Patel (52) - One of RBI’s four deputy Governors, was reappointed in January for another three years from the Central Bank. He has run the Central
Bank’s
monetary
policy
department,
a leading candidature for Government jobs. Patel, a close lieutenant to Rajan, headed a committee that introduced landmark changes
including a switch to inflation-targeting and adopting consumer prices as the new benchmark instead of wholesale prices. He managed the money markets in RBI, kept liquidity tight at a time when RBI was lowering rates, starving banks of cash. Arundhati Bhattacharya(60) A high-profile banker, Bhattacharya has been at the helm of India’s largest lender — State Bank of India
since 2013. Lauded by the investors for her expert skills in the management of bad debts. She was also listed in Forbes as the World’s 100 most powerful women. Her term end at the chair of SBI is prophesized to be yet another front runner in race. Rakesh Mohan(68) Had two stints as a Deputy Governor of RBI. He served as a Secretary at the Department of Economic Affairs at the Indian Government’s finance ministry.
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Indian Space Research Organisation
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By Khushboo Agarwal IBS Hyderabad This one organization has been responsible for
CROTSAT are a series of satellites that are helpful
continuously making India proud in the space arena
for earth observation. These satellites are a part of
for last 47 years.
Indian
From the days of Aryabhata
Remote
sensing
programme
which
(India's first Satellite) extending to IRS 1A
specifically focused on the Earth's Resource
(India's
Management and Monitoring.
first
Remote
sensing
satellite)
then
5 CROTSAT
achieving a mile stone in MARS exploration by
satellites have been launched for these very
making it the cheapest MARS exploration mission
purposes. CROTSAT 2C is the latest satellite of
till date, with MOM (Mars Orbiter Mission) ISRO
the CROTSAT series launched on 22nd June 2016
has
space
whose potential use turns out to be weather
explorations. It certainly has harnessed space
mapping, cartography, and strategic applications.
always
technology
brought for
glory
national
to
India's
development,
while
pursuing space science research and planetary
The primary reason of featuring these satellites in
exploration.
this article is to show the pace with which India is
Lately, ISRO has been indulged in various
moving forward in Space Technology with the
extravagant space projects, the latest being The Indian
Regional
Navigation
Satellite
System
(IRNSS) and the CROTSAT series of satellites. Indian
Regional
Navigation
Satellite
System
(IRNSS) also goes by the name NAVIC, which in Hindi means Sailor or a Navigator, which when expanded turns out to be Navigation with Indian
help of ISRO. India does not have to rely upon any other country for anything. India does not have to
anymore rely upon "a" USA in any kind of a crisis situation neither on "a" Russia for any kind of resource monitoring. India is becoming self sufficient with " ISRO's success in the launch of the latest Satellites".
Constellation. This is actually a constellation of seven satellites which provide actual real time positioning and timing services in India and 1500
km surrounding India. This kind of service was very important for India because in hostile situations other countries are reluctant to provide their global navigation satellite systems. Such was a case in Kargil war where India had to rely upon American GPS.
After IRNSS 1G being launched on 28th
April 2016 India has its first indigenous Regional Navigation Satellite System which shall help with the Standard positioning service for Civilian use and
Restricted 4
service
for
Military
use.
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THE INDIAN STARTUP BUBBLE
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By Karan Tehran , IBS Hyderabad A business to sustain in the longer run there are few basic
building
business
Bangalore followed by NCR and Mumbai.
strategy, adequate resources, technical knowhow of
Companies with no real business model will die
the industry and analytical skills to decipher the
anyway. From the recent incident of layoffs from
market
economy.
start-ups like housing.com and Zomato we can
Although being necessary but not adequate building
experience the symptoms of bursting of start-up
blocks form mutually exclusive but not collectively
bubble.
exhaustible list of the pre-requisites for a good
The young entrepreneurs are showing their
trends
blocks
floating
namely-sound
across
the
business empire that could sustain the competition in the industry along-with have top management that can take decisions which can skyrocket the business to new heights. Talking about the latest trend in the business arena is
inexperience very soon in how they are handling the money provided to them which is a major problem with Indian Start-ups. The bubble which was supposed to survive few
START-UP’s. What does star t-ups actually mean is an entrepreneurial venture typically describing newly emerged fast growing business. Apart from
formulation of business strategies, adequate and sufficiently skilled workforce to implement the same is equally important. India is home to third largest number of start-ups globally & with the government support, a start-up can be built in a day which will definitely motivate
more years has already started straining because of
many young entrepreneurs to turn ideas into action
absurd decision taken by heavily funded start-ups.
resulting in more and more jobs in India.
Start-ups are not bubble wraps. The valuations are reaching a bubble stage. India’s fastest growing e-commerce start-up Snap deal raised $627 million at a reported valuation of over $2 billion. Later in December, India’s largest online retailer Flipkart raised another $700 million at over a $100 billion valuation. A total of 132 teams totalling 6690 crores were pumped in start-up ecosystem. As per the statistics strategic geographical locations where
start-ups must be placed are based out of are 5
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THE PATANJALI STORY By Shikhar Verma, IBS Hyderabad
The Patanjali Story is one of the highly debated
short period and as far as the disadvantages are
topics these days. The Pat Anjali Ayurveda firm was
concerned, it can expand its market by using
launched in the year 2006 by Baba Ramdev, who
various available advertisement techniques and
had already gained a lot of followers through his
opening more stores in the cities in order to meet
effective yoga campaigns. Since 2014, Patanjali has
the quantity required by the consumers.
launched various products like Aloe Gel, Aloe Vera Juice, Dant Kanti Toothpaste etc. and had a revenue of Rupees 5000 crores in the last financial year, beating Colgate in personal care product, which was leading the Indian market from past 8 decades.
Patanjali products have a lot of advantages like, the promotion of Indian ancient culture by using more of herbs and fewer chemicals, quality products, reasonable prices, no side effects of the products etc. But, the greatest benefit will be in terms of its impact is the use of Ayurvedic for producing their product as people in India are becoming more health conscious day by day. Patanjali firm will also provide a major push to government’s “Make in India” initiative. However, the other side of Patanjali products involves, shortage of the products in the market, no home delivery of the products and depletion in the quality of the products. To conclude, Patanjali firm is a positive step
forward as it has captured a large market in a very 6
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EUROPEAN UNION
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By Komal Rohilla, IBS Hyderabad Union, European Community Bank & European Court of Auditors. European Union represents itself at the united nation, G8, G20 because of its strong global influence. EUROZONE: Eurozone is monetary union of 19 of the 28 European Union. The other nine member of
The European Union (EU) is a group of 28
European Union has their own and follow their
member’s states that are located in Europe. Initially
own national currencies. Although most of them
it was started by six countries in 1951 which are
are obliged to adopt EURO.EU issue their own
Belgium, France, Germany, Italy, Luxembourg, and
currencies and coin.EU have their own central
Netherlands. Earlier it was named by European coal
bank known as EUROPEAN CENTRAL BANK.
and steel community (ECSC) and the European
Its main
Economic Community but community gain its im-
control. The Euro group is composed of the
portance by joining of new member’s states. From
finance ministers of Eurozone states, but in
23 June 2016 European Union only left with 27
emergencies, national leaders also form the Euro
countries because Britain chooses to exit from
group. Since the financial crisis of 2007–08, the
European Union.
Eurozone has established and used provisions for
Basically EU is a socio economic union which is totally based on series of treaties, which declares
granting emergency loans to member states in return for the enactment of economic reform.
that EU itself is founded on the value of human dignity, freedom, democracy, equality and respect for human rights, including the rights of person belonging to minorities in a society in which
injustice,
non-discrimination,
justice,
equality
between women and men. EU has developed and maintained the standardised system of law that applies to all members of it. It regulates the movement of goods and capital within the countries. It has right to take all the monetary decision, it also maintain the common policy of the trade. It is governed by 7 institutions which are the European Council, Council of European parliament, the
European Commission, Court of Justice of European 7
function is to keep the inflation under
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Ketan Parekh’s Scam
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By Himanshi Gandhi , IBS Hyderabad “Nothing awakens the conscience like a lot of National Bank, State BANK OF India & Bank of
money.” P. Sainath
India lost huge amounts in the scam. The plan was Ketan Parekh, popularly known as “Pied Piper of
failed when the markets got crashed in March 2000
Dalal Street”, was convicted in 2008 against the
due to the fall in NASDAQ.
charge of manipulation of the Indian Stock Market in 1999-2001. As a result, he is precluded from
Consequences
trading in Indian Stock Exchanges till 2017.
SEBI took the following measures
Trading cycle was reduced from one week to one day.
BADLA (It involves buying stocks with borrowed money with the stock exchange acting as an interest rate determined by the demand for the underlying stock and a maturity not greater than 70 days), was banned.
History
of
Ketan
Parekh
(KP)
KP was a chartered accountant by profession and belonged to a family of brokers, which formed the basis of his interest in stock exchange and trading. He was working as a trainee under Harshad Mehta,
Broker control over stock exchanges was demolished.
However, it is suspected that Ketan is still operating in channels.
who himself was convicted in 1992 under the stock manipulation charge. The
Scam
Being a CA by profession, KP was aware of all the loopholes of the banking system and stock exchange markets. He followed a simple strategy of buying the shares at low prices and then utilizing them as collateral security for taking funds from banks and other financial institutions, when their share prices went high. Many financials institutes like UTI, MMCB
(Madhavpura
Mercantile
Cooperative
Bank), Global Trust Bank etc. Banks like Punjab 8
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stock exchange through other
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ZERO DEBT COMPANY By Surbhi Gupta, IBS Hyderabad
Finance is the life line of any business and is important to an organization as the firm has to know
High Liquidity-The company with no debt
how viable it is and balance the profit with the cost.
will have more cash in hand to manage the dai-
Zero debt r efer s to a situation wher e an individ-
ly affairs of the business.
ual is free from any financial obligation to third par-
Greater Stability-The company will have greater stability with high retained earnings
ties.
and liquidit Some of the disadvantages of zero debt companies are:
No Tax benefits- The company might end up paying more taxes as Interest is a deductible expense and is deducted from corporate taxes.
A Zero Debt Company is a company which has not borrowed any money from any financial institutions or sources like commercial banks, investment banks, insurance companies, investment companies and
Less Returns to the Investors-Company might pay less to their shareholder’s as they have to manage the business affairs with limited cash.
credit unions to meet their long and short time
Thus for investors Debt Free Companies are in-
requirements. Such companies do not have any kind
vestment heavens. Debt Free companies are like
of long term and short term debts on their financial
‘Financially Independent’ business.
statements. Some of the examples of zero debt companies in India for the year 2016 are Infosys Limited ,Crisil Limited, ICRA Limited, CMC Limited, and ACC Limited. Some of the advantages of zero debt companies
are:
Interest Free-Company is not liable to pay any interest amount as it is free from debts.
Benefits of Expansion- Company can enjoy the benefits of expansion as they are debt free and are not liable to pay to any third parties and can independently take their own decisions towards the growth and can improve their performance in long run.
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FDI in Retail Trade for Indian Economy
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By Harsh Agarwal, IBS Hyderabad
FDI or Foreign Direct Investment means
panies like transport companies, packaging
our
companies, IT firms, Consultancies, Advertis-
economy. It is has its own pro and cons effects the economy and all the other
ing Firms and much other form of businesses.
participants in that sector. Retail Sector already
Government of India has taken the initiative of
has very high
competition and India being a
“Make In India” where the government is inviting
price sensitive market it always gives company
foreign companies to come and invest in our econ-
an open market. Current government of India is
omy. Government is trying to ease up the lengthy
trying to support FDI as it is important for devel-
process of setting up of new business so that more
opment of the Indian economy. The direct ef-
and more companies come and invest in our econ-
fects of FDI on the economy would be:
omy. Residency Permit Policy is also being set up
It will invite new players in the market who will
to encourage the FDI policy. Few companies who
bring more products for the consumers at very
have invested in the retail sector after the new FDI
competitive prices.
policy of the government are:
Revenue in terms of taxes would help the gov-
manufacturing plant for refrigerators in India
jects.
with an investment of Rs 250 crore (US$ 37.28
More competition in the market will not let big
million), and also invest around Rs 20 crore
players of the market to exploit the consumers.
(US$ 3 million) on an assembly unit for
Multi-national
lithium ion batteries at its existing facility in
companies
will
bring
most important requirement of the economy.
Panasonic Corporation plans to set up a new
ernment to invest in public development pro-
employment opportunities for all, which is the
It will bring business to service providing com-
allowing foreign companies to come and trade in and it
Jhajjar in the next 8-10 months.
Banana Republic, an American fashion brand
New technology and resources will come and
owned by GAP, plans to open its first store in
people will be trained in advanced methodology
India by early next year by entering into a
of working.
partnership with Arvind Retail.
Mediators who exploit farmers will be removed
Global beverage company Pepsi plans to invest
as big companies deal directly with the farmers.
Rs 500 crore (US$ 74.56 million) to set up
Gross Domestic Product of the economy will
another unit in Maharashtra to make mango,
rise as more production of goods will add to the
pomegranate and orange-based citrus juices,
GDP
while biotechnology giant Monsanto plans to
Companies will also bring opportunities for
set up a seed plant in Buldhana district of
smaller businessman as all works cannot be done
Maharashtra
by them and many of the work will be outsourced as marketing, IT, etc.
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Though being a very glorious policy it also has its
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FB cons which the economy will have to face like the bigger companies may manipulate the market with their huge resources affecting the price which would adversely affect the smaller businessman due to they being unable to match the manipulated price. Also the currency rate of Rupee might also be affected as the rupee will get weaker. So it is difficult to tell whether FDI is a boon or curse for the economy. Though being a very glorious policy it also has its cons which the economy will have to face like the bigger companies may manipulate the market with their huge resources affecting the price which would adversely affect the smaller businessman due to they being unable to match the manipulated price. Also the currency rate of Rupee might also be affected as the rupee will get weaker. So it is difficult to tell whether FDI is a
boon or curse for the economy.
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PANAMA PAPERS: BIG NAMES REVEALED By Payal Bhandari, IBS Hyderabad
Mossack Fonseca is Panamanian Law firm which
basically is renowned for hiding documents that kept the records of the personal and financial information of the world’s rich and famous;
from politicians, Fifa
Ahmed Al-Mirghani – Former President Of Sudan
Hamad Bin Khalifa Al Thani – Former Emir Of Qatar
officials, fraudsters and drug smugglers, to celebrities and professional athletes in helping them in evasion of
From India, the following names were revealed in
tax and making their personal information private.
Panama Papers:-
Around 11.5 million documents were leaked to news agencies from this firm, which stated the cases of fraud,
Minister and business person, Shamanuru
tax evasion and many illegal practices done by rich and
Shivashankarappa
wealthy individuals by investing their money in offshore companies. This company looks like a
Rajendra Patil – Son-in-law of Karnataka
Harish Salve – Former Solicitor General and
legitimate legal firm rendering normal legal services,
son of NKP Salve, veteran Indian National
but in fact they do nothing except managing the money
Congress Politician
invested in them. The documents leaked were quickly dubbed as the “Panama Papers” which provides rare
Amitabh Bachchan, Aishwarya Rai Bachchan, Ajay Devgan – Bollywood Celebrities
insights into a world where a global industry led by major banks, legal firms, and asset management
In terms of quantity of data leaked, this exceeded
companies is managed. The International Consortium
and outnumbered all that happened before this.
of Investigative Journalists (ICIJ) on 10th May, 2016
This was way greater than Wikileaks (1.7 GB),
released a comprehensive list of individuals and com-
Offshore Leaks (260 GB) and Swiss Leaks
panies in the Panama Papers. Hidden in these 11.5
(3.3 GB). The data leaked during this scam was
million secret files is the information about 143
2.6 TB which is 2600 GB. This data was in form
politicians including head of the states, associates,
of
elected officials, ministers and corporates from more
(3,047,306),
than 50 countries. Some of the major players from across the globe are listed as below:
Petro Poroshenko – President Of Ukraine
Mauricio Macri, President Of Argentina
Khalifa Bin Zayed Al Nahyan – President Of The
Emails
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Database
formats
PDFs (2,154,264), images (1,117,026) and Text documents (320,166).
United Arab Emirates and Emir Of Abu Dhabi
(4,804,608),
Salman Of Saudi Arabia – King Of Saudi Arabia THE FINANCIAL BULLETIN | AUGUST 2016| www.moneymattersclub.org
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BRICS NATION By Prerna Pincha, IBS Hyderabad
BRICS is an acronym for a select group of 5 countries:
Soon after the formation of the BRICS, the
Brazil, Russia, India, China, South Africa. All of these
‘BRICS forum’ came into the picture in 2011. It
5 countries are emerging national economies, i.e., either
is an independent international organization
developing countries or newly industrialized countries.
which encourages commercial, political and
The term ‘BRICS’ wasn’t the same from the very
cultural cooperation between the BRICS nations.
beginning. It was ‘BRIC’ initially, when the union was so formed. The term "BRIC" was coined in the year 2001 by the then-chairman of Goldman Sachs Asset Management, Jim O'Neill. The BRIC was basically formed with the motive of improving the global
In the year 2012, the BRICS nations pledged $75 billion to boost the lending power of the
International Monetary Fund (IMF). And then they started achieving new milestones, one after another. This was about the operations of the
economic situation and reforming the financial in
BRICS.
stitutions. Till the year 2009, South Africa wasn’t
As far as the financial architecture front of the
included in the union. It was 2010 since when South
BRICS
Africa had started putting in efforts to become a part of
components, namely, the New Development Bank
this association. The process of formal inclusion of
(NDB) and the Contingent Reserve Arrangement
South Africa into the union began in the month of
(CRA).
August and finally in December, 2010, ‘BRIC’ was
infrastructure projects and the capital of the bank
converted into ‘BRICS’, though the entry of South
is contributed by all the 5 states of the BRICS
Africa was quite controversial. Before the inclusion of
equally, whereas, the CRA provides protection
South Africa, the BRIC union had already conducted 2
against global liquidity pressures, i.e., helps in
summits, the first one been held in 2009, whereby the
recovering the currency issues of members when
respective leaders of the BRIC nation participated to
their respective national currencies are being
discuss and decide upon the motive for which it was
adversely affected by global financial pressures.
formed. The first BRICS summit in India was held on
The payment mechanism of the BRICS is
29th March, 2012 and the next would be held on 15-16 October, 2016.
is
concerned,
The
NDB
it
deals
comprises
in
lending
two
for
supported by the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system,
The members of BRICS represent over 3 billion people,
although alternatives for the same have been
or 42% of the world population. All five members are
looked for. As an alternative to the existing
in the top 25 of the world by population, and four are in
system,
the top 10. Also, the combined nominal GDP of the
(Cross-border Inter-bank Payment System).
these countries is equivalent to 20% of the world gross
So, to sum up everything mentioned above,
products. These facts clearly suggest that the members of BRICS nation occupy a very large share in the world
economy. 14
China
has
come
with
the
CIPS
BRICS is basically an union of 5 nations, that focuses on the betterment of the global economy,
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FB whereby ensuring their own respective security and development. The leaders of all the 5 countries meet in regular intervals to decide upon their next course of action to be implemented and to measure the impact of the steps taken earlier.
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MNC in India-Devil in disguise?
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By Rupal Bhatnagar, IBS Hyderabad In the last few years we have seen how various MNCs
globalization in a country like India. The youth
have flooded our country and extremely successful.
today is
From IBM to HSBC, Infosys to KPMG we have seen
countries as they have an exposure in the form of
how popular these companies have become an integral
MNC. There may be aspects where people thing it
part of the Indian society. Even after so many years of
is destroying our culture and is the reason for
ruling the Indian market, the question that still exists is
brain drain. However, looking at the bigger pic-
that
ture we see that how the people today are at par
are
these
MNCs
beneficial
or
are
they
overshadowing our Indian culture.
absolutely in pace with the foreign
with the other nations and are in no way lagging behind because development is all about adapting. Apparently, the only thing that is permanent in the world is CHANGE. So, in my opinion MNCs are and will always be an imperative part of our modern culture. They are the connecting thread between India and other developed countries. Hence, they are definitely not a devil in disguise but are a necessity for the growth of the nation.
MNCs have been ruling our country for a very long time. Now days every job aspirant wishes to be a part of it. Probably due to attractive remuneration and a variety of facilities they provide. Even though they have odd and long working hours, they try to compensate
it
with
other
facilities
such
as
transportation and cafes etc. There is huge amount of
interactions that happen due to various fun activities they organize for the employees. Apart from this, the work culture and standards have risen to really high position. Because of the MNCs, the working habits and strategies have improved a lot. And most important, there has been a jump for the nation from a mediocre sector to a proper and organized hub of opportunities. They also encourage and improve the relations with the other nations in terms of investments and trades. So
basically they have a crucial role bringing about 16
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1930 : The Great Depression
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By Sachi Gupta, IBS Hyderabad It was the longest, deepest, and most widespread night of 20th century. The crash in stock market in 1929 resulted in deflation in asset, commodity prices, drastic drop in demand and disruption in trade, which lead to widespread unemployment thus poverty. Personal income, tax revenue, profits and international trade also dropped. The reason behind this is a matter of active
debate among economists, as each one have their own theories. As per Keynesian Demand-driven theory the depression was caused by a widespread loss of confidence
among
the
public.
Which
lead
to
under consumption. People believed they could avoid further losses by holding money. Another school of thought believed that the Great Depression was the result of significant policy mistake by monetary authority. Which resulted in reduction in money supply
which lead to recession followed by Great Depression. While other economist argued that various labor market policies imposed at the start caused severity of the Great Depression. After the crash of stock market and more than 40% collapse of American banks by 1933, strict trading and banking regulations were put in place, as well as financial protections, enforced by the newly formed
Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC). An array of services, regulations, and subsidies were introduces by FDR and Congress, including widespread work creation programs in many countries. Many economists believe that government spending on the second world
war 2 caused or at least accelerated
recovery.
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SMART CITIES vs. SMART LAWS By Anurag Verma, IBS Hyderabad smart city and it is not possible to bring in a consolidated law. A practical approach would involve each section amending laws according to them.
What are smart cities? Cities which have smart physical, social, institutional and economic infrastructure and generate options for a common man to pursue his/her livelihood are smart cities. Indian Government recently rolled out a plan involving development of 100 smart cities around the country however there are concerns about the lack of legal framework to regulate and manage these cities A similar budget was allocated to the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme. Launched in 2006, JNNURM was a reform-driven programme to provide rapid but planned development in 65 cities in India. How Rupees 1 lakh crore will transform 600 cities when JNNURM couldn’t transform even 65 of them.
Requirement of privacy laws A smart city would produce huge amounts of data
that would need a safe storage facility (A secure framework) to avoid theft and consequent misuse of data Thus there is a need to place an appropriate legal framework to address such activities in the smart ecosystem Implementing smart city goals would require the cities to generate more revenues to cater to the
multiple stakeholders involved in the ecosystem. It would thus require amendment of present laws including those of municipal corporations. The smart city concept must involve both citizens and governing agencies to gain wider acceptability and transparency. It requires a centralised metropoli-
Transforming a city into a smart city is a complex
tan governing structure. Technology should be used
process which involves harmonizing a number of
only as a tool to monitor urban services and not con-
infrastructure elements involved into one big
sidered as the only solution.
information technology family. These aspects include Sanitation, electricity, housing, health, urban mobility, water and security.
Implementing smart city goals would require the cities to generate more revenues to cater to the multiple stakeholders involved in the ecosystem.
This is a very complex which poses nuisance for the
It would thus require amendment of present laws
city leaders add experts who would find it very difficult
including those of municipal corporations.
to create a new set of frameworks for the entire smart city. Finally, they will end twisting the existing and municipal regulations.
The smart city concept must involve both citizens and governing agencies to gain wider acceptability and transparency.
There are a number of sectors involved in creating a 18
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Surge Pricing: Uber vs Ola By Ben Jonathan, IBS Hyderabad
When the demand increases and the supply cannot meet the demand, then there will be a price rise of the product in demand. But how frequent can the price fluctuate over a short period of time for a product. This is where dynamic pricing is introduced in market as a part of the pricing strategy. The idea is to increase the price at a certain rate based on the gap between demand and supply.Surge pricing-the word when heard takes us to the memories when we wanted a cab badly and the ride fare was too high to afford. The idea of doing surge pricing is that, when the cabs are on high demand the surge multiplier algorithm automatically does a multiplier calculation and estimates the new rate for which the rider has to acknowledge, provided the rider is ready to pay. This ensures that both the cab and the rider needs are quantified to a certain extent as the rider’s urgency is meet and the driver is paid well. Ola and Uber in India have put surge pricing in-force due to the increase in demand for their service, however when the demand was too high to be meet, the pricing went up to a new peak. Although the Price multiplier might be rendering the same on the app of both Ola and Uber, the basic fare is what changes the whole dynamics of the pricing. Fares at Hyderabad
OLA Micro
Uber GO
Base fare
35
25
Distance fare per KM
6
7
Cost per min
1
0.95
As the above table depicts the difference of base fare and the per kilometer rate, the ride cost would differ at a greater extent even when both the apps show the same multiplier. This criterion plays a major role as the driver operates both the devices, meaning a single booking on either of the apps would again increase the multiplier rate. Although most users check for the ride estimate, the undeniable factors of road, traffic and weather conditions have a say as to what the price of the estimate would be. This implies that the ride cost will be more in Ola than in Uber and the surge pricing when put in force will bring more profits to Ola than Uber.
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TOPIC: 7TH PAY COMMISSION By Jayana Gupta, IBS Hyderabad
The Government of India announced on 19 November, 2015 the implementation of 7th Pay Commission recommended 23.55% hike in pay and allowances. The Union Cabinet approves 7th Pay panel recommendations on 29th June 2016. The commission was headed by Justice Ashok Kumar Mathur. One crore government employees and pensioners will get a 2.5 times hike in basic pay and pensions under the 7th Pay Commission recommendations that will cost the exchequer annually Rs 1.02 lakh crore. The new scales of pay provide for entry-level basic pay going up from Rs 7,000 per month to Rs 18,000, while at the highest level i.e. Secretary, it would go up from Rs 90,000 to Rs 2.5 lakh. For Class one officers, the starting salary will be Rs 56,100.
Advantages:
Investments and savings will rise because of higher pay.
Consumption will increase that will leads to more flow of money in economy and that will directly increase our GDP.
Rate of increment has been retained at 3 per cent. This will benefit the employees in future on account of higher basic pay.
Disadvantages:
More consumption will lead to more demand that leads to Inflation.
There is a hike of 1.02 lakh crore of Government burdens which may make it troublesome for the government to meet its fiscal deficit target for the current financial year.
Controversies:
With widespread resentment against the "meagre" pay hike announced in the 7th Pay Commission, as many as 33 lakh central government employees are threatening to go on strike from July 11.
According to the opposition party the pay hike is a mere 15 percent on the basic pay, compared to 23.5 percent, which is being falsely claimed by the Central Government. It is the lowest hike in last 70 years, i.e. since Independence.
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Bitcoin: The Emerging Currency By Shreyas Bhaskaran , IBS Hyderabad
In the digital era, where almost everything around us is automated and the business processes are carried out electronically, even the area of currency has been digitalised and made in the form of electronic money. The Bitcoin, launched in 2009, is a form of electronic cash which allows online payments to be sent directly from one party to another without going through a financial institution (a bank or clearing house). Bitcoin hit the market as a creation by a pseudonymous developer named Satoshi Nakamoto. Bitcoins have become the first decentralised currency where you can send coins through the internet. The bitcoins can be used to buy a variety of goods and services and can even be exchanged for other currencies.
For a user to buy and sell bitcoins, he would need a digital wallet. The transaction is secured with the network nodes by individuals called miners, who process the payment and record in the public ledger, also known as block chain, and are rewarded with transaction fees and newly generated bitcoins. Apart from that, bitcoin is also traded via online exchanges. The bitcoin has gained immense popularity with more than 12 million bitcoin wallets being used for paying with this digital currency in 2015 and the amount of money in bitcoin is estimated at $6.8 billion. But most of the central banks don’t encourage the use of bitcoins. With regard to the Indian perspective, the Reserve Bank of India doesn’t permit bitcoin transactions, as it violates the Foreign Exchange Management Act
(FEMA) and can be used to move black money easily. But on the other hand, investors feel secured with the digital currency, consider it as owning an investment and don’t want banks controlling their money. Bitcoin has the potential to change the society similarly to how the Internet has done.
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BREXIT By Thrivikrim Gajula, IBS Hyderabad
What happens if we come out of a family and try to settle as independent person?
Personal expenses occur.
Have to make new friends.
Define ourselves to the world.
One on one dependency.
Have to Manage things alone without team .
Above issues will definitely happen in BREXIT where BRITAN has to .
Rename its economy.
Hold strength of reducing pound value which came to 30 years lowest fall till today.
Again start fresh MOU with neighboring countries.
Taxes managing with outlying imposture.(previous britan is free of trading in EU).
Cost of living increases.
Again regain investors’ faith.
Following the consequences after the BREXIT poll it is been clear that pound value is being down to historical fall. Sadly future generations of UK have to suffer the loss of the historical mistake. While it is sure that investing companies have to shift their head operations from UK which is defiantly an death lying cause of UK sustainability. For example tourist visiting UK will be imposed of extra charges that definitely affect UK visitors. May be UK must be ready to face lot of surviving issues, Hope it doesn’t affect the rest if the world more. Surprisingly acceptable fact is a decision of a country with a population of 6 crores made 100 crores population of India and other 690 crore populated world lose their economies in a span of hours with a single vote. May be this is called magic of democracy
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