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In this issue, we bring to you the much talked about funding crisis, currency swap pact, crowdfunding, Indian markets and banking.
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JET Airways Funding Crisis Jet Airways posted a worse-than-expected loss for the third straight quarter because of higher fuel costs and foreign currency losses. It plunged into a net loss of Rs. 1,297.46 crore in the three months ended 30th September, excluding its units. It showed a net profit of Rs. 49.63 crore in the same period a year prior. Jet Airways crisis started off on 3rd May 2018 with its shares falling to 12.3% after Inter Globe Aviation reported a decline in net profit for the March-quarter. Jet started posting its first quarterly loss on 23rd May, which was the first negative net worth in at least 12 quarters. On 1st August, media reports said that Jet Airways asked its employees to take a 25% cut in salaries as a part of the cost-cutting measure. By the end of August, Jet posted another loss for Junequarter and said that it will inject funds and cut costs by more than Rs. 200 billion in two years. On 4th September the Government planned relief packages for airlines, on 6th September Jet Airways had paid salaries to 84% of its employees after reports emerged that pilots had warned ‘non-cooperation' over salary default. On September 20th the Income Tax Department conducted a survey at Jet's premises. Also, over two dozen passengers on a Jet flight were treated for minor injuries after the plane lost cabin pressure in the same month. On October 4th ICRA downgraded the ratings for Jet for company's long-term loans and NCDs, citing the impact of a steep increase in jet fuel prices, rupee depreciation, and delay in implementation of liquidity initiatives. By October 30th Jet had many takers for its stake including Tata Group and U.S.based Delta Air Lines Inc. On November 5th there were reports citing that Tata aims to buy the 51% stake in the airline owned by Naresh Goyal, and Etihad Airways' 24% stake, and merge Jet with Vistara. On November 12th, Jet posted the third straight quarterly loss and on 13th Tata Sons being the due diligence to buy Jet as per reports. On November 22nd, independent director Rajan Mathai resigned, citing the reason of rising pressure from other commitments.
On 26th November, Naresh Goyal said, he may hand over Jet Airways to Etihad Airways. The deal being hashed out is expected to see Etihad injecting new equity into the airline, holding as much as 49% in the expanded equity base, while Goyal is open to his stake getting diluted from the current 51% to as low as 15%, depending on the extent of the cash infusion.
By: Namrata Karia
Currency Swap Pact: India and Japan The depreciating rupee has been a matter of concern for India for quite some time now. The government and the Reserve Bank of India have tried numerous measures to stabilize the rupee. However, the biggest step taken towards keeping the rupee stable, by far should be the Indo-Japan currency swap arrangement. The idea behind the deal was that it would act as a buffer to push up the rupee against dollar. The bilateral currency swap is considered to be an open-ended credit line between the two countries at a fixed exchange rate. The country that avails this loan pays interest to the other at a benchmark interest rate. This swap arrangement is up to $75 billion worth of yen or dollars from the Japanese government upon need be. The Reserve Bank of India can put it to use by selling it off to the borrowers and paying their foreign loans. It can also be sold to the importers to settle their bills. The Reserve Bank of India can also use it to increase its foreign exchange reserves which might help appreciate the rupee.
The depreciating rupee has caused the current account deficit to widen. This widening current account deficit has led to the importers upping their demand for dollars as compared to what the exporters are bringing into the country. In order to control the depreciating rupee, the Reserve Bank of India has used up a lot of its foreign exchange reserves. The existing foreign exchange reserve is under check and the situation is not alarming, however, this additional $75 billion worth buffer could actually help the Central Bank towards keeping the situation under control to a greater extent. Japan is the second largest holder of dollar reserves after China, so it is extremely unlikely that it would ask India for a loan but on the contrary, India could actually use this to its advantage and rock -bottom its interest rates thus helping its currency appreciate. The swap arrangements are not something new and have been used before by countries to tackle the hegemony of the dollar in the international market. An arrangement like this might not immediately shoot up the value of the rupee but what it does is, that, it assures India with creditworthiness. This creditworthiness will help boost the confidence of the foreign investors, institutional investors and the importers who deal in the rupee.
It is currently an arrangement that remains on paper until India desperately needs the buffer to save the rupee.
By: Satwik Debasis
Crowdfunding What is Crowdfunding? In crowdfunding, a project or venture is funded by raising many small amounts of money from a large number of individuals. It takes place by making use of an easily accessible network of people through social media and crowdfunding websites which brings investors and entrepreneurs together. Since it enables the funds to be generated from outside the traditional circle (owner, relatives, and venture capitalist), it increases the potential of entrepreneurship. Process of Crowdfunding 1. The person interested in Crowdfunding has to visit a crowdfunding website where there is an overview of the projects being pitched. To get more details or invest in the project, registration has to be done. 2. If an investor finds a project in which he is interested, he's required to look for the following details provided by the individual or social enterprise which is looking to raise money:
Amount of money that's required to be raised
Amount of money raised until then
Usage of the money
The time duration for which the pitch is open
Number of people already invested
What will the investor get in return
3. The investment can only get ahead if the business is able to raise the full required amount. 4. There is a 14-days cooling off period during which the investor can pull off the investment if he changes his mind. Types of Crowdfunding
Various types of Crowdfunding are: -
1. Reward - based Crowdfunding
Reward-based Crowdfunding involves contribution by individuals in a business in exchange of a "reward". The reward is in form of a product or a service which is offered by a business. There is no financial or equity return. Business owners give incentives to the contributors with fewer expenses or selling ownership stake. 2. Donation-based Crowdfunding The sole reason for investment is investors believing in the cause. There are intangible returns. Donors contribute because of social or personal motivation and have no expectations in return. Rewards like acknowledgment on an album cover, event tickets, gifts can be provided. Various type of Donation-based Crowdfunding are disaster reliefs, charity, non-profits etc. 3. Equity-based Crowdfunding Investors become part owners of the company as they invest in trade of equity shares. Just like equity owners, investors get a financial return on the investment made by them and receive their share of profit in form of dividend. If the business is successful, the value of shares goes up, and if not, it goes down. 4. Debt-based Crowdfunding Investors receive their money back with interest. It bypasses the traditional bank as investors not only get financial returns but also invest in the project, they believe in.
By: Ishita Gaba
Two years of RERA Real Estate Regulatory Authority (RERA) Bill was introduced by the UPA 2 government in 2013. The bill got approval from the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016. The Act prohibits unaccounted money from being pumped into the sector and as of now, 70 percent of the money has to be deposited in bank accounts through cheques compulsorily. Before RERA, most of the builders swindled funds to different projects, leading to delayed delivery across several cities. Now with RERA, both new and on-going projects are to be brought within its fold. The implementation of the Real Estate Regulation (and Development) Act, 2016, in the country is woefully short of expectations even after almost 2 years of all its sections becoming law on May 1, 2017. Of the 28 states where the Act is to be enforced, only 3 states have appointed a permanent regulator, 14 states have functional web portals and 20 states have notified the rules. All the seven Union Territories, however, have notified the rules.
Maharashtra, Madhya Pradesh, and Punjab have appointed permanent regulators under RERA. All other states where RERA is being implemented are functioning with provisional designated regulators. To enable customers to easily access project information, RERA says that all states must maintain a web-based portal where all developers will upload project information. But states like Haryana, Assam, Kerala, Telangana, and Orissa do not have these portals.
Even in states like Uttar Pradesh, Bihar, Rajasthan, and Andhra Pradesh, among others, where web-based portals have been launched, the information uploaded by developers is so insufficient that it is of no use. At the same time, the state RERA rules, wherever implemented, are not very clear about the registration of on-going projects launched before all sections of the RERA Act became law on May 1, 2017. The law came into effect with 59 of 92 sections notified on May 1, 2016. Exactly a year later, the remaining sections came into force and thus, this has left many buyers unguarded and with heartburn. All existing projects had to be registered with RERA by August 2017, but even today a number of projects which have not secured occupation certificates from the authorities remain unregistered with RERA.
Most states and UTs have implemented RERA half-heartedly, thus failing to create an effective regulator. It is said that Maharashtra RERA was the most active in the country and the only exception where the regulator's proactive functioning had set new precedents. Poor implementation of RERA in various states has had an adverse effect on the betterment of the realty sector.
By: Ishita Saini
FPI worries surrounding Indian market Foreign Portfolio Investment is an investment by NRI's in Indian securities which includes shares, corporate bonds, government bonds, infrastructure security, convertible security. Investors who make an investment in these securities are known as Foreign Portfolio Investors. They generally deal through stock markets and get in and out quickly with keeping lower stakes in companies. Ex- buying small stakes in a different country of a company for investment purpose is FPI while acquiring a foreign company or merger with a foreign company is known as FDI. SEBI has recently announced the criteria for Foreign Portfolio Investment. In which, any equity investment by non-resident which is less than or equal to 10% of capital in a company is portfolio investment. While more or above this the investment will be called as Foreign Direct Investment (FDI) Investment by a foreign portfolio investor (FPI) cannot be more than 10 % of the paid-up capital of the Indian company. All FPI together cannot acquire or invest more than 24 % of the paid-up capital of an Indian Company. As per SEBI regulations, Foreign portfolio investment (FPI's) are not allowed to invest in unlisted share and investment in unlisted entities will be treated as foreign direct investments. Also, due to on-going concerns over rupee depreciation, global trade war tiff, and rising crude prices, the latest primary data shows, foreign portfolio investors (FPI's) sold equities costing of Rs 24,186 Crore from OCT 1 - 26 and bonds worth Rs 11,407crore, taking the total up to Rs 35,593 crore. So far, this financial year, Foreign portfolio investments (FPI) have pulled out a total of Rs 97,000 crore from the capital markets. Which includes around Rs 37,000 crore from equity and around Rs 60,000 crore from the debt markets. Most of the investors are facing problems with ease of doing investment in India. A large pension fund was frustrated with KYC (Know Your Customer) also its board of trustee with demand for telephone bills and documents etc. India should consider giving FPI license to large institutional investors. We should give them a license to invest in India.
The final worry for investors is the election in May 2019 and the on-going economic policies. Most of which have priced in the continuity of stable government. Moreover, they have experienced a fair amount of policy reversal in countries like Venezuela, South Africa, Venezuela & Brazil. It is important to reassure the investors that India is committed to growthoriented economic policies and ease of doing business as well as investments. Irrespective of the election, the economic policies will be carried on and foreign investment will be welcomed with ease.
By: Raj Shekhar Singh
Ease of Doing Business Index The Ease of Doing Business Index is a ranking that is used by countries against each other based on how the regulatory environment is conducive to business operations. Economies that have a high rank (1 to 20) have simpler and more friendly regulations for businesses and vice versa. According to the latest World Bank annual ratings, India has been ranked 77 among 190 economies in the ease of doing business. India improved its rank to 77 in 2018 from 100 in 2017. Ease of Doing Business in India is averaged around 124.82 from 2008 until 2018, reaching an all-time high of 139 in 2010 and a record low of 77 in 2018. Past rankings for India When the Modi government came to power in 2014, India was ranked at the 142nd position among 190 nations. Then, in 2016 it was ranked 131st in the Ease of Doing Business index. Later it was ranked 100th in the World Bank's Doing Business report 2017. Ahead of the general elections next year, the ranking comes as a shot in the arm for the Narendra Modi government which faces strong opposing voices from rival parties. Parameters for a country to be at the top in the ease of doing business list: As per World Bank’s annual Doing Business 2019 report, India has improved on 6 out of the 10 parameters relating to commencement and ease of doing businesses. While India's overall rank was 77 this year, here's how the country ranked among 190 nations in the respective WB parameters in 2019: Ease of starting a business: 137 Dealing with construction permits: 52 Getting electricity for the same: 24 Registering your property: 166
Getting credit for your business: 22 Protecting minority investors: 7
Paying taxes: 121
Trading across borders: 80 Enforcing contracts: 163 Resolving Insolvency: 108 The few parameters where India lags behind other countries are: As per the latest World Bank report, the following are the areas where India lags behind other countries in ease of starting a business: -
In India, it takes 1,445 days on an average to resolve a commercial dispute whereas in other high-income economies it takes only 582 days. In Registration of properties, India lags behind as it is ranked 166 amongst 190 countries. Reasons for India's progress 
India's ease of doing business ranking in few years has improved at a fast pace as being a domestic entrepreneur now is easier and less cumbersome to do businesses.

-the new ranking is reflective of the reform of Goods and Services Tax (GST) that has been introduced and this is seen as a multi-year reform process.
By: Garima Singla
One year of GST One year of GST July 1, 2018 marked one year of the launch of Goods and Service Tax in India. What is Goods and Service Tax? GST is a destination-based tax and is levied at the ultimate consumption. Under the new tax regime, the final consumer of the goods and services will have to bear the tax charged in the supply chain. Implementation of GST States can have the facility to assess a GST turnover of Rs. 1.5 crore or less. The rest will be with the Centre. In case of intrastate supply, 50:50 ratio is there between the Centre and States. Impact of GST Increases competitiveness- The retail price of the manufactured goods and services in India reveals that the total tax component is around 25-30% of the cost of the product. After implementation of GST, the prices have gone down, as the burden of paying taxes has been reduced to the final consumer of such goods and services. There is a scope to increase production, hence, competition increases. Economic Union of India -Goods can be easily transported all over the country, which is a benefit to all businesses. This encourages an increase in production and for businesses to specialize in PAN-India operations. Loopholes of GST Bill 
Tobacco and alcohol Products
They have not included the alcohol/beverages products under GST bill. It means currently the states would own the facility to extend the tax on alcohol/beverage consumption as per their demand. However, tobacco merchandise square measure enclosed in merchandise and Services Tax, but it would be chargeable at 40%.
Multiplicity of Tax Slabs
Instead of having a single or two slabs, we have 5 Slabs in GST - 0%, 5%, 12%, 18%, 28%. Though GST bill has these above loopholes, collection under GST in the first month of GST launched in July 2017 was 94,063 (‘000 Cr). Highest GST collection was 1,03,458 (‘000 Cr) in March and April of 2018 for both the months individually. GST collection of November 2018 was 97,637 (‘000 Cr)
Conclusion: GST is Success, Not a failure. Since it’s implementation, our Indian government eared a lot as compared to previous tax laws.
By : Reshma Gandhi
Discussion on RBI Board Meeting (November 2018) The RBI board held a gathering on Monday, 20th November 2018 in the midst of a fracture between the national bank and the legislature to discuss issues likecapital needed by RBI, loaning standards for SMEs, etc. Reasons for the clash: 1. Interest rates- The spat started with the administration being despondent with the swelling centered RBI for not cutting financing costs – and not withstanding raising them. 2. NPA characterization- RBI's February 12 round on characterization of nonperforming resources (NPAs) and standards of advance rebuilding were of a concern. The administration considered it to be excessively cruel, and it drove everything except two state-run banks into the red. 3. Nirav Modi scam- Around a similar time, as the Nirav Modi trick broke, the administration hit out at the RBI on supervision, drawing a nearly prompt counter with Urjit Patel looking for more powers to direct open area banks so they are at standard with their private part peers. BOARD MEETING HIGHLIGHTS A meeting took place between the RBI and Government of India on 20th November, which stated the followings: • The RBI flagged a trade-off with the legislature by consenting to think about its requests, including the exchange of surplus saves—an issue that had set off an open uproar between the money related approach creators and their political managers. • Union Minister Piyush Goyal denied any showdown between the legislature and the RBI. He said that there was nothing frightful in discourses among the individuals from RBI's directorate about the national bank's duties towards the nation, while the legislature had illuminated that it has not requested even a solitary rupee from RBI saves.
• The RBI has infused ₹8,000 Crore into the framework by buying government securities on 22 November. In light of an appraisal of winning liquidity conditions and furthermore of the strong liquidity needs going ahead,
it has chosen to direct buy of the accompanying government securities under Open Market Operations for a total measure of ₹80 billion.
• RBI on Monday talked about capital necessities for banks, rebuilding of MSME credits. The board instructed RBI to consider a plan for rebuilding standard resources of MSME borrowers with total credit offices of up to ₹25 crore, subject to such conditions as are vital for guaranteeing monetary solidness. • RBI on Monday consented to ease liquidity for the budgetary area and increment credit to private companies. • After a long distance race executive gathering, RBI is relied upon to allow banks to recast advances given to little and medium undertakings (SMEs). The Road Ahead Next RBI executive gathering is fixed on 14 December. Proceeding, it will forecast well for the economy if both the legislature and the RBI direct discourse in a way that produces trust in the general population when the economy is as yet attempting to recover its magic.
By: Aditi Malu
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