From Editors Desk Editors- Subhadeep Chakraborty, Heeral Rawal, Vishnu Teja Annamraju Hello fellow readers, The campus is buzzing with few of the enthusiastic souls while the others at home wait in hope for their chance to visit the campus. Irrespective of where the students are, the online classes have been running in full swing with the students gearing up to face the corporate life in a couple of months’ times. It’s definitely a good time to brush up your basics while also focus on some insightful content that should give you an edge over the rest in the race to be industry ready. This edition as usual covers some of the buzzing topics of the market whereas at the same time having the basics of finance applied to some niche sectors of the market. Additionally, this time we have come up with an interesting read on “The need of Blue Economy model” which educates us on the sustainable use of ocean resources for economic growth while respecting the sustainable development goals popularly known as SDGs. For all the trading enthusiasts, who wish to gain a fair understanding of why they should go for Technical Analysis can read the article “Significance of Technical Analysis” whereas if you want to delve deep into the intricacies of trading then “Algorithm Trading” might just be your best pick. This article talks about the new ‘normal’ method used for shares and derivative trading which can enable a firm to make tens of thousands of trades per second. Algorithmic trading can be used in a wide variety of situations including order execution, arbitrage, and trend trading performed based on pre-defined coding. As the Union budget 2021-22 is just around the corner, keep yourself updated with our article on national security spending in order to understand why is it necessary to plan defence budget strategically for the year 2021-22. If tech savvy content interests you, do checkout the article “Challenges to the growth of FinTech in India”. This article provides an overview of the opportunities and growth trends in India along with the challenges faced by the FinTech in the digital space. While covering the topics around the world in the Sofia Times, we have not left the occasion of starting our blog for finance snippets bi-monthly. SOFIA is a firm believer of imparting finance knowledge with fun. Finance is not all about credit and debit, it’s more about drawing inferences of credit and debit and having a valuable insight of the business. Driven by Society of Finance, this edition is not only for finance enthusiasts, but also for the people who would like to keep themselves updated with the current happenings in the business world. As usual we hope that this edition will enrich your knowledge benefit in your academic and career decision. Happy Reading!
Back to table of content 1|Page
Algorithm Trading In today’s times, when everything is getting automated trading is also one of them. Algorithm trading is the new ‘normal’ method used for shares and derivative trading. Algorithm which means pre- defined programmed instructions to be executed based on specified terms and conditions. Algorithm trading is trading method where trading is performed based on pre-defined coding fed in software. This saves time to execute manual trading orders and increases the order execution speed. Trading could be done for shares, derivates, commodities. It is widely used by investment banks, mutual funds, hedge funds and pension funds. Algorithmic trading is used for both high frequency trading (HFT) and quant-based trading. High Frequency Trading (HFT) – In HFT, large number of orders are executed in very short span of time within micro seconds using pre-programmed software’s. Quant based Trading – Performing quantitative analysis, mathematical and statistical models are built based on historical data and accordingly algorithm strategy is built to form algorithm trading strategy. SEBI allowed algorithmic trading to be used for Indian stock markets on April 2008 by opening up direct market access (DMA) that is providing direct access to exchange trading terminal through an electronic medium. This facility is currently exclusive to institutional investors without intervention or involvement of brokers. Institutional Investors –are the investors which put money into market to buy securities, assets in a large volume and have huge purchasing power which includes banks, pension funds, hedge funds, mutual funds Retail Investors – are investors who purchase securities for their own personal accounts and trade in lower stock value which values less than 2 lakh per stock. Exchange of ie buy and selling of share is done through exchange traded funds (ETFs) or online brokerage firms. Currently close to 50% exchange volume of the Future and options (F&O) trading is done using algorithm trading compared to developed countries like USA where the percentage is around 70%. The main factors to predict the stock price are volume, price, support and resistance. Support or Support level– In technical analysis while analysing the stock chart, when the stock price falls and a downward trend is paused due to demand or buying interest the price level is called support level. As the price of asset or security drop the demand increases thus the fall of price is prevented due to demand. Hence, a support line is formed to prevent price fall further.
Back to table of content 2|Page
Resistance or Resistance level-While doing stock chart analysis, the price level of asset or security show resist to move beyond a price level due to high price the demand of the asset decreases and seller start selling the asset.
Back to table of content 3|Page
Strategies used for algorithm Trading is: 1. Arbitrage opportunity- buying a stock listed at two different stock market exchanges. Buying at lower price from one exchange and selling the stock at higher priced stock exchange. Example – ‘X’ is listed at both Bombay stock exchange and Nifty stock exchange at Rs10,11 respectively. So, one can buy from Bombay stock exchange and sell at nifty stock exchange to make profit of Rs 1 per share. Although this cannot be practised in India as arbitrage trading on intra-day is not permitted. 2. Trend Identificationa) Trendlines & Chart Patterns: With help of trend analysis, identifying support level and resistance level a trend needs to be recognised. Trend could be an upward trend or a downward trend for a time period. Trendline of a chart group all points together to make uniform trend, joining these points on graph make a trend line.
Back to table of content 4|Page
b) Simple Moving Averages-Taking time frame into consideration and calculating average stock price within a time frame. If the current stock price is more than average then buy decision could be taken if not then either stock could be sold or avoid buying. Example: Daily Closing Prices: 11,12,13,14,15,16,17 First day of 5-day SMA: (11 + 12 + 13 + 14 + 15) / 5 = 13 Hence when stock price is less than 13 could be bought on 6th day Second day of 5-day SMA: (12 + 13 + 14 + 15 + 16) / 5 = 14 Third day of 5-day SMA: (13 + 14 + 15 + 16 + 17) / 5 = 15
Back to table of content 5|Page
c) Momentum Indicators- It is technical indicator which signifies the strength of stock by measuring the rate of rise or fall of stock price. Momentum (M) is a comparison between the current closing price (CP) and a closing price "t" period ago. You determine the value of "t." M = CP – CPt or M = (CP / CPt) * 100 The first formula simply takes the difference between the two closing stock prices of the day. The second formula calculates momentum as the percentage rate of change in the price. The momentum indicator identifies when the price is moving upward or downward and how relative strength is the momentum. When the first formula has a positive number, the price is above the price "t" time periods ago. When it's a negative number, the price is below the price "t" periods ago. When the second formulae of the momentum indicator are a percentage higher than 100, the price is above the price "t" periods ago. When it's a percentage lower than 100, the price is below the price "t" periods ago. Example – Current closing price of stock = Rs 100 and closing price 2 days ago=Rs102 M=100-102=-2 M %= (100/102) *100=98.03 % Therefore, the momentum of stock is falling by 98.03 %
Article submitted by: Meghna Bhattacharya (PDGM 20-22)
Back to table of content 6|Page
Significance of Technical Analysis Stepping your best foot forward can be quite challenging when it comes to investing in stock markets. So, how does one go about it? Is there a shortcut to a fool-proof plan behind this? Technically a big yes! With the help of technical analysis, one can gain deeper insights of what steps could be taken to make the most of an investment. Evaluation of stock prices along with the supply and demand of stock prices – everything is directly dependent upon the stock analysis. The study is primarily focused on analysing the prices and volumes of stocks being traded in the market. With this, investors gain knowledge of where and how much to invest in a particular stock to realise a decent high value return.
What does technical analysis offer? By now there have emerged multiple trading and investing models based on the price changes patterns. The technical analysts who work closely with these changes and trends, have also come up with set indicators that enables them to produce relevant information for an investor to look at, before investing. These include: • • • • • • • •
Trendlines in price Patterns in charts Momentum indicators Volume of stocks Oscillators Support levels Resistance indications Moving averages
Not at indicators mentioned above are focused on a single aspect, instead they are streamlined to investigate multiple domains. For example, the price and volume changes are keen on the market trends, some others like momentum indicators are focused on ascertaining whether a trend is strong enough to survive and continue in the near future.
Back to table of content 7|Page
How does technical analysis work in favour of an investor? Technical analysis is one of the most significant disciplines in trading and one of the most useful aspects of a trader’s life. Right from identifying investment avenues to determining the trends and patterns of price and volume along with implied volatility, technical analysis serves as a one solution for all investment related nuances.
In this regard, there are a few assumptions, which help in smooth operation of the tool. • • • •
The past trading activity on a particular stock can be helpful in drawing insights for future investment The changes in prices of the stocks are another valuable indicator that the underlying security is fairly priced History repeats itself – is the most common belief, as the future predictions are made based on the past trends A random and sudden movement in the market will eventually give rise to a specific pattern in the movement of stock prices
It should be noted that even a trend as old as a century can still be relevant due to the price changing patterns. It is likely that the same pattern might be repeated in the future, hence it is advised to be aware of the same before and while investing.
Usefulness of the technical analysis The indicators in the stock market, as mentioned above work on multiple areas. As a result, they give out information that allows an investor to take the plunge and dive into the market. Here is a list of advantages that are gained through technical analysis:
Identifying resistance and support The resistance and support levels showcase the level of congestion in a particular stock. Herein, the stock prices are likely to oscillate within a specific range, so when the prices move beyond this limit, the stock is perceived to be performing better.
Determining entry points With the patterns and trends of the market, one can also identify the right time to enter the market. The demand and supply levels are identified, and one can make informed decisions, thereafter.
Back to table of content 8|Page
Spotting trends One of the prime concerns of a trader is resolved through technical analysis, that is to spot a trend. The visual representation of data through charts aid in spotting the trends easily and faster. Accordingly, he or she can invest in the stocks based on the long-term and short-term market trends. Moreover, besides such advantages, one should be self-aware of his or her preferences and financial status, before delving into the market for making a sound profit.
Limitations of technical analysis Despite all the positive aspects that technical analysis carries and the insights it has to offer, the flip side of the coin sings a different song. Although technical analysis is regarded as the most effective tool in determining market trends, it does not promise for the most outstanding profits ever to an investor. Some of the key limitations that technical analysis comes with are as follows: •
•
•
The charts and patterns do not represent information that is reasonable enough to take a step. In simple words, it does not directly prompt people/investor to take action, rather the information available is required to be judged professionally before going ahead History might repeat itself, but not in the exact same pattern. Hence, one has to be aware of the patterns and trends alongside using his/her personal preferences and rationale behind before investing Technical analysis is widely popular, and most investors move ahead base on the same. It often leads to stock prices falling or rising as most investors took the same path of investment anticipating the same outcome
Altogether, technical analysis in the stock markets is a huge success story so far. Nevertheless, it is esteemed to remain so in the upcoming decades or so. However, falling prey to similar anticipations and depending entirely on technical analysis charts and trends might not always bring fulfilling results. Some analysts and other researchers often look into deeper research, thereby deriving newer insights and inferences that might lead to better investment plans for traders.
Article submitted by: Jeenia Bhadra (BIFS 2020-22)
Back to table of content
9|Page
Challenges to The Growth of Fintech In India In the simplest of words, fintech refers to the businesses and products emerging out of the overlap between finance and technology. From mobile payments to internet banking to cryptocurrency, fintech is everywhere around us. It has been credited for disrupting the financial services and banking industry. With diverse offerings, fintech has gained a lot of popularity in last few years. Demonetization and the push for cashless economy have been the drivers of its growth in India. The discourse on fintech has been largely restricted to its opportunities for growth, less is spoken on the challenges it faces. Keeping that in mind, this article provides an overview of the challenges to the growth of fintech in India.
CHALLENGES FACED BY FINTECH Fintech in India faces many challenges, which restrict its growth. The key challenges are as follows: •
Lack of awareness– A huge percentage of Indian population still does not have a bank account. This poses a big challenge as bank accounts are necessary for online transactions
•
Lack of trust- There have been multiple frauds in online transactions, which ultimately lead to loss of money. Many customers still associate fintech with such online frauds. This has led to a lack of trust among the customers
•
Preference for cash and other conservative banking habits- Given that a substantial percentage of the population of our country is not financially literate and does not have access to bank accounts and internet connection, there is a preference for cash. Despite government measures to promote a cashless economy, we still have a long way to go
•
Data privacy and cybersecurity concerns- Fintech firms have access to private data of the customers. As more and more financial data becomes available digitally, the threat of cybersecurity breach increases
•
Lack of collaborations between FinTech and Banks- More often than not, banks and fintech consider each other as a threat. Fintech firms fear loss of identity and autonomy in case they collaborate with banks. On the other hand, banks fear loss of reputation if they collaborate with fintech. These apprehensions lead to a lack of collaboration between them
Back to table of content 10 | P a g e
CHALLENGES FACED BY FINTECH IN THE DIGITAL LENDING SPACE Recently, RBI is coming down on fintech firms in the digital lending space. It becomes important to understand the reasons behind RBI’s move. The reasons are as follows: •
Unethical practices adopted by fintech to attract customers- The business model of many fintech firms is based on commissions. To elaborate, the fintech firm acts as a lead generator for NBFC’s and banks. The greater the leads they generate, higher will be the commission that they would make. This makes them push customers aggressively for loans. As a result, there will be many customers who would take loan even if they do not need one. This increases the probability of non-repayment of loan. Also, it has been observed that when customers default on their loans, they are threatened and harassed by the banks/NBFS for recovery of those loans. Recently, Bajaj Finance was penalized by RBI for not adhering to the recovery guidelines
•
Cybersecurity and data breach concerns- Many fintech firms are not registered with RBI. Whenever a customer downloads a fintech app on his/her mobile, the unregistered fintech apps get access to their data (including financial details of the customers). Such data can be misused. There have been reports that the some of the users of these apps have been blackmailed and threatened by the hackers
This has prompted RBI to form a working group of six members to evaluate the state of digital lending activities. There have also been reports that Google has recently removed apps from the play store which do not comply with the banking regulation. Even, in June last year, Google had removed fifty loan apps which were indulging in threat, intimidation and cyber-bullying.
CONCLUDING REMARKS Though the opportunities for the growth of fintech are umpteen, it is equally important to be cognizant of the challenges to its growth. The key to the success of Fintech in India lies in understanding, analyzing and then overcoming these challenges.
Article submitted by: Abhishek Agarwal (BIFS 2020-22)
Back to table of content 11 | P a g e
Stagflation in the economy
Under the conventional view, the rate of inflation is expected to be inversely proportional to the rate of unemployment. In the early and mid-1970s, OPEC (Organization of the Petroleum Exporting Countries) decided to cut prices and sent oil prices soaring across the world. On one hand, the rise in oil prices constrained the productive capacities of most western companies that heavily depend on oil thus hampering economic growth. On the other hand, the oil price spike led to inflation and most commodities became costlier. Thus, with the fall in GDP, the rate of inflation elevated. This condition gave rise to Stagflation. đ??’đ??đ??šđ?? đ??&#x;đ??Ľđ??šđ??đ??˘đ??¨đ??§ = đ??ˆđ??§đ??&#x;đ??Ľđ??šđ??đ??˘đ??¨đ??§ + đ??‘đ??˘đ??Źđ??ž đ??˘đ??§ đ??Žđ??Śđ??Šđ??Ľđ??¨đ??˛đ??Śđ??žđ??§đ?? + đ??’đ??Ľđ??¨đ??° đ??„đ??œđ??¨đ??§đ??¨đ??Śđ??˘đ??œ đ?? đ??Ťđ??¨đ??°đ??đ??Ą
Back to table of content 12 | P a g e
In Layman’s terms, Stagflation is an abnormal situation in which inflation and unemployment coexist. Ironically, Stagflation involves increase in credit or money supply “relative” to growth/employment or supply in the economy. Stagflation is the combined effect of several factors in the economy. The indications for a probable Stagflation are rise in prices, rise in wage rate, emergence of excess capacity, reduction in the level of production, increase in involuntary employment. This scenario is very difficult to control in itself, because if you try to control any one of the variables, it creates an economic imbalance in the system. If the unemployment rate increases, the demand would suddenly decrease and since the economy is already slowing down, there would be a decrease in the supply. This combination of decrease in both demand and supply leads to a pull in inflation with rise in prices.
Scenario-1 Consider a situation when due to the increase in prices, the demand is low. The Central banks intervene in the markets and reduce the interest rates. As a result of which the credit or money in the economy either remains the same or increases. This credit amount does not go to the factories to produce more goods because the demands for those goods and services are lower. Hence, they don’t produce any real employment. But the money goes into sectors other than the factories. They go as a tool for wealth transfer to the producers of the commodity that has seen a supply shock. So, there is a wealth transfer from the consumers of the commodity to the producers of the commodity or asset markets. This is where price increase happens and it further filters down in the economy. The supply of real goods and services do not really increase, rather come down as a response for lower demand. Since the supply of real goods and services come down, no longer the same manpower is required and hence the unemployment in the economy goes up. In other words, the inflation increases, the price becomes sticky and there is growth slowdown. There is also gradual economic slowdown as a result of which there is decrease in the level of production. The labor force prefers to move out of the economic system leading to higher unemployment .
Back to table of content 13 | P a g e
Scenario-2 Consider a situation where the government increases the fiscal deficits or by the crowding out phenomenon increases the expenses over the revenue it receives by issuing debt from private investors in the market. This means little new money is created and out of the same pool of money the government extracts a greater amount i.e. crowding out occurs in the monetary side. Since from the same pool of money, the government is taking more, the interest rates rise in the economy. As a result, the credit availability for the private sector is coming down. However, the overall credit in the economy is still the same or may even rise for the public sector. The investment in the private sector comes down. In other words, the supply of goods in the economy comes down even if the demand increases. The demand is expected to increase since the government is spending more. Since the private sector is investing less, the supply either remains the same or comes down. Hence, there price rise in the economy with a probable scenario for inflation. Economic growth is certainly coming down due to lack of supply in the economy and lack of employment opportunities. Hence, Stagflation occurs.
To sum up, the causes of Stagflation can be attributed to the following factors: • • • • • • • •
Increase in the supply of money Rise in wage under the pressure of trade union Consistent rise in agricultural prices owing to government policy Rise in administered prices Reduction in demand on account of fiscal and monetary policies directed at Inflation Occurrence of excess capacity due to lack of aggregate demand Credit expansion by the banks Deficit in the external trade of rich nations
Back to table of content 14 | P a g e
• • • •
Loss of production Increase in industrial capacity Increase in savings and investments Reduced demand for labor resulting in unemployment
Controlling Stagflation The solution to Stagflation is quite simple. By reversing the actions of the entities that were the reasons for Stagflation. The government should reduce its fiscal deficits. However, if the stagflation is due to supply shock and loose monetary policy, then apart from fiscal deficit cut, the government needs to reduce the credit in the economy by either increasing interest rates or by implementing reverse Quantitative Tightening. The other way to control the stagflation cycle in the economy is by controlling the inflation. As mentioned in the beginning, Stagflation was first seen in the 1970s when the oil prices started rising across the globe and there was an inflationary cycle. Those supply shocks resulted in stagflation for countries even like the US. Some measures to curb stagflation is to have: • • • •
Appropriate income policy Regulation of credit creation Consumption level is to be very carefully encouraged More encouragement to labour intensive work
Article submitted by: Amir Hossain (PGDM 20-22)
Back to table of content 15 | P a g e
National Security Comes at A Price! The preparation of the Union budget 2021-22 has kickstarted with the Finance Minister, Mrs. Nirmala Sitharaman meeting various industrialists for discussions. The year 2020 took the whole world with a sway as COVID – 19 crept through our windows along with the economic recession but for India, the situation has been worse off than other countries. It has constantly been locked in a face-off at LAC with its long-standing cold neighbour – China. In 2019, China’s military expenditure was $261 billion while India even after an increase of 6.8% was just able to reach $71.1 Bn. which is less than 2.5% of India’s GDP. With an opponent that large in terms of budget, power, and support, India needs to plan its defence budget strategically for the year 2021-22. The face-off has come at a time when already the Indian economy has been projected to shrink by 7.7% in the financial year ending March 2021. A humongous number of resources are required to be plugged into the system at all levels to even think about keeping China at bay. With the advent of COVID-19, the face of warfare has changed tremendously. The inclusion of biowarfare with AI has made the wars more expensive and difficult to fight, let alone win. Cybercrime has already become a major problem for the government which is becoming difficult to deal with given the country’s vintage technology and infrastructure. Recently India has banned 267 Chinese mobile applications to curb the cybersecurity threats but the fact billions of Foreign Direct Investment flows in from China every year cannot be side-lined while tackling the issues from the business front. China, with a GDP almost 5 times that of India stands as a lethal threat both on the border and beyond. The difference in the strength of both countries has been reiterated after the Galwan valley incident forced the government to execute an emergency defence spending of over $2 billion showcasing the equipment shortage in the forces within the nation. The goal of benchmark military spending of 3% of the GDP has only moved farther away as India constantly grapples with its development and security needs. But is raising the budget for the defence an easy task for the government? The easiest way to raise money for the government is to increase the amount of direct tax levied on the taxpayers. At the time of the Kargil war, a Kargil cess was levied to meet the expenses of the war. But if the government increases the tax percentage or the CESS percentage today where as per the Asian Development Bank, the economy has already shrunk by almost 9%, will it have a positive impact. The funds can also be raised by using the method of disinvestment. For the year 2021, the government has set a disinvestment target of Rs. 1.2 lakh crores. If this disinvestment is done specifically from defence owned companies then it can be a great source of funds.
Back to table of content 16 | P a g e
Thus, more than the quantity of spending, the quality of spending needs to increase. India has been constantly lagging in the procurement of equipment and ammunition at the right time, in the right amount from the right source. Be it the Dassault Rafale deal or any other, national security has always borne the brunt of ineffective politics.
With China moving back on all the agreements it had signed previously, the LAC has become a replica of LOC. So, let us go back in history, India has fought 3 full-scale wars against Pakistan. We have fought a mini-war which was Kargil and we are fighting proxy wars against Pakistan in the Kashmir valley for over two decades now. A mini-war like Kargil in which we even didn’t cross the borders cost India Rs 10,000 crores that too 20 years back. If we get into a full-fledged war with China today then the cost will increase manifolds. Steps towards increasing the quality of expenditure have been taken in the last 12 months with CDS stepping up in an attempt to amalgamate the expenses of all three forces namely, Airforce, Army, and the Navy. But even if the expenses of the forces are joint, the fact remains that 60% of our defence forces are made up of manpower while only 49% is being spent on their remuneration. With an underpaid and underequipped force, the sustainability of the security of the nation is under question. To tackle this problem, the defence ministry has suggested time and again setting up a nonlapsable fund for the capital and revenue expenditures of the military. A non-lapsable fund means if there is any excess fund left at the end of the year, then it would be added up in the budget of the successive year rather than dissolving it completely. If such a fund is set up by the Finance Ministry then the problem of shortage of funds can be solved to a great extent. Today India although stands as the third-largest spender in terms of defence expenses but the gap between the top two spenders i.e., the US and China are huge. With a war that needs to be fought on many fronts at bay, we need to increase both the quantity and quality of military spending.
Article submitted by: Disha Gupta (PGDM 20-22)
Back to table of content 17 | P a g e
The need of Blue Economy model and its connection with Sustainable Development Goal -14
Introduction Oceans coverup almost three-quarters(3/4th) of the earth surface and plays a very important role in global trade and tourism making them highly significant in geopolitical sense. Around 70-80% of international trade takes place via sea route and ocean. Not only acting as an energy house of minerals and resources, it also helps in maintaining a energy balance by regulating CO2 in the atmosphere. The importance of ocean-based economy is quite evident from the fact that it contributes around 5% to the world’s GDP share and directly and indirectly sustains livelihood to more than 350 million people around the globe i.e., near to half of world population. The
United Nation’s Sustainable Development Goal (SDG-14) which specifically refers on “Life below Water” aims to conserve and sustainably use marine resources for a holistic development of entire world. The idea of Blue Economy, which basically focus on the sustainable usage of oceanic resources for renewable energy, tourism, transport, fisheries etc. has a great potential and can help the nations in boosting their economic growth and thereby improving livelihood of people and increasing their GDP. By ensuring dynamic balance of natural resources and environment, it conceptualizes the need to protect it and derive maximum economic benefit from the oceans and seas using regulated business model.
Back to table of content 18 | P a g e
In Indian Context, the Indian Ocean Region (I.O.R) is strategically significant to country’s growth as most of its oil and energy demand is imported through sea and therefore in path of becoming a 5 trillion-dollar economy, the effective implementation of policies for Blue Economy in accordance with the commitment to SDG 14 can be the game changer. Moreover, not only SDG-14 but it can also augment measures taken by Governmental bodies to achieve other SDG goals like SDG-1 (No Poverty) and SDG-2 (Zero Hunger) by increasing employment opportunities and fighting the nutritional challenges by ensuring food security.
Why India needs to streamline Blue economy model? Blue Economy can empower India to present itself as a global winner to meet its socioeconomic obligations by increasing livelihood generation, promoting itself as a global marine tourism hub and also bridging the connectivity with its neighbors cutting down its transportation and logistics cost. With a population of more than 130 crores, majority of workforce in India is directly or indirectly dependent on Primary sector like agriculture, fishing, forestry etc. but the share of this sector to GDP is only close to just 20%. In terms of fish production, India is 2nd largest but majority of production comes out from the inland fisheries sector. Therefore, having a coastline of more than 7500 km, India can tap the enormous potential opportunities hidden within its maritime boundaries in terms of fish production, aquaculture, mineral beds, ocean energy and exploring un-identified energy resources in a regulated manner to cater to the needs of masses. In line with its attempt to foster economic growth using this model, India has also taken some steps in right direction and have set up framework for Integrated Coastal Zone management to expand its marine protected areas, coastal regulatory zone and developed its own National oil spill contingency plan. Post COVID-19 scenario, to streamline this model, a more comprehensive and detailed plan is required to be developed to tackle negative externalities and environmental challenges posed by the un-regulated and excessive utilization of marine resources.
Challenges in Current Scenario Natural disasters, man-made pollution, poor waste management policies and past accidents of oil spills have already made the situation very alarming continuing the risk to de-stabilize the marine ecosystem. Apart from these, the over-exploitation of marine ecosystem is causing severe damage to environment, the results could be easily observed in terms of rise in sea level, change in salinity and acidic levels posing threat to marine species. One of the major concerns is the damaged caused to the Coral reefs, also known as the “Rain forests of the Oceans� are now endangered in many parts of the world. These coral reefs cater highest amount of biodiversity by Corals. These Coral reefs not only filters water naturally but creates areas of fishing zone and promotes underwater tourism. Hence, unregulated approach of using of oceanic resources negatively impacts the growth of tourism sector and fisheries industry impacting livelihood of millions of communities that depend on it.
Back to table of content 19 | P a g e
Conclusion and Way Forward Rather perceiving oceanic bodies as a space of free resource extraction and dumping of waste resources, the Blue Economy model conceptualizes a broader picture for effective and sustainable approach of utilizing oceanic resources that can benefit countries to route themselves on the trajectory of growth, achieve their Sustainable development goals and simultaneously combat both natural and man-made environmental challenges. To develop and build an entire architectural map on Blue Economy model, the policy makers around the globe can refer to the success model adopted by Seychelles, the first country to launch their sovereign Blue Bonds to raise capital from investors to fund their marine and ocean-based projects. Blue Economy can act a backbone to India’s “Aatma Nirbhar Bharat” campaign and catalyze its socio-economic growth.
Article submitted by: Sumit Saurav (PGDM BDA 20-22)
Back to table of content 20 | P a g e
Stay updated for more Contact us: Send us your feedback at: sofia@gim.ac.in
For suggestions/Articles, mail us at:
Amir Hossain Dhanshree Bhale Harshit Jain Heeral Rawal Mitanshu Garg Mukul Gupta Nancy Srivastava Ritwit Singh Subhadeep Chakraborty Vishnu Annamraju
Mob- 9732209941 Mob- 9993885316 Mob- 8982108968 Mob- 7992325944 Mob- 8146048831 Mob- 9560213970 Mob-9621027587 Mob- 9637063418 Mob- 8372816101 Mob- 9866876127
Email - amir.hossain20@gim.ac.in Email - dhanshree.bhale20@gim.ac.in Email - harshit.jain20h@gim.ac.in Email - heeral.rawal20@gim.ac.in Email - mitanshu.garg20@gim.ac.in Email - mukul.gupta20bifs@gim.ac.in Email - nancy.srivastava20bifs@gim.ac.in Email- ritwit.singh20@gim.ac.in Email - subhadeep.chakraborty20@gim.ac.in Email - vishnu.annamraju20bifs@gim.ac.in
Back to table of content 21 | P a g e