201st edition by The IBS Times

A Step to make DEMONETIZATION - A Boon Or Bane Con-User , a - Noel Mathew Consumer - Gagan kapoor

NARENDRA MODI - Prime Minister

on Flight Mode - Kartik Grover

Maharaja Makeover -Tanay Sood

GST on luxuries: Set to burn a hole in the pocket or not? -Nishika Tatiya (Cover Story)

Team IBS Times Shilpam Dubey (Editor in Chief) Sneha Tibrewal (Managing Editor) Antra Bharti DEBANJAN PAUL DIXITA REDDY GAGAN KAPOOR RADHIKA GUPTA SHREYA RANI SMRITI PATODIA SRUJANA NAIK UTSAV CHANGOIWALA Aarushi Jandrotia Aishwarya Siram Amit Shovan Mandal Ayush Thalia Ishaan Sengupta Kartik Grover Naman Shah Nishika Tatiya Noel Mathew Sambhav Jain Srivatsasa Sripujitha Tanay Sood Designed By : Gagan Kapoor & Sneha Tibrewal 2

Too many Disclosures.. Once upon a time in India, inflation used to be exaggerated because of ever-increasing price of pulses. Currently, it's not too different, except for the fact that instead of inflation being exaggerated, it's the disinflation! Cause still remains the same. When we remove the prices of pulses and vegetables from the headline inflation, it’s hovering around 3.78%, not as low. Then why so much ado about reducing rates? Similarly, we are witnessing exaggerated sentiments about demonetization as well. Whether it’s a failure or not, who decides? Air India’s privatization move topped the headlines, but the core of the discussion, whether or not PSUs be privatized, still continues. And why shouldn’t it be? The top 12 defaulters, who contribute to 25% to total NPAs are not government-owned companies. There is no policy right now, whether fiscal or monetary, for whom we are able to seek closure. As these disclosures continue, we cover, in our 201st edition, all these issues and a lot more.. Shilpam Dubey Team IBS Times

COVER STORY - GST on LUXURIES : Set to burn a hole in the pocket or not?

09 12

DEMONETIZATION - A Boon Or Bane NARENDRA MODI- Prime Minister on Flight Mode

15 18 22

MAHARAJA MAKEOVER BANKRUPTCY Proceedings Of Top 12 Defaulters INDIA is an AGRICULTURAL COUNTRY : How justified this Statement is in current scenario? MONETARY MIMESTONES : Inflation in May, June and Subsequent Monetary Policies

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How Will GST Cost Your EVERYDAY LIFE?

A Step To Make CON-USER, A CONSUMER!

INDUSTRY ANALYSIS- Indian MINES Industry

MARKET WATCH - Emerging Trends in the MARKET

GST on LUXURIES: Set to burn a hole in the pocket or not? - Nishika Tatiya

Do deodorants, chocolate, butter, toothpaste and everyday sta tionery products co me under luxury goods? The GST Council says yes, putting all these in the highest tax bracket tha t is 28%. All these and many more ite ms o f regular usage like sha mpoo, sauce , musta rd flour, chewing gum, instant co ffees, hair dyes, shaving products will share space with items like cars, jets and air conditioners. The products which are not seen as being essential and are no t pressing in natu re and which are considered as health hazards has been slapped with a higher tax slab under GST. About 80% of the goods have been kept in 18% and below tax slabs so that the burden o f infla tionary pressure cannot be felt by the common consumers. Only 12-13% of the goods are kept under 28% tax slab. Among those which ha ve made through the 28% tax bracket are beauty and co smetic products, oral care products, room air fresheners and hair dyes. Impact on automobile sector • If you are planning to buy luxury or premium cars, then this is the right time. Cars longer than 4 me ters and an engine size above 1500 cc are classified as luxury cars. It’s not only

the premium car ma kers like Audi, Mercedes-Benz, etc. are going to get advantage of this new tax regime , but the premium models under the mass car makers will also benefit fro m the new tax structure. As the GST is implemen ted taxes will be around 4 to 12 percen tage points lower. Prior to GST the tax on su ch cars wa s abou t 52-55% . Post GST the taxes will come down to 42-45% . With the GST ra te of 28% which is the highest tax rate plus the maximum cess that is 15% will be capped on luxury cars making a total of 43%. • Small cars will be charged 1% cess after the 28% tax;; mid - sized cars will be charged 3% cess above 28% tax. So, there won’t be much impa ct of GST on small and mid - sized cars. • Motorcycles with more the 350 cc engine displacement will attract 28% tax rate plus 3% ce ss which will mean a total tax incidence of 31%. The prices of these premium motorcycles are tend to rise and are noticeable. For e xample the triumph street twin priced at Rs. 7 lakhs pre - GST has seen a hike of 15,000 in its price. But this hike is considerable for the buyers and it is unlikely that the premium segments buyers will change their decision. 6

Impact on Sin Goods • Aerated Drinks and flavoured water will also fe tch a maximum of 15% cess cap on top of 28% ta x slab. The effective tax rate would be 43%. Befo re GST aerated drinks were taxed at 23 – 24% which is a huge gap. This increase will have a negative e ffect and the farmers, retailers, distributors all will be extremely disappointed. This increment in tax rate will be harmful for the growth of beverage industry. • On pan ma sala, the cess has been capped at 135 % on top o f 28% tax rate. • Tobacco ce ss will be capped at a mixture of Rs. 4 ,170 per 1,000 sticks or 290% ad valorem. • The ce ss on cigare ttes as announced by the GST Council ranges between Rs. 485 to Rs. 792 per 1 ,000 cigarettes. Cigare ttes of length exceeding 75mm, the ce ss increased to 36% from 5%, while the specific or fixed cess remained the same. • Coal is capped with a cess of Rs. 400 per ton. Impact on C onsumer dura ble a nd home appliances • Consumer durable prices are likely to get inflated which includes air

conditioners, refrigerators, washing machines and television. The prices will go up by 4% or more. Prior to GST, the cumulative tax (excise and VAT) on this consumer durable were around 23-28% depending upon the sta te of the product. However, in cities like Mu mbai, the p rice change will be more as an additional octroi of 5% is charged on consumer goods. • Home appliances like mixers, juicers, toasters, electric irons, e tc. will also get more expensive as these come under the 28% ta x bracke t. The price s of these home appliances are considered to be the highest post GST co mpared to the world Impact on Electrical equipment The prices for the electrical machinery a re going to stay neutral for the end consumer as the tax levied under the previous taxation policy was also around 28%. Although the manu facturers using electrical machinery will benefit from the availability of input tax credit. The only machinery which is charged nil rate of tax under GST is the Handlooms which a re used in the handicraft industry Impact on Luxury brands • Almost all luxury brands from Audi to watch brands like Rado, Chopard , ti tan to such retail brands like Ji mmy Choo and Burberry were on sale prior the implementation of GST. Brands like Ferragamo went on sale earlier than expected. Gucci also held a preview sale for selected clients. As usual this time of the year is the sale season so last year too there was usual sale going on with discounts ranging from 30 – 35%. But the reason for sale this 7

year is GST and the discounts and o ffers are more . Bu t some brands wen t on sale before the expected dates due to GST. • Luxury wa tches brands like Chopard;; Rado started offering discounts one week prior to the implemen tation of GST. Ethos, which sells Rolex and Dior watches in India, had run a sale on 1500 watches prior implemen tation of GST. As the prices will shoot up a fter the GST, so the distributors o f watch brand are even ready to give 50% discounts so the consumer demand in this se ctor is not dampened. There fore, they are willing to lower their margin by 8 – 10% so as to keep the prices intact. So for the consumers this is the right time to buy the branded imported watch as the discounts will be a t its peak. Luxury watches are being sold at steep discounts on online portals as well. Gold coins were also being sold at the pre-GST prices at the portals.

to 25%. The reason behind this action is the sudden decline in the prices o f SUVs which is making luxury items cheaper, and therefore eroding the government’s revenue. So the council wants to readjust the cess on premium cars. Conclusion For most o f the items under the luxury tax slab, excep t for wa tches and cars, rates are almost the same a s pre-GST. There would not be much impact. Most o f the companies would gain from supply chain efficiency in this tax regime. Luxury watches will cost more while buyers for luxury cars will benefit most as long as the cess is not increased . As we see the impact of GST on service s can be positive as well as negative . Now the question arises whe ther investment in luxury goods and se rvices a fter implementation of GST will be the choice of investor or not.

Impact on services • Accommodation in hotels including 5 star and above rated hotels, guesthouses o r o ther commercial places meant for residential purposes, where room ren t is above Rs. 7,500 will be charged at 28%. • Entertainmen t events like access to amusement parks, water parks, cinema, movie festivals, casinos, race – course, any sporting event such as IPL and the like will be charged GST at 28%. In the meeting which wa s held on 5 th August2017, GST council plans to increase the ce ss for luxury cars and sports u tility vehicles (SU Vs) from current 15% the maximum ceiling of cess leviable 8

DEMONETIZATION - A Boon Or Bane - Noel Mathew Demonetization, was i t a boon or bane? This is a question tha t we need to think upon. It’s been ten months since the government has introduced the plan which surprised the whole country. Let’s look into the past where it all started. November 8 , 2016 is an historical da te which will be remembered for long. It’s the day when the country came to stand still. On November 8 2016 at 12 in the midnight Prime Minister Narendra Modi executed a surgical a ttack on the Indian economy by implemen ting a ban on INR 1000 and INR 500 notes which were the highly valued currencies then and that people were given the opportunity to exchange the old currencies wi th the newly developed INR 2000 and INR 500 currencies until the end o f the year .About 80% of the Indian currencies were of RS.1000 and Rs.500 denominations during demonetization. Here in this article we will look at the objectives, pros and cons of demonetization. Many debates and opinions had been held over this move .Anyway demonetization left a huge mark on Indian economy irre spective of its success or failure. The main objective of the government was to fight back menace of black money. About 5 lakh crores of

money, out o f demonetized 15 .4 lakh crores was expected to be restrained through this move. The government also focused on reducing flow o f terror funds .The plan was to leave terrorist and naxalites cashless and thus reduce the terror a ttacks. Another objective o f this was to a chieve lower rate o f in terest by capturing all the unaccoun ted money and thereby resulting in higher growth rate. The long vision of this move ment was to make India a cashless economy, an economy which is completely digitalized. Were these objective s achieved? Let’s have a look at it. About 90% of the old currencies we re deposited back into bank till 28th December 2016.That is about 14 lakh crores were returned which means the government has made a pro fit o f only 1 .4 lakh crore which was much lower than expected. Apart fro m the profi t made , the government has succeeded in keeping a track on money deposited by ea ch individual into their bank a ccounts, which will help in substantial increase in tax revenue as people are forced to reveal an increased income to ma tch their deposited amounts. This lead to mo re amount being deposited in Sa vings and Current account o f commercial banks 9

moreover this increase in liquidity position of banks will be utilised further for lending purposes. De monetization helped in reducing naxalism as hundreds of naxalists surrendered post demonetization. They were left with no money to bu y food , weapons and other materials. Terrorist activities in Jammu and Kashmir go t reduced by o ver 60% during this period and hawala operations have taken a big hit. There was a massive inflow of funds to government entities as many people were forced to repay their taxes, loans and o ther a rrears. The total number of re turns filed as on August 2017 stands a t over 2.82 cro re compared to 2 .26 cro re filed during corresponding period of 2016-17. This resulted in higher supply o f money in the market which in turn is expected to increase the demand and supply of commodities. Several raids were carried out by the IT department during this period and about 3000 crores in cash has been recovered. The main positive aspect of this movement is the increase in digital push. Several people turned into digital transactions as they were running short of liquid currencies. It created an opportunity among people to know about the digital banking systems. Several E wallets and apps came up during this period to make the money transactions easier. Moreover the number of ATMs which doubled during 2012 and 2015 has hardly shown any growth in the past six months. The number of debit card transactions on ATMs has decreased to an average of 660 million a month from over 750 million before demonetisation. This shows an increase in digital awareness among the

people. Prices of various sectors were also affected through this movemen t. Real Esta te sector wa s one a mong them. Prices of land and property fell down largely as most o f the transactions were cash based ra ther than based on bank transfer or cheque transactions. There was an e ffect on price in consumer goods sector a s well. Prices in this sector fell down marginally due to moderation in demand as more of card and cheque transactions were done for the purchases. But the country has gone through some tough phases to attain all these . Now we will look at some of the challenges and drawbacks of this movement. The main drawback of demonetisa tion was the chaos and frenzy i t crea ted among co mmon people. People rushed to the banks to ge t the currencies exchanged while inadequate supply of notes in banks a ffe cted the day to day budget of the people. Banks and ATMs witnessed long ques as people were in need of money. The situation of people in rural areas was even worse as there were limited banks and ATMs in their vicinity. People and business firms find it difficult get changes for the bigger denomination INR2000 due to insufficiency of smaller denomination notes of INR 500 and INR 100 . Many problems were faced by lower business groups (like shops), because the sales have suffered due to de monetization. The poor daily wage workers were left with no job and income as owners were unable to pay them. The livelihood for these labourers has co me to a standstill. Their pending dues and rising cash 10

crunch have forced them to go back to their respective native places. Demonetization has affe cted so me business activities as well. Clothing business was one among them. It was hit badly despite it being a wedding season. Lot o f working hours were skipped by people to deposit and withdraw ca sh from the bank which resulted in loss o f man hours.

what dete rmines the effectiveness o f the change. So time will provide the opportunity to determine whether demonetization is a boon or bane.

NRIs were another se t o f people who got affected by this. They had to rush back to India to get the currencies exchanged. Moreover some had lost their beloved ones, their valuable time and many people were forced to live without food for few days. De monetization has affected the markets badly. Indian stock ma rkets saw a heavy fall after the historic decision. Foreign and Indian investors find it reluctant to invest in Indian ma rkets after this. Conclusion: Though it had undergone many challenges and drawbacks, on a detail thinking demonetization was a mu ch needed step. It will create a posi tive impact on Indian economy in a long run. People got to know about the value of money in this short span . The increase in the number o f online transactions and payments are the proof tha t India will turn into a digital economy sooner or later, but there always exist a question tha t how successful was the execu tion of this bold move. Demonetiza tion played various roles in everyoneâ&#x20AC;&#x2122;s life , for some it doesnâ&#x20AC;&#x2122;t affected much bu t for so me o thers it had bought their life to stand still. Changes are always hard to accept, but time is 11

NARENDRA MODI- Prime Minister on Flight Mode - Kartik Grover Narendra Damodardas Modi a politician who has withstood wi th resilience and courage, a politician who has been named as Na Mo in his 2014 Lok Sabha campaigns, he who has been in Ti me’s ‘most influential people’ list with other dignitaries such as U S President Donald Trump , Russian President Vladamir Pu tin and British Prime Minister Theresa May. Since Narendra Modi’s win in Lok Sabha elections in 2014, he ha s been with the people of India round the clock. He is the first Prime Minister who gets connected with people through social ne tworking such as Twitter. His Cabinet Minister su ch as Exte rnal Affairs Ministe r Sush ma Swaraj and Railway Minister Sure sh Prabhu resolves people’s daily issues through Twitter. After assuming o ffice in June 2014, Pri me Minister Narendra Modi has visi ted several countries in a bid to hard sell his Governmen t’s ‘Make in India’ campaign and to boost bilateral ties. His recen t visit to the United States on 24th June to 26th June focused more on stra tegic ties wi th eradicating radical Islamic Terro rism. During his meeting with his counterpart the US Pre sident Donald Trump marked 70 years of Diplomatic Relations be tween Indian and the United States. President

Trump and Prime Minister Modi expressed confidence tha t the United States and India will provide strong leadership to address Global Threats and build prosperity for their citizens. Applauding the entrepreneurship and innovation of Indians and Indian- Americans tha t have directly benefitted both na tions, President Tru mp welco med India’s formal en try in to In ternational Expedited Traveler Initiative in order to facilitate closer business and educational ties a mongst the citizens. This came as an appreciation after President Tru mp signs executive order on H1B visa review which came as a shock to many Indian IT professionals in America . The Uni ted States continues to remove barriers to energy development and investment to U.S. energy exports so that more na tural gas, coal, renewable resources and technologies are available to increa se India’s economic growth . Both the dignitaries looked forward to conclusion of contractual agree ment be tween Westinghouse Electric Company and Nuclear Power Corporation o f India fo r six nuclear reactors in India. Prime Minister Narendra Modi’s next visit was Israel, a nation which helped India in 12

time o f war and making their first move as a friendly counterpart. Prime Minister Modi made histo ry by becoming the first Indian Prime Minister to visit Israel. India- Israel ties a re a marriage made in heaven, practiced on earth . Israel Pri me Minister Benjamin Ne tanyahu has u sed this phrase to describe Israel’s relationship with another country. “Indian talent time s Israeli technology. It equals Israel-India's ties for tomorrow .” Given the unique nature of this bilateral relationship and of the imminent visi t, a paradigmatic shift remains a possibility. During Prime Minister Modi’s three-day visit beginning July 4 ,2017 many Memorandum of Understandings (MoUs) were signed between two nations. MoUs were between Department of Science and Technology, India and National Technological Innovation, which targe ted innovation techniques in the field of Automation and Technology. MoU between the Ministry of Wa ter and Sanitation of India and the Ministry of National Infrastructure , Energy and Water Resources of Israel on National Campaign for Water Conservation in India. MoU between the Indian Spa ce Research Organization (ISR O) of Republic of India and the Israel Spa ce Agency (ISA) of Israel regarding cooperation in Geosynchronous Earth Orbit-Low Earth Orbit Op tical Link fibres and requires space validation for wider acceptance. MoU between the Indian Space Research Organization (ISRO) and the Israel Space Agency (ISA) regarding cooperation in Electric Propulsion for Small Satellites. MoU between U.P. Jal Nigam, Governmen t of Uttar Pradesh, of the Republic of India

and the Ministry of National Infra structure, Energy and Water Resources of the Sta te of Israel on Sta te Wa ter Utility Reform in India. Prime Minister Modi and Israeli PM Netanyahu me t young Moshe, the boy who survived the 26/11 Mumbai terror attack. Shri Modi also met young Moshe's maternal and paternal grandparents and Ms. Sandra Solomon, his nanny. Prime Ministe r Narendra Modi on June 03, 2016 landed on Afghanistan soil to inaugurate Afghan-India Friendship Dam which was execu ted by WAPC OS Ltd . a Governmen t of India Undertaking under ministry o f Wate r Resources, River Development and Ganga Rejuvenation. Afghan-India Friendship Dam is a Multipurpose project planned for generating 42 Mega Watt of power, irrigating 80000 hecta res of land, and other non-mone tary benefits to the people of Afghanistan . Salma Dam is a landmark infrastructure project undertaken by Governmen t of India on river Chist-e- Sharif, in Herat province of Afghanistan. Due to some con fidential reasons, Indian engineers and te chnicians involved wi th the project have been reaching the si te once in a month by helicopter service provided by Govern ment of Afghanistan amid security. All equipment and material were transported from India to Bander-e- Abbas port of Iran via sea and then along 1250 kms by road from there to Islam Kila border post a t Iran-Afghanistan border and then further 350 km b y road from the border post to the site . Cement, steel reinforcement, explosives e tc. we re imported to Afghanistan from neighboring countries. The gro ss capacity o f the Dam is 633 Million M3.

The last of a series o f major Indian infrastructure projects initiated a fter the Taliban regime was evicted in 2001, the Salma Dam is expected to help Afghanistan capitalize on opportuni ties that will open up once the Chabahar project, linking the port in Iran to Cen tral Asia’s road and railway networks, is completed. This port will act as bypass for India from Pakistan in transportation of goods to Afghanistan. Curren tly Pakistan does not give permission to India for its goods transportation but allowed Afghan shipments to enter India. India’s public- sector Wa ter and Power Consulting Corporation – which, interestingly, was born after Afghanistan requested New Delhi’s expertise for hydroelectric projects in 1968 – will continue to remain involved in the project for a t least three mo re years, a s local engineering staffs a re trained to manage the project. Being a Prime Minister who sleeps for around 4 hours a day and is equally energetic fro m morning till night micro- managing the cabinet with all ease , do you think Prime Minister Modi’s international visits so far has substantiated? Do you think Mr. Narendra Modi can transform our developing nation to a developed nation?

MAHARAJA MAKEOVER

- Tanay Sood The iconic masco t laid down for the Maharaja: eyes always closed, head always covered , and feet always o ff the ground, but looks like Maharaja’s feet never got o ff the ground. After independence, the govern ment acquired a 49 % stake in the airline. India might have got independence but Air India never got its freedom to fly and was always trapped in the administration of corrupt bureaucrats. Air India has always been in the news, especially in nega tive segment whe ther it is for passenger dissatisfaction, delay in flight schedules due to high pro file individuals using the national carrier as their private taxis and unprofessional behaviour just adds up to their complaint box. Would you believe if said, Air India did show profits between 1991- 1994 and made a reco rd profi t o f INR 333 Cr. in 1992- 1993.National carrier books of accounts at present show s To tal Debt of INR 55,000 C r. and working capital debt INR 33,000 Cr. with annual interest ou tgo of INR 45 ,000 Cr. that is about 21% of total turnover. Carrier is running on INR 30,231Cr. bailout approved in 2012, and additional INR 22 ,000 Cr. bailout was provided by the governmen t. This bailout amount (Public Money) is a perfect

example of how a go vernment fails to meet its public expenditure targets and lacks in the administra tion of allocations of funds for the development of the nation. Airline management is also responsible to a great e xtent, till date retired e mployees o f AI ge ts free Domestic and International tickets e ven for their families and on the contrary, they are the highest salaried employee surprising higher than Emirates Airlines employee. Rather these funds could be used for some productive public welfare or could help the Na tional carrier to develop and expand their aviation business. A government job is not of an airline operator. The govern ment is supposed to run the coun try and not airlines into the ground. Air India used to be a jewel in our crown until it has been muddied and rubbed into the ground. From several years Air India has been u sed as a ginny pig and has been used to pamper the politicians and bureaucrats. It has been misused and abused. Chairman has been political appointments. So, the convection and conten tion should be to get back Air India its pride of place. India is expected to become the third 15

to manage the airline which has been proved in the last 20 years. Have you ever heard your broker or portfolio manager asking to inve st or buy stocks of Air India, the answer is very straight forward ‘No’ as it is a governmen t co mpany and the stakeholders never fel t the need to come out o f their co mfort zone as there were assured of returns and knew the government would keep bailing them out with public money. Now imagine if the Air India was actually listed on the exchange it would have generated funds due to high liquidity investment options and benefited the govern ment in expanding their operations, fine example would be the So is priva tization the only way to private players su ch as Jet Airways who preserve our national carrier. The have partnered with Etihad Airways, and government has made numerous Lost Co st Carrier (LCC) SpiceJe t and attemp ts in search of prospective buyers Indigo Airways who are always striving to for the debt-ridden carrier bu t did not capture the market share by either succeed. The first attempt wa s made in introducing more destinations or the year 2001 and now again on 28 June connecting Tier 2 and religious hubs with 2017, the Union Cabinet has given ‘in- rest o f the country. In today’s highly principle’ nod for the Air India competitive edge cutting global disinvestment along with its five o f its economies, profi t and wealth maximization subsidiaries MRO (Maintenance, Repairs, is prime mo tive o f every business. Private and Opera tions) units. This decision players would prove to be more frui tful for comes a fter N ITI Aayog had the success and life of Air India as they recommended the strategic disinvestment would bring down the operating costs and of the loss- making airline Air India, and to would ensure the effective management of allocate more funds for economic and capital costs in the short and long run. If social welfare. However, the big buck the governmen t is serious about here is, will the government do its privatization they should first wri te o ff the homework and learn from their past airline’s debt and convert the company’s mistakes and brain stormed upon the assets into equity. Wi th its subsidiaries and strategies they want to i mplement to sell hospitality business, the go vernment can the airline which at present stands a t INR write off the debts to a grea t exten t by 55,000 Cr. in debt. selling prime properties located in Mumbai, New Delhi, London, Hong Kong, Nairobi, It’s not about we love Air India less, we Japan, and Mauritius. love India more , and in order for India to have a grea t airline, we need to divest in Disinvestment is a good move by the the airline, as the governmen t is not able government, but they have to ensure all largest aviation marke t by 2020 and is expected to be the largest b y 2030. Witnessing a growth o f 17.62 per cent over the pre vious year, to tal passenger traffic stood at a 223.6 million in FY16, which was recorded at 190.1 mm in FY15 in India.

the loopholes are strategically fixed for the airline and can be expected to co me few inches closer to b reakeven point and prospective buyers are inclined towards the national carrier buy-out proposal . The argument still remains in the house, should government sell their en tire sta ke or only a part o f it. InterGlobe Aviation Ltd, running Indigo Airlines, which is the current leader by market share in the Indian aviation has shown a keen interest in buying a stake in Air India to the e xtent of their Interna tional routes and its profitable low-cost Air India express. The second bidder might be Ta ta Group in partnership with Singapore Airlines. Ta ta group has already entered the India skies via Air Asia and Vistara. Tata Group may seem to be a perfect buyer as their intentions on business is not to ma ke money but to grow and expand the business. The government would soon float a request proposal fo r the selection of industry experts plus transa ction advisor, legal advisor as well as a sset valuation professional. The mystery still prevails how would the govern ment fund the humongous debt? Will common man again fall prey to it;; as we have witnessed in the past increasing ‘ta x’ value is the common weapon used to increase public administrative revenues.

BANKRUPTCY Proceedings Of Top 12 Defaulters - Srivatsasa Sripujitha Reserve bank of India identified the top 12 defaulters owing Rs.50 billion which accounts for 25% of to tal Non Performing Assets. Credit Suisse estimated that steel, textile and construction se ctors contribute Rs.2 trillion as loan. The 60% of default account holders were classified as Non Performing Assets. On 25th July 2017 Govern ment of India introduced “The Banking Regulation Bill, 2017, in Lok Sabha giving powers to Reserve bank of India to refer large defaulting companies for bankruptcy proceedings. The new bill replaces “The Banking Regulation Ordinance, 2017, promulgated by President on 4th May, 2017.The bill aims at speedy resolu tion to improve the fiscal health of the banking companies. It was considered mandatory to make provisions in Banking Regulation Act, 1949 for au thorizing the Reserve Bank of India to issue directions to any banking companies to e ffectively u se provisions of Insolvency & Bankruptcy Code, 2016. The Reserve Bank o f India has constituted an Internal Advisory Committee (IAC ), which arrived a t an objective, non-discre tionary cri terion for referring accounts for resolution under

Insolvency Ban kruptcy code (IBC), 2016.As per IBC , 2016 once the application is filed by a financial creditor under Section 7 o f IBC, and admitted by National Company Law Tribunal, a moratorium period of 180 days commences, if the company defaults then an additional period of 90 days is provided. During this moratorium period, the Inte rim Resolution professionals (IR P) ta kes operational and financial control of the defaulting entity’s board till the resolution process is complete. There are two ways o f dealing with the stressed asse ts i.e., by deb t restru cturing and converting debt to equity as stated in the article “RBI WILL N OT TOLERATE” by Shilpam Dubey. DEFAU LTER C OMPANIES AND THEIR PROCEEDINGS Bhushan Steel: Bhushan steel ltd . is one of the pro minent players in Indian Steel Industry. It is the 3r d largest producer o f steel. The debt is Rs. 44,477 Cr. in the FY 15-16. Peti tions were filed under Section 7 of the Insolvency and Bankruptcy Code (IBC) to Na tional Company Law Tribunal (NCLT) b y Sta te bank of India (SBI), a lead banker to 18

Bhushan steel. SBI filed a claim of Rs. 4,295 Cr. from Bhushan Steel. Recently JSW Steel, the Sajjan Jindal- controlled company had made an unsolicited o ffer to lenders to take around Rs. 22,000 Cr. JSW will gain 55% stake by acquiring Bhushan Steel. Insolvency proceedings are going on with the moratorium period as specified under IBC, 2016. Lenders were considering restru cturing the company’s deb t under the RBI’s Sche me for Sustainable Structuring of Stressed Assets, which allowed lenders to split the debt into su stainable and unsustainable parts. Essar Steel: Essar Steel is a fully integra ted flat carbon steel manufa cturer from iron ore to ready-to-marke t products. National Company Law Tribunal (NCLT)’s Ahmedabad bench approved the initiating bankruptcy pro ceedings of Essar Steel. Petitions were filed against Essar Steel by lenders, State Bank of India and Standard Chartered Bank. NCL T rejected Essar Steel’s con tention tha t insolvency proceedings should not be initiated against the co mpany as it had already started a deb t restructuring process wi th the company’s creditors. Ernst & Young partner Dinkar Venka tasubramanian was appointed as Interi m Review Pro fessional (IRP) to deal wi th the debt of Rs. 37 ,284 Cr. Bankruptcy proceedings are carried on as per IBC , 2016 wi th a maximum moratorium period of 270 days. JSW Steel has offered Essar steel to buy their assets as insolvency proceedings but it was suspended b y Na tional Company law Tribunal (NCLT). Sandeep Jajodi, promoter o f Essar Steel said tha t the huge financial crunch is due to drop in commodity prices, de-allocation of its

captive coal mines and huge steel imports from China. Lenders surged for the strategic debt restructuring (SDR) sche me to convert its debt to equity. Monnet Ispat: Monnet Ispat has a de-risked business portfolio tha t enco mpasses manufa cturing and marketing of Sponge Iron, Steel and Ferro Alloys. Consortium of lenders, SBI filed a petition against Monne t Ispat to NCL T for recovering its claim of R s. 1539 Cr. through bankruptcy p roceedings. Total debt o f Monnet Ispat stands a t Rs.12,115 Cr. Sumi t Binani, financial advisor a t Grant Thornton Advisory Pvt. Ltd , wa s appointed as In terim Resolution Professional to initiate the bankruptcy proceeding. Upon the initiation o f Corporate In solvency Re solution Process (CIRP), the powers of Board of directors are suspended and Interi m Review Professional shall exercise all the duties relating to bankruptcy proceedings. Electro Steel: Electro Steel is the leading manufacturer and worldwide supplier of ductile Iron Pipes and fittings. State Bank of India (SBI), initiated insolvency proceedings before NCLT started its debt recovery process for a deb t recovery of Rs. 10,273 C r. Electro Steels is restructuring its debt under Corpora te Deb t Restructu ring (CDR) and Stra tegic Deb t Restructu ring (SDR). Lenders were in talks with Tata Steel Ltd . and London based First International Group Plc to sell a majority stake in the co mpany. SDR sche me enables banks to re cover their bad loans by converting the advances in to equity and taking control of distressed companies. Alok Industries: Alok industries ltd . (firm) is the largest fully 19

integrated te xtile co mpany with dominant presence in the co tton and polyester segments. A petition was filed b y Industrial and Commerce Bank o f China (IC BC) that sought dismissal o f SBI’s petition against the firm. ICBC claims that i t has lent close to $55 mn and the case is still in pro cess as ICBC see ks the liquidation of Alok Industries. As the p rovisions we re invoking against Section 14 (1) (a) o f the Insolvency and the bankruptcy code the case of ICBC was dismissed. SBI claimed Rs.8,000 C r. as its debt where as the overall debt stands a t about R s. 20,000 Cr. Ajay Joshi has been appointed as IRP to carry on the Insolvency Proceedings. Jyothi Structures: Jyothi structure s deals with Engineering, Procurement and Construction projects in the field of Power transmission. SBI has filed a petition against Jyothi structure s to NCLT claiming the deb t re covery. The total debt is Rs. 7 ,000 C r. Lenders are trying to sell 51% of its stake bu t the attempt was vain. NCLT approved the bankrup tcy proceedings by appointing Animesh Bisht, a senior asso ciate a t law firm Cyril Amarchand Mangaldas as In terim Resolution Professional to carry on the insolvency proceedings. Jyothi Structures was hit by problems in power sector arising from the lack of fuel linkages or problems in land acquisition. ABG Shipyard: It is the largest priva te shipbuilding yard in India. IC ICI Bank approached NCLT to initiate the bankrup tcy proceedings against ABG shipyard after i t defaulted on R s. 4,500 Cr of loans. Along with IC ICI, twen ty creditors claimed Gujarat High court for winding up the company as the total debt was Rs. 6,953 Cr. NCLT admitted the

Insolvency and Bankruptcy peti tion and admitted Sundaresh Bhat, a partner a t BDO as Interim Resolution Professional to carry on the insolvency proceedings. Amtek Auto: It is one o f the world’s largest global forging and integrated ma chining companies. Corpora tion Bank and SBI’s approval has been admitted by NCLT, Chandigarh to initiate the bankruptcy proceedings against Amtek Au to which has a to tal debt o f Rs. 14 ,075 Cr. Dinkar Venkatasubramanian was appointed a s Interim Re solution Professional to undertake the bankruptcy pro ceedings. Proxy advisory firm Stakeholders Empowerment Se rvices (SES) raised concerns on the move to convert a Rs. 95 Cr. loan into shares in the company. Lanco Infratech: Lanco In fratech has been driving grow th in the domain of Engineering, Procurement and Construction (EPC), power, solar, natural resources and infrastructure. NCLT, Hyderabad approved the bankruptcy proceedings o f Lanco Infra tech which was claimed as defaulter company with a to tal debt o f Rs.44364 Cr. by IDBI Bank. Savan Godiawala was appointed as Interi m Insolvency Pro fessional to underta ke the bankruptcy proceedings. However NCL T has to approve the insolvency proceedings against it. Jaypee Infratech: Jaypee In fratech deals with constru ction activities like planned express wa y facilities, parks, shelters and toilets. NCLT, Allahabad admitted the insolvency proceedings against Jaypee Infratech . The total debt of Jaypee Infratech is Rs. 20

9,635 Cr. which the company is unable to pay ID BI. So, ID BI claimed against it to NCLT. A Chartered Accountant was appointed as an interim Insolvency Resolution Professional to carry on the Insolvency Proceedings.

Bhushan Power & Steel: It is the largest producer of auto grade steel. NCLT approved to initiate the insolvency proceedings against Bhushan Steel and Power which has a total debt Rs.37,248 C r. Peti tion was claimed against it by Punjab Na tional Bank to undertake the insolvency proceedings. IR P was appointed by NCL T to initiate the insolvency proceedings. Era Infra Engineering Ltd: It e merged as an icon in the varied verticals of in frastructure wi thin and outside India. Era Infra Engineering ltd. is yet to receive the approval from NCL T. Due to the jurisdictional proceedings the case is still pending in the Delhi High court. RBI said lenders have 6 months to finalize resolution plan for other 500 NPAâ&#x20AC;&#x2122;s and the insolvency and bankrup tcy proceedings must be initiated for the unresolved accounts. The size of the judicial system in India is small in relation to the size o f population and unable to mee t the potential demand. There are 38 odd debt recovery tribunals and five debt recovery appellate tribunals as adjudicating authorities. Increase in the number would help solve these issues a bit faster. The key is the combination o f a functional judicial syste m and a healthy credit culture.

India is an Agricultural Country: How justified this Statement is in current scenario? - Aarushi Jandrotia Brief history : In 1980, 60% of the India’s workers we re either farmers o r farmhands. Now, in 2017, the percen tage has been reduced to 55%. As the country was developing we could see the changing patterns in farming also. These changed patterns were because of several reasons;; land holdings changing pattern, shifting from light crop to ca sh crop s, push o f the Indian agricultural into the global ma rkets without a level playing field, increa se in the cost o f cultivation, uncertainty o f crop output, lack o f pro fitable prices, indebtedness avoidance by the government and its agencies, decline of public investment, individualization of agricultural operations, so on and so forth . The farmer is trapped in this vicious cycle. When the tension increases between the government and the farmers, and when the governmen t is not ready to listen to the farmers then protest comes into play. In 1988, an angry farmer leader, Mahendra Singh Tikait, fro m U ttar Pradesh, blockaded the boat club lawns with thousands of followers and their cattle, near Parliamen t. He and his the members of his Bhartiya Kisan Union were demanding higher prices for agricultural produce and waiver of water charges and electricity. At tha t ti me

India’s GDP(Gross Do mestic was 30%.

Product)

There are three phases o f post- Independence era. First, the 1950-60s which was marked by re forms and consolidation of agriculture ;; second the period of the Green Revolution and growth of political populism during the 1970s-80s;; and the third being the advent of liberalization and deterioration of farmers' condition a fter the 1990s.After Independence that the Nehruvian government ca me up wi th pro-peasant policies such as re-distribution o f land, reduction of land revenue, abolition of intermediaries and most important, greater share in political power for farming co mmunities a t the state level. However, these strategies helped farmers to an extent bu t could not help them at large. With the advent of the Green Revolution, modern me thods of cultiva tion, pri marily use of ma chinery, high-yielding varieties of seeds, fertilizers and pesticides we re emphasized. This strateg y led to increa se in agricultural productivity but had probably "unintended" consequences. The new advancement led to cultiva tion of a single crop under the pre ssure of 22

market. Now , a farmer had to draw mo re and more credit to plough the land. In addition, lack of remunera tive prices would further intensify the trouble. The fluctuation in prices and the uncertainty of the crop yield leads to the farmer distress. Current Scenario: After Three decades later, though the share of GDP o f farm sector has increased to 15%, bu t the share of workforce dependent on agricultu re has not seen any significant fall. A 2014 survey by Lokniti found that around 40% of fa rmers were dissatisfied wi th their economic condition. The figure was more than 60% in eastern India. Mo re than 70% thought ci ty life was better than village life. India’s agriculture depends 65% on rain, and more than half the population on agriculture, too little or too much rain always causes trouble. On occasions like these, accusa tions of the government o f the day being anti-farmer replace all other charges in the attacks. Something similar has happened this year, a s erratic weather has fuelled a new cycle of distress in rural India. The farmers chose the bumper crop year of 2016-2017 to pro test means they we re willing to pardon governments for drought (in 2014 and 2015), seeing them as an act of God , but now when crop prices plunged as the govern ment allowed cheap imports. India has more than 200 farmer’s organizations, in July 2017, farmers across the country had successfully put forth two of their core demands to policymakers. One of which is a loan

waiver and better price s for their harvest. And other one is tha t they want a sa y in trade policy. They believe that it is pro- consumer bias. They did so b y spilling milk and dumping vege tables on highways, or b y pre tending to consu me dead rats and soil at Delhi’s Jan tar Mantar. They question tha t why credit from moneylenders at very high ra tes is more accessible than subsidized crop loans. The prote sts were called off when the state govern ment announced loan waivers and agreed to increase the price dairy firms would have to pay them for their milk. More than half of India's population of 1.3 billion is engaged in agriculture and allied sectors, bu t their contribution to national income has been dwindling rapidly.

Over the past two de cades, thousands of indebted fa rmers have co mmitted suicide. Farme rs commit suicide and are more likely to kill the mselves because o f economic distress. Ke y drivers o f farm- related suicides are the factors like , as poverty, bankrup tcy, or fa rming-related issues (crop failures, inability to sell etc.). During the January-April period 855 cases o f farmer suicides were reported in Maharashtra and in the year-ago period1,023 cases were reported. To 23

prevent farmers from committing suicides Maharashtra Govern ment is implementing a pilot p roject. Funds o f Rs 34.19 crore in 2015-16 and Rs 12 .50 crore in 2016-17 are given to the se districts for implementa tion of the 'Baliraja Chetana Abhiyan'. How loan waiver can be he lpful for farmers? A loan waiver can help bankers to renew the loans and farmers can use the borrowed money for production o f mo re crops Since the banking industry is not able to extend credit to the de faulted farmers. A loan waiver can actually benefit the economy. In different parts of the country, di fferen t political parties has waived off loan waivers and farm loans. But Loan waivers are not the solution for the farmers in distre ss. I has no long term economic gain. It can be a relief only for one season but it is not economically viable since it reduces govt’s fiscal power to intervene when needed the most.

Loan waivers not only disrupts credit discipline of the agricultural sector, but also in other sectors across the country. Thus, loan waivers need to be carefully crafted. Impact of loan waivers in the Indian economy: Uttar Pradesh (UP), Punjab and Maharashtra—these three states have announced large-scale farm debt waivers which amoun ts to around Rs77,000 crore which is 0.5% o f India’s 2016-17 GDP. Bu t if all the states for farm loan waiver then the to tal waiver will amount to Rs6 .3 trillion tha t is around 4% of the GDP. This can lead to de flation will be there will hit GDP by 0.7% . Real interest will be high too a t 4 .7%. The aggregate demand will be affected in four ways by the waivers: impact on private consumption via increases in private sector net wealth, impact on the public sector via changes in government e xpenditure or ta xes, crowding out impact via higher borrowings by sta te govern ments bonds crowding in impact via higher credit availability as bank NPAs fall.

MONETARY MIMESTONES : Inflation in May, June and Subsequent Monetary Policies - Ishaan Sengupta Monetary policy in India has been in the news since the new Governor took o ffice. While the economy in general took a huge ‘confidence’ loss in the form of Raghuram Rajan’s resignation, the economic indicators see m to be normalizing and improving at a steady pace (owing to both domestic and international factors). Bu t perhaps the most ‘pleasing’ of all indices is the plunging inflation rate. The consumer price index has dropped to a 5-year low of 1.54% as opposed to 2.18% in May. This has not only taken the ma rket by surprise, but also shocked the Monetary Policy Committee of the RBI as well. Wha t is to be inferred and what lies ahead seems to be the question on everyone’s mind. He re is a small snippet of what is happening in the economy and what are the tenta tive steps that the RBI is taking to address them. Low Inflation. What are the reasons? It is important to understand that there a re significant economic changes that d rive the inflation rate of any coun try. There a re countries like Zimbabwe and Venezuela which have wi tnessed more than 100% inflation within the past two decades, enough to ruin the whole economy. On the contra ry, in India, we are currently witnessing the opposite of a cost-push

inflation (A coun try experiencing a cost- push inflation, su ffers from rising input or intermediate good prices, which in tu rn reduces supply of final goods – finally increasing prices). In India, we are currently seeing a fall in food price s - pulses, rice and millet prices. The minimum support p rice is not high enough to crea te inflation in the market, and food inputs (to be processed fo r final retail) remain low priced. The monsoon in the previous sowing season was appropriate for food buffers hence there hasn’ t been a situation regarding excess demand. This fall in food prices has been consistent. Farmers are preferring to g row cash crops (which sells for a higher p rice in the market), instead of food crops. This year’s kharif crops sowing data has revealed that while rice planta tion has increased by 2.4% and pulses plantation has increased by 7%, these numbers a re nowhere close to the 21% hike in cotton plantation and 8 .7% hike in sugarcane plantation since last year. Along with agricultural inputs, the price of manufacturing inputs also fell – reducing cost of production in all major sectors – owing to the plunging trends of crude oil prices, all the wa y fro m March to June – trading as low as 45$ per barrell. 25

Will it be as low in the middle run? It is cri tical that we have discussed food prices above, given future expecta tions are tha t the inflation rate will rise in the middle run. This is clearly because of fiscal policies ta ken by the current dispensation, and it is quite evident that the numbers would see a t least a 2% increase if not more, over a 6-Âmon th interval. The reasons for the sa me include mammo th initiatives like the Goods and Services Ta x, In crease in Wages in accordance to the 7th pa y commission and finally the possible increase in agricultural wages/minimum support price, as expected by the MPC . The GST is likely to increase retail prices o f many luxury goods, while the 7th pay commission and MSP are likely to increase real income of the con sumer, creating a situa tion of a demand-Âpull inflation (when exce ss demand increases prices) in the medium run.

rates, the RBI too k a cautious stand. The MPC had been in consensus and reports from Ma y, June and July suggest that all the members including the RBI Governor agreed with the fact that the in flation rate was likely to increase due to apprehensions mentioned above.

It is even more important to consider the fact that, since sowing of food crops ha ve been less this Kharif sea son, there would be a limited supply o f the same when these sa me crops are reaped. Coming to oil prices, we are currently seeing an upsurge even up to a high of 52$ (because of reduction in the stockpile of oil barrels in the US).

The economy decoded Every time a new variable enters the model, the erstwhile predictions turns on its head . A simple reduction in inflation leads to subsequent actions that affect the inflation rate a s well as other economic variables. The RBI has made it extremely clear that its MPC is taking a cautious stance when carrying out aggressive mone tary policies. Given that a minute repo rate change can have a strong effect on the economy in the long run, and that all these monetary policies are a result of a dispari ty or a disequilibrium in infla tion, i t is quite evident tha t Monetary Policy in India will be a talking point given its importance in keeping the whole economy in check. That is what the RBI is there for.

The RBI and its decis ion to cut the repo rate. As wa s expected , the RBI had enough leeway to cu t the repo rate by a cau tious 25 points as opposed to 50 points which was expected by many analysts. It was last October when the RBI had cu t the repo rate by 25 basis points, especially when the CPI was above 5%. However, despite the progre ssive fall in inflation

Given, tha t the repo ra te was cu t, money supply in the e conomy increases, hence the purchasing power of people. There will be a high demand for goods and therefore prices will be up. Commercial banks would try to decrease loan in terest rates to disse minate the increased money supply by the R BI. SBI followed suit by reducing their savings ra te, and similarly other banks might do the same . This in turn will promp t people to either keep their money in cash or invest in securities (unlikely). Demand will increase for goods which will increase the inflation rate in the market substantially.

How Will GST Cost Your Everyday Life? - Aishwarya Siram GST is a comprehensive, mul ti-stage, destination-based consu mption tax levied at every stage of value addition in the lifecycle of a product.

common man, with the proposed rates being: 5%,12%, 18% , 28% (+luxury cess). Tax rates before and after GST :

Reason for GST : Since August 2016, when the 122nd Amendment (GST Constitu tional Bill) was passed by the Rajya Sabha, India has been preparing to change the way it pays taxes. The new law that is billed as independent India’s biggest reform initiative is expected to increa se government revenue, improve compliance rates and crea te a common national market by consolidating a web of local and central taxes into a single levy. However, while the much-awaited GST regime has been implemen ted on July 1, 2017, the speculations and co mplex terminology around this intricate tax reform has left citizens worried about what it means for their pockets. GST appears to be a mixed bag wi th certain necessities getting cheaper, while the o thers are likely to disturb household budgets by ge tting more expensive. Also, the GST ra tes will depend on whether the commodity is used by a rich person or a

However, GST is fo r the benefit of the economy at large. Hence it has bo th merits and de-merits depending on the product and the class of citizenship.

Things that may become cheaper:

Things that may become costlier:

• Fans, air coolers, lighting, water heaters, compute r monito rs, printers and other entry-level electronic items. • FMC G goods such a s soaps, hair oil, toothpastes, over-the-counter drugs etc. • Pharma products, includes Insulin. • Processed food items, Biscuits. • Ready-made clothes, including branded apparel ( up to Rs 1,000). • Footwear (those priced below Rs 500 will attract 5 % and those priced above Rs 500 will be taxed at 18 %). • Movie tickets priced up to ₹100 (will be taxed at 18%). • Two-wheelers. • Cement, paint and other forms of construction material. • Solar panels, Point of Sale (PoS) machines and fingerprint scanners. • Economy class airfares. • Budget ho tels and restaurants (Currently, 22 % is levied on hotels and restaurants). • Cab rides (Currently, the effective rate of service tax is 6 % which will get reduced to 5 %). • Kerosene, coal, domestic LPG. • SUVs and luxury cars (Currently, they attract an overall incidence of above 50 %, which would come down to 43 %)

• High-end hotels with Rs 5,000 plus tariff and restaurants that serve liquor. • Appliances like air conditioners, television, fridge, va cuum cleaner, dishwasher and washing machines. • Mobile bills and internet packs. • Jewellery and high-end accessories. • Rail transportation, air travel and rent-a-cab services. • DTH, Wi-Fi , cable TV and courier services. • Small and medium sized cars (diesel as well as petrol). • Tobacco/Cigarettes, Pan Masala, Aerated drinks. • Luxury personal care products like deodorants, perfu mes, sha mpoos, shaving creams, hair dyes. • Insurance premiums, banking charges and school fees. • Online Shopping (however, this is expected to be balanced by lower costs of logistics and smoother inter-sta te transport because of a uniform tax rate). • Movie tickets priced ₹100 or more (will be taxed at 28%). • Gold and gold jewellery (will increase to 3 % tax ra te. Currently, most sta tes levy 1 % VAT on gold (excep t in Kerala, where VAT is 5 % ) and the central government imposes 1 % excise duty on it.

Reason: For manufactured consumer goods, the current tax regime means the consumer pays approxi mately 24%-26% more than the cost of production due to VAT (value added tax) and excise du ty. So with the GST rate expected to be 18% for mo st goods, they are expected to become cheaper.

Reason: The e ffective service tax rate at present is 15% and it applies to almost all services (e xcept essential ones such as ambulance 28

services, cultural activities, sports events and certain pilgrimages). Under GST, this rate will increase to 18% thus making services more expensive. Also, luxury goods and service s ha ve been pegged at higher ra te (along with an additional cess), with the rationale being that those who can affo rd luxury can afford taxes too. Tax free Items - There won’t be any tax (0% tax) on almost 50 % o f i tems in the Consumer Price Index baske t, including food grains, eggs, meat, milk, curd, sal t, bread, fruits, vegetables, essen tial medicines, prasad, stamps, judicial papers, printed books, newspapers, bangles, silk and jute textiles etc. Services like religious/pilgrimage travels, Haj yatra, me tro travel, educa tion and healthcare will also not be taxed. Good news for tra velers as hotels with tariff below Rs 1,000 have also been exemp ted from GST. They are many pro s and cons of GST. However, the most i mportant factor to be considered is how it would effect a normal day to day household living. How GST will impact y our house hold budget? Automobiles: The price difference will be bigger for SUVs (55% to 43%) compared to small cars (30% to 29%). Life Insurance: While premium o f term plans and non-life policies are taxed, only charges (mortality and AMC charges, e tc) in other life.

policies attract GST . Ex- Base price : Rs 15 ,000 ;; To tal taxes now* : Rs 2,250 ;; Under GST : Rs 2,700 Gold Ornaments: Making charges Rs 10,000 The yellow metal will become dearer as there will be 3% GST on gold and 5% on making charges. Hotel stay: If you se ttle for a room tha t co sts less than Rs 1,000, there will be no GST to pay. Then i t rises progressively. An ything above Rs 5,000 will attract 28%. Refine d cooking oil: Hair oil prices will stay high due to 18% GST. But coconut oil being refined cooking oil, will be ta xed at 5%. Train travel: AC coaches : While those travelling by local trains or in sleeper class are no t a ffe cted, first-class and AC compartment travelers will pay more. Apparel: Rea dymade : Due to industry pressure, GST on garments p riced below Rs 1,000 has been brought down from 12% to 5%. Thus, GST has a varied impact on citizens of the country. Conclusions of how GST would affect the economy a t large has to be analyzed after few mon ths of functioning of the uniform tax syste m in the nation.

A Step To Make Con-User, A Consumer! - Gagan Kapoor “A Satisfied customer is the best business strategy of all” – Michael Leboeuf A consu mer for one is a seller for someone else and we have observed that consumer grievance s are always there in the market. Ranging from a small pencil to a BMW, there are always few consumers dissatisfied with the service provided by a firm. Good companies hear the grievances of their cu stomers and grea t companies act upon them but in business is i t always possible to behave in a way, the cu stomer wants you to or a company actually behaves like it is supposed to? There is always an opportunity cost between retaining a customer and satisfying him and most o f the ti mes, the lack of ve rtical flow o f communication within an organization hides the consumer complaints and grievances in middle of nowhere. Every na tion works in the interest o f the public and every nation have i ts own Consumer prote ction act to pro tect the interest of consumer and to preven t any unfair practice against the con sumer. India developed its Consu mer Protection Act in 1986 and has continuously

amended it according to the changing needs and de mands. So me Major Amendments were made in the years 2002, 2005 2009 & 2011 and the bill is again in news for developing changes after the launch o f GST all over India. To follow up with the expected changes, I would like you to go through the brie f of Consumer Protection Act 1986 given below - Consumer Protection Act, 1986 The Consumer Protection Act, 1986 was authorized to give a less difficult and speedier access to review o f consumer grievances. The Act tries to advance and secures the enthusiasm o f customers against insufficiencies and deformities in products or ad ministrations. It additionally looks to se cure the p rivileges of a buyer against unreasonable exchange rehearses, which might be honed by producers and dealers. The set-up of con sumer forum is adapted to give alleviation to the two parties, and debilitate long suit. In a procedure called 'informal adjudication', forum authori ties 30

intervene between the two parties and urge bargain. The Act applies to all products and ventures unless particularly exempted by the Central Governmen t. It covers every one of the divisions whether private , open or agreeable. This Act has given appara tus whereby buyers can record their grievances which will be heard b y the consumer discussions wi th e xtraordinary powers so move can be made against blundering providers and the conceivable remuneration might be gran ted to purchaser for the hardships he has experienced. The consumer under this law is not required to store colossal court charges, which prior used to hinder custo mers from moving toward the courts. The rigors of court techniques have been supplanted with basic methodology when con trasted with the typical courts, which helps in faster redressal of grievances. The arrangements of the Act a re compensatory in nature. If you don't mind recall, custo mer courts give review just in instan ces o f items or administrations for individual utilize, abandons in items utilized for business reasons for existing are not engaged. Essentia l include:

priv ile ges

cons umers

• Right to be secured against advertising of products and enterprises which are dangerous to life and property. • Right to be educated about the quality,

• amount, standard and cost of merchandise or administra tions to ensure the buyer against out of line exchange rehearses. • Right to be guaranteed, wherever conceivable, access to assortment of products and ven tures at aggressive costs. • Right to be heard and to be guaranteed tha t consumer’s interests will get due thought at fitting gatherings. • Ideal to look for redressal against uncalled for exchange rehearses. • Right to consumer education. Need for C onsumer Protection Act 2017 When worldwide economy is decelerating, and Indian economy, its cash and markets are in a light inclination, there is a need to answer the call of custo mers for a fast and dynamic grievance redressal framework. The y need organizations and associations, governmen t and in addition non-government, not to underestimate them any mo re. The Consumer Pro tection Act, 1986, corrected thrice , has fizzled them. Sure consu mers do relax their satchel strings and spend all the more, accordingly additionally revving up economy. The new Bill proposes a viable Central Consumer Protection Au thority to take up their cases on claim or suo mo tu. The requiremen t for such a law has never been felt so intensely a s now. Individuals are progressively falling prey to here now gone again later 31

administrators, ML M organizations, ponzi plans, false administrations and so forth. More prominent consumer security additionally expect hugeness in the wa ke of unstable development of web based business specifically connecting organizations to purchasers. Rivalry can just to some degree get rid of wasteful or badly intentioned organizations. There is a clamor out there for a law that tunes in to purchasers, upholds their rights and does equity to them proficiently and expediently. Another critical element of the Bill is class activity suits. A legal claim is one in which a gathering of individuals with the sa me or co mparable grievance against a similar item or ad ministration sue the litigant as a gathering. It might be re viewed that a lady Erin Brockovich won $333 million pay in 1996 from an organization for the general population of Hinkley in California for contaminating a water supply. Indeed, even a film was made on her and i t won honors. While people can battle bodies of evidence against organizations, associations and even gove rnments abroad in created nations, in India, the said specialist would do it, once it is persuaded of the lawfulness of a supplication by a gathering of individuals.

Milton Friedman, an American business analyst and Nobel laureate, says many individuals need the legislature to ensu re the consu mer. Be that as it may, a significantly more pre ssing issue is to shield the custo mer from the legislature.

The Bill would meet this praised objective. According to the Ministry o f Road Transport, the aggregate nu mber of street mischance s because of potholes for 2015 was 10,876. One additionally hears frequently of lethal episodes because of perilous states o f streets. After respectably enabling investors and contributors with class activity sui ts in the Company Law, the NDA government is currently looking to profit all buyers, putting govern ments and private associations on same platform. The new law will compel specialists, organizations or asso ciations to take healing measures, declare re muneration in the event o f da mage, death toll o r resource harms, and put the authori ties worried in the dock. Indeed, even big names embra cing deficient ite ms o r administrations can be acted against, sa y experts. Consequently, it is exceptionally basic tha t Parliament acknowledges on the double that individuals need the new buyer charge section and that they require it now. No more escape clauses One o f the remarkable ad monitions o f GST was to guarantee that the advantages o f this new administration permeate to the customers. Prior, there have been a few cases, where organizations have skirted standards. Nonetheless, with this new component, the ad ministration will guarantee tha t master purchase r measures are stringently followed in each aspect of everyday life.

Buyers were and ought to depe nda bly remain the need. • Strict measures will be taken. • The draft bill of the Act is a t present pending with the Standing Committee on Food and Consumer Affairs. When they give an approval, i t will be passed on to the bureau. • In the last leg, it will be acquainted with the Parliament and get green lit. • As indicated by reports, strict correctional measure s will be taken to ensure the enthusiasm of the buyers.

my words to you and you keep on buying them wi th your time and let’s see what the Modi Govern ment is holding in their hands.

Tending to consumer protests • The correct strides and measu res of this bill will be known soon. • Be tha t as i t may, it proposes the making of Consumer Dispute Redressal Commissions in area and national levels and furthermore the development of Consume r Protection Authority to direct a careful test on dissensions raised by the purchasers. • As o f late , Consumer Affairs Minister endorsed the rules to make the administration charge collected by eateries "deliberate".

“One Custo mer well taken care of could be more valuable than $10,000 wo rth of advertising.” – Jim Rohn Undoubtedly the public is expecting merry comments from the Government regarding the new rights for them regarding their unsolved grievances, but let’s also hope that it doesn’t crea te conflicts between the firms and Governmen t. Till then I’ll keep on selling 33

Industry Analysis- Indian Mines Industry - Amit Shovan Mandal - Naman Shah Since the Independence mining sector has been an importan t segmen t in the Indian economy there has been a pronounced growth in this sector and India Today India produces as many as 95 minerals which includes 4 fuels 10 metallic minerals 23 non metallic minerals 3 Atomic and 55 minor minerals. The Mining industry in India is a major economic activity which contributes significantly to the economy of India. The GDP con tribution of the mining industry is 2.5% only but going by the GD P of the total industrial sector it contributes around 10%-Â11%.

2017 and a record low o f 551 .10 INR Billion in the third quarter of 2011. Speaking of the sectors in mining India accounts for maximum share of coal and the balance is of other me tals. Major part of these me tals comprise iron, manganese, bauxite and chromite.

FDI in this se ctor plays an important role. The net inflow through FD I in this sector from 2000 to 2016 has been 2216.09 million USD which is likely to increase as the central govern ment of today has allowed up to hundred percent FD I in this sector. GDP Fro m Mining in India increased to 988.17 INR Billion in the first quarter of 2017 from 798.16 INR Billion in the fourth quarter of 2016. GD P From Mining in India averaged 723.83 INR Billion from 2011 until 2017, reaching an all time high of 988.17 INR Billion in the first quarter of

Our country excels with flying colours on an international platform in this sector. India stands third in terms o f production of coal and lignite contributing a production of 659 million tonnes out o f 8085 million tonnes that is 8.1%. 34

Coming down to Bauxite , India accounts for an 8.5 percent contribution standing, 4th in the world. It should also be no ticed that the aviation industry o f our country is thriving and it contributes a s one of the major demand-Âseekers o f aluminum. The Production of bauxite a t 28.13 million tonnes during the PFY registered an increase of 25% as compared to the preceding previous year. Odisha wi th 38% contribution was the leading producer of bauxite followed by Gujarat (36%), Jharkhand , Chhattisgarh and Maharashtra (7% each) and the remaining production was con tributed by Goa, Karnataka , Madhya Pradesh and Tamil Nadu. The share o f public sector mines in the to tal production was 24% while remaining 76% was con tributed by private se ctor mines. There were 177 reporting mines of Bauxite during the previous year o f which ten were owned by public sector and 167 by private sector. The major players in this field, i .e. N ALCO and HINDALCO are showing numbers in terms o f production, with an increase of 13% and 36% respe ctively in the PFY. The Vedanta Group also shows similar numbers. Aluminium and i ts Ores comprises 3 .8% of the world production standing 5th in the world.

Chromite is also one of the major metals produced in India and a ccounts fo r a production of 7.2% delivering 21 lakh tonnes while standing fourth globally.

Barytes produced in India registers 9.8% of the to tal world production standing third. The production o f Kyanate also stands on the sa me rank producing 17 .8 % of global production. Magnesite produced in India account for 0.5% of total production. Apatite and rock phosphate accoun ts for 0.6%. Mica production in India accounts for 0 .2 percent of world production as result India conquers the se venteenth rank. Copper production accoun ts for 3.4% standing sixth. India also stands third on the global platform and produce s 5.4% of the total zinc. Challenges faced by major mines: Iron ore Iron ore is main raw material of steel industry. So , grow th o f iron mining is depend on the performance o f the steel industry. Steel industry is a capital-Â intensive industry. To set up a plant of 35

1MTPA capacity it requires Rs. 25-Â30 billion, so its initial fixed cost is an issue. Companies like Tata Steel still enjoy a premium for their products because of its quality and its brand value created mo re than 100 years back. Unlike the FMCG or retail sectors, the buyers have a low bargaining power. The bargaining power of suppliers is low for the fully integrated steel plants as they have their own mines of key raw material like iron ore coal for example Ta ta Steel. But SAIL , which i mports coking coal so they are dependent on their suppliers. It is medium in the do mestic steel industry as demand still exceeds the supply. India is a net importer o f steel. So low cost steel from other coun try like China are one of the major compe titors of this sector. It is medium to low . Although usage of aluminum has been rising continuously in the au tomobile and consumer durables sectors, it still does not pose any significant threat to steel as the latter cannot be replaced comple tely and the cost differential is also very high. Bauxite The main raw ma terial of Aluminum Industry is Bauxite. Like iron ore bauxi te mines are also depend on the performance and demand of aluminum the marke t. It may be noted that the minimum economic size o f a fully integra ted greenfield smelter is around 250,000 tonne. Like iron industry Aluminum industry is a highly capital-Âintensive industry. Its required US$ 1.2 billion is required to setup an economically viable greenfield project. The bargaining power of suppliers

is low for fully integra ted aluminum smelters (upstream) as they have their own mines for key raw ma terial like bauxite, e.g. Nalco and Hindalco. As i t is a commodity so customers are able to enjoy relatively high bargaining power. Competition is primarily on quality and price, as being a commodity, differentiation is difficult. The u sage of aluminum is rising continuously in the automobile and constru ction sector bu t steel still remains a main substitute because of its relatively lower cost. But copper has been slowly substitu ting aluminum's usage in the power sector due to its higher conductivity. Coal The output per miner per annum in India varies from 150 to 2 ,650 tonne is very low a s compared to an average of around 12,000 tonne in the U.S. and Australia. Also there are very low innovation capabilities in coal mines. Due to poor infrastructure facilities, lack of R&D programs and training and development there a re very high rate of accidents occurs.Ma fia -Âraj is also one o f the major issue in this sector. Copper Power sector is the largest user of copper in India. But per capita electricity consump tion in India is very low, about 780 kwh co mpared to the global per capita consump tion 2780kwh.Also per capita consumption is around 0.5kg compared to 2.7kg. 36

Opportunities : Iron ore India’s per capita steel consumption was 60 kg in 2015 compared wi th the global average of 222 kg . Rural per capita steel consumption is likely to reach around 20 kg from 13 kg. The Ministry of Steel aims to increase the steel production capacity to 142.3 million tones by the end of 2017 indicating new opportunities in the sector. So, there is a huge untapped market wi th strong grow th potential. As a result, an amount equal to U S$ 25 billion to U S$ 33 billion is expected to be invested in steel sector over the next 6-7 years. Bauxite India has the world’s 7 th largest reserve base of bauxite. Also India holds a fair advantage in cost o f production and conversion costs in alumina. So as the usage of aluminum is rising continuously in the auto mobile and construction sector so there is a huge opportunity for existing industry to expand their production as well as new entrants too.

electricity generation distribu tion and utilization – 12-15% per annum demand growth in this sector is possible. Govt. o f India now allow mining lease granted for a long duration of minimum 20 years and up to 30 years. Under the Union Budget 2016-17, the Gove rnment changed customs and excise duty on certain mineral fuels & mineral oils In March FY16, the index o f mineral production was 148.8 and the to tal value of mineral production stood at USD3.41 billion in FY16 . In 2016 mining Sector Con tribution to GDP US$ 21.86 Billion and it is expected upto US$ 82 Billion by 2025.

Coal Till now India depends mostly on thermal power plant for electrici ty. In other hand India has the world’s 5 th-largest coal reserves & accounts for 7.5 per cent of total global production. So, thermal power plant and growing steel industries are a huge opportunity for coal sector. Copper Though there is very per capi ta consumption of copper , copper production capacity has increased by 20 times during past 15 years.Since copper and its alloy components play vital role in 37

Emerging Trends in the Market - Market Watch -

Ayush Thalia

Nifty touching 10,000: The 50- share NSE index touched 10,000 mark, first ever since 1995 on 25 July, 2017. The biggest contribution can be seen from mobile tower company Bharti Infra tel. HD FC bank re mained second point wise contributor wi th 20% increa se in net profi ts for quarter ended June 30. Other con tributors were Indiabulls Housing Finance, Ambuja Ce ments and media firm, Zee En tertainment Enterprises. Overseas inve stors we re willing to invest in capital market in hopes o f greater return due to coming of GST, making it to a to tal o f USD 25 billion as on 25 July, 2017. Also Foreign Portfolio Inve stors invested a ne t of Rs. 2977 Cr. in equities and Rs. 12371 Cr. in debt marke t during the period from July 3- July 21.

Sambhav Jain

The shares of Reliance Industries and Wipro made new 52 week highs. While the Reliance Industries launched Jio phone and cable TV, Wipro proposed to buy back shares worth Rs. 11000 Cr. Sensex reaches 32,000: The 30- share BSE Sensex crossed the 32,000 mark for the first time on 13 July, 2017. It took 33 sessions to rise 1 ,000 points befo re i t finally wen t beyond the significant 32,000. The major reason where all the sectorial indices led by FMC G, capital goods, power, metal and banking where trading in the posi tive zone. Unlike the banks and IT stocks, the latest 1,000 points rally in the Sensex was driven by Reliance, large Pharmacy stocks, Bharti Airtel, ITC and Maruti. Prominent gainers where cigarette and FMC G majors ITC and lenders like ICIC I, HDFC and Axis Bank. The reasons for gain in marke t where low consumer inflation and speculation of ra te cut by the Reserves Ban k of India. Also, US Federal Reserve signal that monetary tightening would be gradual in the world’s largest economy provided firepower to charge-up bulls. 38

GOLD Ever since the launch o f the GST on 1st July 2017, India has seen a rise in gold imports by 2.5 ti mes to 625.5 ton s. The effective rate co mes to 15 .67% after GST at 3% for gold and 18% for making charges keeping customs at 10%. The effective price on gold jewellery come s to 3.24 percentage points. This helps to predict how India, where price s rose by 300% in the last decade (FY 2008-FY 2017) is an emerging market for gold. World Gold Council has predicted a slow growth for the se cond half of the year 2017 but India being a sen timental market for gold may face changes during the wedding seasons.

India and the Middle East now account for 35% of global gold demand be tween them, but the rising tension and the war of words between USA and North Korea have booked the precious metal at the highest with a rise of 0 .3 per cent to $1,264.50 per ounce on 9 th August 2017. The sharp increase in tension rattled the financial markets in the Asia-Pacific region, stocks slipped while the US Treasuries and gold rates rose a fter the US received threats of missile attacks from North Korea. The geopolitical risk

playing in gold’s favor re mains unpredicted while the ra tes per ounce are expected to break $1300. OIL Saudi Arabia, the world’s largest crude oil producer announced plans to limit oil exports to 6.6 million barrels a day in August. Saudi Arabia, the most i mportant member of OPEC — is struggling to reduce the excessive supply o f oil in the global market for three years. Saudi Arabia expects to cu t sales in Asia by up to 10% in September to gear up the global crude glut. Oil futures booked a slight loss for the first two weeks o f August, as inve stors watched the ou tcome of a mee ting of the OPEC and concerns grow that major oil producers commi tment to output caps may be wavering but posted a 9.9% gain for July, the biggest monthly percentage gain since April 2016. The mounting tension between USA and North Korea affected the US crude oil inventories as it fell by 6.5 million barrels to 1.15 billion barrels while gasoline inventories rose 3.4 million barrels to 231.1 million barrels. The fall in U.S. commercial crude sto cks provides further evidence that the marke t is rebalancing. FOREX The rupee has gained 6 .6% against the dollar so far this year. Amid heightened global uncertainties, the rupee retrea ted sharply by 21 paise to end at Rs. 63.84 against the 39

dollar due to fresh de mand from i mporters and banks. The geopolitical tensions between US and North Korea dampened the fore x market senti ment. In cro ss-currency trades, the rupee value fell back against the pound closing at Rs. 82.93 from Rs. 82.88 per pound and also fell against the Japanese yen to settle at Rs. 58.17 per 100 yens from R s. 57 .68 earlier.

Nikkei 225 share index closed down 1.3% at its lowest since June 1 as the strong Yen hit exporters, while South Korea's KOSPI index fell 1.1% to seven- week lows. Sou th Korea’s Won currency dropped 0.9% against the dollar to i ts lowest close since 13 July 2017

The benchmark Sensex index also fell by 0.8% or 259.48 points and closed at 32,014.19. So far this year, it has risen over 21%. The foreign institutional investors (FIIs) bought $8 .71 billion and $18.49 billion in equity and debt marke ts, respectively. The dollar index was trading at 93 .305, down by 0.15% from its previous close of 93.432. EQUITY India's IPO market has been a succe ss in the first half of 2017 with companies raising $2.6 billion. Several big listings including General Insurance Corp (GIC) of India and SBI Life Insuran ce are due in the coming month s. The main stock market index hit a record high in 2017, as both foreign and domestic funds poured billions of dollars into equities. Indian shares fell on 10 August 2017 as Tata Motors dragged indexes down after its results failed to mee t expectations, while sentiment was also hurt by worries about simmering U .S.-North Korea tensions. The benchmark BSE Sensex closed down 0.84% at 31,531 .33, its lowest close in over a mon th. The broader NSE Nifty ended 0 .89% lower at 9,820.25, its lowest close in nearly a month. 40

FINANCIAL TRIVIA US dollar index reached an all time high of 164.72 in February 1985 and a record low of 71.32 in April, 2008.