The IBS Times; 196th issue; December 2016

DONALD TRUMP: 45TH AMERICAN PRESIDENT BY SHREYA RANI

The IBS times DEMONETIZATION

SHORT TERM PAIN, LONG TERM GAIN

BY SHILPAM DUBEY COLOMBIAN PEACE TREATY

BLOOD FOR BLOOD

BY UTSAV CHANGOIWALA TRANS PACIFIC PARTNERSHIP

FOR AMERICA OR FOR WORLD?

BY SNEHA TIBERWAL

FinStreet, IBS Hyderabad

ISSUE NO. 196, DECEMBER 2016

What’s Inside

2

INTELLIGENCE BEYOND SUCCESS LETTER FROM THE EDITOR

TEAM IBS TIMES ISHAN GUPTA (EDITOR-IN-CHIEF) ROHIT TILLU (MANAGING EDITOR) ABHINAV BANERJEE ANUPAMA KUMARSWAMI

CHESTHA KUMAR EYAMINI N HEMLATA HAJONG JATIN SHARMA PRATEEK PANDEY RANU SARUPRIA SANDHYA ADHAVAN SWARUPA ROY ANTRA BHARATI DEBANJAN PAUL DIXITA REDDY GAGAN KAPOOR JEET PC RADHIKA GUPTA SHILPAM DUBEY SHREYA RANI

Dear Readers, Greetings from Team FinStreet.

Thank you everyone who have contributed and made us where we stand today. We look forward to continue our work of making available all the latest happenings around the globe.

Team FinStreet is proud to present the 196th edition of The IBS Times.

For the third time in its history India demonetized its currency with effect from November 8th, 2016. this is the largest ever demonetization as it affects the entire population of this country. We cover this event in our COVERSTORY, SHORT TERM PAIN, LONG TERM GAIN. To give a broader perspective of demonetization we bring two supporting articles A BOON TO PAYMENT COMPANIES? and ARE BRICKS OF REAL ESTATE DEMONETIZATION PROOF?. From the eastern shore we bring to you the Indo-Japan nuclear deal in A STEP TOWARDS A BRIGHT FUTURE and from the western front we cover the Columbian peace treaty, the Trans Pacific Pact and the new head of the oval office in our segments BLOOD FOR BLOOD, TPP - FOR AMERICA OR FOR WORLD? and DONALD TRUMP: 45TH AMERICAN PRESIDENT. For Sector research we‘ve published a report on Indian Jewellery Industry. From the investment point of view, this issue also brings to you an exhaustive report on PC Jewellers by Team Vriddhi Research.

Do make the most out of it and keep enjoying the experience of The IBS TIMES. Your feedbacks and opinions will help us make it better.

SMRITI PATODIA SNEHA TIBREWAL SRUJANA NAIK

Ishan Gupta Team FinStreet

UTSAV CHANGOIWALA

3

COLOMBIAN PEACE TREATY BLOOD FOR BLOOD

Peace is what this planet is craving for but our ambitions and hatred for others has put this to a corner where it is just a cause. World peace is just an illusion when every other people in their minds are thinking only if they could kill the other person for a reason or the other. In this world people may find thousands of reasons to fight but very few for collaboration. One such reason is 'inequality' where the rich get richer and poor get poorer.

When these poor people have nothing with them to support their survival and they see that there is nobody to support them or when influential people along with the government decide to exploit their land for personal gain leaves these poor people with nothing but to revolt for their livelihood. These communities form their own revolt groups and keep planning activities against the government, one such community formed is FARC (Revolutionary Armed Forces Of Colombia) in Colombia. Colombia has always been a country of inequality and violence all this while and that is what lead to this community.

Who are these people?

These are mainly small farmers and land workers who were trying to claim their rights on the land which the Colombian state had sold to few elite class to pay off their debts back in 19th century and 20th century. They were formed in1964 and were the armed wing of communist party who followed MarxistLeninist Ideology lead by Manuel Marulanda.

This rural guerrilla organisation was inspired by the Cuban Revolution in 1950's. Over the years their workforce has reduced from 200000

-Utsav Changoiwala

20,000 active fighters in 2002 to around 7,000 currently. They mainly target the poor people and recruit them even children below 15 years and women are also included in their workforce. These groups has been fighting one of the longest- running armed insurgency in the western hemisphere. To fund themselves they do all sorts of illegal activities for ransom apart from these they have bombed oilfields, bridges, social clubs, etc. They are the reason for lives of more than 250,000 lives and making many homeless and orphans.

To put a stop to all this current president of Colombia Mr. Juan Manuel Santos has been on talks with the leader of FARC Mr. Rodrigo Londono from the past 4 years with the help of Cuban president in Havana and finally they had decided to enter into a peace agreement.

It was a historic moment for everybody to witness a peace treaty between the Colombian State and FARC for which even UN secretary General Ban Ki-Moon, US Secretary of State John Kerry and Cuban president Raul Castro had come to mark the end of 52 year armed conflict. Mr. Kerry had appreciated the efforts put in by Mr. Santos and has also offered USD390 million to implement it.

4

The treaty was signed between President Santos and FARC leader Timochenko on 26th September 2016 in Colombian port city of Cartagena which said the FARC has confess all its wrong doings and the state will forgive them and if they want to fight they could form their separate party and fight politically. He ended his announcement with a message to the world from Colombia saying "No More War" which the crowd repeated after him and Timochenko addressed the crowd and pleaded for forgiveness for being the cause of all pains during the war. Mr. Santos had promised the Colombians that any agreement shall be approved only by the country on a popular vote, so as to keep with his promise the proceeding for the voting was to be done on 2nd October 2016. They had been facing problem from the opposition as they were not happy with the conditions for the agreement, the polls still indicated that majority of the people would vote for it and not against it.

2nd October 2016 the D-day had come and something totally unpredicted happened which took the whole world by shock.

Majority of people had taken their decision of going against the peace treaty, there was a mixture of emotions in Colombia where most of the people celebrated rejection of the treaty, rest of the people could not believe what they saw and were left broken by the decision. The votes were like 50.2% voted against it and 49.8% voted for it. Though it is a close margin the peace treaty cannot happen with FARC until it gets the majority. The people in the suburbs and the borderline states were the one who mainly supported the peace treaty but people in the city and the centre states could not digest the part that FARC will not have any have any criminal charges and will be allowed to roam around freely even after being the reason for their hardships and e

losses, they felt a need for justice that is why they voted against the treaty. After the Mr. Santos said that it is just the first step to peace and he will keep trying to attain peace. Now an air of uncertainty as to what is going to happen can be seen in the eyes of every person in Colombia, but there seem to be a ray of hope as it was seen that Timochenko along with other FARC members have gone to the Board again on 24th November 2016 to make an agreement that will acceptable by the people who voted 'No'. The people who voted against led by the opposition leader and Ex. President of Colombia Mr. Alvaro Uribe say that, 'first let the culprits be put behind the bars only then will they think of forgiveness'.

They demand for the following corrections in the agreement.

• Those members who are found guilty of crimes should not be allowed to run Public Offices.

• FARC leaders needs to serve their time in prison for the crimes they have committed • The gains that they have made from all illegal activities should be paid to the victims as compensation • No changes should be made to the Colombian Constitution.

We need to wait to see what happens with the treaty and how everything wraps up but all in all there have been hardships which has been faced by both the FARC and rest of Colombia, which now needs to come to an end.

5

INDO-JAPAN NUCLEAR DEAL A STEP TOWARDS A BRIGHT FUTURE

‗Energy‘ is defined as the strength and vitality required for sustained physical or mental activity. on the similar note ‗Development‘ is the process of economic and social transformation that is based on complex cultural and environmental factors and their interactions. The science of running a process requires energy and by law of conservation of energy, ―Energy can neither be created nor destroyed; rather, it transforms from one form to another.‖ Thus Energy becomes the most fundamental requirement of every society or nation as it progresses through the ladder of development. Of course, once it reaches a relative degree of development, the energy demand becomes more stable. There is a distinct and categorical correlation between the energy consumption and income of a nation each reinforcing the other. In fact, every element of our lives in the upcoming years is increasingly going to become energyintensive that is a necessary prerequisite for development.

From the last couple of years, India is going through a phase of rapid ascent in economic empowerment. Industries are evolving at a significantly higher rate since liberalisation.

The government‘s focus for this decade will be on the development of key infrastructure and the uplifting of the 600,000 villages where 750 million people live, as vibrant engines of the economy. In 2008, we crossed the trillion-dollar mark, and it took more than six decades for us to reach that milestone.

However, it is predicted that the Indian economy will double again, to reach the $2trillion mark by 2017, and then again erfegrgtr

-Jeet PC

redouble, to reach the $4 trillion milestone by 2025. All this economic growth will need massive energy. It is predicted that the total electricity demand will grow from the current 150,000 MW to at least over 950,000 MW by the year 2030 which will still be less than one-fourth of the current U.S. per capita energy need. In fact, by 2050, in all likelihood the demand could go even higher, and the per capita energy demand would be equal to the current French or Russian figure of about 6000 W per capita.

The total installed electrical capacity of India (utilities) was just over 300 gigawatts (GW) as of May 2016. 1 Of this, 210 GW (70 percent) constituted thermal power such as coal, gas and diesel. India is thus highly reliant on fossil fuels to meet its energy demands. Hydroelectric power too contributes a significant percentage with a total installed capacity of just over 40 GW. The total installed capacity of grid-interactive renewable power—which consists of wind, solar, biomass and small hydro—is just under 43 GW. The installed capacity of nuclear power is 5.78 GW, a mere 1.8 percent of the total capacity. 2 In terms of actual power generation, the total electricity generation in India in 2014-15 was 1,278 terawatt hour (TWh), of which nuclear contributed just under three percent.

India has an electricity problem. India‘s primary energy consumption has more than doubled between 1990 and 2016 to nearly 32,000 PJ. India's dependence on imported energy resources and the inconsistent reform er 6

of the energy sector are challenges to satisfying rising demand. India has been plagued with blackouts in recent years. Just two months ago, India had a blackout in 20 of 28 states leaving 710 million people without power. That's more than double the population of the entire U.S. Perhaps the most important source of energy for India in the coming decades is nuclear power, given its huge potential for growth, emission-free nature and consistent nature of production. A significant expansion of nuclear power can both enable the connectivity of millions of Indians who currently lack access to the power grid and help it contribute to global efforts to tackle climate change by curbing its total carbon emissions. The Bharatiya Janata Party (BJP) government is intent on significantly scaling up installed nuclear capacity. Prime Minister Narendra Modi struck an agreement with US President Barack Obama on the issue of civil nuclear liability and pushed for a deal with French nuclear giant Areva for the Jaitapur Nuclear Power Plant project during a visit to Paris in April 2015. In June 2016, after PM Modi‘s visit to the US, it was announced that the long awaited project for American nuclear giant Westinghouse to build reactors in India was set to go through.

On the backdrop of this Indian Prime Minister Narendra Modi on his three-day visit to Japan in November 2016 signed a deal with his counterpart Shinzo Abe on nuclear energy.

The deal has been in discussion between the two countries for six years before it was signed, the 2011 Fukushima nuclear disaster delayed it. This is the first time that Japan signed such deal with a non-signatory of NonProliferation Treaty. The deal gives Japan to supply nuclear reactors, fuel and technology tvg

to India. This deal is to help in India build the six nuclear reactors planned in Delhi, to be completed by 2032.

This is Japan's first nuclear agreement with a non-NPT signatory state. It is important to note that being the victim of atomic bombings; it had long avoided civil nuclear cooperation with India because of India‘s refusal to sign NPT. India is outside the Nuclear Non-Proliferation Treaty due to its weapons programme, it was for 34 years largely excluded from trade in nuclear plant or materials, which has hampered its development of civil nuclear energy until 2009. It has now shifted its stance. The main motivation for Japan‘s departure from its traditionally stated position could be attributed to Japan‘s own security concerns in the changing geostrategic environment in the wake of the phenomenal rise of Chinese power in the last few decades.

Both India and Japan stand to gain from the November 11 agreement. PM Modi, since his last visit to Japan in 2014, was keen on this deal as it would benefit India and improve its chances of getting into the Nuclear Suppliers Group (NSG). India aims to ramp up its nuclear power producing capacity ten-fold by 2032. It is currently in negotiations with Westinghouse Electric, owned by Japan's rerrfg 7

Toshiba Corporation. India is planning to build six nuclear power plants in its southern region, and Japan's technical knowledge and superior expertise will facilitate India in setting up these plants. The nuclear deal comes against the backdrop of growing concern over China's expanding role in the region. Tokyo has a longstanding dispute with Beijing over islands in the East China Sea and is increasingly vocal about its rival's intentions to control almost the whole of the South China Sea. Similarly, India has a territorial dispute with China. In 2014 tension on the border between the two neighbors led to an exchange of fire between the troops guarding the border. There are some voices also drawing attention to the downside of the deal. According to Green Peace assessment, this agreement is a dangerous energy distraction and amounts to nuclear proliferation in Asia. It further says this appears to be a frantic effort to secure new contracts for Toshiba‘s AP1000 reactor design, because of its poor record in construction timeline and financial pullbacks.

In a security context, the India-Japan civil nuclear deal may contribute to instability in the region. China has territorial disputes with both New Delhi and Tokyo. The nuclear agreement between India and Japan will lead to further tension in the region instead of contributing to stability and peace in the region. For Pakistan, Indo-Japan nuclear deal will have serious strategic consequences as more nuclear reactors would increase the possibility of dual-use nuclear material. It would enable India to produce significant quantities of fissile material and nuclear weapons from some of its un-safeguarded nuclear reactors. Pakistan has been raising its concerns on this this issue in important multilateral fora and its bilateral discussions fe

with other states for some time. Pakistan feels that Indo-Japan nuclear deal and similar other agreements that India has signed with other states including US, France and Australia, will allow it to divert enriched uranium nuclear fuel from its civilian facilities for military purposes.

All of this and the deal has many Pros and Cons. Many points are still hanging hayward regarding India‘s commitments to the deal such as whether or not India will be able to reprocess the nuclear fuel. To ensure nuclear testing will not happen in future, it may require giving legally-binding assurances to the NSG and letting the way out of tracking of the nuclear material program. Despite all these confusions, the deal has been finalised.

But what remains to answer is what could possibly be the Opportunity cost of harnessing nuclear energy for sustainable development, only time will tell.

8

POLLUTION AND ITS IMPACT ON ECONOMY BE A PART OF THE SOLUTION, NOT PART OF THE POLLUTION

Is pollution only throwing waste here and there? No, pollution is when anything is added to the environment and eventually harms it. Smoke or dust in the air is a kind of pollution that harms our environment and living things. Sewage in drinking water is another type of pollution that contaminates the water and is known as water pollution. It can make people ill as it has lot of germs and viruses. When there is too much noise in the environment, even that harms the environment as people get disturbed by the too much noise that surrounds them. A large number of things can be linked with pollution, for example poor health, and heath is the essence of human capital. If somebody pledges to remove pollution then it means he is pledging to invest in human capital. The level of pollution is increasing day by day in our country. Many initiatives have been taken to reduce pollution by many people but only a few of them could be successful. One good example of initiative to reduce pollution is odd even rule. This initiative was taken by Delhi chief minister Arvind Kejriwal to reduce air pollution. He made it mandatory to run only odd number cars on add dates and even number cars on even dates. This odd rule was applicable for only 15 days but after 15 days Delhi government could see the effect of this rule that how it helped out their city. Although there was not much decline but still there was a lot of effect. Initially people faced some problem but after the results were out, they even realized its importance.

There is not singe reason that contributes to pollution, handful number of reasons leads to fe

-Radhika Gupta

pollution. Air pollution is the most harmful form of pollution in the environment. How is it caused? We humans are only responsible for it. It is caused by the cars, trucks, buses, trains and factories used by us. They are many harmful gases that are remitted by these means like sulphur dioxide, carbon monooxide, nitrogen oxide. Smoke from the burning leaves and cigarettes are also a major reason that harms both human and atmosphere. Now days, a large number of people are suffering from lung cancer, asthma, allergies, and various breathing problems. It is all mainly because of air pollution caused by us. These are all manmade problems caused by human waste material, release of poisonous gases and other chemical pollutants from the industry, agricultural pollutants like pesticides, and chemical fertilizers, pollutants by automobiles and dumping of chemical and nuclear wastes, etc. It has led to a worldwide environmental crisis. In many ways, it has changed both the individual and social ways of life.

Another form of pollution is water pollution.

As more and more number of industries are growing and due to modern civilization, water pollution is increasing day by day. Now the sources of water pollution have also increased like domestic effluents, sewage disposal, industrial wastes, radioactive wastes and oil leakages, etc. Because of these Indian rivers are getting polluted. The initiative to protect the holy Ganga River i.e. the Ganga Action Plan to control the water of Ganga from pollution has also not been proved successful. er 9

Water pollution has been the causes for many sever diseases like diarrhea, trachoma, intestinal norms, hepatitis, jaundice and many more. According to the data of WHO out of total communicable diseases 21 percent of all communicable diseases in India are water borne diseases. Most of the sea water is polluted by oil. One of the example is the ship that carried oil and dump into the sea of Mumbai. A lot of sea water got contaminated at that time. Huge tankers on daily routine basis dump oil into the sea. This harmful act of dumping poisons smothers or coats sea plants and animals and kills them.

Everybody kind of sound that we produce is not noise but when some noise goes beyond certain limit and harms the people around than it becomes noise. Noise pollution is created when the sound is unwanted and goes beyond 80 decibels sounds of lightning and thunder, noise produced by heavy machines, automobiles, railways. Aero planes and the blaring sound of loudspeakers.

Noise pollution causes a huge effect on hearing. It may cause total loss of hearing that may result in the reduction of worker‘s efficiency which is an ultimate loss to the country. If the noise pollution is at higher level than it may lead to physical and psychological damage. It also causes stress, anxiety, headaches and irritatability. These all type of pollutions has disastrous consequences. Ozone layers are decreasing because of pollution and these rercf

have lower down the quality standards which has a significant impact on productivity.

During the last few years, the awareness of people for the protection of environment in society has been gradually increasing. Various types of pressure groups are acting in defense of the environment. The government is also now promoting more and more regulations to protect the environment and the community.

The adoption of production and abatement technology is mandatory now with respect to global environmental problems. From the regulatory authority's point of view the installation of pollution control devices would be beneficial to the environment in and around the production premises and to overall society welfare. On the other hand, the two alternative courses of action before the firm, namely, the decision to produce by regulating emissions and to opt for closure of operations are influenced by an assessment of the comparative costs and benefits of these alternative options. Most of the private firms' investment decisions with respect to the adoption of the abatement technology are guided by their own profit maximization motives. These all things should be considered to protect our environment which ultimately affects our economy.

10

DEMONETIZATION AND ITS IMPACT SHORT TERM PAIN, LONG TERM GAIN

Could that have been imagined? Two shocks in one day – 86% of currency with the public eliminated at one go and Donald Trump won the elections! Prime Minister Modi announced the demonetization of Rs500 and Rs1000 notes on 8th Nov in an effort to purge black money out of the system, curb tax evasion, and stop counterfeiting of notes. One of the ambitions behind demonetization is also moving towards a cashless economy.

It‘s been more than 3 weeks since demonetization was announced and it would be an understatement to say that the situation has created panic in the economy. People are standing for hours in the long queues at banks and ATMs to convert their cash in to new money and deposit their money in to bank accounts. A lot of them still returned back empty-handed from ATMs because the cash got exhausted. The government has been criticized a lot for declaring demonetization before ensuring that it had enough cash to exchange with the old notes. RBI- operated presses have started printing new Rs500 notes from Wednesday but they are running behind their schedule and it may take till January to lubricate the economy with enough currency notes.

-Shilpam Dubey

This has so far caused huge inconvenience to small and medium sized business who depend on cash transactions for their day-to-day payments. Because of cash crunch, these businesses have been caused irreversible damages. Agriculture products and packaged goods have seen hit. Distribution chains have been affected negatively because cash crunch has hurt toll-road operations. Spending has slashed because people don‘t have enough cash and there is limit in taking out money from ATMs. People are stocking up their cash for essential items and this has caused a huge drop in businesses of sectors like jewelry and luxury brands.

The forecasts of most economists shows that demonetization will impact the GDP in negative manner for nearly two quarters.

There can be a dip of 0.5-1% in the GDP lower than expected. The more the delay in supply of new notes the more loss would be there. Fitch has cut India‘s GDP forecast from 7.4% to 6.9% for the current fiscal year and from lowered its projection of 8% to 7.7% for fiscal year 2017-18.

11

Ambitions of becoming cashless economy and curbing black money Witnessing this unimaginable slow-down in businesses and spending of the common people, makes one wonder is India ready to become a cashless economy. Sure there is rising interest in e-payment options, mobile wallets and companies like Paytm Mobiwik, OlaMoney are witnessing exponential increase in their transactions, but given the current infrastructure, becoming a cashless economy seems like a dream. RBI data shows that only 1.49 million merchant outlets accept debit and credit cards as modes of payments and even after all the hard work of financial inclusion programs, 24% of the Jan Dhan accounts have no balance at all. Also, only 20 to 25 % of all transactions in India are cashless.

Unorganized sectors contribute almost 50% to India‘s GDP and constitutes 90% of workforce. It‘s a no brainer that they transact in cash and for very small business like a kirna store, going for an e-payment system for its customers will increase its fixed cost beyond its affordability. Besides, there is a general preference for using cash over credit or debit cards in India.

A lot of polls done online show that despite inconvenience due to cash crunch, a majority of people are supporting demonetization and one of their major hopes is that black money would be eliminated from the economy. But, these hopes might be only partially fulfilled.

Firstly, demonetization only addresses black money in the form of cash with the people but a lot of black money is in the form of gold and real state. It was not a surprise when immediately after demonetization was announced gold prices shot up to its three rttrfe

year high to Rs 48000 per 10 grams. Though, it fell later due to high inspection by Income Tax department.

The road ahead..

Talking about the positive impact of demonetization, there are short term losses but surely long term gains. While demonetization is a step to vanish the black money already in the economy, government needs to take steps which curb the further formation of black money. It is a very difficult task and can‘t be achieved in the short run. Benami transactions bill and India‘s recent deal with Switzerland to end Swiss banks secrecy under which they will allow automatic exchange of financial information can prove to be substantial efforts to end black money formation.

With some part of informal sector turning to the formal sector there would be increase in tax revenue in the next year which can also lead to increase in GDP by as much as 3% in the long run. Also, demonetization along with GST can help formalize the shadow economy which will lead to greater tax and higher GDP. The government seems to be committed to its goals and it should be because a lot of losses have already been incurred. The short term pain should not turn out to be too much for long term gain.

12

UPCOMING ELECTIONS THE WAR FOR HINTERLANDS

UTTAR PRADESH ELECTION 2017 Uttar Pradesh elections will be held in 2017 and it is a sign of the stakes that all political parties already happen to be in election mode.

UP politics will be extremely intense, just like the state, the feature of politics has very low organic identity left. In one hand, there is remarkable evidence that voting patterns in UP are very much open-ended than standard research that tries to analogize social identity with voting patterns allows for. UP is a state where the difference between national and local elections is always easy to interpret.

The clichĂŠs roll out faster than you can say 'Uttar Pradesh'. UP is the most populous state; delivers 80 MPs to the Lok Sabha; and also has given India most of its prime ministers; it is the cradle of defining political movements; and the road to Delhi goes through Lucknow.

Along with the fratricidal wars of the Samajwadi Party, UP 2017 looks evidently like a competition between Mayawati and Modi. That sounds like a bad news for the BJP, as it won't divide the 19% Muslim vote enough, and will make Modi more unguarded to attacks. But also it won't be an easy elephant ride for Mayawati, as Muslims remain incredulous.

Whether or not the BJP acquires Uttar Pradesh, its impact on the Modi government's picture, its chances in 2019, won't be influenced much. BJP's loss in Bihar a year ago did not become a huge turning point for Modi.

-Smriti Patodia

Local politics may beat the BJP in UP, mainly because it does not have a CM face.

Importantly, voters in UP and elsewhere have repeatedly shown that they are highly capable of making vastly and surprisingly different choices in the state and national elections.

Even if the BJP wins UP, it will only help perpetuate the fortification of Modi. But even if the BJP loses UP, it does not specifically herald Modi's defeat in the 2019 general elections. The BSP or SP winning UP doesn't really matters in national politics, as the two parties are quite satisfied to support whoever is in power in Delhi, overtly or covertly.

PUNJAB ELECTIONS 2017 The legislative assemble election of Punjab is also to be scheduled in 2017. These elections are held once in every five years where the Indian electorate choose the members of the Vidhan sabha (Legislative Assembly). Main parties of the election are - Shiromani Akali Dal (SAD), BJP, Congress and AAP. The Election Commission of India stated that Punjab will go to elections between February and March next year, probably after the announcement of The Union Budget on vregr4gr 13

February 2017.

Punjab elections have been a bipolar affair with powers fluctuating between BJP alliances and congress. Because of the recent decline in the popularity of the Congress, it is expected that these The main opposition is supposed to be the major beneficiary of any anti-incumbency vote Punjab is witnessing a phase where politics has become more of promises to send the competing parties to jail for their misdeeds rather than activating and institutionalising the Justice delivering system.

A contender that stands a chance of rising Punjab election is Aam Admi Party (AAP).

With the encouraging support from its volunteer in Punjab, AAP is all set to strike a blow to BJP.

bank accounts, are finding it difficult to show their life‘s earning legit. Farmers are finding it hard to pay farm workers and also to ‗artiyas‘ or Grain traders who they lend money to. Tasks like painting, construction etc is now on hold and all those labourers had to suffer.

Srimoni Akali Dal will loose farmers as their traditional vote bank due to this adding further conflict between the much troubled SAD-BJP alliances.

People standing in long queues outside ATM‘s at the cost of utilizing their time to get wages are seething with frustration. This will definitely work against BJP‘s favour.

However, demonetisation will definitely curb demand for drugs as most of the payments are made in cash, and might help Punjab in reducing the negative publicity it has gained post the release of ‗Udta Punjab‘.

In my opinion AAP will lead this election followed by Congress.

EFFECTS OF DEMONETISATION ON ELECTION Demonetisation of higher denomination notes such as Rs.500 and Rs.1000 has been hailed by media and Modi supporters as a bold move, but it‘s coincidence with Punjab and UP elections may have repercussions. It‘s now evident poor execution has majorly affected the middle class and people below poverty line. Punjab being the agricultural capital of India and having a high percentage of farmers is facing the brunt of demonetisation. Most of them, not having ergr 14

DEMONETIZATION’S AND FINTECH A BOON TO PAYMENT COMPANIES?

Taking the nation by surprise, Prime Minister Narendra Modi on November 8 announced the demonetization of Rs 1,000 and Rs 500 notes, making these notes invalid in a major assault on black money, fake currency and corruption and to bring more accountability in cash-based informal industries.

In a country where nearly 90% of transactions are carried out in cash, a bold move to transform the region into a ―cashless‖ economy has created chaos. This is a master stroke by PM which on one hand takes care of fake notes for funding terrorist financing and black money stashed in cash and at the same time is encouraging transactions using cheque, electronic transactions through wallet/cards and electronic fund transfers like NEFT. E-wallet companies like Paytm, PayU India, MobiKwik, and Freecharge have been seeing great results in GMV(Gross Merchandise value) and the number of transactions since the move. According to an AssochamRNCOS joint study, the mobile payment transaction volume is likely to register a compounded growth rate of over 90 percent to reach 153 billion by FY 2021-22. This is against only 3 billion transactions in FY 2015-16.

Mobile payment transaction value in India is also likely to register over 150% CAGR and cross Rs 2,000 trillion by FY 2021-22 from just over Rs 8 trillion as of FY 2015-16 Indian M-wallet market study said.

Most of the e-Commerce companies stopped vre

-Dixita Reddy

receiving old denomination notes of Rs 500 and Rs 1000 notes and paid more emphasis on other means of digital payments. All the ecommerce companies depend on the payment gateways such as CC Avenue or their own for payment processing. Demonetization has led to increased online transactions and hence the business of these payment gateways.

How much money did Paytm, Mobikwik, and Freecharge make from demonetization?

MOBIKWIK MobiKwik has registered 7000% increase in bank transfers. It allows its users to transfer money instantly to any bank account at 0% fee. Mobikwik is providing cash pick up facility to its customers for some days. A person can click on ‗cash pick up‘ on the Mobikwik app, a representative of the wallet will come to them to exchange Rs500 and Rs1000 notes and will directly load it in their e-wallet. Users can load money into their mwallets using their credit/debit cards or net banking. This means, one doesn‘t have to go to bank or automated teller machines (ATM‘S) at all.

Mobikwik has registered 18-fold growth in transactions since the announcement of demonetization that saw old Rs 500 and Rs 1,000 notes ceasing to be legal tender.

The mobile payments network has over 1 lakh merchants and 35 million customers at present and has witnessed a 40 percent increase in its mobile application downloads re 15

since the initiative.

government's

demonetization

MobiKwik has even revised its monthly annualized Gross Merchandise Value (GMV) sales target by 10 times to USD 10 billion by 2017. User traffic and merchant queries have also gone up by 200 percent since the announcement of currency notes ban on November 9.

PAYTM Cashing in on the opportunity of demonetization mobile commerce firm Paytm launched a full-fledged marketing campaign to promote its cashless payment option.

With Rs.600 crore allocated for branding and marketing in 2016-17, Paytm is leaving no stone unturned to milk the opportunity. With over 850,000 offline merchants using Paytm across India, Paytm‘s communication is also looking to target daily wage workers such as electricians or plumbers with a do-it-yourself (DIY) print advertisements. This is a target group which wasn‘t the focus for the company up until now.

Paytm has been witnessing over 7 million transactions worth Rs 120 crores a day, helping it cross $5 billion GMV sales, four months ahead of its target. The company is currently doing more transactions than the combined average daily usage of credit and debit cards in India. Their target is mainly to capture the offline transactions into the picture, which is majorly cash based. Over 10 lakh offline merchants across India accept Paytm for payment including taxis, autos, petrol pumps, grocery shops, restaurants, coffee shops, multiplexes, and parking. Paytm has over 150 million mobile wallet users.

The company has also waived off its 1% transaction fee for transferring money to the Bank for KYC-enabled merchants to facilitate this shift towards digital in merchant behavior.

FREECHARGE Freecharge claimed that the average wallet balance on its platform increased 12 times.

According to a Financial Express report, It has removed the initial set-up charges and the commission charged to merchants on each transaction and has been registering a merchant every 30 seconds on average.

Most wallet firms also concentrate on enabling offline payments by tying up merchants who then accept money through the wallets from the consumers. Given the urgent need for alternatives to using Rs500 and Rs1000 notes, companies in the digital payment ecosystem have also registered a spike in inbound interest from merchants.

The merchants who were slow in responding have been calling them to get on-boarded immediately, and those who were skeptical are also changing their minds.

Consumers are also looking for alternatives to traditional digital payment instruments like wallets, with bitcoin companies like Zebpay too seeing an increase in interest. Zebpay, which usually adds 1,000 new users every day, has added about 2,000 new users according to, Sandeep Goenka, co-founder, Zebpay With India going digital, demonetization might be a boon to the payment companies in the long term, only when the changing minds do not remain stagnant.

16

INDUSTRY ANALYSIS JEWELLERY INDUSTRY

-Srujana Naik

All that glitters is Gold.

-Anonymous

exhibitions. Indian Government has taken various initiatives for promotions such as:

Jewellery industry is one among the major contributors to country‘s economy. In recent years it has been noticed that jewellery industry is one among the fast growing sectors in the Indian economy. It contributes around 6 to 7 percent of country‘s GDP. Large scale employments and foreign exchange earnings are its other benefaction.

To prepare a medium term exports strategy for various sectors including gems and jewellery by the Ministry of Commerce. To enhance the possibility of direct procurement of rough diamonds from mining countries.

Today, India is a hub of the global jewellery markets and the reason being low costs and high skilled labour. Also India is the world‘s largest cutting and polishing centre for diamonds. According to the industry reports India exports 95 percent of the world‘s diamonds. Revenue generated from exports in 2015-16 is 38.6 billion USD which makes it the second largest exporter after petrochemicals. Indian government has permitted for 100 percent Foreign Direct Investment in this sector through the automatic route.

Regulating Bodies Gem and Jewelry Export Promotion Council (GPEC) - This is one of the apex bodies of the jewellery and gem trade in India. Set up in the year 1996, today it has more than 6000 members spread all over country. The main objective of the council is to introduce the Indian gems and jewelry in the International market and promote their exports. This is achieved by providing market information regarding foreign trade, import duties, tariff regulations and jewellery erfergte

To promotion Indian diamonds and jewellery abroad through publicity, advertisements and participation in international fairs, buyer seller meets and directs approach to market retailers. To identify new markets by market research Promotion of export of 'hallmark' jewellery from India to assure foreign customers of purity and quality of jewellery made in India.

Gem and Jewellery Trade Council of India (GJTCI): The main reason for establishing this council is for boosting the gem and jewellery trade of India. It also indulges itself in disseminating latest information to its jeweller-members through a newsletter, educative programs & trade motivational events such as seminars, workshops, exhibitions, festivals etc The Bureau of Indian Standards: This National Standards Body of India is responsible for hall marking of gold jewellery and certification of its purity.

Market Size The jewellery market in India is occupied by more than 500,000 players with most being small players. India being one of the largest err 17

exporters of jewellery the market size of Jewellery market is 13 billion USD. The gross exports of Gems and Jewellery in April 2006 was at 3.23 billion USD and cuts and polished diamonds stood at 1.78 billion USD. According to the statistics the Jewellery market in India is expected to grow at a Compound Annual Growth Rate of 15.95 percent over the period 2014-2019. According to Department of Industrial Policy and Promotion (DIPP), the FDI inflows in diamond and gold ornaments in March 2016 were 772.05 million USD.

Consumptio n demand – jewellery

High Import Dependence & limited recycling

Challenges Ahead

The jewellery industry has outstanding potential for growth and increase in value addition, exports and employment generation.

However when looked deeply there are certain challenges that this industry is facing which is holding it back from growing and attaining the peak position. The challenges are shown in the following figure.

Possible Solutions

With industry facing so many challenges it also has ample opportunities to transform and e

Risk of talent shortage Limited research & technology adoption Limited financing options for the industry

Investment demand – jewellery Investment demand – bars and coins

Perception of opaqueness in the industry Large investment demand and associated supply infrastructure Over regulated consumption industry and under developed investment industry

18

to grow and be the reason for the development of Indian economy through higher exports and employment generation.

Below is the figure that gives possible solution for the above discussed challenges.

The Way Ahead After scanning through challenges that jewellery industry is facing the road ahead isn‘t as easy as it seems to be. The goal of ensuring sustainable industry growth to enhance value addition, employment, and exports without impacting the current account deficit (by increased imports) requires a continuous effort by the stakeholders, including the gems and jewellery industry, government, and RBI. Role of Industry • To develop infrastructure and required skills to cater to specific needs of demand • Authorize use of better financing options • Encourage recycling of gold

With Demonetization trending everywhere Jewellery industry will not be affected much because the price largely depends on the international prices of gems and jewels. But definitely demand for gold will be affected to some extent. People having black money are rushing to buy gold and other gems and jewellers are demanding a premium for it.

From the above facts and figures it can be said that Jewellery industry plays an important role in the Indian economy by providing significant employment, earnings and high value addition. This industry has more potential for growth. With e-commerce developing rapidly the demand for jewellery is likely to witness consistent growth driven by evolving lifestyle, anticipated recovery in economic conditions and expected increase in demand from tier 2 and tier 3 and rural markets which accounts for a major part of the demand.

Role of the Government • Support industry in infrastructure and skill development • Provide differentiated regulation for consumption and investment demand • Develop alternatives to investment in physical gold

Role of RBI and the financial sector • Monetize existing investment and recycling schemes • Provide better financing options to the industry • Provide differential regulations for consumption and investment demand

19

DEMONITIZATION AND REAL ESTATE ARE BRICKS OF REAL ESTATE DEMONETIZATION PROOF?

A large portion of India's business surroundings has been hugely shaken up by the late demonetization of the higher value notes(Rs. 1000 and Rs. 500) by the Modi government. This is the third demonetization practice embraced by the Indian powers, on the off chance that we incorporate the one done just before autonomy in 1946. It is still too soon to precisely gage the profundity of the shakeup this has created, yet its effect on the land area is quickly unmistakable.

Since Modi's shock declaration, the swells have been spreading through the officially bothered area, which has been encountering excruciatingly moderate development as of late. Poor deals prompting to level costs, overwhelming liquidity difficulties and high unsold stock have all conspired to keep land segment far from satisfying its potential - and give vital private security to normal natives.

Unquestionable effect on land The land area will be influenced by the demonetization work out, as it has customarily observed a high association of dark cash and money exchanges. Be that as it may, every single such occurrence have been in the optional deals advertise, where money segments have generally been a veritable 'must'. As it were, the resale properties fragment will take a major hit.

Be that as it may, fleeting agony is inescapable when we search for any inevitable long haul cure for the infection.

There has for long been a strident request to get straightforwardness in the segment so that fre

-Gagan Kapoor

it turns out to be more sorted out, and money dealings should essentially be the principal side effect of the illness to be managed.

The extravagance and top of the line sections of private land will likewise observe a noteworthy effect from this work out, since it is another territory which has seen a great deal of installments done in real money. The legitimate saving money/financing channels have represented just a little piece of all exchanges in this space. The demonetization move is probably going to bring about extravagance property costs plunging by as much as 25-30% as dealers battle to offload properties to produce liquidity. This implies extravagance home purchasers will all of a sudden have a much more extensive transmission capacity of alternatives to look over.

With dark cash abruptly being wiped out of the market, a great deal of financial specialists who have been putting resources into activities with unaccounted-for cash and raising costs to book benefits - will be swept out from the framework, along these lines supporting a genuine and necessary revision.

What remains unaffected?

The essential market - or, all the more particularly, the market framed by undertakings attempted by presumed and valid designers in the main 8 Indian urban areas - will stay pretty much unaffected. This is on the grounds that purchasers into such undertakings take the home credits/fund ferfge 20

course to purchase their homes, and exchanges are done through lawful channels.

In this way, there won't be any significant effect on deals in this fragment.

In any case, there may be an effect on many ventures in level 2 or 3 urban communities where money has assumed a part even in essential private deals. Be that as it may, the turmoil in this portion will settle down in a brief timeframe.

Targeting Benami Properties In the previous one year, there have been a couple of positive and possibly dependable changes in the Indian land. The death of RERA (Real Estate Regulation and Development Act 2016), the Benami Transactions Act and now the demonetization move will guarantee that going ahead, the part will lose a lot of its noteworthy spoil and turn out to be more straightforward.

Benami exchanges adding to the making of a parallel dark cash economy follow a long history in India. It was as ahead of schedule as 1778 that Justice Hyde's notes made a say of it after the foundation of British administer in India. In 1882, the courts were compelled to authorize it when the Indian Trusts Act under its segments 81 and 82 perceived the benami exchanges. In 1976, i.e., post freedom, parliament mediated interestingly when it banished all suits in connection to benami properties.

Pushing forward to further check its development, parliament completely restricted benami exchanges, making it an offense and forbidding all suits and claims activities in view of benami exchanges. Be that as it may, as the mishandle and grtgrhgrdc

misrepresentation around the benami exchanges proceeded with unabated, parliament was pushed to nullification segment 82 of Indian Trusts Act and Section 281A of the Income Tax Act alongside other noteworthy annulment. It was at this phase the law commission on demand likewise presented its proposals as 57th report subsequent to analyzing the benami exchanges in every one of its implications.

With a specific end goal to actualize these proposals, the president proclaimed the Benami Transaction (Prohibition of the Right to Recover Property) Ordinance, 1988. The law was viewed as not managing the issue of benami exchanges completely. Subsequently the law commission was asked for by and by to analyze the subject. It then presented its 130th report, titled 'Benami Transactions – a Continuum'.

In light of the law commission suggestions through its 130th report, the mandate was changed over into an Act by presentation of a bill in the parliament. Furthermore, this Act was known as the Benami Transactions (Prohibition) Act, 1988. The exceptionally late case in the chain of occasions which has by and by conveyed to the fore the issue of extortion completed under the clothing of benami exchanges is the situation of Adarsh Society, Mumbai, where around 35 pads were accounted for to be claimed in benami names.

Not that there is no mindfulness or no system to adequately arrangement and check these benami exchanges. As far back as 1988 there has existed the Benami Transactions (Prohibition) Act, yet has still not been executed, in this manner neglecting to affect benami exchanges. On the off chance that even following 23 years of its sanctioning the standards for doing the motivations behind few 21

this Act have still not been confined, there is no clarity on the issues like recuperation technique, disciplines brought about, and skilled power in-control, then who is to be rebuked for this whole circumstance?

Throughout the previous 23 years there has just been an affirmation about the few provisos display in the Act as one of the exceptionally clear purposes behind its nonusage like for instance the weight of verification about whether an exchange is benami is just on the individual who claims that it is such; however how would we, as a dependable vote based system, represent the way that we have still not possessed the capacity to give viably to topping off these lacunae, in this manner making the Act implementable?

The second regulatory changes commission in its fourth report unequivocally underlined that means ought to be taken for the quick usage of the Benami Transactions (Prohibition) Act, 1988, as a vital measure to manage the issue of debasement. Additionally, in an answer to a featured question on February 23, the bureau of income, under the service of back educated the Lok Sabha that a draft Benami Transactions Prohibitions Consolidation (Amendment) Bill had been set up by the branch of income, which had likewise been screened and endorsed by the service of law and equity. It is presently being prepared for endorsement of the bureau after which it will be presented in parliament.

The Public Interest Foundation has moved a Right to Information (RTI) application to the bureau of income trying to learn the present status of execution of the Benami Transactions (Prohibition) Act, 1988. After a long stretch of stagnancy, the above vervrbrdef

advancement at last demonstrates some beam of trust. In any case, this activity should be followed up at a pressing pace to help it achieve some compelling conclusion.

Exigency of adequate activity is incited not just keeping in mind the end goal to protect the validity of majority rule government; additionally with a specific end goal to check the development of a parallel economy in India which, as indicated by a World Bank think about called 'Shadow Economies All over the World', has swelled to around Rs 15 lakh crore.

Just players who lead their business with trustworthiness will survive. This looks good for end-clients, will's identity mindful of their rights, have the affirmation of not being duped and will no longer need to battle with always rising costs. They will have their preferred capacity to purchase properties at reasonable costs, in activities which will without a doubt be conveyed on time.

The demonetization practice was an exceptionally a needed and important stride which will undoubtedly carry with it a colossal shake-up wherever dark cash has assumed a noteworthy part. Over the long haul, the Indian land segment will develop more grounded, more beneficial and prepared to do long stretches of managed development.

Starting now, there is no explanation behind designers and speculators who have led their dealings straightforwardly and legitimately to freeze. It will basically be the same old thing for them.

22

QUARTERLY RESULT UPDATE EFFECT OF AN UNPREDICTABLE QUARTER

The market has seen a lot of big game changing events over the past few months.

REXIT, BREXIT and the recent demonetization scheme to name a few. When the market was building in expectations that Raghuram Rajan will get a second term after the outstanding work he did in the first term, his exit went totally against everyone‘s expectation- from the average investor on the street to the bookie in the dark lanes of Mumbai.

On the other hand, the decision of Britain‘s exit from EU took the world by surprise.

Experts have claimed that this might haunt the economies across the globe for years to come. Many Indian businesses have their offices in Britain, but with BREXIT, this benefit may be taken away and may result in companies relocating their business set ups to other places. It might also have a positive effect, but these results may not show up immediately. The process may take some time as the new government will take time to design and implement their policies.

Now the latest hot topic is of demonetization.

It‘s a memorable experience of the generation and its impact is felt by every citizen of India.

Although it is not a big disaster like global banking sector crisis of 2007, but at the same time, it will act as a liquidity shock that disturbs economic activities. It may reduce India‘s GDP growth as the liquidity impact may last for three-four months.

Amidst all these turmoil, many firms had to change their tactics and business strategies.

Some have succeeded and some might be refef

-Debanjan Paul

struggling or about to struggle in the near future. We will have a look at the performance of all the biggest firms from IT, Telecom, Automobile, FMCG and Banking sector over the past quarter.

Tech Mahindra: Tech Mahindra is an Indian multinational Information Technology and Outsourcing company which is headquartered in Pune. It is a USD 4.2 billion company with an employee strength of 112,886 operating across 90 countries worldwide. It was ranked 5th in India‘s IT firms and 111th in Fortune India 500 list for 2012.

It has been reported that Tech Mahindra met its estimate in the 3rd quarter. The profit fell by 3.4 percent, i.e. Rs 759 crore from Rs 785.6 crore, however, revenue increased by 1 percent. EBIT rose to 6.5 percent to Rs 962.1 crore and margin expanded by 71 basis points to 14.36 percent in the last quarter. Other income also declined by 61.4 percent to Rs 63.94 crore in the quarter from Rs 165.80 crore in the previous quarter. The net profit was expected to be a bit higher but overall results met expectations according to Sarabjit Kaur of Angel Broking.

Nestle: The consumer products companies have cut down their production as sales have slowed down significantly due to the aftermath of demonetization drive. This is definitely going to reflect in the 4th quarter. However, the story in Q3 is somewhat different.

23

Talking about Nestle India, it is a company engaged in food business. It includes milk products and nutrition, beverages, prepared dishes and cooking aids, and chocolate and confectionery. Some of its most renowned products are Nescafe, Maggi, Nestle Munch, Eclairs etc. In India, it is headquartered in Gurgaon.

Reliance communications provides GSM mobile services, fixed broadband and DTH services. It was established in 2002, and is the fourth largest telecom operator in India with 98.70 million subscribers as of June 2016.

During the last quarter ending September, it had a sales turnover of Rs 23634.4 crore which is an increase of 4.04 percent from the previous quarter. They had an operating profit of Rs 484.9 crore and a net profit of Rs 269.4 crore which is again an increase of 4.19 percent and 16.70 percent respectively from the previous quarter.

In the quarter ending September 2016, their total sales turnover was Rs 2212 crore which was an overall decrease of 10.88 percent from the previous quarter. Their total income was Rs 2286 crore which was again a disappointing decrease of 11.81 percent from the previous quarter. Their operating profit was Rs 119 crore and suffered a net loss of Rs 864 crore with an increase of 5.31 percent and decrease of 54.56 percent respectively from the previous quarter.

Ashok Leyland:

Yes Bank:

Ashok Leyland is an Indian automobile manufacturing company headquartered in Chennai, India founded in 1948. They are the 2nd largest commercial vehicle manufacturer in India with a turnover of USD 2.5 Billion in 2010-11. The product range of this company includes buses, trucks, engines, defence and special vehicles. Recently they have acquired LCV business from Nissan Motor Corporation.

The sales turnover of the company in the last quarter was Rs 4094.3 crore which is an increase of 6.01 percent from the second quarter. The total income was Rs 4982.23 crore which is again an increase of 4.61 percent. Their operating profit was Rs 1385.9 crore which was an increase of 6.06 percent.

Their net profit was Rs 801.54 crore which is also an increase of 9.53 percent from the last quarter.

During the last quarter ending September 2016, their total sales turnover was Rs 4622.4 crore which was an increase of 8.54 percent from the previous quarter. Their total income recorded was Rs 4660.5 crore which was an increase of 7 percent from the second quarter.

Their operating profit was Rs 574.6 crore and net profit was Rs 294.4 crore with an increase of 0.78 percent and 1.25 percent respectively.

So, we have seen how the top firms have performed during the last quarter, with most of them performing well. However, it remains to be seen how they perform in the last quarter, with demonetization looming over the shoulder of each firms irrespective of which sectors they are in. It‘s really hard to say what the macroeconomic effects of demonetization is going to be. It‘s something we have got to wait and see about. Till then we will hold our breathe and wait for the outcome come December.

Reliance Communication:

24

TRANS PACIFIC PARTNERSHIP TPP - FOR AMERICA OR FOR WORLD?

Trans Pacific Partnership (TPP), a thirty chapter agreement signed on 4th February 2016 is said to be the largest trade and business investment agreement in the world.

The agreement is between the twelve Pacific Rim nations which contribute forty percent of the global gross domestic product, one third of the world trade and also include eight hundred million people into it. It has America, Canada, Australia, New Zealand and Japan from the major economies, and Chile, Peru, Mexico, Vietnam, Singapore, Brunei and Malaysia from the minor ones. Two significant economies in the region, namely China and South Korea are not part of the TPP now, might join later.

It all began with the trade agreement between just four nations - Brunei, Chile, New Zealand and Singapore known as P4 trade agreement, which came into effect in 2006.

The deal had a great impact which includes red

-Sneha Tiberwal

removal of tariffs on most goods traded between the countries and also cooperation on wider issues such as employment practices, intellectual property and competition policies.

Impact of TPP The TPP is expected to not only revolutionise the trade market of the twelve countries but also make an impact on the other sectors.

• Expand the export of Made-in-America goods and services and support American jobs • Eliminates over 18,000 different taxes on Made-in-America exports • Includes the worker protections like offering a minimum wage, benefits, and safety programs which makes the movement of workers easy in various jobs • Includes the most robust enforceable environmental protections of any trade reffa 25

• agreement in history which includes prohibition of harmful fisheries subsidies, protection of wetlands and important natural areas, protection of the marine environment from ship pollution and many more • Helps small businesses benefit from global trade • Promotes e-commerce, protects digital, freedom, and preserves an open internet • Levels the playing field for United State workers by disciplining state-owned enterprises (SOEs) • Prioritizes good governance to fight against corruption, decrease conflicts of interest and many public issues • Capitalizes on America‘s position as the world leader in services exports Economical Impact The economical impact of the Trans Pacific Partnership has remained into controversy from the day it has been proposed. May be this is the reason why after so much efforts put in by president Barack Obama and other nations, newly elected president of America Donald Trump is against the agreement and wants to renegotiate all the criteria.

According to the study of Peterson Institute for International Economics by 2030, the United State is expected to have an annual income gains of $131 billion and export gains of $357 billion. This equates to a 0.5 percent d

increase in GDP. Another study, performed by researchers at Tufts University, found precisely the opposite. By 2025, TPP would be responsible for a 0.5 percent decrease in GDP. It also project nearly 450,000 U.S. job losses and a consequent rise in income inequality, represented by a decrease in labor‘s share of total income.

Economic models are built on assumptions that drastically influence the results leading to economic forecasting as tricky job.

Differences in methodology and ideological assumptions have made the two competing theories on TPP have a totally contradictory outcomes. However, if we look into the world history, expanding free trade most likely benefits all parties involved. TPP is also expected to spark significant economic growth in poorer nations which would open their markets to foreign competition for the first time, and its potential benefits for the United State should not be discounted.

However there are instances in the past that does not say the same. In China, for instance, 680 million people have been lifted out of poverty since the country opened itself up to trade in 1979. Chile instituted its own free market, pro-trade reforms in the 1980‘s and saw a similar reduction in poverty. The story is the same: foreign trade allows for more efficient, specialized production that enables nations to begin accumulating greater wealth.

26

Impact on India The TPP is expected to have a huge impact on Indian trade. Firstly, the new bonds made between the countries will erode existing preferences for Indian products in established traditional markets such as the United State and the European Union, benefiting the partners to these agreements. Secondly, they are likely to develop new rules architecture which would place greater burden of compliance on India's manufacturing and services standards for accessing the markets of the participating countries.

is going to have on the world economy. With the buzz going around about the existence of the partnership after Donald Trump coming into power remains a question. Changes are expected to turn the table of the agreement, but will it be good or bad is still questionable.

The response of commerce ministry is however positive. It says that these challenges should be treated as an opportunity to respond strategically, and to persuade Indian industry to rise to the challenge of higher standards in both products and services, and the framework of rules. Besides, India is trying to find its way into the global supply chains and markets via the Regional Comprehensive Economic Partnership (RCEP), a proposed free trade agreement between the ten members of the Association of Southeast Asian Nations Twelve nations coming to consensus for a single contract itself tells about the impact it rer 27

THE UNCONVENTIONAL PRESIDENT DONALD TRUMP: 45TH AMERICAN PRESIDENT

Trump wins out the race with 279 surprising electoral votes. Whereas, Hillary won the popular vote, she accumulated just 228 of the 270 electoral votes needed to win the election. While that may sound strange, it is the way the American Electoral College system works. Each state has a fixed number of electoral votes, equal to its representation in Congress. California, for example, has 55 thanks to its 53 House members and two senators. When the general public votes for their choice of president, they are indirectly voting for their ―elector.‖ The representative then casts his or her electoral vote for the most popular candidate.

Hence, the candidates don‘t need to win by a landslide to garner all the electoral votes. For instance, in Florida, Trump received all 29 electoral votes, despite winning just 49% of the popular votes. Hillary also won all of New York‘s 29 electoral votes, when she received 64% of the popular votes. Unfortunately, the resounding support from the state‘s residents did not earn her extra electoral votes.

-Shreya Rani

Donald John Trump elected as the 45th president of the U.S on Tuesday with an explosive, populist and polarizing campaign which relentlessly aimed at the institutions and long-held ideals of democratic American.

The surprising outcomes and defying late polls showed Hillary Clinton with a moderate but persistent edge, threatened convulsions throughout the country and the world, where critics had gauzed with alarm as Mr. Trump‘s unvarnished beginning to disillusioned voters took hold. The triumph for Mr. Trump, The 70 years real estate developer turned into a reality television star without any government experience and was a powerful rejection of the establishment forces that had assembled against him, from government to the world of business, and the consensus they had forged on everything from trade to immigration.

This result amounted to a rejection, not only of Mrs. Clinton, but of President Obama, whose provision is suddenly imperilled. And it was a decisive demonstration of power by a e 28

largely overlooked union of mostly white and working class voters who felt that the promise of the U.S had slipped their hold amid decades of multiculturalism and globalization. ―The forgotten men and women of our country will be forgotten no longer,‖ Mr. Trump told supporters on Wednesday at a rally in New York City, just after Mrs. Clinton called to admit.

In a departure from a campaign in which he repeatedly poked division, he sought to do something he had intentionally avoided as a candidate: Appeal for unity: - ―Now it‘s time for America to bind the wounds of division,‖ he said. ―It is time for us to come together as one united people. It‘s time.‖ He unusually offered warm words for Mrs. Clinton for whom he has suggested that she should be in jail, saying she was owed ―a major debt of gratitude for her service to our country‖. Fortified by Mr. Trump‘s strong words for Republicans retained control of the Senate. Only one Republican-controlled seat of Illinois, fell to Democrats early in the evening. And, a Republican Senator Richard Burr of North Carolina, easily won the race of re-election that had been among the country‘s most competitive. A few of other Republican occupants facing difficult races were running better than expected.

He seemed to personify the glory and success that so many of his minions felt was missing from the country and their own lives. And he mocked at the poll-driven word-analysing the ways of modern politics, calling them a sheer waste of time and money. Instead of this he relied totally on his gut.

Mr. Trump‘s wings of success stretched across the battleground states of Florida , Ohio, North Carolina and Pennsylvania seemed likely to set off financial restlessness and immediate discontent among international mergers, many of which were surprised when Mr. Trump in his campaign questioned on the importance of America‘s military commitments abroad and its loyalty to international economic partnerships.

From the moment he started the campaign, with a shocking set of remarks about the Mexican immigrants are criminals and rapists. Mr. Trump was widely undervalued as a candidate firstly by his opponents for being nominated for Republican and secondly by his Democratic rival Mrs. Clinton. His rise was misperceived by polling organizations as well as data analysts. And a myth of improbability plods his campaign, to the detriment of those who disregard his improvisational style, angry message and his appeal to downcast voters. ―He was talking to people who weren‘t being spoken to,‖ said Joseph Gravagna, 37, a marketing company owner from Rockland County, N.Y. ―That‘s how I knew he was going to win.‖ At his triumph celebration at the New York Hilton Midtown where a raucous mob indulged in a cash bar wearing hats bearing his everywhere campaign slogan ―Make America Great Again,‖ voters expressed their happiness that at last their voices had, been heard.

For Mrs. Clinton, the defeat signalled an astonishing end to a political ancestry that has colored Democratic politics for an era. Even after eight years, losing to President Obama in the Democratic and 16 years after leaving the White House for the U.S Senate, as retg54gg 29

President Bill Clinton exited office : she had seemed positioned to carry on two legacies: her president‘s and her husband‘s. Clinton‘s unpredicted loss was a distressing turn in her life and strategists who believed they had built a great strategy that would spoil Mr. Trump‘s ragtag group of loyal operatives and family members and many of whom had no experience in running a national campaign.

Tuesday night, shocked Clinton and his followers who were assured that Mr. Trump had no chance of victory, eagerly paced the Jacob K. Javits Convention Center as states for which they were confident for victory, like Florida and North Carolina, either fell to Mr. Trump or seemed in danger of surmount his way.

But by the time passed, Mrs. Clinton‘s weaknesses as a candidate were exposed. She failed to convince voters desiring for change.

She tried hard to build trust in the eyes of the Americans who were perplexed by her decision to use her private email server as secretary of state. And she strained to make a persuasive case for herself as a champion of the economically oppressed after delivering desultory paid speeches that made her earn millions of dollars.

Mr. Trump, in a 2005 video released last month, about using his public profile to commit sexual assault. He commented that female political rivals lacked a presidential ―look.‖ He ranked women on a scale of one to 10 even marking forth on the desirability of his own daughter and his this kind of throwback male behaviour which many in the country will assumed would disqualify a candidate from high office but to surprise of many, white voters appeared more reluctant to line up behind a white woman.

Starting from Pennsylvania to Wisconsin industrial towns once full of union voters who from decades have been offering their votes to Democratic presidential candidates even in the party‘s lean years, shifted to Mr. Trump‘s.

One county in the Mahoning Valley of Ohio, Trumbull, went to Mr. Trump by just a sixpoint margin.

Atmosphere of Uncertainty abounds as Mr. Trump prepares to take office. His campaign featured a shape changing list of policy proposals. His staffs were in constant turmoil with Mr. Trump‘s children serving critical campaign roles and a rotating cast of advisers alternately seeking access to Mr. Trump‘s advices, losing it and often regaining it.

Mr. Trump‘s many business complications most in foreign countries will follow him into the Oval Office, causing potential conflicts of interest. His acknowledgment of not paying federal taxes for years and refusal to disclose his tax returns has left the people confused about his financial composition.

Whether or not he follows through on his promises remains to be seen. However, his acceptance speech where he asked "America to come together as one united people" was a surprisingly different from his typical rhetoric. Clinton and President Barack Obama has been equally courteous. In the concession speech Clinton asked supporters to support Trump and give him power to lead with an open minded view. Barack Obama has promised a smooth transition and keep aside all their differences and ―root for his success.‖ But this they do know: Mr. Trump will mould his power in his own self-aggrandizing image, and then thoroughly reimaging the legacy, standards and expectations of the presidency.

30

MARKETWATCH EFFECT OF DEMONETISATION AND TRUMP’S VICTORY

-Antra Bharti

Recently two major events of the era took place. First the selection of controversial US presidential candidate Donald Trump and second the announcement of demonetisation of 500 and 1000 denomination notes by Prime Minister Narendra Modi. The impact of these two events were spread across different sectors.

The transformational step of demonetisation taken by Indian government is intended to minimize the black money and corruption.

Also aims that ploughing back these funds for further growth and development of the nation.

Effect on Commodity market (Gold and Silver) Indian Market

Gold reclaimed the Rs 31,000-mark at the domestic bullion market after fresh offtake from investors and stockists, driven by the black money crackdown in India and a surge in global cues amid Donald Trump's victory in the US presidential election.

Silver reclaimed the Rs 45,000 mark by surging Rs 1,390 a kg on heavy speculative rally.

Immediately after the announcement investors rushed to convert their old currencies into valuable commodities, leading to price surge many jewellery shops were accepting old denomination notes a day after the announcement, earning huge premium.

Global Market

Globally, gold prices jumped nearly five per cent on the Donald Trump‘s victory in the US, prompting a dive in stocks and the dollar.

London spot gold vaulted to a six-week high of $1,337.40 an ounce, up nearly five per cent.

Effect on Debt Market Bond prices may remain elevated as the flight to safety would continue,‖ says Sharma. This is because of the deflationary impact of demonetisation. ―We are likely to see some decline in inflationary pressures as demand comes down in the short term,‖ says Anis Chakravarty, Lead Economist, Deloitte India.

Debt market has reacted positively to both vregr 31

demonetisation and Trump‘s victory. Increase in the bank deposits due to demonetisation would results in high liquidity for banking sector. Debt market is also expecting further rate cuts, which could be good news for Debt investors. Experts predicted a 50-75 basis points rate cut in the coming 6-9 months. As a deflationary environment when coupled with high liquidity and slow growth environment would provide the scope for further rate reductions.

worst weekly close value since February.

Automobiles, Realty, and Consumer are the few sectors which has bear the worst impact of this new move. Nifty realty sector has suffered the major brunt of the demonetisation while the second one is Nifty FMCG index, its all due to cash crunch or disruptions in cash payments, and it will be temporary effect.

The Banking sector alone has different impact, as in compared to other sectors.

If we notice the price movements of major sectorial indices at NSE. The movement is compared before and after demonetisation i.e 25 trading days before the event (October 3November 8) with a time frame of 11 days post event (November 8- November 24).

Effect on GDP

Effect on Equity Market ―The global unfolding of these two events and the market jitters created by them presents a value buying opportunity,‖ says Dhananjay Sinha, Head, Institutional Research, Emkay Global‖.

The day after the demonetisation move was announced and Trump won the US presidency, the BSE Sensex opened with a massive loss of 1,300 points, but recovered later.

On 16th November, after a week of demonetisation, the daily closing price of NSE S&P CNX Nifty 50 index dropped by 5.1% as in compared to 8th November, the day announcement was made. This was a fregfeg

In a short run it would lead to negative impact on countries GDP, consumption and investment demand are likely to take a beating owing to the cash crunch. Also, not all black money is going to flow back into the system and hence cash based transactions may witness a dent. ―There may be a negative impact on the GDP in the Oct– Dec quarter, as consumption shock gets transmitted into the system. Some rupee appreciation in the forex markets is also expected as notes in circulation will decrease,‖ says Anis Chakravarty, Lead Economist, Deloitte India. If the RBI and the government don‘t step in to ease the liquidity situation, our export-oriented sectors may suffer.

32

VRIDDHI RESEARCH PC JEWELLERS

-Aditya Jaiswal

Industry at a glance

Macro’s in effect

• The Gems and Jewelry sector plays a significant role in the Indian economy, contributing around 6-7 per cent of the country‘s GDP. • One of the fastest growing sectors, it is extremely export oriented and labor intensive.

• The Government has recently undertaken various measures to promote investments and to upgrade technology and skills to promote ‗Brand India‘ in the international market.

• The gems and jewelry market in India is home to more than 500,000 players, with the majority being small players.

• The overall gross exports of Gems & Jewelry in April 2016 stood at US$ 3.23 billion, whereas exports of cut and polished diamonds stood at US$ 1.78 billion.

• According to a report by Research and Markets, the jewellery market in India is expected to grow at a Compound Annual Growth Rate (CAGR) of 15.95 per cent over the period 2014-2019.

• The cumulative Foreign Direct Investment (FDI) inflows in diamond and gold ornaments in the period April 2000-March 2016 were US$ 772.05 million, according to Department of Industrial Policy and Promotion (DIPP).

• Financial Risk – Due to presence of large number of unorganized players and volatile gold prices keeps the margins under pressure.

• Due to the presence of large number unorganized players branded segment faces stiff competition.

• Very little domestic production of gold leads to dependence on imports.

Analysis of Financial Statements With net sales growing at a five year compounded rate of 19.63% and Eight year compounded rate of return of 41.40% gives strong indication of the strength and fundamentals of the company.

The growth has mainly been due to its constant capacity addition to keep up with both the domestic and export demand over the years.

By looking at the current quarterly results we can expect a much better performance by the company in terms of topline growth.

Budget-2016 Exercise Duty of 1% which was imposed by the government in this budget has hurt the overall industry.

33

The PAT of the company is showing a cyclical nature. Comparing it with growing net sales of the company it could be attributed to growing expense to increase in Gold prices across the globe.

Key Fundamental Ratio’s All the ratios are showing a downtrend, a result of fluctuating gold prices and macroeconomic conditions. Although the company is showing great sales growth but the result is not getting transferred to the bottom-line due to rising gold prices.

Analyst Recommendation P.C Jewellers has given a 5 year return of 148% and a 1 year return of 40%. This has occurred when the benchmark index gave a return of 5%. The beta of the stock with the benchmark NIFTY is 1.08 thus showing a cyclical nature. Although the fundaments of the company are strong, we see a diminishing margins, an indication of poor performance.

The recent FDI proposal, Excise duty and Increasing gold prices have badly hurt the frrfw

34

industry as well as the company.

With the stock twelve months trailing P/E of 19.79 compared to industry P/E of 22.11, it is undervalued and we could see an upward movement till Rs 385 in the coming year. But the analysis of future cash flows shows that the company is overvalued at this point of time.

Looking at the technicals, with RSI at near about 50 and 30 day SMA of Rs 345, we would like to hold off on buying the stock till it reaches a level of Rs 327.

The analyst would give a SELL call for P.C Jewellers.

35

FINANCIAL TRIVIA The 2016 demonetization is the third time it ha taken place in the country. the previous two times was in 1946 and 1978.

THE IBS TIMES The IBS Times is an academic print and is not for any commercial sale.

Reliability and Responsibility for sources of data for the articles vests with the respective authors. Please feel free to drop in your suggestions or any feedback at editor.ibstimes@gmail.com Š IBS Times – FinStreet, The Official Capital Markets Club of IBS Hyderabad.

All Rights Reserved Visit us at www.finstreetibs.org

36