Arbitrage Magazine - October 2021 - Finance & Investment Club | IIM Rohtak

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Presents

October 2021 Vol 5 Issue 2

Our best read – 5-Trillion Economy: Vision, Government Initiatives and Road Map Special Mention: ARE SWEET SUGAR’S BITTER DAYS OVER?

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INDEX S. No.

Article

Page No.

1

5-Trillion Economy: Vision, Government Initiatives and Road Map

3

2

ARE SWEET SUGAR’S BITTER DAYS OVER?

7

3

Gender equality is the key to economic development

9

4

SUSTAINABLE INVESTING AND ESG FUNDS: PATH TO THE SUSTAINABILITY OF INVESTING

11

5

GOLD RUSH AND THE INDIAN ECONOMY

14

6

The value of cryptocurrency: is it a sound investment or just fool's gold?

17

7

MSME Sector: A tool for poverty eradication

20

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5-Trillion Economy: Vision, Government Initiatives and Road Map By: Pratik Avasarmol (IIM Amritsar) Prime Minister Narendra Modi, on 15th August 2019, while giving his 6th Independence speech, expressed the confidence that India would be a $5 trillion economy by 2024. More recently, on 20.12.2019, to mark the 100th year of ASSOCHAM Prime minister said, "The country has developed so fast in the last five years that we can aim for such big and worthy goals."

The Economic survey 2019 laid the foundation for achieving a $5 trillion economy by 2024 presented by Chief Economic Adviser (CEA) Krishnamurthy Subramanian.

Source: Mumbai Times The Context: India set an ambitious goal to achieve a $5 trillion economy by 2024, and if completed, India will be the third-largest economy.

The Government wants to boost the service sector to contribute $3 trillion, Industry to $1, and Agriculture to $1 trillion.

The recent Slowdown due to pandemics has raised a question on an ambitious goal.

What is a $5-Trillion economy?

The $ 5 trillion economy is the total size of the country as a whole. Simply it shows the entire GDP of that country in the same year.

What is GDP?

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The GDP is the total money value of all the goods and services produced within the boundary of a country within a given period, generally for one year.

The total size of Indian GDP in 2014 was $1.85 trillion, whereas in 2018, it was $2.7 Trillion, and India is the sixth-largest economy in the world and the third-largest in terms of purchase power parity.

Source: NDTV India Government Initiatives: #National Pipeline Project On the occasion of Independence Day 2019, Prime Minister Narendra Modi announced an Rs. 102 Lakh Crore infrastructure pipeline under the national infrastructure project has been laid down by considering achieving a $5 Trillion Economy goal by 2024.

Why is it required?

Robust infrastructure is the number one requirement for any economy to grow with an equally strong supply chain. To become more competitive in this area, India needs to boost the service and industry sector. In addition to that, it will also create opportunities for employment and upgrade the well-being of people.

The following are essential observations: 1. Investment needed: ₹111 lakh crore over the next five years (2020-2025) to build infrastructure projects and drive economic growth.

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2. Energy, roads, railways, and urban projects are estimated to account for the bulk of projects (around 70%).

3. The monetization of infrastructure assets. Setting up of development finance institutions.

4. Strengthening the municipal bond market. #Make in India: How "Make in India will awake India."

As Government has already planned to boost all sectors and their contribution to total GDP following are the highlights of essential in India's dream to achieve a $5 Trillion economy.

"Make in India" aims to increase the contribution of manufacturing in GDP to 25% from 16%.

With the launch of the 'Make in India' campaign, India has already marked its presence as one of the world's fastest-growing economies.

India has good demographic dividends for the next 2-3 decades, and the workforce's cost is less compared to the other developed countries.

India is a house of solid and responsible business houses operating with credibility and professionalism. These business houses have enormous contributions to the development of the Indian economy.

NITI AAYOG: In the future, Niti Ayog CEO Amitabh Kant recently outlined these steps. #Increase Ease of Business and Ease of Living to promote private investments Over the last few years, the Government has taken some steps in this regard like they have scrapped more than 1300 antiquated law that creates an obstacle while making FDI's India has jumped up to 65 positions in the World Bank Ease of Doing Business by adopting these reforms. But India's challenge is to be in the top 25 countries in the next four years. #Urbanization - Can't Ignore at any cost If we compare the total land area, which is less than 5% globally, it contributes to more than 75% of real GDP. We will see more urbanization in the next five decades than India could ever see from the last 500 years. # Women Participation is the key

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Source: The Hindu Unfortunately, Indian women's contribution to work is only 26%, whereas the world's average stands at 48%. If we left out such a vast mass, then we could not grow at a set pace. Eventually, it won't be easy to achieve a target of a $5 trillion economy. #Agriculture Reforms is vital We all know that India is an agriculture-based country where 48% of the population work in farms and businesses related to farming, poultry, etc. Indian farmers can't grow on subsidies. They need better technology, infrastructure, roads, water supply, and essential agriculture tools, and if they are not growing, we must not think about this ambitious dream.

References: https://indbiz.gov.in/atmanirbhar-bharat-to-facilitate-indias-dream-to-be-a-us-5-trillioneconomy/ https://economictimes.indiatimes.com/news/economy/indicators/indian-economy-to-grow-at-95-in-2021-8-5-in-2022-imf/videoshow/86968477.cms https://www.thehindu.com/news/cities/Hyderabad/indias-us-5-trillion-economy-dreamshattered-for-now-due-to-pandemic-rangarajan/article36899010.ece

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ARE SWEET SUGAR’S BITTER DAYS OVER? By: Manya Mittal and Trish Gupta (Shri Ram College of Commerce, Delhi) Commodities have enjoyed a sensational year, be it the stock market or the government schemes, they have been the hot topic everywhere. One such commodity that has enjoyed a remarkable run is Sugar. A commodity despite being sweet, tasted bitter for the investors because it had been on a negative trend for many years. The turn of the decade spelled misfortunes for many but it has surely increased the sweetness of sugar for those concerned. Global demand, rising prices and increased government support are some of the reasons that have led to these good times. Ethanol, a key by-product of the sugar industry, has been the centre of attraction in major government rulings and this has impacted the sugar stocks and sugar industry in a positive way.

Will the sweetness increase further or will it stabilise is something that everyone has their eyes on?

To begin with, ethanol supply for the present year 2020-21 is more than 300 crore litres which is a remarkable achievement, considering it is only a by-product. Not only this, the central government also plans to achieve a blending target of 20 percent by 2025 by increasing the investment to at least Rs. 41,000 crores in the ethanol sector. Why has this industry become an immediate target of the government in recent times? Is it an achievable target? Doesn’t it affect food security or is the government trying to kill two birds with a single stone?

Before finding answers to these questions, let's first understand Ethanol blending capacity. So, ethanol, made from molasses and grains, results in fuel when mixed with petroleum. Thus, the government plans to increase the ethanol’s blending capacity with petroleum.

Now, the answer to the above questions lies in the fact that the government plans to cut down oil import bills and fight the climate change battle by shrinking carbon footprint. Thus, this brings a great positive impact on the economy, by promoting ethanol as an inexhaustible non-polluting fuel. A few government officials believe that this helps in achieving multi-fold objectives while a few cautions the government to maintain balance in food security needs.

Now let's quantify these facts and understand the government's blueprint to achieve its set target.

India is the third largest oil consumer in the world after the US and China with oil import bills of over $100 Million in the past two years. This clearly justifies the inclusion of the Ethanol Blending Programme, EBP, under the government's radar. The government plans to set aside sugarcane for the increased production of ethanol. This solves two targets, firstly increased employment opportunities in rural areas and boost in agricultural economy.

The Union government modified a scheme in order to promote ethanol production in the country. Under this scheme sugar mills will be provided cheaper loans to set up ethanol blending factories. On the other hand, oil marketing companies are going to be given assurances of buyers for the next 10 years. Interestingly, India is the second largest producer and largest consumer of sugar globally. This acts as an advantage for the country.

However, in this extremely appealing process and boom, the major problem lies in the fierce competition between food and fuel crops for fixed resource, land. As always, increase in production of cash crops for food and not fuel is a matter of great concern. Another problem lies in the interstate movement of ethanol. To ensure smooth transport of ethanol across the country,

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the central government made certain provisions under the Industries Development and Regulations Act. However, the problem lies in the fact that only 14 states implemented it.

The turn of the financial year brought in a ray of hope for many sugar producing companies because of the positive news that was floating around regarding this sector. A sector that had witnessed a rigid 5 years in the stock market where little or no movement was seen, suddenly saw a huge spike after 1 April 2021 and this rally continued till Mid-July. Shares of all ethanolsugar producing companies touched new highs and a deadlock seemed to have broken. Shares of Dhampur Sugar Mills, Balrampur Chini Mills, Triveni Engineering and many others doubled within a span of 4 months. A sector that interested no investor saw trading in huge volumes. The shares surged almost 100% and the brokerages continue to feel that there is a huge potential that is still left to be tapped. So, the entire EBP clearly justifies this boom in the sugar producing companies.

To conclude, if we go by the numbers, the demand for sugar is going to increase in coming years as India is being seen as one the young markets in sugar exports. Sugar production has touched all time high and the companies involved in manufacturing are reporting unbelievable profits.

This has spelled good times for the investors as well as the manufacturers. The government support has regenerated a dead sector that was being looked upon by everybody. However, the government also has withdrawn the export subsidies that were earlier given to this sector for the September quarter. Although this news has little or no relevance in comparison to what the government is planning for this sector. However, it definitely lays emphasis on the fact that the current benefits are being withdrawn from the sector for benefits that will be reaped after 4-5 years. So, a similar pandemic like uncertain situation can shake this industry heavily. Will the industry continue to blossom on future prospects or will it lose its charm in the coming years?

We will leave it for time to tell.

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Gender equality is the key to economic development By: Yanshikha Bansal (Sri Guru Gobind Singh College of Commerce, Delhi) “A nation where women thrive, is a nation that always strives. “ Now it has been more than a decade talking about the importance of gender equality in the society and women empowerment. But have we ever considered the fact that merely issuing laws in favour of women will not ensure gender equality in the society? For gender equality to prevail in the society we require a collaborative and participative sustained approach that would lead to true economic development in the society.

With rapid innovations and vast technological improvements, the status of women has uplifted in the society but still there are crucial areas we need to work upon as family laws are still not in the favour of women. Women are not allowed to work outside their houses or take up occupations of their choice and even the firms discriminate against women in providing equal wages for the equal work they do. According to the Indian statistical data of 2020, women account for only 19.9% of the total labour force in India which means that half of total women population is unemployed in India due to lack of skills, safety issues or family customs.

Moreover, as per the data provided by the National Commission for Women, there has been a 46% rise in crime rates against women in the first half of 2021 which proves to be a major hurdle in preventing women to take up a no. of occupations in the economy as security of females is still the primary concern in each family. Another major factor that can help in ensuring gender equality in the society is education. Though every year we celebrate Literacy Day on 8 September which has immensely helped in improving the literacy rates in India but still there is lot more to be done. According to the India stats, the literacy rate among females is 70.3% which is very less in comparison to the male literacy rates.

Even today in backward areas of India, while the girls are taught household chores only the male children in the family are sent to schools to acquire education. In urban areas despite earning a decent amount, women are not given the freedom to spend as per their choice or take independent decisions. Studies done by EIGE (European Institute for Gender Equality) shows that by restricting women and discriminating against them we can never achieve an inclusive growth.

Therefore, we need to understand that gender equality and economic development in the society are interdependent and to have high growth rates in economy we need to work for uplifting the status of women in the society. Since childhood girls and boys should be given the same treatment so that when they grow, they are more aware about their rights and can contribute more in the GDP of the country by providing skilled labour in the economy. In schools and colleges, sex education should be imparted on primary basis among the students and since we are living in an era of digitalization so more of movies like Dangal, Neerja, Chak De India etc should be released as ‘in order to empower the females in society we need to first a fall empower the mentality of the male folk in the society’.

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Records have shown that countries with greater equality among males and females have economies that are fast growing and more competitive. We need to learn from other nation’s experiences like that of Scandinavian countries particularly Norway and Iceland as these countries have impressive growth rates because it provides equal wages for equal work and due to higher participation of women in the public-private sector industries. Japan and Singapore are small nations but have high GDP because the crime rates against women in these countries are negligible and male and female are provided with equal opportunities in every field.

Our government has also tried to ensure equality among all through reservations, UAF and recent decision of supreme court to let girls appear for exams for recruitment of army officers is really a noble task in this dimension. More of govt schemes like Ladli scheme, Beti Bachao – Beti Padhao etc should be introduced and rigorously practiced in our country. So, in my opinion it is clearly visible that a nation can prosper only when women are provided education, protection and a healthy environment to live in. When gender equality would prevail in society women would be able to work in a better manner, earn and contribute in national income, moreover she would be able to educate her children who can later become an asset for the society and lastly, she would be aware of her rights and would be able to confidently raise her voice against the injustices done. Hence striving for gender equality has long term positive impacts not only on the economy but also on the life of all individuals as a whole.

“Let girls become equal to all in every country big or small, Let the girls show their might and spread their light because Mahatma Gandhi once said, be the change you want to see in the world”

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SUSTAINABLE INVESTING AND ESG FUNDS: PATH TO THE SUSTAINABILITY OF INVESTING By: Laqshay Gupta (Shaheed Sukhdev College of Business Studies, Delhi) Environmental, social, and governance (ESG) investment has risen in popularity over the past as the public, in general, has become more cognizant of its responsibility as an investor, prompting investors to seek out ESG goods. The growing investor interest in ESG factors reflects the view that to reach a sustainable future, investors should take an ESG-aware approach. The first step towards a sustainable investing approach is to understand the basic concepts, including how ESG factors affect the structure of investment portfolios and investment returns. In this article, we will discuss how the concept of social return measures the potential for sustainability from any point of view. We will also look at what firms are doing to incorporate lessons from social finance lessons into their business models and investments. Lastly, we'll discuss promising past and current approaches that investors might consider adopting to make sustainable investments a reality for both themselves and their clients.

When it comes to financial decisions, many investors look to ESG governance. The levels of interest in this field vary significantly across regions and countries, however; notably, fewer than 25% of US investable assets are committed to sustainable strategies according to SWFI data.

Nowadays, there are numerous resources available on how you can incorporate ESG investments into your portfolio.

As demand for ESG ratings, indexes, and funds surge, the finance industry is responding by developing additional products and services. ESG funds are funds that invest in companies that score highly on sustainability. With an increased focus on ESG investing, it is becoming more important to know what a 'sustainable investment' is and how a sustainable investment can benefit individuals. Investing professionals need to be able to justify the benefits of the sustainable investments they want to recommend.

Simply stated, researchers examine a firm's ESG framework and evaluate growth potential and risks that aren't often included in ordinary financial reporting. An ESG analysis is provided b y market analysts, but it is done by itself. ESG analysis is primarily derived from sustainable development issues and the financial sustainability of the company. The report looks at matters of social and environmental interest, including labour, human rights, health and safety, the impact on the environment, and supply chain management. Companies that have a strong social responsibility are considered as being "sustainable" financially. Investing responsibly is never more important than it is today. The latest data show that “sustainable” investments are outperforming by about 3% annually since 2010. As national governments become increasingly unstable, our financial security depends on sustainable investing more than ever before.

How Can ESG Become A Game-Changer – Our environment's sustainability has become a primary focus for individuals, nations, and businesses. The market wants a solution. That is why a growing number of companies have started to integrate ESG factors into their decision-making process. Investing for sustainable development is now becoming achievable as the ethical investment space becomes more competitive and mainstream investors are starting to take notice.

Typically, businesses profit from the economic rise, higher consumption, and globalization. As a result, they often overlook the environmental and social costs of production (and consumption).

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This leads to the environmental and social drag on the economy. This drag will intensify with human population growth. The historic solution is for investors to divest their portfolio’s exposure to industries that fail to meet certain benchmarks for sustainability.

Conversely, technological developments have encouraged investors and stockholders to scrutinize how corporations operate. In the face of this, one way to save our planet from the devastating effects of global warming is by increasingly sustainably investing in shares. To do so, investors must first seek out companies that align themselves with several social and environmental goals.

Why Is ESG Investing? – Environmental, social, and governance (ESG) investors are looking for businesses that can solve these challenges. ESG funds invest in companies based on their environmental impact, whether they treat their workers well or not, and the quality of the company's management team. A commitment to ESGs is a commitment to sustainable long-term investing. ESGs are about considering non-financial factors when assessing investment opportunities As per Bloomberg data, the MSCI India ESG Index has consistently outperformed its benchmark index over 12 months by a very significant margin - 4.7% to be precise, outperforming the Nifty 500 index, which has been in negative territory since last year. The market for ESG funds is still marginal in India, but it’s on its way to becoming mainstream with the increased adoption of sustainable investment practices globally. It is a type of fund which invests in companies that have a lower level of environmental or social risk than others.

Getting Started On ESG Investing – Retail investors have the opportunity to assess businesses' ESG programs and make proper investments at any time. The method of evaluating an institution, on the other hand, is not so straightforward. It requires a certain level of education and research to evaluate the sustainability of a company and invest in it. This can be an arduous task with so many companies and funds to choose from, but there are options for those with little free time or who don't have that kind of expertise. Investing in sustainable projects is good for you as well as the environment because most renewable energy sources, such as solar power, wind turbines, hydroelectric dams, and geothermal plants all help reduce CO2 emissions coming from fossil fuels by 90%, which leads to less pollution and lower levels of surface ozone which causes respiratory illnesses - both directly related to global warming. Investing in an ESG fund offered by retail money managers or life insurance companies can allow you to seek good returns & do well by doing good.

To mitigate ESG risks, foreign investors who invest in India-listed firms rigorously investigate their ESG activities and corporate sustainability. But this has led to a great deal of contention around the controversial topic of how investors should define sustainability, or if they exist at all. There has been much discussion around ESG over recent years with institutional concerns on sustainability growing rapidly by individual interest and demand. This has led to an increasing number of investment opportunities promoting sustainable investment schemes internationally, including real estate investment trusts (REITs) and sustainable mutual funds (SMFs).

Millennials Are Changing The Face Of Investing – The vast majority of today's millennials are conscious about the environment, guaranteeing equality and fairness, and mitigating risk. Socially responsible investing is now one of the fastest-growing segments within the financial industry.

Many investors now choose to invest in ESG funds that are invested in companies that are better

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for the environment, economy, society. Investors can use ESGs to help reduce environmental impact by choosing companies that have social programs or renewable energy sources, which invest in companies with limited pollution-causing greenhouse gas emissions (GHG) like wind turbines, solar panels, LED bulbs etcetera.

Given the rise of millennial engagement and enthusiasm in sustainable investing, now is the time for all ages to embrace ESG investments.

If you want sustainable investing to succeed in our society, you need to start by taking baby steps with ESG funds.

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GOLD RUSH AND THE INDIAN ECONOMY By: Jahnvi Sangal (Ramanujan College, Delhi) Introduction Gold is a metal that, alongside silver, has been used for many purposes all around the world including economic barter. It is the most ductile and malleable metal as it can be woven into wires and can be beaten down to sheet which can be most slender of all metals (Kumar, 2017).

The quality of gold and its sustenance over a long period has made it valuable enough since an impressive timeframe. India in the ancient times used to export the finished goods in exchange for gold which has accumulated gold in India. (Vanitha & Saravanakumar, 2019). However, the British colonialism in India had, through its exchange and trade policies, sent a considerable amount of gold from India to Britain. This article talks about the degree of relevance of gold in India as against the fact that the highest volume of gold has been vaulted into India and what India must do to yield more value out of it.

History Before the Bretton Woods Conference after the World War 2, gold was the reserve currency for majority of the nations as there was a lack of any internationally approved currency. Thus, countries made huge reserves of gold against a hedge of the collapse of their currency in case of hyperinflation (Reddy, 1996). When the dollar was approved as a reserve currency, countries started to accumulate dollars instead of gold as price fluctuations were a continuous possibility in the world due to fluctuation in demand, and gold was less safe than USD (Mishra, 2010).

The Gold Economy in India Traditionally gold has been looked at by Indians as important and auspicious occasions demand gold buying in different forms in India. It is used in weddings, deities, for any other festive occasion, thus the demand base of gold in India is solid and consequently is relied upon to make a minimum demand level over the coming decades. Indian people hold more gold than any other country in the world, in terms of value, as India sees gold as a part of the culture (D’Souza, 2015). This gold reserve with the people had been seen by the government and served many a times as an opportunity to the economy and thus the government started approval of gold loans and higher interest on gold deposits in the decade of 2000 so that the gold economy could run across the businesses and increase the investment and manufacturing to produce more even without printing more money (Mishra et al., 2010).

The current developments are related more with the demand and supply and price movements in accordance with the international events and fiscal policies in IndiaOn the demand side, though they are no authentic estimates, most of the gold, which is about 80 % of the gold, is used for jeweller fabrication, 15% for the demand of the investors, and 5% for the industrial usage (Abraham & Ramanathan, 2020). The demand for gold has been rooted in the minds of the Indians as culture, religious preferences, and hedge against inflation. It can be

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concluded that the combined effect of treating gold is a major part of treating it as a hedge or value instrument and also that the investments in gold is out of black money in India, at least till recently (Vanitha & Saravanakumar, 2019). The annual consumption of gold may fluctuate but decade-wise consumption is only increasing as the population is expanding. Shortly likewise, the demand for gold in India will continue to be around 600 to 700 tonnes. Even in the month of March of 2021, which has seen a surge in gold imports, the demand was 160 tonnes (Mukherjee, 2020).

Gold imports into India (by value) (Mukherjee & Mukherjee, 2020)

Gold imports (By volume) (Mukherjee & Mukherjee, 2020)

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As the domestic production of gold is limited, around 2 tonnes per year, and some supply from fabricated gold scraps which is around 80 tonnes, the insatiable thirst for gold reaches out to imports of gold which is a huge reason for India’s current account deficit, importing gold and sending currency out of India, thus devaluing the Indian currency. Even the government's decision to decrease this CAD had restricted the imports, which then began gold purchase in the form of illegal imports (Singh, 2013).

Thirdly, the strong demand for gold and restrictive policy stances has always resulted in increased prices of gold in the domestic market as against the international market. The value of gold is increasing each year. It must also be mentioned that the management of gold demand and supply has an important policy implication for the monetary and fiscal policy and also in the exchange rate management. In the recent times, as mentioned before, usage of gold as a financial instrument against loans, and mobilization within the financial funnel has also attracted attention for gold (Narayanan et al., 2020).

The decline in the value of gold in the recent past was so rapid that the recession in Greece could also be attributed to gold as one of the reasons. Similarly, the gold rush in India has also reached the point when the nation’s economy and currency are being sacrificed in the bargain as the metal has fallen for three consecutive years.

It’s about time that gold be used through the help of governmental and fiscal policies for the benefit of the Indian economy, for instance, providing gold loans (Mukherjee, 2020). In addition to that, the government must also discover newer ways of gold use to extract gold from the personal vaults and to use them for circulation in the economy so that it creates value. Presently, gold is the most valuable non-value-creating asset. Gold rush mining must be on priority for the government, as gold imports can be a pit in essential imports.

Conclusion Gold imports have emerged, in terms of the importance of trade, only second to the crude oil. It must be remembered that the Indian government has been, to some extent, successful in limiting the imports of gold, but it should be recalled that the 2008 crisis was survived by India because of Indians having gold in their vaults and that money was not in circulation. Thus, in place of limiting gold demand, the government must look for newer aspects of gold usage for economic prosperity and growth.

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The value of cryptocurrency: is it a sound investment or just fool's gold?

By: Deep Arora (Symbiosis Institute of Management Studies, Pune) The drastic increase in value in the past year has changed many people's minds about cryptocurrency from a salacious method of money laundering to a severe contender for investment. More and more new investors are dipping their toes into the metaphorical water.

Even large companies (Starbucks, Amazon, PayPal, among others) are starting to accept cryptocurrency. With more money converted into cryptocurrency, people with unsolved estates are becoming more likely to possess assets of this kind. So, what does that mean for creditors who invested in cryptocurrencies when their companies or banks failed?

Because cryptocurrencies are decentralized - i.e., they are not tied to a country's currency, nor are they regulated - they are seen as an easy way to defraud people. Nevertheless, that isn't necessarily true. All transactions are open for public inspection, meaning ownership can be verified and traced. Since there is no one controlling body, everyone is accountable to everyone.

As a result, it is more difficult to hide in plain sight as this transparency is a security feature in itself.

There is, however, a hurdle of learning new terminologies and understanding a new process. As a result, many people shy away from dealing with it. This can seem daunting and is undoubtedly a barrier to entry for some. Nonetheless, it is not a reason to disregard what has the potential to be an immensely fruitful asset pot. As professionals, we must begin to change our perspective on cryptocurrency, particularly in relation to company investments in insolvency estates, and adapt processes to deal with cryptocurrency more effectively. The era of dealing only with traditional assets is over.

Then how should a cryptocurrency be treated in an insolvent estate?

Is it possible to identify that the company uses cryptocurrency in the first place? There are various indicators to look for to determine if the estate contains a cryptocurrency, such as:  As indicated in the company's bank statements, transfers to exchanges  Incorporated into the books and records of the company was a USB key  Using everyday keywords such as "crypto" or "bitcoin" to search the electronic records  Identification of seed phrases in the company records  The directors should be consulted As soon as it becomes apparent that the company holds cryptocurrency as an investment, the insolvency practitioner (IP) must take steps to protect and preserve the investment. To ensure the cryptocurrency is correctly secured, the IP will need to act quickly, like any other asset. It's critical to identify and locate the key, but the IP shouldn't assume someone else won't have a copy. The executor should transfer the cryptocurrency into a secure wallet of their own (on behalf of the estate) or to an agent. The new FCA legislation requires cryptocurrency held on someone else's behalf by an approved agent, who can secure the assets properly by having them offline and obtaining appropriate insurance.

Nonetheless, what happens if it turns out that the company entered into a cryptocurrency transaction, but its wallet doesn't contain the cryptocurrency? In the same way that physical

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assets or cash are dispersed, cryptocurrency can also be considered to have been transferred away from the estate. To succeed in clawing back the support for the benefit of the estate, further investigation is required, as with any other claim.

Infographics Resource: https://financesonline.com/cryptocurrency-statistics/ What is the process for realizing cryptocurrency after it has been successfully recovered?

Every exchange has its conversion rate, just as fiat currency has its conversion rate. The conversion rate of an interbank offer is not standardized because there is no interbank offer rate.

Investors are delighted to see the interest rate fluctuate drastically in the last year, as we have seen. Comparing exchange rates and conversion rates would be prudent to minimize any criticisms and ensure the best price is being achieved for the asset. Another option would be to put the cryptocurrency into an auction, which protects the IP since the value is determined by the highest bid rather than an exchange.

We will likely continue to see a significant shift in investments towards cryptocurrency, especially now that so many blue-chip companies are backing it. It is not the fraudsters' friend, as is sometimes thought, and can be traced if you are skilled and knowledgeable about handling it. Cryptocurrency is becoming a more prevalent asset class, and insurance professionals need to be aware of the tools they have at their disposal, including recovery actions and tracing of assets leading to a claim for the benefit of the estate.

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Infographics Resource: https://financesonline.com/cryptocurrency-statistics/

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MSME Sector: A tool for poverty eradication By: R V Pooja (IIT Madras)

A plethora of sectors, such as training and educational Institutes, auto repair services and garages, tailoring, equipment rental & leasing, laundry and dry cleaning, electronic surveillance and security, engineering and fabrication, khadi products and hosiery products, printing and other products made of paper and many more sectors alike, fall under the umbrella of Micro, Small and Medium Enterprises (MSME) sector. This is the sector that is not only fulfilling and catering to all the basic necessities and amenities of life but is also responsible for being one of the highest contributors of socio-economic development.

Not only do MSMEs, in India, contribute a whopping 29% to Gross Domestic Product by producing goods and rendering services for both national and international trades, but at the same time, they play a stellar role in poverty eradication, providing employment, chance to talent, rural areas’ development and the flexibility to establish a business of any size and capital that the owner might be considering. Currently, India is home to about 6.3 crore MSMEs. These are mainly classified into two broad classifications. One, Manufacturing MSMEs. This is the category under which all good producing industries fall, such as production of automotive electronic components, recorders, VCRs, radios, transformers, motors, watches, artifacts and handicraft products that are spun and woven, furniture and wood products etc. Two, Service MSMEs. In this basket, fall all industries that do not provide products but render specific services to its customers. These enterprises include call centres, IT solution providers, laundry and dry cleaning, tailoring, beauty parlours, teaching industries and the like.

MSMEs serve to be important to a country in multiple ways. One of their major highlights is the fact that they function as a powerful tool that can eradicate poverty. Here are the reasons why.

Firstly, they possess the potential to provide anyone and everyone with the gift of employment.

There will be some or the other job available that can perfectly align with the skillsets of the person seeking it. An MSME that is established and already invested in is a golden opportunity that paves the way for the poor to make themselves a fortune which in turn improves their quality of life and enables them to afford better standards of living.

Secondly, the government has agreed to provide a 50% subsidy on patent registration. People might be poor financially but not in terms of knowledge. So, any MSME that is registered which can come up with a new innovation or a creative idea can get it patented with a subsidy. This is not only aimed at pushing people to be ingenious but also aims at providing them with financial support.

Thirdly, Micro and Small enterprises are privileged to avail collateral free loans. An initiative by the Ministry of Micro, Small & Medium Enterprises (MSME) in collaboration with Government

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of India and Small Industries Development Bank of India (SIDBI), that issues funds to micro and small enterprises, ensures betterment of the underprivileged. This initiative called Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is of help to both already established MSMEs and ones that are upcoming.

Fourthly, the government safeguards MSMEs against any stalling of payments by buyers. So, that the businesses of MSMEs keep running hassle free, The Micro, Small and Medium Enterprise Development (MSMED) Act, 2006 claims that “In case the buyer fails to make payment as required under Section 15 of the Micro Small and Medium Enterprises Development Act, the buyer is liable to pay compound interest with monthly rests to the supplier for delayed period beyond 45 days, on the amount, payable at three times the bank rate notified by Reserve Bank of India as provided under Section 16 of the MSMED Act, 2006.” Hence, the government clearly aims at fortifying the MSMEs’ backbones by providing its full support.

Fifthly, the government wishes well for the MSMEs and tries its best to push them into the global market. To achieve this, a scheme under the Ministry of Micro, Small and Medium Enterprises (MSMEs) provides the enterprises financial incentives such as reimbursement covering the expenses incurred for obtaining ISO 9000/ISO 14001/HACCP certification, which enables and certifies the MSMEs making them now eligible for facing the competition by trading in the global market.

Sixthly, all the MSMEs that have been certified to be an MSME can apply for concessions on their electricity bill. All they need to do is carry along their MSME registration certificate along with their electricity bill to the electricity department and file an application.

In conclusion, the government sees MSMEs as the future of the country and that is why the government of India is making its utmost efforts to propel these Micro, Small and Medium Enterprises forward. To support all the poor and hardworking people in some sectors of the MSMEs the government, apart from the ones stated above, is providing them with more benefits which include some governments tenders being open only to MSMEs, providing Industrial Promotion Subsidy (IPS) to the MSMEs that already own the MSME registration certificate, letting the MSMEs avail an exemption of 1% on the Overdraft according to a scheme, enabling the MSMEs avail subsidies on National Small Industries Corporation (NSIC) performances and credit ratings and allowing the MSMEs avail barcode registration subsidy. The government’s effort is simply evident by the statistics. The number of MSMEs has jumped by a total of 18.5% between 2019 and 2020. Hence a clear hint can be seen in the future of MSMEs which will promise to secure more and more jobs for the ones who couldn't even think of employment.

MSMEs will surely make the world a better place.

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References: https://www.startupindia.gov.in/content/sih/en/governmentschemes/reimbursement_iso_standards.html https://www.indiatvnews.com/business/news-msme-heavy-penalties-for-delaying-paymentsmsme-council-617799 https://www.cgtmse.in/ https://www.ibef.org/industry/msme.aspx https://samadhaan.msme.gov.in/MyMsme/MSEFC/MSEFC_Welcome.aspx https://www.lendingkart.com/msme-loan/what-is-msme/ https://taxguru.in/corporate-law/18-benefits-msme-registration.html

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