IBS TIMES 212th ISSUE

Nationalism….

Growth….

Both?

10% RESERVATIONS IN INDIA -ACHINTYA SARASWAT SAGA OF DEMONETISATION -NARAYAN TRIPATHI RAFALE DEAL; CONTROVERSY IN THE AIR -BIDISHA DE IT’S A MIRAGE -OR A DOZEN OF THEM! -SIMRAN ABHICHANDANI

212 ISSUE th 1

FINSTREET, IBS HYDERBAD

TEAM IBS TIMES Samriddhi Bhatnagar (Editor in Chief) Rahul kumar G S (Managing Editor) Supriya Panse (Associate Editor) Bidisha De (Associate Editor) Achintya Saraswat Krishma Mohanan Narayan Tripathi Akanshi Bargava Simran Abhichandani Jagdish Samudrala Kartik Bhardwaj Anisha Jose Revathi Menon Designed by: Samriddhi Bhatnagar Rahul Kumar G S Bidisha De Logo Design Sangeeth Mohan (External) 2

Editor’s letter India is one of world’s largest economies which has proved itself time and again how competent it can be whilst achieving biggest accomplishments in technology with “Mangalyaan” with an immortalised cost of Rs 2000cr. But is it the cause of change in the government after a long reign of the Gandhi family in the country? Did the Modi government turn in good heads for the Indian economy or was it considered yet another sour patch of development?

Though the re-election of Narendra Modi answers these questions very fluently, the 212th issue of IBS Times revisits all the excitement that was seen in the reign of the Modi Government and how it has dawned so far in the economy with special mention of the Pulwama attack and the airstrikes that brought about a wave of patriotism.

As an editor, it gives us immense pleasure to hear from our readers. We intend to improve ourselves on every way step of the way and would like you to invite our readers to support the same. Keep following us on www.finstreetibshyd.wordpress.com as well. Please write to us become a part of the discussion.

Email ID: editor.ibstimes@gmail.com Samriddhi Bhatnagar (Editor-in-Chief) POC, Team IBS Times FinStreet

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Editor’s letter Contents 1.

10 PERCENT RESERVATIONS IN INDIA

2.

IT’S A MIRAGE- OR A DOZEN OF THEM!

3.

ONE NATION ONE CARD….IS IT REALLY BENEFICIAL TO THE PEOPLE OF INDIA??

4.

PRADHAN MANTRI MUDRA YOJANA

5.

SAGA OF DEMONETIZATION

6.

TAKE A RIDE WITH GST

7.

A JOURNEY FROM PLANNING COMMISSION TO NITI AAYOG

8.

THE RAFALE DEAL- CONTROVERSY IN THE AIR

9.

PRADHAN MANTRI UJJWALA YOJANA: BLESSING TO RURAL HOUSEHOLD

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10. CATASTROPHE BONDS- WHY WAIT FOR THE CALAMITY? 11. DID THE ECONOMY BOOM OR BOMBED: THE ERA OF MODI 4

10 PERCENT RESERVATIONS IN INDIA - Achintya Saraswat

On 7th January 2019, the Indian Union Cabinet approved 10 percent reservation for general category, which will be treated separately from the existing reservation. If we leave aside the rhetoric around reservation, the fact is that, it is often the last resort in Indian politics. As, when the government proposes it around election time, it is often a sign of desperation for votes. It’s a familiar script that has been written many times before: in the year 1996, for instance, when the government sought to extend the Scheduled Caste (SC) status to SC converts to Christianity, and in year 2014 when the government notified Jats under Other Backward Class (OBC) in nine states.

Nevertheless, it is another matter that after the elections, such proposals of extending the reservation to those who don’t have it are generally either put on the back burner or are struck down by courts. The surprising speed with which current government’s proposal to provide 10 per cent reservation for the ‘economically weak’ of the upper castes passed test of both houses of parliament has not only surprised many, it has also leads to several questions being asked about government’s motive behind the move, legal challenge it is likely to face and logical inconsistencies it suffers.

Given the sheer size of the population, reservation bill seeks to cover, and its passage in parliament just after half a day’s debate seems less about economic justice for

financial backward and more about electoral politics. As every time reservation policy has been used as an electoral weapon, it has really proved to be a treacherous terrain and had severe consequences.

Just a day after the reservation bill was passed in Rajya Sabha, it has already been challenged in a public interest litigation before Supreme Court by an NGO. Legal aspects apart, there is not at all any clarity on how the eligibility criteria for ‘economic weakness’ has been made up, the cap on annual family income of Rs 8 lakh per year, the agriculture land ownership of 5 acres and the area of house below 1,000 sq ft. These criteria are very liberal that they seem to cover approximately 95 percent of Indians not covered by existing reservations.

In absence of data on number of poor people in India in the upper castes, the government seems to have no idea exactly on how many economically weaker people are going to reap the benefit from the 10 per cent quota. As, 5

India is a developing country with a large middle class. India is also the new emerging economic powerhouse. But according to the new definition of ‘economic backwardness’ almost the whole of India economically backward.

This very contradiction may lead to a new demand of the income criteria be reduced to be brought on par with income tax exemption limit, so the real poor and needy people are actually benefited from this 10 percent quota.

Politically, reservation is a potent tool. But still, where are the government jobs to employ millions of jobless youth? It appears that BJP has really played the reservation card quite well. What remains to be seen, is whether or not people will see it as an election stunt that may not exactly benefit them eventually.

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IT’S A MIRAGE- OR A DOZEN OF THEM!

- Simran Abhichandani Since 2014, when India got MODI-fied, there have been several bold steps taken (good or bad is subjective to political inclinations and well, logic). One of those recent bold step was to give a befitting reply to the never ending acts of terrorism. Brave hearts of the 21st century dropped bombs weighing approximately of 1000 kg’s in 21 minutes. Is this the new India that everyone dreamt of? Probably yes. This new India believes in peace, but a bilateral one.

12 days after 40 CRPF jawans were killed in a suicide bombing in Jammu and Kashmir’s Pulwama, this airstrike took its shape on 26th February 2019. The Mirage 2000 aircrafts took off from Gwalior’s air base in batches. These jets were armed 500/1000lb laser guided bombs.

The Mirage 2000 jets were fitted with Israeli lightening targeting pods. An IAF jet with an early warning took off from Bhatinda.

Simultaneously, an IAF mid-air refuelling tanker took off from Agra. Another, IAF Heron Surveillance also accompanied the team. The Mirage 2000 pilots conducted final checks on the targets. They were then cleared from the command centre to proceed. The Mirage 2000 jets flew across Loc at low level. The pilots of the Mirage 2000 jets used laser pods to 'paint' targets. Finally, the Mirage 2000 jets dropped their payload of bombs. Such was the long story short of the airstrike that would always be remembered for years to come.

Location:

The Story in detail: A Mirage 2000 fighter fleet was chosen for pre-dawn attack in the largest terrorist camp of the terrorist group Jaish-e-Mohammed (JeM) in Pakistan due to the ability of fighter planes to hit long targets. carried with government sources said the accuracy and fall of a series of bombs and missiles, including those guided by the laser.

JeM was responsible for the February 14 suicide attack in Pulwama, Jammu and Kashmir, in which 40 CRPF staff members were killed.

India currently has about three squadrons of Mirage 2000 fighter jets manufactured by the largest French aerospace company Dassault Aviation. The teams are based on Gwalior.

The Mirage 2000 is a single-engine, multifunction French screwdriver capable of launching a wide range of bombs and 7

missiles, including laser-guided bombs.

Sources said the Mirage 2000 multipurpose aircraft was chosen for the attack because of its ability to hit targets with pin point precision. Other IAF activities and platforms were also used in the operation, first in Pakistan after the Indo-Pak war of 1971.

The Mirage 2000s are equipped with Thales RDY 2 radar that can attack targets with 100% accuracy, an IAF official said on condition of anonymity.

The aircraft was preferred because it is able to engage in long-term goals and the evaluation was to be able to register a 100% success rate.

India had installed Mirage aircraft about 30 years ago and has been upgraded at a cost of around 20,000 crores.

Sources said India will have a much wider choice of aircraft to carry out precision attacks when Rafael jets join the IAF, as they are able to hit targets at a wider range. India is buying 36 Rafael jets at a cost of $ 58,000 crore and the first aircraft should be delivered in September.

It is not clear whether the Mirage 2000 fleet flew directly from Gwalior or whether it took off from other bases to carry out the strike.

In a statement, Foreign Secretary Vijay Gokhale said India has hit the largest JeM training camp in Balakot and that a large number of terrorists, trainers, high-level commanders and jihadist groups have been eliminated and trained for the action on Friday.

"This facility at Balakot was headed by Maulana Yosuf Azhar alias Ustad Ghouri, the brother-in-law of Masood Azhar, chief of JeM," he said.

Sources indicated that Yosuf Azhar was killed in the strike along with 350 other terrorists, (no confirmation received). He is understood to be involved in the hijacking of the Indian

Airlines flight IC-814 in December 1999.

"The Government of India is firmly and resolutely committed to taking all necessary measures to fight the menace of terrorism.

Hence this non-military pre-emptive action was specifically targeted at the JeM camp," said Gokhale.

"The selection of the target was also conditioned by our desire to avoid civilian casualties. The facility is located in thick forest on a hilltop far away from any civilian presence," he added.

Amidst the never ending political debates and the ongoing drama, some would celebrate the step and some would still give it a political twist and bend it to use it for their own benefit.

However, let us not miss any opportunity to celebrate and appreciate the brave hearts who always keep fighting for protecting the integrity of our motherland. Let us not snatch that pride from them. Let the world know, we strongly stand for peace but, India is a land that celebrates the victory of good over evil every year (Dusshera) and evil, no matter how strong has to end someday. Jai Hind!

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ONE NATION ONE CARD….IS IT REALLY BENEFICIAL TO THE PEOPLE OF INDIA??

- Samudrala Jagadish

As the election bell is going to ring in the next few days political parties will be preparing themselves to stake the claim in the greed to form the government. After the major step of demonetization in the month of November, 2016 taken by Government of India to eradicate black money and increase cashless transactions in the economy there has been scope for many e-wallets and their business were in rise as there was a scarcity of cash in the country and difficulties have been raised when cash is not readily available for the people and people faced issues to buy their daily essentials and other needs. Post scenario of demonetization the government has been encouraging people to do cashless transactions, online payments and e-wallet aggregators utilized the opportunity to do transactions through e-wallets by attracting the people with cash backs and other special offers. Government also started focusing on convenience, easy access and time duration to transfer money for public which would also be transparent for the government from whom to whom the money is getting transferred. In case if the amount you have to pay is hefty, many have a perception that it would be difficult to count and give the cash physically and they may not feel comfortable in that way.

When you want travel to office, a trip with friends or family what one looks at is sit comfortable, convenience while travelling and cost is the other thing where everyone

wants in the cheaper price or economically they opt for and many people even face issues while paying cash during their travel and to overcome this problems one card has been introduced known as National common mobility card which is acceptable in the entire nation and solve all your travel related problems apart from this it also provides cashback offers if you withdraw cash with this card.

One nation one card is an indigenously developed National common mobility card which enables people to pay multiple kinds of transport charges such as metro services, toll taxes, bus travel, retail shopping and even withdrawal of money across the country.

Usually while travelling we pay through cash and we do not have the exact change and this becomes an issue so this card initially helps to pay the money through the plastic Rupay card in a smoother way and apart from this it is one such initiative to go cashless while travelling.

The card provides offers such as cash back on bill payments, ATM’s and merchant outlets.

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The card runs on government-backed payment platform RuPay and is valid at different places such as metros, buses and trains etc. Few features about the card are it can be used to make digital payments through offline mode and also has a unique stored value, can be used like any other credit and debit card and issued by the any bank. The idea has been bagged from existing services connecting transport in Singapore and London .In London they have oyster card provides seamless connectivity for payments while travelling in public transport such as London underground, London buses, London Overground.

The card is supported by indigenously developed Automatic Fare Collection Gate ‘Swagat’ and an Open Loop Automatic Fare collection system ‘Sweekar’ and from now onwards we are no longer required to depend on foreign technology.

With the changing day-to day life if you compare with late in 2000’s public transport was the only mode if you want to travel out for any purpose unless if you doesn’t own a vehicle. There were largely no private players and people didn’t used to encourage though.

With the increasing population day by day the current public transport is not sufficient and due to traffic issues there was a transformation and people started using their own vehicles to travel to offices and other places. After the diversification of public transport to other modes by the government and by encouraging digital payments with usage of plastic cards for payment people doesn’t feel reluctant as it is the safest mode for a person to travel, doesn’t consume much time and making of payment is in the smoother way without the use of cash the person who wants to travel it would be comfortable for him in each and every way.

Digital payments and cashless transactions would be easier for the public as well for the people who are accepting the payment if it is secure, loopholes and other related constraints are removed completely.

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PRADHAN MANTRI MUDRA YOJANA

- Akanshi Bhargava Pradhan Mantri Mudra Yojana was launched

by Prime Minister Narendra Modi on 8th April , 2015 to provide loans up to Rs 10,00,000 .

Micro Units Development and Refinance Agency Limited (MUDRA) is a new institution set up by Government of India to provide funds to the non-corporate , non-farm income generating activities of the micro , small and medium enterprises to meet the credit needs of below Rs 10,00,000.

The loans are categorized into three: Shishu Kishore Tarun These loans are categorized as per the needs of the funds of the beneficiary micro unit.

Under Shishu scheme loans amounting up to Rs 50,000 is covered. The interest rate offered is low. It can be 1% per month or 12% per annum.

Under Kishore scheme loans above Rs 50,000 and below Rs 5,00,000 is covered. Here the interest rate varies depending upon the bank from where the loan has been sanctioned and the creditworthiness of the borrowers.

Under Tarun scheme covers loans above Rs 5,00,000 and below Rs 10,00,000. Here the interest rate is dependent on the case to case basis.

These loans are provided via financial institutions like Commercial banks , Regional Rural Banks , Small Finance Banks , Cooperative Banks , Microfinance Institutions and Non-Banking Financial Companies.

The number of financial institutions participating in the newly introduced MUDRA Yojana are 27 public sector banks, 36 microfinance institutions, 25 NBFCs and 4 co-operative banks.

More financial institutions are yet to be added in the list. The reason why so many financial institutions are joining the list are the benefits conferred on them due to lending through this scheme: The security used to provide the MUDRA loan will be held by the lender so their risk is minimized. Any asset created with the help of loan will be hypothecated to the lender.

The provision of Credit Guarantee Fund trust for Micro and Small Enterprises (CGFMSE) safeguards the bank if the borrower fails to pay their liabilities as a result of incurring a business loss.

The bank can ask for DPN (Demand Promissory Note) which is a written note of the promise made by the borrower to pay back the loan amount on the pre agreed interest rate.

The MUDRA scheme has proved to be beneficial not only to the lending institutions but also to the the borrowers opting for loans.

Some of the benefits offered by the scheme to the borrowers are: Micro Credit Scheme– Under this scheme the loan is given through Micro Financial Institutions (MFIs) to provide business loans of upto Rs 1 lakh. The loans could be given through individuals engaged in specific micro enterprise activities and through various joint 11

liability groups (JLGs) and Self Help groups (SHGs).

Women Enterprise Programme (Mahila Uddyami Yojana) – This scheme is an important part of MUDRA Yojana designed specifically for the women entrepreneurs. It is designed to encourage individual women entrepreneurs, women’s Joint Liability Groups and Self Help Groups to set up various micro enterprises.

Refinance scheme for Banks– MUDRA allows banks to refinance loan amounts (up to Rs 10 lakh per individual). This refinance facility is given by Scheduled Co-operative Banks, Regional Rural Banks and Commercial banks only if these business loans have been extended for micro enterprise activities.

Mudra Card– MUDRA card can be used as a credit card as well as the debit card. The card user can avail overdraft (loan) facility as well as for ATM withdrawals. The Mudra Card can be used by businesses to obtain working capital under its unique cash-credit arrangement.

Credit Guarantee Fund– It is also known as the portfolio credit guarantee. The creation of this fund “Credit Guarantee Fund for Micro Units (CGFMU)” (managed by the National Credit Guarantee Trustee Company Ltd.) is to provide micro credit with ease.

Equipment Finance Scheme– This scheme is a part of the MUDRA Loan scheme to improve the production techniques of small enterprises. Small entrepreneurs and micro units avail a loan to finance the purchase/upgrade of qualifying equipment/machinery increasing the overall productivity and efficiency of their business.

Credit to Micro Enterprises– The motive of MUDRA scheme is to maximise both the benefits and beneficiaries under the scheme.

A large proportion of India’s population is

involved in specific sectors like Land Transport, Food production, Textile production and community services. Many schemes and products are being introduced to meet the growth requirements of these sectors.

In order to not take more risk only those business person can avail the loan under MUDRA who has not previously defaulted in any loan repayment. Therefore individual business owner, private limited companies, public sector companies, proprietary firms or any other legal business entity can apply for the Mudra loan. The loan is provided to small businesses that carry out specific activities in the manufacturing, services or trading sectors.

Businesses can utilize the capital obtained from a MUDRA loan for marketing purposes, increasing the available working capital or for acquiring capital assets to grow the business.

Loans under the MUDRA Scheme are offered with nominal interest rates and vary based on the quantum of loan sanctioned. As per existing rules of the PMMY, the maximum repayment period for a MUDRA loan can extend to 5 years, however, the repayment period can be shorter if the lender decides so when sanctioning the loan.

MUDRA has proved to be a success for many small entrepreneurs in India. Many small enterprises are developing due to the micro loans offered by the bank. India is a country with a very large population hence we cannot depend on employment alone self-employment is equally important. The microfinance industry in India is growing by financing the new initiatives taken by small enterprises. It is a source of encouragement for those who want to start something innovative of their own.

MUDRA can prove to be more successful if we increase the reach of the scheme by bringing in more changes in the loan procedure.

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SAGA OF DEMONETIZATION

- Narayan Tripathi INTRODUCTION: Till 8, November, 2016 it was just the term in English and normally used by English intellectuals but today even a 10 year child can tell the meaning of the above term with its practical implementation. It may sound funny but it’s a shear truth. So let’s see in detail the saga of Demonetization.

In this article particularly the focus is on the financial aspects like the effect on market, banking system and in general their implications.

MEANING OF DEMONETIZATION: As per Merriam Webster and oxford dictionary the meaning of demonetization is “deprive (a coin, note or precious metal) of its status of money” in simple terms, the existing currency in whatever form holds no value once it is in the process of demonetization or demonetized.

In a technical form it can be stated as the process of taking away the currency status of legal tender which means the currency cannot be used for the purpose of buying or selling, depositing or investing or even for the purpose exchange.

1946 AND 1978 DEMONETIZATION: 2016 is not the very first instance in the history of India, there are two similar instances which already happened in the past, one in 1946 (pre-independence) and the other one in 1978. 12, January, 1946 and the day was Saturday. The other one took place on 16, Jan, 1978 and the day was Sunday.

One thing is common in all the instances and it was the reason for the demonetization economic welfare, bringing back the currency in the system, black money, increase in number of tax payers etc. One more highlight, RBI and the governing body is and was always sceptical about the implementation of demonetization.

2016 DEMONATIZATION: “We have decided that the Rs. 500 and Rs. 1000 currency notes presently in use will no longer be the legal tender”, exact words of our prime minster of India Shri Narendra Modi.

This announcement was done on 8, November, 2016 at 8 p.m., effective from 00.00 A.M. Some news channels gave it a hashtag “Surgical strike on black money”.

People had 50 days to exchange the notes either through banks or post offices. This was a disruptive move by the government of India because Rs. 500 and Rs. 1000 constitute 86% of the cash circulation. We all are aware of the very fact that India is a cash based economy.

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BLAME GAME: People of the Country have this belief or perception, that we must be informed about this at least few days before implementation, so the unjust could have been avoided. This blame is not at all correct because if we analyse the moves of the government from the time it came into power zero balance account for all the citizens under “Pradhan Mantri Jan Dhan Yojana” with Rupay Debit card, OD facility with the vision to bring about the financial inclusion. Next step was “Income Declaration Scheme 2016“disclose the black money and pay 45% tax on total amount and it will be converted to white. The deadline was till 30, September, 2016. The government also made it mandatory to furnish the PAN details to the gold buyers who buy the gold worth Rs 2 lakh or more. In the meantime, the GST bill was passed in upper house with the 100% majority.

Congress, the opposition party of the country strongly opposed the move of the government and blamed the government for the misfortunes happened during the implementation of demonetization (death of people’s, unrest in the country, economic slowdown etc.).

Many experts in the country and globally opposed the move of the government and stated that India don’t need the demonetization. One of them is the exgovernor Mr. Raghuram Rajan who, told that he was not in the favour of the demonetization because he always believed the long term benefits won’t be able to reap due to the heavy short term cost.

OBJECTIVE OF DEMONATIZATION: Government took this decision to bring back the stocked black money back in the vaults, also aimed to get rid of counterfeited notes, increase

the tax collection base, promote the digital payment in the country, bring back the stocked money back in circulation, strengthen the Indian backing system and last but not the least is the terrorism and internal security.

If one look at the objective and outcomes it is easy to identify that this all aims in the growth and economic growth of the country in short as well as in long term. But due to the heavy implementation cost this all got overshadowed and people of the country never paid lot of attention to the outcomes and never tried to analyse.

EFFECTS OF DEMONATIZATION: We all are aware of the fact that everything in life has some pros and some corns and this decision all have the effects like shortage of cash, dip in stock market, negative effect on the industrial output and agriculture, the effect on the real GDP growth rate, diminished opportunities for employment (for short time), cost incurred to the bank. On analysing one can easily say these were the short term issues and in the development of the country they are bearable. People who lost the life in the implementation is the only setback and the thing government must learn.

CONCLUSION: Demonetization is one of the major bold decision taken by the government of India with the vision to capitalize the maximum on black money issue and other issues causing or are threat to the country. People of the country supported the decision of the government and stood in lines to exchange the notes without any complain. Government invested huge amount in printing and also in implementing process. Till now, the more than 90%, money came back into circulation but the cost is not recovered but as it is not the short term vision. So, judging and coming on to any conclusion is not correct and the success or failure cannot be declared.

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TAKE A RIDE WITH GST

- Rahul Kumar G S GST was implemented on July 1st, 2017 but the journey started a long time ago, to be precise 17 years ago when our Late Prime Minister Atal Bihari Vajpayee set up a committee in 2000 to draft the law for GST but the opposition at point Congress did not support the cause and GST was shelved.BJP government returned the same favor when Congress came to power and tried to implement GST in the country. At last GST got a green signal in 2017 why the BJP government as they had the majority in the house and literally didn’t have any opposition and the opposition didn’t matter as they didn’t have any say or power to show what they wanted.

GST was basically implemented to benefit the companies as well as the customers. As the customers were the people who were bearing the extra taxation which was levied on the intrastate transfers. There was a lot of confusion how the taxation would be done what will be the state getting out of it because of this there was a lot of inertia from the side of state governments for accepting GST as they would lose on their main source of income. At last the central government was able to convince state governments that they would not lose on their revenue. But the interesting part is that the government has not crude oil products such as petrol or diesel etc because if they do so the price of these products will actually come down from the prices being charged to the citizens of India.

The implementation of GST was not properly planned as there was huge chaos among the ground level as most of the people did not keep data in the digital format and how to go about filing GST. Proper education of the process was not provided to the parties involved to avoid confusion. The sales of the companies also took a very bad impact after the implementation of GST as some of the wholesalers and retailers were not ready to take goods.

The funniest part is that the government did not have any clue to include which good in which tax bracket. Sanitary napkins were kept under the 12% bracket and recently only they have been brought under the 0% bracket. A tax bracket of 28% is kept on motorcycles which mainly normally used by the common man of India for commutation. The 28% bracket is for luxury goods and owning a motorcycle is clearly not a luxury but the government has decided to keep a blind eye towards the dwelling of the common man.

The government clearly wants to help the common man that’s why they have kept the GST rate on gold as 3%.

After the implementation of GST, it has made easy for companies to keep their warehouses in which our state they want as they interstate tax has been subdued under GST and they don’t have to pay extra tax.

Now let’s check the reality has the GST really brought down the price of the goods. When GST was implemented and when the 15

government gave instruction to the companies to transfer the benefits earned to the customer's companies mainly took three approaches.

1)First Approach: Companies reduced the price of their products than previous prices.

Eg: Colgate has reduced 8 to 9% of the price of their product with effect to 1 July 2017.

HUL gave price reduction in multipacks (eg: Lux soaps), Rin bar of 250gm price was reduced from Rs18 to Rs15.

2)Second Approach: Increasing the grammage of the product for the same price.

Eg: Increasing the grammage of low priced goods such as sachet packs of Bru coffee, surf excel bar, clinic plus shampoo. Surf Excel bar of Rs 10 giving 95gm was increased to 105gm for the same price. An extra 33% grammage for dove soaps was also introduced.

3) Third Approach: Not giving the benefits back to the customers and keeping the same price as earlier and earning exponential profits.

regime. The sad part is that this goes unnoticed by most of the customers as they don’t bother to think more as the price of the product is remaining same so they ready to pay the same price as earlier helping the companies to make money by putting a hole in the customer’s pocket. There is a body with great powers even up to cancel the license of the companies intervening in the profiteering activity known as National Anti Profiteering Authority.

Benefits should be passed on to the customers but the basic thing which we need at this moment is awareness of the benefits that the citizens of our country are eligible by the virtue of GST in place. It’s our duty to know about the laws and make the right of it as a responsible taxpaying citizen of India.

Many companies have the same keeping the same price even when they could give customers the product at a much cheaper price. What the companies did was they increased the base price of the product so that even after the implementation the price of GST. For example, the price of the product was Rs 100 and the cost for manufacturing was Rs60 before GST and the tax part was RS 40, now let’s say after the implementation of GST the tax part has come down from RS 40 to Rs 20. In an ideal condition, the customer should get the product for Manufacturing cost +Tax that is 60+20=Rs 80. But what the companies have done is they have increased the base price of the product from Rs 60 to Rs 80 so again the price of the product becomes Manufacturing cost +Tax that is 20+20=Rs 100 same as earlier as that of the pre-GST 16

A JOURNEY FROM PLANNING COMMISSION TO NITI AAYOG - Supriya Panse It’s been almost four years of Modi government & since then India is continuously on a roller- coaster ride. There has been “N” number of reforms since then, be it GST, Demonetization, Rafael deal, Niti Aayog or RERA act. Thus all these reforms have one or other way benefitted India on a large scale, but one reform which was completely revolutionary was birth of “NITI AAYOG”. Since Independence of India (i.e. since 1950), Planning Commission was solely responsible for creating five-year plans for India as an advisory institution. Planning Commission was not created out or constitution or legal stature, but was considered as an arm of Central Government of India. Thus before the birth of Niti Aayog, total 12 five years plans were completed, i.e. from 1951 to 2017. The 12th Five-year plan was the last five-year plan as it has to be replaced by 3-year plans of Niti Aayog.

“NITI AAYOG” stands for “National Institution for Transforming India” is a thinktank of Government of India established on 1st January 2015. The main objective of Aayog is to end the slow implementation of policies by enhancing inter-ministry & centerstate coordination. We live in a dynamic & competitive world & so at this point in time we need something like “Niti Aayog” for sustainable & continuous growth. Planning Commission was relevant in command economy structure, but for today’s India “Niti” is a full proof strategy. It is not just an

advisory institution as Planning Commission, but the scope has widened since then. The main purpose of “Niti Aayog” is to achieve Sustainable Development Goals by following a bottom-up approach. The Agency Executives are Ex-officio Chairman (Mr. Narendra Modi), Vice Chairman (Mr. Rajiv Kumar) & CEO (Mr. Amitabh Kant). Over & above this the permanent members of governing council include Chief Ministers of all states & union territories (except Delhi & Puducherry), the Lieutenant Governor of Andaman and Nicobar, and the Vice Chairman. Temporary members which also include CEO are selected from leading research institutions & universities. Thus all the members work together as a team for achieving goals. A vision of NITI: Encompasses the overall goals and objectives of the country for the next 15 years. A strategy of NITI: Roadmap of development for the next seven years.

The major differences between the Planning Commission & Niti Aayog are as follows:•In Planning Commission the approach used was “top-down”, while in Niti Aayog the approach is “bottom-up” approach.

•5 year plans in the former system, while 3 year plans in a latter system.

•Planning Commission can allocate funds to ministries & states, while Niti Aayog is just a think-tank, i.e. it cannot allocate funds. Now the funds will be 17

allocated by the finance ministry. .

Convergence, Collaboration & Competition among districts will strengthen their growth.

States will majorly focus on the strengths of these districts individually, measure their progress & rank them individually.

“GOVERNANCE & RESEARCH SCHEME”:- In order to have quality research work done as per various developmental priorities, “Research scheme of Niti Aayog (RSNA)-2018” has been initiated by the government.

“DIGITAL PAYMENT MADE EASY”:Cashless India has always been a dream of States have a greater role in planning & implementation of policies as compare to the earlier situation.

•One of the new functions of Niti Aayog is to address “NATIONAL SECURITY” as a part of “ECONOMIC STRATEGY”.

•A number of full-time employees are comparatively less in “Aayog”.

•In Aayog, CEO is appointed by Prime Minister of India, while in Commission, Secretaries or member of Secretaries were appointed by the usual process.

•Part-time members can be appointed time to time according to the need, while in Planning Commission it was completely barred.

•“NITI LECTURES: TRANSFORMING INDIA”, is an initiative which will grab expert’s help for good governance & policymaking.

•In the new plan, there is non-plan expenditure, while in an earlier system there was high non-plan expenditure.

This list can be further extended by adding many more points to it. If we have a look at some of the major Sustainable development Goals (SDG), of NITI AAYOG,

they are as follows:a)No Poverty b)Zero Hunger c)Good health & well being d)Quality education e)Gender Equality f)Clean water & sanitation g)Affordance & clean energy h)Decent work & economic growth i)Industry, innovation & infrastructure. j)Reduced inequalities k)Sustainable cities & communities l)Responsible consumption & production m) Climate Action n)Life below water o)Life on land p)Peace, Justice & strong institution q) Partnership for the goals “NGO DARPAN”:- All NGOs & Voluntary organizations can register under this online portal to get benefits from the same.

“ATAL INNOVATION MISSION (AIM)”:AIM, along with Self-Employment and Talent Utilization (SETU) scheme is working to enhance innovative & entrepreneur skills among the youth of India.

“NITI LECTURES SERIES”:- The main focus is to build a strong state which will result in a strong nation at a large.

“NATIONAL TECHNICAL BOARD OF NUTRITION (NTBN)”:- The main purpose of establishment of this board is to make technical recommendations on policy related issues.

“SAMAVESH”:- The main objective is to link together various research institutions to have a development process.

“ASPIRATIONAL DISTRICT PROGRAMS”:The focus of this scheme is to concentrate on 3 C’s for effective transformation of districts NDA government & thus the focus of this scheme is to enhance easy digital payments across the 18

country.

“WOMEN TRANSFORMING INDIA2017”:- The tagline or theme of this scheme is “Women in the Changing World of Work: Planet 50-50 by 2030”. The focus is to have women empowerment by creating Gender parity in the country. “HEALTH SYSTEM FOR A NEW INDIA: BUILDING BLOCKS”:- This scheme will complement the ‘Sustainable Development Goal of Good health & well-being’ for all Indians by 2030.

Thus it will be acting as a backbone to the Sustainable Development Goal.

Thus there are many other minor schemes under the umbrella but this was some of the major ones. It’s been more than 4 years to Niti Aayog & now the question is was that a successful initiative?

Gross Domestic Product (GDP), was ₹124679.59 Billion in 2014-15 which has increased to ₹167731.45 Billion in 2017-18.

In a similar way Per Capita GDP has also increased from ₹98405 Billion in 2014-15 to ₹127456 Billion in 2017-18. Financial Assets of the Household sector has also increased from ₹12,572.47 Billion to ₹18,808.74 Billion (2014-2018). Production Yield of all crops has also increased by 25% with the increase in total food grains production from 252.02 million tones to 284.83 million tones.

Minimum support price (MSP), for farmers, has also increased from 3050₹/quintal to 4100₹/quintal. Thus these figures can still go on for many other variable inputs, but the main purpose is to show that these 4 years were actually fruitful for a country like India.

NITI AAYOG was not the sole reason for such a tremendous growth but was still a major contributor.

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THE RAFALE DEAL- CONTROVERSY IN THE AIR

-Bidisha De

The Beginning “The Rafale Deal” roots back to 1999, where India lost two of its Russian Fighter Jets-MIG-21 during the Kargil War. In 2000 India faced a need for fighter aircraft.

Our then Prime Minister, Atal Bihari Vajpayee Government was impressed by the contribution of French-made Dassault Mirage 2000 in the Safed Sagar Operation. However, by that time Dassault had already stopped its manufacture and was working on a new model.

In 2007 there was a change in Government and then Defence Minister A.K. Antony approved that India needs 126 Aircraft. This approval leads to the rise of Medium MultiRole Combat Aircraft (MMRCA) Tender which had six competitors to supply the 126 aircraft to the Indian Air Force (IAF). The six competitors were as follows: Lockheed Martin’s F-16 Aircraft, Boeing’s FA-18 Super Hornet Aircraft, Eurofighter Typhoon, Russian MIG-35, Sweden’s Saab Gripen and Dassault’s Rafale Aircraft. After proper testing of all these fighter jets by IAF, Eurofighter Typhoon and Dassault’s Rafale Aircraft were shortlisted. Finally, Dassault won the bid by 2012 because of its lower bidding cost and low maintenance requirement.The deal was for 126 Rafale Aircrafts worth Rs.54000 crores, from which 18 Aircraft were to be received from Dassault itself in Ready-to-fly condition whereas the rest 108 Aircraft would be manufactured in India itself by Transfer of Technology to Hindustan Aeronautics Ltd. (HAL).

However, the process got delayed because by that time both France and India witnessed a change in the Government.

Changes made with the change in Government With Prime Minister Narendra Modi’s visit to Paris, the MMRCA Tender was scrapped off.

In September 2016, the NDA Government signed an Inter-Government agreement with France and named it “The Rafale Deal”.

Under this deal, the IAF is supposed to receive 36 off-the-shelf twin-engine Dassault Rafale in return of Rs.58000 crores/7.8 billion Euros (15 per cent of which is to be paid in advance). This amount is almost three times more than what the UPA Government had settled for.

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Dassault along with Safran and Thales were needed to share some of their technologies with Defense Research and Development Organisation (DRDO), HAL and Anil Ambani’s Reliance Defence Ltd. (RDL).

After the deal was officially signed and the total cost was revealed, an offset clause of the deal consisted that about 30 per cent of the Rs.58000 crores will be invested by Dassault on Military & Aeronautics Research in India and 20 per cent on the production of Rafale components in India.

Because all the 36 Fighter Jets were supposed to come directly from Dassault in ready-to-fly condition, HAL moved out of the picture. On the other hand, according to the offset clause, RIL was chosen for the deal.

Allegations made by the opposing party and answers by the NDA •With the NDA Government paying three times more than the original deal of 2007, a serious question was raised by the Congress party. On behalf of the Indian citizens, the NDA Government was questioned regarding the changes made in the fighter jets that caused the cost to go up so high.

As an answer to this, the NDA Government refused to reveal the actual details as this deal is for the sake of the Nation’s security and they have a secrecy agreement with Dassault Aviation.

•The vast difference in the cost was needed to be stated separately, to which the NDA Government argued that in the previous case, the Government was actually getting 18 Rafale Jets in ready-to-fly condition. The rest of the 108 was supposed to be made in India itself by HAL only by Transfer of Technology.

Dassault also made it clear during the previous deal that they would not perform any further testing on the HAL assembled jets.

Thus, according to the NDA, the deal this time is much cheaper than what was fixed in the past.

•The last allegation was that the NDA Government was practising Crony Capitalism with Anil Ambani’s RDL. According to the opposing party, HAL being a state-owned company had more experience than a private company like Reliance.

According to the NDA Government, it was an offset clause in which Dassault was the one who chose Reliance instead of HAL and the Government had no role to play in this. The ruling party further brought up the fact that previously the deal couldn’t go any further because HAL was unsure with the assembling of the 108 Rafael jets properly. It was also calculated that the man-hours were required to be increased about 2.7 times and this would, in turn, increase the cost as well.

All the issues raised by the opposing party was thus stated by the NDA Government. The Supreme Court also took a keen interest in the issue and wanted to check themselves whether the process taken place with The Rafale Deal had any glitches or not. After receiving all the details, the Supreme Court stated that they were satisfied with the decision-making process of the deal and there was nothing they could doubt on.

The opposing party however still sticks to their point and believes that the ruling party has performed malpractice in the deal. As of now, the deal remains closed and the delivery of the Rafale Fighter Jets are scheduled to begin by September 2019. .

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As stated by our now Defence Minister Mrs Nirmala Sitharaman, our neighbouring countries are well equipped with proper and latest technology armed forces. Compared to that, the IAF was required to be technologically upgraded to a great extent and the Rafale Fighter Jets can help with bridging the gap.

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PRADHAN MANTRI UJJWALA YOJANA : A BLESSING TO RURAL HOUSEHOLD -Revathi Menon

In Rural India, around 5 lakh people die every year due to unclean fuel system. The scheme ujjwala yojana was implemented by The Ministry of Natural Gas and petroleum to protect the interests of the woman. This initiative was a dream of Prime Minister Narendra Modi to create a smoke free stove in villages across the country. Prime Minister knew the hazards and difficulties the woman were facing and this step was taken to create a big change. His ultimate aim was to make women self-reliant, to uplift them and to also avoid , poor going to unsafe areas for firewood collection.

The scheme was launched by Prime Minister on May 1st 2016 in Ballia, Uttar Pradesh. This scheme transformed the lives of the poor, marginalized, Dalit and the tribal communities immensely. While the scheme was launched it achieved about 30 million connections by the end of September 2017 and by 2019 there was an increase to 50 million.

LPG was a game changer for the rural household in India. The census of 2011 revealed that 62 percent of the rural household used firewood for cooking purposes. And this brought in many health hazards in the lives of rural women. In order to tackle this issue PM launched this scheme to provide LPG connections to rural India. The following were the benefits were of scheme: .

• With this scheme a new connection will be issued to a woman who is below poverty line • The BPL identification was based on rural and social scenarios considering the data of census as well.

• Government provides a subsidy of Rs 1600 to state owned fuel retailers for every free LPG connection they give.

• There is an EMI option available to the person using this scheme, only thing he has to do is to pay for stove as well as refill the cylinder.

• The target of the scheme was 15 million in the first year and 50 million connections in next three years.

• An allocation of 8000cr was made, and an additional allocation of Rs 4800cr has also been made to provide connections by 2020.

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The world health organisation claimed that this scheme was one of the best policies to tackle the air pollution in the country. In 2010 survey stated that indoor air pollution caused two premature deaths every minute and the major cause for the death was dirty cooking fuel.

The dropout rate under this scheme is around 20%, which means that households still did not receive LPG connections after applying. According to latest data by Petroleum Planning and Analysis Cell, the coverage of LPG in India has reached 90% .The growth of people undertaking this benefit is increasing in the southern states and forested areas have less growth as people in such areas are into the usage of firewood due its vast availability. States like Gujarat, Bihar and Uttarakhand are amongst top with more than 4 cylinder refills in year where as in Chhattisgarh and Madhya Pradesh 3 cylinders where refilled in a year.

January 2019 showed that the total LPG consumption was the highest in the northern region grabbed with a share of 32.8 per cent followed by the southern region constituted 27.2 per cent, the western region had 22.9 per cent, the eastern region had 15 per cent, and the north eastern region was at 2 per cent.

The rising demand has made India the second-largest consumer of LPG, with 22.5 million tonnes being consumed in 2017-18 which is expected to touch 30.3 million tonnes in 2025 and 40.6 million tonnes in 2040. LPG penetration in the country has also increased from 62 per cent in 2016 to 90 per cent now.

It was found that one of the major issue faced in this scheme was documentation. Even though the volunteers went on educating about the documents needed for this scheme , many females did not have it. Some did not have Aadhaar card, nor bank account and some did not have a ration card. The scheme states that BPL ration card, Aadhaar or voters ID was mandatory to avail benefit.

Sometimes, the people availing this scheme might already have a connection in this case Aadhaar is needed to avail another connection under the scheme.

Even though the scheme was successful and could reach targets, the beneficiaries were not utilising the scheme to full limit. Once the cylinder was bought the beneficiary had to refill it and this is where the scheme failed.

The people under this scheme considered refilling as expensive and replaces the cylinder with firewood.

Although the LPG connections increases to 16% the usage of gas cylinders was only 9%.

This in turn gives a clear idea that usage did not reach the targets in fact it was lesser when compared to the previous years.

Muslim Women faced difficulties in cooking food during the time of Ramzan as they had to wake up early and cook even before the family starts fasting. With the implementation of this scheme much of the difficulties was reduced. Another positive impact this scheme created was the bank account. It was mandatory for the beneficiary to open a bank account in the name of the female apply the scheme. Many accounts were opened as part of the prime ministers Jan Dhan scheme. This in turn encouraged the woman to save and deposit money.

Even though the scheme was successful, right after the launch what we can see is that there is a lack of follow up schemes, and lack of educating the customers about the benefits of the scheme and the health hazards associated with the usage of firewood .Only if they are acknowledged about the benefits and hazards , they will stop switching from gas cylinder to firewood. However the promise of accessibility and availability of cleaner cooking fuel to every nook and corner of India under this scheme is still a question mark.

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CATASTROPHE BONDS- WHY WAIT FOR THE CALAMITY? -Kartik Bhardwaj

For a Layman, Catastrophe bond is a high yield debt instrument which is used by insurers to raise funds during a natural calamity. This concept was first practiced is United States because of the regular occurrences of hurricanes and cyclones. It started in the year 1992 when the hurricane Andrew hit Florida and Louisiana. Following which in the year 2005, when Katrina came with a damage of about $25 billion, it forced more than 11 insurance companies into bankruptcy. There was a need to develop new ways to raise capital to cover catastrophe insurance. The solution was to turn to the financial market which has way more investors as compared to the insurance markets.

The insurance companies were facing huge difficulty in settling the claims of their policyholders. This was the time when the insurance companies started issuing Cat bonds. Here the funds are being invested in money market with low risk. The bond holders get an annual interest which is higher than the average debt security interest rate in the market.

There is a catch though!

If any natural calamity occurs before the period of maturity of the bond and the damages cross a specific dollar limit set by the insurance company, the amount invested in these bonds is used to settle the claims. If not, the investors get a fairly good amount of interest every year following which they will receive the principal at maturity.

Investors can use these securities to diversify the risk in their portfolios as they are not affected by the microeconomic factors. The interest rates stay the same even in bearish times.

These bonds are traded in the OTC (Over the Counter) market and can be customized as per the investors’ and the issuers’ need.

The reason that the Indian government should look into this is simple. Over the past years, the number of disasters on the Indian soil have increased drastically. Kedarnath landslides, followed by Kerala floods and currently the cyclone named Fani which has hit Orissa with a speed of 130 miles an hour.

Over 1.1 million civilians were evacuated in less than 12 hours. More than 100 trains and flights were cancelled. When the dust settles, there will be a need to cover the damage caused to these people. Whom will the insurance companies will look up to? Why do they have to rely on government relief funds when they have the solution right in front of them.

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Indian investors are a bit conservative compared to foreign investors. Hence the companies may customize the working of these bonds. Of course, they should pay a high yield to the investors but they may put a limit to the amount of these funds that will be used for providing coverage. The ratio can be 80:20 where the remaining 20 percent is returned back to the investors and only 80 percent of their principal is exhausted. Also, these bonds don’t have a high maturity period.

Ideally, the time period is between 3 to 5 years.

Key takeaways:  CAT bond is a high yield debt instrument meant to raise capital for the insurance companies in the event of a natural disaster  A CAT bond allows the issuer to use the funds invested only if the specific event occurs and the damage coverage amount goes over the specific dollar limit  Investors receive a high rate of interest than most debt securities  If the specific event is triggered, the obligation to pay interest of return principal is either deferred or completely forgiven Indian government can easily issue such bonds as they have a good credit rating in the eyes of the investors. Also, the benefit of this is simple: The response time to provide relief to the needful will be a lot quicker than it is now. Our government won’t have to look towards other countries for help in our tough times.

We have a chance to fulfill our social responsibilities through investing…

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DID THE ECONOMY BOOM OR BOMBED: THE ERA OF MODI -Samriddhi Bhatnagar

In one of the world’s youngest economy, where growth and population, both are always exploding, many major changes were initiated by the residing cabinet by introducing chief economic changes in the country. These were a signal to the world, that the world’s biggest population bearing country was entering a new phase that would ultimately change for the better. But this vouches for the big question, were these changes able to impact the economy for better or for worse. Some of the instances which have created a wave excitement can elucidated under the Modi government from Demonetisation, Goods and Services Tax, economic condition to Bankruptcy Code, India is seen rising among its peers in terms of economy and GDP. But this can be further explained as: CAPITAL MARKETS Sensex has fallen over 6% from an incomparable high it hit on April2018. In fact, contrary to what most market participants had anticipated, the Sensex has came back simply 51% underneath PM Narendra Modi's term as compared to UPA-II's 78% and UPA-I's a108%, underneath the then prime minister Manmohan Singh. A steep fall LED by a dreaded rise in non-performing assets (NPAs) and the losses reported by banks over the past few quarters. Poor job growth and, of late, signs of lag in sectors like automobile, FMCG and aviation have place a dent on Modi's reform-oriented image. The initial state, which was 2015 showed a giant improvement with 21 IPOs raising Rs13,513 as compared to very little over Rs1,200 in 2014.

The public offers collected Rs 26,500 in 2016 and Rs75,278 in 2017. But again the Initial public offering listings fell drastically to 24, raising simply Rs31,731 in 2018 as bank frauds, considerations over company governance, liquidity issue arising post IL&FS default.

The average yearly divestment underneath Modi government stood at Rs57,100 crore, quite on top of UPA-II's Rs19,873 crore.

FY18 became the primary year ever once government offloaded stake price over Rs11,00,000. But, that was mostly on the account of ONGC feat the government's entire 51.11% stake in oil trained worker HPCL for Rs36,915 crore. In FY19, withdrawal touched Rs85,000 against the target of Rs80,000 crore.

It had been mostly done via many tranches of Exchange listed Fund (ETF) of state-owned corporations and cross-selling of presidency equity in same sector companies. (source:ibef.org) MACROSTABILITY Recalculated GDP data shows the Indian economy growing 0.6% quicker under PM Modi as compared to time throughout the UPA-II government, however it's still a protracted way from attaining double digit growth. Modi govt was additionally well in fiscal matters and can be said to be more prudent. The average fiscal deficit rate of growth beneath PM Modi has been 1.7% lower as compared to previous years in the reign of Gandhi family.

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Job creation has been a long challenge for the Modi government despite many initiatives to tackle it.

Obtainable data shows that the cabinet has tried to maintained an upward trend between June 2017 and 2018 which is not much to be said. During the Narendra Modi era, dangerous loans have remained a thorn within the aspect of Indian industry, one thing the ruling BJP has overtly damned the Manmohan Singh government for. Though, the Non performing arts Assets (NPAs) have skyrocketed 321% between 2014-15, once Modi government came into power, and 2017-18. the whole advances, meanwhile, have fully grown by a touch over 12% throughout this era.

Narendra Modi government was able to herald 50% additional foreign direct investment throughout solely four years of its tenure. The FDI influx, that started robust within the initial days of the Modi government, had reached a highland in its second and third year and brought a downward trend by the fourth year.

While product exports have remained flat beneath the Modi government, services exports have increased 50%. By its fourth year, the incumbent government has managed to realize some ground in terms of exports as compared to the previous regime.

On the opposite hand, whereas moderate oil costs have helped Narendra Modi keep the import bill in restraint, the present regime has rumoured debt growing 3 times slower as hostile the Manmohan Singh government from 2009-2014. However, the Modi government is paying 0.3 per cent higher rate of interest. Although GDP of the economy, exports and foreign alliances seem to have grown given the overseas journey of the Prime Minister, the big picture begs the question of why the government has not been able to generate enough employment which seems to have drastically lowered far below the belt, or why the initiation of the new policies not been highly fared enough or penetrated yet deep enough into the country.

The definition of the success of the economy depends on these few factors which might further improve in the next 5 years of the yet again, “Modi Sarkar�, although many still think it is thanks to the wave of patriotism and nationalism of the Prime Minister, that the government is here to stay, again. (source:ibef.org, economic times)

(Source: The Hindu)

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FINANCIAL tRIVIA Constitutional Crisis : The 1998-99 budget was passed without any debate as there was a constitutional crisis where the then I.K. Gujral government was on its way to be dissolved. A special session of the parliament was called to pass the budget.

thE IBS tIMES

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