The IBS Times; 206th Issue, February 2018

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Team IBS Times Shilpam Dubey (Editor in Chief) Sneha Tibrewal (Managing Editor) Antra Bharti Debanjan Paul Dixita Reddy Gagan Kapoor Radhika Gupta Shreya Rani Smriti Patodia Srujana Naik Utsav Changoiwala Aarushi Jandrotia Aishwarya Siram Amit Shovan Mandal Ayush Thalia Ishaan Sengupta Kartik Grover  Nishika Tatiya Noel Mathew Sambhav Jain Srivatsasa Sripujitha Tanay Sood Designed By : Gagan Kapoor & Sneha Tibrewal

Where is all the Liquidity...

When our last issue was released in Jan, stock markets, all across, were skyrocketing.. Sensex was all time high, crossed 36000 points in January. It’s now back to 34000, responding to the introduction of LTCG tax. Not just in India, stock markets elsewhere in the the world plummeted in the last week of Jan. So, where is the all the liquidity flowing into?

Definitely not Bitcoins! After realising how insanely hyped bitcoins are, investors are pulling their money out, slashing the prices below 8000 USD, more than 50% below its peak of 17000 USD this year.

We cover all these market movements in our Marketwatch, in our analysis on real estate industry in India, its slowdown, and in our analysis of Budget 2018-19. Also, we cover in our cover story, how the Big four giants of auditing—Deloitte, KPMG, PwC and E&Y have reached where they are and the controversies surrounding them.

Please write to us and become of part of these discussions.

Email id : editor.ibstimes@gmail.com Shilpam Dubey Team IBS Times, Finstreet

CONTENT

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COVER STORY - BIG 4: Hub of Accounting & Auditing Expectations vs. Reality: The Union Budget 2018-2019 Collapse of a Real Estate Behemoth-Unitech’s Story Electoral Finance Reform in India The Slowdown of Real Estate Is There A Need For FRDI Bill?

BLOCKCHAIN : The New Face of Finance Industry?

The Crisis to Amend FDI Norms INDUSTRIAL ANALYSIS-Venture Capital & Private Equity MARKET WATCH - Early Bid 2018

BIG 4: Hub of Accounting & Auditing - Sambhav Jain Whenever we think of accounting or auditing, one thing that comes to our mind is “Big 4”. But why only big four, why not any other firm? Well, Big Four refers to the four largest accounting firms in the world namely, Deloitte & Touche, Ernst & Young, KPMG and Price Waterhouse Coopers (PWC). The big four are the most prestigious accounting firms providing professional services. They basically run the accounting industry.

Their work is associated with professionalism and quality. Combined they perform more than 80 percent of the public company audits in the U.S, thereby completely dominating the industry.

These four firms symbolize the ideals of the public accounting firms and industry as a whole.

membership agreement to share the name, image, brand and standards of the company. These firms are so big that they have 100 offices in United States alone.

Big four firms are not individual companies but a large network of membership firms located all over the world. Each network is owned and operated independently with the help of

Ernst and Young(E&Y) : Ernst & Whinney merged with Arthur Young to create Ernst & Young in 1989. It is a global organization of member firms in more than 150 countries. Integrity,

Deloitte : Deloitte Touche Tohmatsu, popularly known as “Deloitte” was founded by William Deloitte in 1845. It is the largest among the big four with approximately 244,000 employees in more than 150 countries. It is providing services like audit, consulting, financial advisory, risk management and tax consultancy. Over the years, it has emerged as one of the most successful brands in the world.

PricewaterhouseCoopers(PwC) : The company was formed by the merger of two large accounting firms – Price Waterhouse and Coopers & Lybrand. It employs more than 223,400 professionals in 157 countries around the world. They independently own and manage firms like other international companies and share common values and standards. PwC provides excellent assurance, consulting and tax services.

respect, teamwork, enthusiasm and motivation form the core values of Ernst &Young. The company employs nearly 231,000 employees and provides continuous training and career growth programs. Ernst & Young offers assurance, advisory, tax and specialty services.

particular auditor having international network for the Indian investee company, then audit of such company would be carried as joint audit wherein one of the auditors should be an Indian firm. So, as a result, joint audits are now mandatory for Indian companies that receive foreign investments.

Klynveld Peat Marwick Goerdeler (KPMG) : The organization was formed in1987 through the merger of Peat Marwick International and Klynveld Main Goerdeler (KMG). It’s a global accounting firm providing audit, tax, advisory and industry- specific services. It employs nearly 189,000 professionals providing quality services in 155 countries around the world. KPMG places great value on quality of service.

This is a welcome move that will protect Indian firms. It has opened ample opportunities for Indian audit firms. This will give Indian firms a chance to prove themselves and gain market share.

Currently, big four controls the majority of audit work in Indian listed companies.

The new FDI policy will benefit both Indian and global firms. Indian firms will get an opportunity to interact with global firms to share their knowledge and compete on a global scale. It will also provide an opportunity to global firms to better understand the business environment and process in India.

It’s a dream job for every accountant to work for these firms. Also, big four provide ample job opportunities. They represent the pinnacle of an accounting career. All the big four firms are ranked on the Fortune 100 best companies to work for lists every year.

PM message to Chartered Accountants Back in July, 2017, Prime Minister Narendra Modi had said at the foundation day of the Institute of Chartered Accountants of India (ICAI) that “People talk of big four accounting firms but sadly there is no Indian firm there and also added that by 2022, let us have a Big 8, where four firms are Indian.” The recent amendments in Foreign Direct Investment (FDI) policy is a step in this direction. New clause in FDI policy says that if the foreign investor wishes to specify a

SEBI action against PwC: Recently, SEBI has passed 108- page order banning Price Waterhouse Coopers (PWC) from audit of listed companies for two years following Satyam scandal of January 2009. This 108-page order is issued by whole-time member G. Mahalingam, nine years after the scam at Satyam Computer Services came to light.

The two main SEBI actions are: Ban on firms and entities using the PwC brand or banner name from the audit of listed companies for two years Levying a fine of Rs 13.09 crore with 12% interest for nine years as disgorgement of wrongful gains. This amounts to around Rs 36 crore over nine years

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However, this order would not impact audit assignments relating to the financial year 2017-18 undertaken by the firms forming part of the PwC network in India.

PwC has filed an appeal against SEBI order at the Securities Appellate Tribunal(SAT) which heard the matter but refused to stay the two-year ban.

However, it can continue to serve its clients whose financial year started on 1st January, 2018. In the petition filed at the Bombay High Court, Price Waterhouse has challenged that SEBI doesn’t have the power to act against auditors as auditing firms in India are regulated by the Institute of Chartered Accountants of India (ICAI).

PwC has challenged the ban but if it stands, then it will lose all its new clients, who came to it last year due to the mandatory auditor rotation clause as per the provisions of Companies Act,2013.

Since the new clients can't go back to their previous auditors, their options are limited to one of two remaining Big Four firms or an Indian firm.

So, Indian firms can now tap the market and increase their market share. Also with the coming up of new FDI policy and SEBI ban on PwC, they have a great opportunity to realize the dream of PM Narendra Modi of creating “Big 8”.

Expectations vs. Reality: The Union Budget 2018-2019 - Ishaan Sengupta

The Union budget of 2018-2019 was probably the most awaited, televised phenomena, eagerly followed by market stakeholders as well as various strata within the Indian society. Some expected this budget to be very populist, given that the next Lok Sabha elections are around the corner, while others primarily believed that it would be a well-planned, conservative and an allocative budget.

Either way, the assumptions pertaining to the budget was that it would drive economic activity and influence economic variables for the coming months. When it was announced, the budget took a certain section by shock by aiding neglected, priority sectors. So here is a contrast between what was expected and what actually unfolded on the 1st of February.

So here is a list of compositions, sectors and industries most likely to benefit from the budget –

A priority-sops budget – The budget has reintroduced the standard deduction phenomena to provide some aid to tax payers, by increasing exemption of tax to 40,000 rupees contributing to travel allowance quotients and medical exemptions. This came as an unexpected move, but was introduced to subvert mass ailment regarding other tight fiscal policy measures introduced in the economy.

Farmer’s Budget – Sops for farm loan waivers, are outdated.

And that is what this budget accomplished when it comes to addressing the grievances of the farming sector. The post-harvest bargaining power of farmers has been rejuvenated with a 1.5x minimum support price quotient which has been linked to production cost. Secondly, the FCI has been informed about an enhanced food subsidy upto 35%.

Thirdly, the agricultural output has been increasing, however credit has been the primary cause of concern, when it comes to the woes of farmers. And hence more budgetary allocation is to be surmised towards programmes like Pradhan Mantri Krishi Sinchayee Yojana, Pradhan Mantri Fasal Bima Yojana and ENAM.

Limit Increase of Tax Exemption on Life Insurance – Life Insurance still seems to be a gaping hole in the Indian economy, and it is more natural that the government introduce a separate tax exemption quotient for life insurance, as it currently falls under the ambit of 80C. 1.5 lakhs of tax exemption in long term financial instruments under 80C is a major setback for the growth of the insurance industry in a country that requires higher investment in both private and public sectors. Therefore, a separate tax exemption quotient of 50,000 INR per annum is required to be set up. And that is specifically being worked upon.

However, in the real front, nothing regarding tax exemptions benefited the insurance sector.

Tax on Equities – For people investing in equity shares, this might be a shock. The long-term capital gains tax was reintroduced, on capital gains above 1,00,000 rupees of 10%.

This resulted in over a 1000 point drop in Sensex and Nifty, immediately. And it is expected, that the market would go rogue for another week. Investor confidence in the short run has been affected badly. But is a good opportunity for low scale investors to invest and earn capital gains, when the market comes back to the norm.

Revised Fiscal Deficit Targets – Moody’s has predicted that a minor slippage in fiscal deficit targets, would not affect the fiscal prudence of the overall economy, given the stability of the Indian economy. The government has revised its 2018-19 fiscal deficit projections to 3.3 per cent of GDP and for the current fiscal year to 3.5 per cent of GDP, against original targets of 3 per cent and 3.2 per cent, respectively. The budget therefore amounts to a expenditure budget.

A Senior Citizens Budget – Tax cuts on pensions, investments, medical expense and insurance is set to benefit senior citizens to the core. Fixed deposits, Recurring Deposits of seniors citizens would now amount to reduced taxes and hence less leakages, and increase in real income of senior citizens.

Import Duties to Increase Government, under its constant push towards a self-sufficient Make in India campaign is likely to increase import duties and tariffs in certain sectors – namely power, capital goods and chemical sectors to disengage heavy imports in the same. While this will curtain the use of foreign goods, the prices would rise of the said products.

The private Agricultural Sector – This sector is also set to improve given more participation of private players into the sector with low costs and better-quality yield measurements. Private players such as crop insurance, irrigation companies and agricultural credit companies. There has been a 21% allocation amounting to 13,000 crores for crop insurance to assist farmers in

battling seasonalities and contingencies.

This will ensure that agricultural output does not reduce, hence keeping agricultural prices at a sustainable level.

Rural Economy’s injection is here The Rural economy is expected to benefit given that the government’s qualitative announcement cum intent to make labour markets more attractive by infusing special sectoral reforms collaborated with resuming stalled infrastructure projects to create more jobs across sectors. They have pitched for policies that focus on rural markets to reverse slide in wages, create more jobs and reduce personal tax slabs to give more purchasing power to the consumers. More purchasing power to consumers will not only aid a demand led economy but also lead to more creation of ample jobs around the country.

The industry has also sought incentives for setting up warehousing and cold chain facilities and efforts to increase Foreign Direct Investment (FDI) in the sector.

Tax on Dividends – Tax on dividends in cohorts with the long-term capital gains tax is set to harm investor sentiments, and it has given, a 10% deduction on dividends has also been announce. This points to issues pertaining to the fact that the tax is more akin to a triple taxed revenue source from the government. Dividends are subject to post tax appropriation, along with DDT which is then forwarded to investors who again have to pay taxes on their long-term benefits. This will harm the long-term investors in general.

From push into the housing to the

agricultural sector and losses to investors in the stock market, as a measure to reduce the overvaluation of stocks in the market, the budget comes to haunt investors who are primarily looking for a less risk income. While there is renewed hope for some sectors, and a massive push to in-home businesses in power sector with increase import duties on the same, the budget therefore takes us to a neutral-izing feat after a volatile economic quarter.

Collapse of a Real Estate Behemoth-Unitech’s Story - Kartik Grover In its 2007-08 yearly report, Unitech administrator Ramesh Chandra talked about turning into a container India designer, wandering into the telecom business and transforming into a professionally oversaw organization, something uncommon in the land business.

Inside 10 years, the organization that once bragged of dish India nearness with marquee ventures is presently being nagged by controllers, loan specialists and homebuyers alike.

The tone was one of forceful extension, with a preventative note on the worldwide money related log jam. A little more than 10 years after the fact, the Gurugram-based organization's two promoters are in prison over a fabrication case, it has left the telecom business, its tasks have for the most part slowed down and it is fighting disappointed homebuyers and financial specialists.

The National Company Law Tribunal (NCLT) on Friday suspended executives of Unitech Ltd and enabled the legislature to choose chosen people to the board as the service of corporate issues (MCA) moved to assume control over the obliged land firm - a stage with couple of points of reference in India's corporate and lawful

scene. The MCA is looking to take control of the private firm as there are charges of reserve redirection against the organization, said a man mindful of the issue. It has documented its appeal to under area 241 of the Companies Act, 2013 that enables the legislature to apply to the council in the event that it feels that an organization is working in a way biased to open intrigue - for this situation, homebuyers, investors and contributors. This is just the second time that the administration is summoning open enthusiasm to assume control over a private firm after Satyam Computer Services, whose originator Ramalinga Raju conceded in 2009 to fudging the books of the organization more than quite a while to the tune of Rs. 7,136 crores.

The move comes in the midst of turmoil in India's land area after a drawn-out log jam. Bankruptcy procedures have been started against promoters of numerous realty firms, including Amrapali Group and Jaypee Infra tech, after irate clients dragged the manufacturers to court. A month ago, the legislature revised the indebtedness and insolvency code to incorporate home purchasers as a class of loan bosses to land firms. Late 2008, after the worldwide liquidity emergency

following the crumple of Lehman Brothers, the super-hot Indian property advertise began to slow down. Most realty designers were grasped by a liquidity crush, which kept on frequenting brokers for quite a long time. Unitech's issues intensified with the promoters being in dock for the 2G trick on one side and liquidity issues on the other. The market chilled and deals plunged, driving Unitech to back off development because of income imperatives. Following a MCA appeal, the National Company Law Tribunal (NCLT) expelled its board, and enabled the administration to name 10 executives to its board. The MCA request of referred to the destiny of 19,000 homebuyers, 15,000 little investors and 700,000 investors as constituting open premium. It said the organization has additionally defaulted on debentures worth Rs251.78 crore and owes little investors Rs596.76 crore.

"The legislature has taken a powerful ruling against Unitech out of the blue. We are in safe hands now. The genuine issue with the Chandra siblings was their wrong goal," said Vivek Tyagi, president, Anthea Homebuyers Association. Inhabitants of Anthea, an undertaking in Gurugram propelled by Unitech in 2011, have battled its promoters like the devil, until overseeing executives Sanjay and Ajay Chandra were captured in April on charges of tax evasion and neglecting to convey the task. Anthea is as yet a desolate real estate parcel. Unitech's fairly estimated worth tumbled to Rs1,906.07 crore on 8 December from Rs16,929 crore on 31 December 2010. In a similar period, advertise capitalization of India's biggest designer DLF tumbled to

Rs42,540.83 crore from Rs49,558.51 crore. Unitech was the second biggest engineer till 2010, until the 2G telecom range embarrassment broke and Sanjay Chandra was captured regarding it in April 2011.

"Segment 241(2) engages the focal government to influence a reference to NCLT and look for a request for insurance of open to intrigue," said Sandeep Parekh, overseeing accomplice, Finsec Law Advisors. "The medicinal forces are recommended under segment 242 which enables NCLT to take 'any' activity which is simply and fair for the organization and its investors, including, evacuation of existing chiefs and arrangement of new.

As the organization is recorded, Sebi (Securities and Exchange Board of India) will likewise need to take a gander at issues identified with speculator intrigue, change of control and corporate administration under the new board." The adjusted realty charge, set to be presented in Parliament, should facilitate some of these issues by getting straightforwardness and responsibility, however maybe it is the ideal opportunity for the legislature to clear pending issues.

The financial plan one month from now might be a decent chance to offer motivators that may rescue brokers and pad investors. An early entry of the realty bill might be a long-haul shelter.

Real estate agents, in the meantime, would do well to get genuine on the request crunch and scale back desire and keep away from hones that may arrive them in courts or jails. Prepared to-move-in condos are picking up money in business sectors like Delhi and

Bengaluru. One new report says new dispatches in the main eight property advertises crosswise over India declined 11% in the October-December quarter of 2015 from the past quarter. Ideally, these are indications of development among manufacturers. Current circumstance: Immense stock of pads in NCR, Recent year returns are low/negative, generally merchants in the market, not very many purchasers.

Gigantic stock, retail speculator negative on land, tremendous drop in level value/yearly compensation proportion, immense fall of costs in USD terms – All this focuses we are close to the base. May be not achieved the base yet, but rather might be only a year from the base of land costs.

The Question is Should you buy a home now? May be, you can begin searching for a home and consult for a misery bargain. Purchasing a home bodes well since you will spare your lease. In this way, your net cost is EMI-Rent. It is a purchasers showcase, and on the off chance that you begin looking now, and conclude in a year, most likely, you are purchasing your home close to the base!

Electoral Finance Reform in India - Amit Shovan Mandal Will Electoral Bonds be effective in cleaning election financing?

The electoral bond is a banking instrument, which is interest-free, like a promissory note, that a political party will be able to redeem it only through their registered bank account, in a prescribed period. The bank account used by a political party must be notified to the Election Commission of India. Recently GOI announced that Electoral Bond will be available for purchase for 10 days each in the month of January, April, July and October. An additional period of 30 days may be specified by GOI in a Lok Sabha election year. These bonds can be purchased for any value only through bank accounts after meeting all the KYC norms, in multiples of Rs 1,000/-, Rs 10,000/-, Rs 1,00,000/-, Rs 10,00,000/and Rs 1,00,00,000/- from the specified branches of the State Bank of India. The bonds will have a 15-day validity that will

ensure that the bond won’t become a haven or a parallel currency.

We all know that India is the largest democratic country in the world. Near about 815 million people of India take part in the election process. India is far behind when we compare with other democratic countries in terms of regulation of political parties and transparency in the funding of political parties as well as their election spending. The limit for spending in a parliament constituency in larger states is Rs 70 lakhs which are more than what an “average” to give a good fight, but according to successful MPs, tell us that their election cost them Rs 5 to Rs 10 crore. Some years ago, the Association for Democratic Rights (ADR) had estimated that 70 percent of the funds flowing into political parties came via cash donations from unknown sources.

Sources of income- Between FY 2004-05 and FY 2014-15 :

The conventional practice of funding the political system was to take the donation in cash. But in that way, the source of income is not coming in front of the people. From the chart, we can see how various political parties have much more income from the unknown source than known sources. According to GOI, introducing ‘Electoral Bond’ is a part of “Operation clean money”. The main moto of GOI is to bring transparency in the electoral funding system but unlike the United States, and the United Kingdom as well as other mature democracies, electoral bond neither carries donor name nor party name. According to ‘Association for democratic reforms’, in this way, the electoral bond will become a channel for making black money to into clean money.

Moreover, for donor Electoral Bond is exempted from IT Act. For the tax for a political party, IT dept. can collect information from designated bank or RBI. So, by this way Govt. can collect information about electoral bond but other political parties will remain in dark.

According to Bishwajit Bhattacharya, a former Additional Solicitor General of India, “parties will not have to submit records of electoral bonds”. Moreover, “It is true that businesses and their associations and federations do not want the donors named, but then the transparency of the system cannot be achieved when donations have no upper limits and names of groups making payments are blacked out”. Now the question is that why donors want to remain anonymous? Why Govt. compromising the transparency for them?

The financial Bill, 2017 removed the maximum limit for a donation to political

by the corporate body. Previously, according to Companies Act, a company could donate maximum 7.5% of its avg. net profit of last three years.

According to S. Y. Quraishi, a former Chief Election Commissioner, “Very soon we will see companies spending all their profits on politics alone, so they can control governments,” The electoral bonds are designed to reduce the number of cash donations made to political parties. But this bond will not carry the name of the payee and the corporate donors at the same time are not liable to disclose the name of the party to which the donation has been made. By introducing this electoral bond, the source of income will not come into light. So, lot of amendment require in Electoral Bond to increase it transparency. Like donors’ name must be on the bond, donors should liable to pay income tax for donating through electoral bond, there should be a maximum limit for donating by corporate body/company, Govt. should form a board consisting a representative from political party, representative from election commission, representative from IT dept. representative from RBI/designated bank for bringing more transparency in the process and make Electoral Bond as a strong tool to fight against Black Money.

The Slowdown of Real Estate

- Aishwaya Siram The Reserve Bank of India has taken a decision to push banks to clear their balance sheets by identifying non-performing assets, resolving bad debts of large defaulters after which taking them to bankruptcy court for liquidation, this has focused attention on the crisis in a few sectors.

Real estate is one among those sectors like power, steel and textile. Real estate sector broadly consists of housing, commercial real estate and hospitality assets. Firms such as Unitech, Jaypee Infratech and Amrapalli are being pursued by banks and home buyers who had paid them advances but not received their houses have turned to the courts.

However, finished contract or houses are yet to be handed to banks and home buyers. They fear they would lose out in case of liquidation because home buyers’ claims will be looked upon only after those of secured creditors like the banks have been settled.

The post-liberalisation evolution of this sector reveals quite starkly the characteristics and contradictions of post-reform growth. An overriding objective of neoliberal reform is to get (domestic and foreign) private investment to drive

economic growth by providing it the right platform and offering it the appropriate incentives. But in a market economy, while supply side initiatives may help improve into an activity a private sector afflicted with inertia, those initiatives would work only if such activity finds a right market. So even if it is not among the stated objectives of reform, a parallel thrust of policy must be that of stimulating demand for ever growing real estate sector.

However, there are certain issues pertaining to the downfall of real estate sector in the recent times : • Private preference This is challenging for a policy frame that refrains from using autonomous state expenditure as the principal stimulus to growth. The belief is that this is not essential and should be curbed down when tax and other concessions are used to incentivize private investment, since increased public expenditure would lead to large deficits that defeat the purpose of fiscal reform. It must also be avoided because it goes against the grain of a growth strategy that seeks to give allowance to the private sector. This implies that

demand must come from the private sector. If business does well, demand for office space increases.

• The rise of housing loans - One area that benefited from this credit splurge was real estate. The growth of housing loans reached momentum at the end of 1990s and remained at extremely high levels right up to 2006-07, before the start of global crisis. As a result, the share of housing finance in total credit rose.

• Defaulting developers - Within the real estate sector, it is developers rather than home buyers who seem to be defaulting on payments.

Competition between developers led to massive accumulation of land, as they built up land banks as a strategic weapon against others. Borrowing for this purpose and land development meant that the interest burden accumulated by developers was high, and was in excess of what could be met by the development and marketing of house properties and commercial floor space. Hence, leading developers have also stopped servicing debt and have become part of the NPA issues.

• A fallout of the NPA problem is, banks are less willing to lend as they work on clearing up balance sheets and finding funds to recapitalize themselves. This has hit even the housing sector, where defaults have been far less than in areas like construction and real estate is concerned. Here too, while credit and demand for housing are still growing, they are fast losing momentum.

• RERA- With the implementation of Real Estate Regulation Act (RERA) many new and existing real estate projects have slow down. Residential project launches have fallen by 8% since the Real Estate (Regulation and Development)Act 2016 was announced.

RERA makes it mandatory for all commercial and residential real estate projects where the land is over 500 sq. mt. or eight apartments to register with the regulator before launching a project.

The act also impose regulations on the promoter and ensures that construction is completed on time.

• Many bankers are worried that the project financed by them would get stuck under RERA. Bankers have also invested money with a buyback guarantee or an option of converting debt to equity and taking over part of the project, in some cases, they have even demanded personal collaterals from promoters. Despite all this safeguards lenders expect that new bad loans will arise from the real estate sector.

According to the Reserve Bank of India (RBI) data, loans of commercial real estate have dropped by over 3.3%.

After demonetisation, the sharpest slowdown took place in the cash-intensive real estate sector and the situation become worse after the introduction of RERA. The construction sector has suffered from relatively high leverage and high-interest burden.

According to experts, the reasons include demonetisation, the RERA (Real

Estate (Regulation and Development) Act, the high court’s stay on approvals, lack of clarity on Development Plan (DP) and lakhs of unsold inventory remaining with the builders.

However, experts believe that real estate market is going through a transitional state. Things are going to function better over time and the reforms will help in shaping up the sector to a more consumer friendly market.

The real estate sector, which witnessed a slew of policy measures through the year, experienced a market slowdown but the affordable segment emerged as its growth element, as mentioned by most property consultants and developers.

The policy reforms, however, promise to make residential real estate dealings more transparent than ever before and the market is expected to see at least a partial recovery in 2018 which will help improve the confidence of homebuyers, fewer new launches, improving sales and declining unsold units.

Is There A Need For FRDI Bill?

- Nishika Tatiya When you move a system to rule of law from personality-based solutions, there is a period of readjustment of the old method for getting things done to the new. People, institutions and analysts all need to adjust to the new reality. The recent news about the financial resolution and deposit insurance (FRDI) bill in the winter session of the Indian parliament has pointed out one area that is section 52 of the bill, ignoring everything else in the 125 pages of the bill. And this section has resulted in panic amongst the people about the safety of bank deposits if this bill got passed as quoted by the news agencies. Such big is the discontent caused being spread by this controversy that our finance minister, Shri Arun Jaitley had to conduct a press conference and clarify that this bill is aimed at securing depositor’s money rather than being looked the other way.

Now let us see in detail what this FRDI Bill is all about and try and understand the rationale behind fears in the public at large and its utility.

Introduction : The insolvency and bankruptcy code were adopted to swiftly address the issues arising in the troubled companies to bring the entity on track or else ensuring a time bound winding up of the company if needed. However, a similar structure was needed to address the financial institutions who are in distress, post the 2008 subprime crisis which killed iconic US investment bank Lehman Brothers Holdings Inc. Various government were stepping in to save the financial system to collapse by bailing out huge sums at the cost of taxpayer’s money. With the introduction of FRDI Bill, the government would quickly address a situation in which a bank, NBFC, a pension fund or a mutual fund run by an asset management company in distress can be sold off, merged with another firm or closed down with minimum disturbance to the economy, stakeholders, investors and the financial system at large. The bill proposed setting up of a new entity named financial resolution corporation with an objective of classifying different institutions on the basis of their financial

viability, along with carrying inspections and if required take over control at a later stage.

Main provisions of the Bill : The bill provides for the setting up of the Resolution corporation which will be tasked with monitoring financial firms, anticipating their risk failures, taking corrective action and resolving them in case of failure. Resolution corporation is formed to replace the existing deposit insurance and credit guarantee corporation (DICGC). The resolution corporation is also tasked with providing deposit insurance up to a certain limit which is yet to be specified, in the case of failure of banks.

The resolution corporation will also classify the financial firms under five categories based on their risk of failure.

These categories in the order of increasing risk are: (i) low, (ii) moderate, (iii) material, (iv) imminent, and (v) critical.

Once the firm is classified as ‘critical’ the resolution corporation will take over the financial firm. It will resolve the firm within one year (maybe extended by another year).

Resolution may be undertaken by any one of the following methods: (i) merger or acquisitions, (ii) transferring assets, liabilities and management to a temporary firm and (iii) liquidation.

Bail in Provision : Till here all the things flow quite smoothly.

It takes a different turn when the bill empowers the corporation of bailing in a failing financial institution. What is Bail in?

A ‘Bail-in’ involves rescuing a financial institution on the brink of failure by

making its creditors and depositors take a loss on their holding. It is just opposite of a bail out which involves rescuing of a financial institution from outside parties such as governments or external agencies, using taxpayer’s money. In other words, instead of government recuing a failing financial institution by infusing capital, depositor’s money is being used for this purpose.

Positive Impacts : 1. The government claims the FRDI Bill seeks to protect the customers of financial service providers in times of financial distress.

2. FRDI Bill along with IBC will form a comprehensive framework to deal with the Insolvency and bankruptcy of any entity in the country.

3. It will reduce the time and cost involved in resolving distressed financial bodies.

4. It will promote ease of doing business in the country, will improve financial inclusion and increases access to credit.

5. It will inculcate discipline in financial service providers in the event of financial crisis.

Negative Impacts : 1. The bills biggest problem is its controversial provision of the bail in clause which states that the depositor’s money will be used in case of bank failure.

2. Another major flaw in the FRDI Bill is that it fails to specify the deposit insurance amount which will protect the depositor if the bank fails. Right now, all deposits up to Rs 1 lakh is protected under the DICGC Act.

According to the latest data available (March 2016) the average balance per term deposits account is 2.54 lakhs.

3. Earlier there were separate bodies such as SEBI, IRDA, RBI, but after FRDI there would be accumulation of too much power in the hands of few (resolution corporation) which is very risky.

4. One more fear among the public is that after demonetisation a substantial amount of cash has already been deposited in bank accounts and the balance is generally higher than Rs 1 lakh.

Conclusion : It is very clear that the financial resolution and deposit insurance act has not been presented to the public properly by the government. Thus, the bill needs to be refined further to make it acceptable to the people for whom the law is been made. In a developing country like India, where financial instruments are limited and alternatives like financial markets aren’t developed, a bail in as a resolution mechanism shall be avoided. And if the bail in clause necessarily needs to be implemented then deposits of elderly, retired and widows should definitely be exempted from the resolution mechanism.

A well-defined system that makes banks more accountable and gives an early caution of ill health is progress, without exporting our deposits to more risk than they face today is progress, isn’t it?

BLOCKCHAIN : The New Face of Finance Industry -Aarushi Jandrotia What is a blockchain?

Blockchain is the chain of blocks which contains information. This technique was originally described in 1991 by group of researchers then it went unused until it was adapted by “Satoshi Nakamoto” in 2009 to create a digital cryptocurrency called “Bitcoin”. A blockchain is a distributed ledger which is completely open to anyone, they have some interesting property once the data has been recorded inside a blockchain then it becomes very difficult to change it or to tamper with it.

How does blockchain work?

Each block in the blockchain contains mainly three components- the data, hash and hash of previous block. The data in the block depends on the type of the blockchain, for example: In Bitcoin blockchain, stores the details of the transactions in here such as sender, receiver and amount of coins.

A block also has hash. We can compare a hash to a fingerprint because it is as unique, it identifies block and all of its contents. Once a block is created its hash is calculated, change in something inside a block will change in hash. And when hash changes it no longer remains the same block. The third element inside the block is the hash of the previous block.

This creates a chain of block and this is the main reason which makes a block so secured. The data in the previous hash of the next chained block will have the data in the hash of the previous hash and goes on as leads to the original block which has no previous hash, and is called the genesis block. When we tamper with any of the blocks, the following blocks will become invalid. To mitigate this blockchain has something which is called the “proof of work”. It’s a mechanism that slows down the creation of new blocks, if we take an example of Bitcoin it takes 10 minutes to calculate the proof of work and add a new block in the chain. Ann again if you tamper with one block, you have to calculate the proof of work for all the following blocks. So, we can say that the security for blockchain comes from hashing and its proof of work mechanism.

One of the other methods is that it uses

P2P (peer-to-peer) network in which everyone is allowed to join. When someone joins this network, he gets a full copy of the blockchain. The node is used to verify that everything is still in order.

When someone creates a new block that block is sent to everyone on that network and each node is verified. Blocks that has been tampered with will be rejected by other nodes in the network. And this how we can say that blockchain is very secure. Computer programs are used to automatically execute a contract between buyers and sellers and this contract is called “Smart Contract”. Hence no need to any kind of central authority to manage the blockchain.

The impact of blockchain technology on regulatory enforcement in finance sector : 1. As a verification tool : Blockchain technology not only offers the ability to preserve historical transactions and records but can also be used in plentiful applications in other areas too like trade reporting, confirmation, clearing, record keeping, financial records auditing, due diligence, contracting and supply chain management. Blockchain makes it easy and time saving for an individual or a company to preserve records be it personal or financial. This preserved information can easily be downloaded by interested parties and a smart contract can be made if interested when specific terms or products deliveries are met. With the help of this technology due diligence in connection with mergers, acquisition and third party business arrangements can be facilitated. By lowering cost and accelerating the time that regulators or law enforcement authorities invest in ensuring legal compliance, blockchain

technology has the potential to greatly improve regulatory efficiency.

2. As a vehicle for cryptocurrencies : Cryptocurrencies have no physical form in contrast to fiat currencies, so all the transactions are recorded in the blockchain. We already know that they not backed by any government or central bank.

These application makes blockchain technology, the vehicle for all cryptocurrencies. For Example: Bitcoin, Litecoin and Etherium etc. The holder of cryptocurrencies maintain their anonymity through the blockchain network and secure their cryptocurrency “wallet” through a private “key”. ICO (Initial Coin Offerings) is the extension of the cryptocurrency exchange which deals with the sale of digital “tokens” or coins which take place in blockchain network.

ICOs provide services like it permits companies to raise funds through the sale of tokens that can be redeemed for goods or services that can be resold for profit on a token exchange.

Roadblocks to Blockchain Technology : The hurdles in adapting blockchain technology is not only technical but also political, regulatory approval, and thousands of hours of custom software

design and both front and back end programming to link up the current business networks with blockchain ledgers. As security has always been a concern several central banks including Federal Reserve, The bank of Canada and the Bank of England have launched investigation into digital currencies. They would research that the distributed ledger technology should not compromise the security system against systemic attack.

And there some questions which arises and needs to be answered like who will be responsible for maintaining and managing the blockchain? Who will make sure the entrance of new participants to the blockchain? Who will validate the transactions? Etc. another roadblock which is there is as there is anonymity in cryptocurrency users’ it heightens the risk of fraudulent transactions and complicates the role of regulators. As identities are hidden, digital currency exchange cannot comply with KYC (know your customer) and AML (Anti-money laundering).

Conclusion : Blockchain technology has the potential to reduce the cost and time associated with regulatory compliance and enforcement when employed as a mechanism for verification and record keeping. This technology is fully secured as it is difficult to tamper with it. The counterfeiting is avoidable with the help of this technology. With Distributed ledger technology, there is less errors and the eliminations of repetitive confirmation steps. As we there is great transparency and ease of auditing leads to saving in anti-money laundering regulatory compliance costs too. There is need to

give any brokerage to any of the dealers or brokers, hence we save a lot of capital as well. With these merits there are demerits also which has been discussed earlier. Having all those in mind the demand for blockchain-services is on the rise. The technology is not even maturing but also advancing at a rapid pace.

Several of the applications are still on the roll, most of them are either on the developing stage or in beta testing. If more money would be poured in the blockchain-based startups, then we could expect the DLT services becoming more mainstream in the near future.

The Crisis to Amend FDI Norms -

Ayush Thalia

The Union Cabinet has endorsed number of corrections to Foreign Direct Investment (FDI) Policy. The reason for alterations is to disentangle and change FDI approach in India to give simplicity of working together in nation.

Foreign Direct Investment (FDI) is a noteworthy driver of financial development and a wellspring of non-obligation back for the monetary advancement of the nation. Government has set up a financial specialist agreeable strategy on FDI, under which FDI up to 100%, is allowed on the programmed course in many areas/exercises. In the current past, the Government has brought FDI arrangement changes in various parts viz. Safeguard, Construction Development, Insurance, Pension, Other Financial Services, Asset reproduction Companies, Broadcasting, Civil Aviation, Pharmaceuticals, Trading and so on.

The changed approach will prompt bigger FDI inflows adding to development of venture, business and wage. 100% FDI for Single Brand Retail Trading (SBRT) under programmed course. The current strategy FDI arrangement on SBRT permits 49% FDI under programmed course, and past 49% up to 100% is permitted through government

endorsement course. The revision now allows 100% FDI for SBRT under programmed course. It additionally allows SBRT element to set off its incremental sourcing of products from India for worldwide operations amid starting 5 years against compulsory sourcing necessity of 30% of buys from India.

Incremental sourcing implies increment as far as estimation of such worldwide sourcing from India for that solitary brand (in Indian Rupees term) specific money related year over going before monetary year. After culmination of 5-year time frame, SBRT element should be required to meet 30% sourcing standards straightforwardly towards its India's operation on yearly premise.

The government is also planning to amend the changes in the Construction development.

The legislature is additionally intending to alter the adjustments in the Construction advancement. The revision clears up that land broking administration does not go under land business. In this way, it is qualified for 100% FDI under programmed course.

FDI NORMS IMPACTING SECTORS : Foreign carriers will be now permitted putting up to 49% in Air India under government endorsement course.

Outside carriers are permitted to put capital in Indian organizations working booked and non-planned air transport administrations, up to the furthest reaches of 49 % of their paid-up capital under government endorsement course. Be that as it may, this arrangement was not material to Air India, inferring that outside aircrafts couldn't put resources into Air India. The alteration gets rid of this limitation and enables outside carriers to contribute up to 49% under endorsement course in Air India.

The expansion in FDI breaking point to 100% in carriers is sure for the flight part.

Little ponder then that the loads of InterGlobe Aviation Ltd (IndiGo), Jet Airways (India) Ltd and SpiceJet Ltd ascended in the scope of 6-7.4%.

FIIs/FPIs are now also permitted putting resources into Power Exchanges through essential market. The present FDI arrangement permits 49% FDI in Power Exchanges enrolled under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010 under programmed course. Be that as it may, Foreign Portfolio Investors (FPIs) and Foreign Institutional Investors (FIIs) buys were limited to optional market as it were.

The correction now permits FIIs/FPIs to put resources into Power Exchanges through essential market also. The affirmed FDI Policy changes meaning of 'therapeutic gadgets'.

Prior FDI arrangement on pharmaceuticals division gave meaning of restorative gadget as contained in FDI Policy will be liable to alteration in Drugs and Cosmetics Act. As Now the reference to Drugs and Cosmetics Act from FDI arrangement will be dropped.

Offers of organizations that supply safeguard gear, for example, Bharat Electronics Ltd, Reliance DĂŠfense and Engineering Ltd and Premier Explosives Ltd, increased after the administration brought FDI confines up in the barrier division and got rid of the entrance to innovation condition.

Higher proprietorship may empower outside protection hardware creators to open generation focuses in India. This can augment the seller base for nearby organizations, increment rivalry among providers for business, and furthermore prompt better consistence with balance commitments.

Balance rules require nearby sourcing of parts. With the legislature never again demanding innovation exchange, outside unique hardware producers might be available to building up a neighbourhood merchant base, with or without Indian accomplices.

Additionally, organizations, for example, Bharat Electronics take up turnkey requests to grow full frameworks. A huge segment of these extensive contracts is sourced from outsider sellers and remote organizations. On the off chance that outside organizations open shop in India, more restriction can enhance the temporary worker's productivity.

More noteworthy possession control may likewise observe more joint endeavours.

A few household organizations have acquired provider licenses, yet absence of aptitude has kept them away from creating generation offices. Facilitating of proprietorship standards can enable

nearby organizations to give a solid push to such ventures. In any case, protection orders keep on being sporadic and endorsements accompany a slack.

Strategy changes without perceivability on the income front may at present make financial specialists reluctant to contribute.

Sourcing standards have been casual for up to three years for single brand retailers alongside a casual sourcing administration for an additional five years.

In any case, this improvement is probably not going to have much effect on recorded Indian retailers, who are in the multi-mark fragment. The legislature likewise permitted 100% FDI under programmed course for coordinate to-home TV administrations. Be that as it may, this improvement may not move the needle much as 100% FDI was at that point permitted (49% FDI under programmed course and past 49% through government endorsement).

Coordinate to-home organizations, for example, Dish TV India Ltd may profit on the off chance that it is searching for a vital financial specialist.

Joint Audits : The current FDI Policy does not have any arrangements in regard of examiners that can be named by the Indian investee organizations accepting outside speculations.

The alteration now stipulates joint reviews in investee organizations (accepting remote speculations) in circumstances where the outside financial specialist wishes to indicate a specific inspector/review firm having global system for the Indian investee organization and one of the evaluators ought not be a piece of a

similar system. This would permit the investee organization to choose a specific examiner/review firm of its decision. This move is relied upon to fortify little and medium Indian review firms all things considered.

The Way Ahead : The consistent updating and opening of divisions is a reasonable sign that the Indian Government is continually going for facilitating the venture procedure in India. This most recent advancement is the fourth real alteration in FDI Policy in the previous three years. It is apparent that the change juggernaut is rolling, and further changes may be coming soon.

These arrangement changes will unquestionably make the speculation atmosphere more helpful for remote financial specialists and enable India to wind up plainly one of the biggest markets for outside ventures all around.

AN ANALYSIS : Venture Capital & Private Equity - Noel Mathew How do companies raise funds at different stages of development? There are different types of financial assistance provided to the companies. Private equity and venture capital are two among them.

Private Equity fund refers to an unregistered investment type, wherein the investors combine their money for investment purposes. Private Equity involves higher investments in the matured companies. There is lesser amount of risk involved in private equity.

On the contrary venture capital financing implies funding to those ventures which involves high risk and initiated by new entrepreneurs, who need money to implement their ideas. Private equity mainly focuses on corporate governance whereas venture capital focuses management capability. Both private equity and venture capital has got different roles. Private equity funds are provided for growth and expansion of a business, but venture capital funds are for scaling up the operations. Here in this article we will look at different private equity and venture capitalist firms and their functioning.

Private Equity and Venture Capital Private equity refers are the investments made by the investors or companies in the private companies that are not quoted

on the stock exchange. Here the investments are made at the maturity level of the company. Private Equity firms buy an existing company and do restructuring to develop, expand and make it better than before.

Leveraged Buyout, Venture Capital, Mezzanine Capital and Growth Buyout are some of the main strategies of Private Equity. It has become an important part of the financial services across the world in last 20 years. Private equity is one of the attractive funding options.

Venture capital is a private or institutional investment made into early-stage of a company. It is the money invested in businesses that are small which have a huge potential to grow. The venture capital funding process mainly involves four phases in the development of a company: Idea generation, Start up, Ramp up, and Exit. It is also referred to risk capital or patient risk capital, as it includes the risk of losing the money if the venture doesn’t succeed or takes a longer period to get it established. It is the most suitable option for funding a high capital source for companies and for businesses having large up-front capital requirements. There are mainly three methods of venture capital financing.

They are Equity, Participating debentures and conditional loan.

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An Analysis : Venture investing in India is one of the initial efforts by the Government of India at providing risk capital which resulted in the establishment of the Risk Capital Foundation. There have been some other efforts such as the creation of the Technology Development Fund (TDF) from a cess which was dependent on all technology imports and other quasi-market based initiatives such as the Programme for Advancement of Commercial Technology (PACT). The regulatory authority for VC and PE in India operate at three levels. At top level is the set of regulations which affects the constitution of the investment vehicle and the inward cross-border funds and cross border outward remittance of disinvestment. At the next level there are regulations governing the issuance of securities by investee companies and the laws related to the governance of the investee enterprise. At the last stage, there are the regulations regarding the taxation of gains and income from various investment activities. It is estimated that in Indian VC and PE industry, only about

ten percent of the funds that from domestic sources which implies ninety percent of the capital that is invested in this asset class are of foreign origin. Investments through VC and PE funding from foreign sources are mainly governed by the foreign direct investment (FDI) regulations of India.

These regulations have lightened up over the years to permit unrestricted foreign ownership of a nearly all sectors. But there are certain other restrictions, which limit the flexibility for foreign VC and PE investors in terms of doing business. For example, VC and PE investments that are considered as convertible debt are subject to rules and regulations governing foreign currency borrowings which are often subjected to some periodic changes.

Venture Intelligence (VI) is the oldest provider of data on the VC and PE industries in India. The VI database has benefited from its vast use by a number of players in the venture investing industry. It also provides all transaction related data in one single place which makes it suitable to easy analysis. The analysis of data is carried at three levels of transaction. At fist level is the analysis on enterprise or the investee company. A detailed analysis about the company is carried out here. At next level various investment activity at the level of rounds of funding are analysed and measured. At third level an analysis is done based on the investment activity in terms of the funding provided by individual funds to various enterprises in their portfolio.

Regional distribution of PE and VC funded enterprises

Conclusion : From the small beginnings in the late eighties, the VC and PE industry has grown in terms of breadth, depth as well as effective in fund management practices. Both VC and PE have the capacity to support enterprises across the range of sectors, which have the potential by providing sufficient funding at various stages of development of the company.

This resulted in relatively large number of companies to go public or to expand. It has also shown creativity in terms of coming up with structuring mechanisms that will allow Indian enterprises to create organizational platforms which will enable them to compete in the global market. It will make the industry a more effective and pervasive enabler of starting up enterprises in India as well as it will provide a set of investment opportunities for the public securities market. As a corollary it will also turn the industry as a key driver of economic growth.

Market Watch: Early Bid 2018 - Tanay Sood Benchmark indices BSE Sensex and Nifty 50 are breaking all records, with the markets trading above 35,500 and 10,800 points. The record-breaking is expected to continue before the budget announcement in a couple of weeks from now and with healthy earnings by bluechip companies and Good and Service Tax(GST) have given fresh impetus to the buying momentum.

Despite the Indian economy is going through shaky grounds, the stock markets over the last weeks have been reaching new high almost daily. Global investment is finally starting to turn to Indian stocks and the performances of large institutions and high net worth individuals, retail investors are participating in the in the financial markets more, demonetisation and GST have brought them closer to the financial assets, as individuals have chosen to put their funds into financial instruments like mutual funds and fixed deposits, rather than keeping it in cash.

Mutual fund houses have attracted large stocks with continuous money supply from onshore, has added more weight to the indices.

Aviation Sector : With Air India making the headlines regarding its disinvestment programme.

Aviation stocks have picked up and shown good signs. Private aviation players Interglobe Aviation Ltd (Indigo Airlines), Jet Airways and SpiceJet have recovered due to falling in global oil prices, which forms the third most important cost component of the aviation sector. Brokers are still bearish on this sector, as point percentage price fall or rise in crude oil effects the whole sector.

With profits and revenue generation being variable, the sector has still managed to attract investors. Though Low-Cost Carrier (LCC) – Indigo has shown remarkable financial performance, traders still bet high on SpiceJet and Jet Airways stocks.

Banking Sector : Both the private and public-sector banks stocks have gained momentum after the announcement of recapitalisation package for public sector banks (PSBs) and INR 7 lakh Cr. infra boost via the Bharatmala project. Also, the continuous decline in the Non-Performing Assets percentage in banking sector, financial statements and reports has shown investor confidence. Top gainers have been Punjab National Bank, State Bank of India, Indian Bank and Canara Bank hence showing a strong investor

still hold good and trade numbers continue to show positive green signals. confidence, while in the private sector reduction in goods and service tax rate ICICI Bank, HDFC Bank and Yes Bank and Axis Bank have witnessed good balance sheet profit margins. Yes Bank and IndusInd Bank, has emerged as the top pick for the brokerage firms, as both the private lenders have joined BSE stock exchange’s 30 member Sensex Index.

Government likely mulling allowing 100 per cent Foreign Direct Investment (FDI) in the banking sector. Finmin, DIPP, IBA in talks to hike FDI cap in Pvt banks from current 74 percent to 100 percent, PSU banks to 49 percent, from current 20 percent. Higher FDI would prove beneficial for the sector, as the need for the capital increases, as banks move to Basel III capital adequacy norms.

Automobile : Stock in Focus: Tata Motors, Eicher Motors, Maruti Suzuki India, Hero MotoCorp and Mahindra and Mahindra.

The stocks of these sectors have performed considerably better, as the GST implication had a very big impact on this sector. Investor and manufacturers are keeping a close track on the budget 2018, as they are big tax relief for hybrids and electric vehicles in addition ease of norms on external commercial borrowings, which is expected to pay the way for infrastructure development.

Crude Oil : Stocks of major oil companies Reliance Industries Ltd, Oil and Natural Gas Corporation Ltd, Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd; are performing above the expectations of the market, the sole reason being the fall in global oil prices.

The government has clarified that the

for transportation of petroleum crude and petroleum products applies only when the items are transported ‘through pipeline’. Reliance Industries announcing its results for Q3 FY18 shows PAT stood at INR 9445 Cr vs INR 7524 Cr YoY. Income at INR 104718 Cr vs INR 86925 Cr YoY, with this announcement the shares, have jumped from INR 945 to INR 980 in a week’s time.

Fast Moving Consumer Goods : The sector which was hit hard with demonetisation and GST has slowly seen signs of recovery with the circulation of currency in the economy, thus making the industries to continue the flow of production.

ITC: Plans to add 500 rooms across new hotels over the next three to five years.

This would include setting up first its overseas property in Colombo, Sri Lanka. ITC October – December PAT at INR 3,090 Cr vs INR 2,647 Cr, up 17 percent YoY. Revenue from Operations INR 9,952 Cr vs INR 13,570 Cr down 27 percent YoY, following this announcement share is trading stable at INR 276.80 Conclusion : The biggest reason for BSE sensex and Nifty 50 doing phenomenally well is because of India’s ease of doing business ranking which has jumped 30 positions to become the top 100th country. Creation of jobs and other

reforms undertaken by Modi government.

Dalal Street would be looking closely the finance budget of 2018, and it would be remarkable if markets can still hold good and trade numbers continue to show positive green signals.

The fiscal deficit is likely to be at 3.4 percent of GDP against the Budget estimate of 3.2percent. Indirect taxes are likely to witness a shortfall to the tune of INR 222bn (2.6%) driven by subdued GST collections. GST tax revenue shortfall. GST transition has caused a transitory revenue shortfall in current fiscal. FY19 is likely to see a large expansion in GST collections (+25percent). Accurately forecast the GST revenue remains a challenge basis the nature of taxes structure and regular changes to the tax rates Pharma Metals and FMCG have had the highest rollover figures this expiry. Metals saw a move out of its consolidation this month due to the reversal in base metal prices. FMCG index saw a break out of its 3-month consolidation and pharma which reigned in the bear territory seen a reversal signs of long build up. Pharma could be closely watched in the next series as midcap pharma stocks are showing momentum, hence large cap could catch up which could halt the current downtrend.

FINANCIAL TRIVIA Manmohan Singh who is famously known to be an introvert, became emotional in his first Budget Speech of 1991 and said "I was born in a poor family in a chronically drought prone village which is now part of Pakistan. University scholarships and grants made it possible for me to go to college in India as well as in England. This country has honoured me by appointing me to some of the most important public offices of our sovereign Republic. This is a debt which I can never be able to fully repay. The best I can do is to pledge myself to serve our country with utmost sincerity and dedication. This I promise to the House."