Professional Documents
Culture Documents
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Convenor
Prof. M Venkateswarlu
Editorial Board
Abhiron Bhattacharya
Suvankar Sadhukhan
Siddharth Amitanshu
Manisha Nair
Tanaya Gaikwad
Arvinth D
Design Team
Suvankar Sadhukhan
Abhiron Bhattacharya
EDITORS NOTE
Our Prime Minister Mr. Narendra Modi famously said Make-InIndia is a Lions Step. Taking a cue from it, this edition of IN-FINNITIE brings to you the detailed analysis on the concept of Make
In India, which is in as a current trend. It also mentions about
the first edition of NITIE Post Budget Analysis, which gave the
audience a detailed understanding of the Union Budget 2015 and its
implications on the Indian economy.
In our quest to bring to our readers all the latest happenings in and
around the financial world, we dive in to other key topics like Basel
Capital Accord, Quantitative Easing, Repercussions of falling prices
of crude oil to the economic health of India, and Civil Aviation in
India. To know about the Banks and steps towards Indian Financial
Inclusion, dont forget to walk through our review of Indian banking
industry.
Following the trend, we were inundated with brilliant and exotic
articles that really made us toiled hard to find the best. We extend
our sincere gratitude to all the authors who burned the midnights
oil to write such exquisite articles. In our endeavour towards
continuous improvement we invite feedback and criticism at
street.nitie@gmail.com
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Street Wall
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1
Abhiron Bhattacharya(NITIE)
The world is looking towards Asia for growth. I dont need to give an invitation; I just need to tell people the address of India PM Narendra Modi
Exhibit 1.1 | India's Position in Global Manufacturing GDP and Export Over the Last 20 Years
India share of global GDP
increased from 1.2 to 2.5%
over last 20 years
China
2.3
26.5
Germany, UK,
France, Italy
Japan
India
17.3
6.8
8 .5
3.1
25.5
24.9
24.4
United
States
24.1
21.6
17.7
16.7
12.2
8 .5
8 .2
2.2
2.5
0.9
2009 2013
1993
1.2
1993
20.2
24.1
2.4
19.2
17.8
17.9
14.9
9.6
7.3
2.2
2.0
0.5
2009 2013
1993
12.5
27.6
9.5
The same bleak picture characterises the Indian export sectorand exports are, the best indicator of success for any manufacturing nation. Here, Indias performance has improved
9.7
11.5
8 .6
8 .6
21.0
17.8
4.7
4.5
1.3
1.7
2009 2013
Country
Thailand
Rank
(2015)
Rank
(2014)
26
28
Mexico
39
43
China
90
93
Russia
62
64
Brazil
120
India
Starting a business
158
184
Getting electricity
137
Registering property
121
Getting credit
36
123
142
Rank
(2015)
Topic
140
Trend in
Rank
2014-15
Paying taxes
156
126
Enforcing contracts
186
Resolving insolvency
137
Source: World Bank "Ease of doing business" report 2014 and 2015.
Cost to export
USD 1,170
USD 620
USD 615
USD 595
Bill of landing
Commercial invoice
Time to
export
Documentations
to export
Packing list
Inspection report
Certificate of Origin
Contract
Station receipt
Sources: US Economic Census; BLS; BEA; ILO; Euromonitor; EIU; BCG analysis; Press search.
Note: No difference assumed in other costs (for example, raw-material inputs, machine and tool depreciation); cost structure calculated as a
weighted average across all industries.
1 Average of top 25 countries
Ease of doing
business
Infrastructure
TO
FACILITATE
INVESTMENT.
FOSTER The lack of them obviously increases the costs of
INNOVATION. ENHANCE SKILL DEVELOPMENT. production. In absence of electricity there is loss of
PROTECT INTELLECTUAL PROPERTY. AND production, or the alternative is to set up your own
Gain global
global
BUILD
BEST-IN-CLASS
MANUFACTURING
unit and incurClaim
more
costs on it. Some others depend
Revive manufacturing
competitiveness
leadership
INFRASTRUCTURE. THERES NEVER BEEN A on Diesel generator sets to run factories. The current
BETTER TIME TO
energy deficiency in
Exhibit 4.2 | India's Infrastructure Facilities a Key Cause of Concern for Businesses
MAKE IN INDIA
India is around 5 %
according to the Central
India's rank on Infrastructure has been
because of severe under penetration in most
deteriorating over the years
of the sectors
This means in pure
Energy Agency. Basically
classical
economics
apart from the west of the
there is going to be a
country and Gujarat in
demand and then there
particular all regions are
would be producers
energy deficient.
who
would
be
Water is another short
incentivized to supply
resource
and
the
goods and Services to
indiscriminate use of
meet that demand.
ground water and lack of
The global demand
perennial rivers especially
is increasing day by
in the Deccan is a major
day as we have started
issue as well.
consuming goods and
services like never before. According to worldwatch. While India scores well on cost competitive- ness,
org there are 1.7 billion members of the consumer it is in some of these other factors that the country
classnearly half of them in the developing world. loses out. When compared on the basis of some of
In addition, there are
these non-cost parameters,
continents
that
are
India ranks poorly not only
developing, particularly
with respect to the developed
Africa, where the growth
economies, but most of the
of demand for goods
developing economies as
and services has been
well. Indias rank on ease
phenomenal in the last
of doing business, logistics
decade.
performance and corruption
Now
the
producer
perception
narrates
a
incentives can come from
sorry tale. Administrative
four factors
hassles form a key challenge
in
fostering
greater
Cheaper costs
manufacturing
and
industrial
of production &
growth. For instance, critical
Movement of goods
delays are faced due to issues
Ease of doing
in
seeking
construction
business
permits, utility connections
Market with
and credit approvals. Even as
the ability to pay that
India figures in the bottom
improves margin
half of the list of 175 countries
Finding the
on corruption perception, low
right skill set
judicial strength in India leads
to significant delays in the
Now these factor alone
settlement of court cases.
will expose the lack of
infrastructure in the country. Raw materials have to
Making Make In India a Reality
make their way into the factory and finished goods
have to move out. In the middle of this the processing (And) miles to go before I sleep, And miles to go
of materials into goods would take water, electricity,
before I sleep. Robert Frost
real estate, clinics and hospitals to support this facility.
Rank
(201415)
Rank
(201213)
Japan
11
Germany
US
12
15
China
46
48
Thailand
48
46
Brazil
76
70
India
87
84
Country
Electricity
production, while at the other end it has to increase properly. A poorly marketed product is akin to a poorly
the branding and repositioning of India.According made product. And as the world continues to integrate
to a report by Mckinsey and Company, Indias we would see that new markets are hard to come by
manufacturing sector could touch US$ 1 trillion by and market share has to be taken at the expense of
2025. There is potential
other manufacturers.
Exhibit
4.3
|
Decreasing
Ease
of
Doing
Business
in
India
for the sector to account
for 25-30 per cent of
But, the real question is
India ranks 142 among 189 countries on
... especially due to difficult to enforce contracts /
ease of doing business
deal with construction permits and start a business
the countrys GDP and
whether India is truly
create up to 90 million
prepared for this. Archaic
domestic jobs, by 2025.
labor laws, Infrastructural
In India, the number
roadblocks,
FDI
of jobs in the sector has
restrictions,
unclear
also remained low over
taxation rules and land
the last twenty years,
acquisition make it tough
increasing only by 1.8%
to bet high on India.
per year from 37 and 53
For India to become a
million. This contrasts
global
manufacturing
with the services sector,
destination
structural
which has increased by Exhibit 4.4 | Complex and Costly Approval Process for Export Limiting "Make in India"
changes are required and
6.5% per year during the same period, growing its infrastructure has the biggest role to play. If one
share of Indias labour force from 22 to 31 percent and consisders the ease of doing business then India was
now accounting for 150 million jobs (compared to rated at 140 out of 189 countries. That fact gives a
approximately
80 million in 1993).
major indication of the incredicble face lift the country
Exhibit 2.3 | US, With Low Energy Cost and High Productivity Gains, is Catching Up With the East
on Cost
Thus
while India not only has to build its infrastructure
Shale gas boom and continued productivity increase has turned the tide in US' favour
to sustain its manufactring units but also position
change
US change
Key driver
itself
as nation
ofPeers
producting
withUS advantage
Zero Defect
('04 cable
'14)
('04
'14)
and more importantly Zero Effect. Flexible workforce
Wages
+27%
Moderate
increase / Decline
wages
Without
this rebranding
it+71%would be
difficult
toinsustain
Make
In
India
.
Today
a
lot
of
efforts
are
being
made
Absolute
+19%
+27%
Continued productivity growth
productivity
to sustain the supply side of things, but International
Strengthening
of other currencies
demand
for Indian
goods+7% is at an
all-time
low.withAny
Currency
Flat
respect to USD
visitor to an apparel retail outlet in US for example can
Shale gas boom
-25%
+98%
seeNatural-gas
and Egypt brand
costthe China, Thailand, Bangladesh
Flattening of natural gas demand
more than India. Even to the eyes of
its
citizens Indian
Deregulations and restructuring
Electricity
+30%
+75%
cost
Technological
advancements
made
goods or rather the Made in
India
brand has
taken a beating.
Now efforts should be made to market Make in India needs. Not only from the cabability point of view but
also from mindset that is stamped on the minds of
Exhibit 2.4 | India is Challenged by Secondary Factors
the Indian society.Further more one cannot just stop
Direct cost
Overall
relative to
business
Ease of doing
Logistics
Corruption
at Make in India in being the plateau of hope and
the India
environment
business
performance
perception
salvation for the economy, the ideology should be
Country
Delta
Rank
Rank
Rank
Rank
backed by everlasting products that promote Zero
57
142
54
94
India
-Defect and Zero Effect. Lets think about making
28
China
+10%
50
90
80
our product which has zero defect; so that it does not
Germany
+39%
12
14
1
12
come back (get rejected) from the world market and
US
+15%
7
7
9
19
zero effect so that the manufacturing does not have
an adverse effect on our environment was the moto
Japan
+27%
27
29
10
18
that was promoted by Mr. Narendra Modi.
34
26
35
Thailand
+4%
102
Government
policy and
reforms
India
173
China
8 48
Road transport
India
China
37.9
15.9
Exhibit 1.3 | Most Global Economies Expected to Grow Robustly Over the Next Several Years
4.8
6
4
3.3
2.8
2.1
2
0
1.5
1.9
1.7
1.9
1.7
1.8
2.4
1.9
0.4
-2
Mar13
Jun13
Sep13
Dec13
2.1
2.0
2.4
-0.1
Mar14
29.6
30
28 .1
24.8
25
27.3
26.2
26.8
28 .0 27.7
28 .9
26.5 27.0
20
Jun14
Mar13
Jun13
Sep13
Dec13
Mar14
Jun14
3.7%
2.8 %
0.8 %
-2.0%
Sep-13
Oct-13
-1.2%
Nov-13
0.4%
-0.2%
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
5.9
4.3
1.5
50
+60 million
40
125
100
75
50
60
57
54
57
60
65
62
72
68
75
79
82
86
91
95
99
104
109
114
30
20
10
25
0
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 FY 26 FY 27 FY 28 FY 29 FY 30
21.625%
6078 million
5.26.1%
power is in short supply and the countrys infrastructure falls short of expectations.
Sources: Government of India, Ministry of Labour & Employment, RBI, Press search, BCG analysis.
3.3
2.7
2.7
2.1
0.9
Germany
Euro zone
United States
ME, NA
Latin America
20102014
Emerging
Asia
China
World
201420201
Source: Thomson Reuters datastream (IMF World Economic Outlook) / BCG analysis.
estimate.
1IMF
8.1%
48 %
37%
Aug-14
150
2.1
1.7
3.4
3.1
3.0
34%
34%
11%
4%
Sources: Reserve Bank of India Database on Indian Economy; Central Statistics Office; BCG analysis.
175
6.5
6.4
-0.5%
Jan-14
8 .0
0.4%
-1.8 %
Dec-13
<5%
57%
4%
79%
15%
7%
910%
6%
1015%
>15%
Do you see stronger growth over the next 5 years compared to last 5 years?
In your sector? (% change)
2.4%
1.7%
67%
48%
60%
<3%
21%
21%
21%
1 to 3%
9%
8%
-1 to 1%
13%
13%
20%
10%
5%
0%
77%
2.6%
1.9%
-1 to -3%
<-3%
1%
0%
5.1%
8.1%
Source: CII-BCG Manufacturing Leadership Survey 2013, CII-BCG Manufacturing Leadership Survey 2014.
Conclusion
References
http://indianexpress.com/article/business/businessothers/rbi-should-use-indian-paper-ink-to-printcurrency-pm-narendra-modi/
http://www.makeinindia.com
http://rbi.org.in/Scripts/PublicationReportDetails.
aspx?ID=784
http://www.equitymaster.com/
http://www.moneycontrol.com/
http://economictimes.indiatimes.com/
http://www.banking-business-review.com/
http://indiabudget.nic.in/
http://www.dinodiacapital.com/
http://www.rbi.org.in/scripts/bs_viewcontent.
aspx?Id=2619
http://www.researchandmarkets.com/
http://finance.yahoo.com/
http://www.moneyrediff.com
http://economictimes.indiatimes.com/news/
Ambikesh Mishra(VGSOM)
On
10
11
Aishani Sharma(SIMS,Pune)
12
13
introduced:
1. Capital Conservation Buffer: Within the
CAR levels of 8%, this new buffer of 2.5% needs to
be maintained by banks which would help them to
absorb losses, especially in periods of tight liquidity
levels.
2. Countercyclical buffer: Along with the
capital conservation buffer, Basel III has introduced
a countercyclical capital buffer which ranges from
0 2.5%. This requirement is made for periods of
excessive credit growth and by triggering this ratio
the excess liquidity in the system can be optimized.
3. Liquidity Requirements:-For this requirement,
banks need to maintain two ratios namely the
Liquidity Coverage Ratio (LCR) and Net Stable
Funding Ratio (NSFR) at 100% levels. The LCR
requires institutions to hold a sufficient buffer of high
quality assets that can be converted into cash within
30 days. The NSFR requires institutions to have more
sources of stable funding such as retail deposits,
savings accounts rather than risky instruments like
certificate of deposits.
4. Leverage Ratio:-This ratio requires the Tier I
capital to represent at least 3% of total assets, in order
to prevent excessive build-up of leverages (amount of
debt) on banks.
On paper, the Basel Capital Accord appear to be well
drafted and prudent. Yet, the world has seen their
paralysed effectiveness in handling various financial
crisis. The actual effectiveness of the regulations
14
15
16
17
-Krishna Deshmukh
Introduction
(JBIMS)
18
Samir Chincholikar
Reason for failure of Kingfisher airlines:
Overestimating
demand and focussing
on providing luxury
absence of long
serving MD or CEO
Lack of long term
strategy, frequent
changes from low cost
model to full service
carrier and vice-versa
Reasons for failure of
SpiceJet:
Discount fares, Flash
sales
Decision to operate in
Tier-II and Tier-III cities
Interference of family members in senior level
management
Punitive Taxation:
19
Government
policies:
2)
4)
Infrastructure problems:
5) Air Safety:
The
US
Federal
Aviation
Administration (FAA) had lowered
Indias aviation safety ranking from
category-I to category-II, finding regulatory oversight
inadequate. Planes of carriers like Air India and Jet
Airways providing services in US had been impeded.
Category-II ratings designate that country lacks
regulations necessary to oversee to carriers working
under the safety guidelines. DGCA has fared poorly
in matters of record keeping, inspection procedures,
technical expertise and training personnel. All
concerned authorities should work swiftly to change
3)Increased competition and Sticky prices: status from category-II to category-I, if failed there
would be restrictions on Indian carriers to operate
Indian aviation market is extremely competitive flights to international destinations.
in nature and airlines use fare wars and predatory
pricing from time to time to gain larger chunk of What can be done to revive Indian aviation
market share instead of focusing on profit shares. As a
industry?
result for most of the air-carriers, operating costs are
much more than the revenue generated by them. As 1)
Tax Reforms:
20
5)
4)
Air Safety:
References:
1) http://dgca.nic.in/
2) http://www.ibef.org/industry/indian-aviation.
aspx
3 http://www.aai.aero/public_notices/aaisite_
test/main_new.jsp
21
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Pre-Nationalization Phase which comprised
first stage (before 1955)
Second Stage of Nationalization and
Consolidation from 1955-1990
Third stage of Financial & Banking Sector
Reforms and Partial Liberalization (1990-2004)
Increased Liberalization from 2004
onwards fourth stage
Scheduled Banks
A Scheduled bank is a
bank that is listed under
the second schedule of
the RBI Act, 1934. To be
incorporated under this
schedule of the RBI Act,
banks need to satisfy
certain conditions like
having a paid up capital
and reserve of at least 0.5 million and satisfying the
Reserve Bank about fair practices. Scheduled banks
are further ordered into commercial and cooperative
banks.
Scheduled Commercial Banks (SCBs)
Scheduled Commercial Banks (SCBs) represent a
24
Scheduled Cooperative Banks in India might be Around 27 nationalized banks, 19 private sector
majorly classified into urban credit cooperative banks, 32 foreign banks & various co-operative banks,
and rural credit cooperative banks. Rural credit regional rural banks are operating in India.
cooperative banks carry out long term and short term
lending. Credit cooperatives in many states have a
three level structure (primary, district and state level).
Non-Scheduled Banks
Non-Scheduled Banks additionally work in the
Indian banking industry, as Local Area Banks (LAB).
There are just 4 LABs working in India. These are
banks that were set up under the scheme declared
by the legislature of India in 1996, for the station of
new private banks of a local nature; with purview over
greatest of three bordering regions.
25
Budgetary measures
Population:
Literacy:
Limits on Foreign Direct Investments (FDI) Literacy plagues our country as we have very low
literacy rates compared to developed nations. This, on
and Foreign Institutional Investor (FII)
The insurance sector in India is yearning for one hand act as a block in transaction processes but
investments. Expansion is needed in many sectors. on the other hand leads to increase in trust on bank.
The government of India had approved the FDI cap
Technological factors
increase in insurance sector to 49% from 26% in
December 2014. FII limits are 24% of paid up capital
26
Environmental factors
Indian economy has been robust for some years now.
With change of power at central level and NaMos
effect, there is positivity in the general atmosphere. As
more investments come into India and service sector
grows, there will be more loan borrowing, savings etc.
from businesses who wish to make investments here
and subsequently more lending. This will positively
affect Indian banking industry.
Legal Factors
RBIs intervention
References
27
Introduction
Payment facilitators like One 97, Oxigen,
Large conglomerates like Aditya Birla Group,
Reliance Industries, Tech Mahindra, Videocon, Sun
Pharma
Scheduled Commercial Banks such as Kotak
Mahindra Bank, Axis Bank etc (interested in joint
ventures with promoter/promoter group)
Services provided
A payment bank can accept demand
deposits, i.e., current and savings bank deposits
from individuals, small businesses and other entries.
Initially restricted to hold a maximum balance of Rs.
1 lakh per customer with simplified KYC norms
Can issue ATM/ debit cards/ PPIs, and offer
remittance services and internet and mobile banking
services. Cash outs
at other terminals
are allowed in
addition to other
channels
Can act as
a channel to accept
remittances to be
sent and to receive
remittances from
multiple
banks
under
RTGS/
NEFT/IMPS
It has the
permission
to
Abhishek Sharma
(IIFT Delhi)
28
Phani Tejaswi K
Eligible Promoters
Interested Promoters so
far
Telecom majors like
Vodafone, Bharti Airtel, Idea
Retailers like Futures
Group
29
30
31
The Situation
Spot price of Brent Crude, updated on January 23, 2015 (Joss Fong/Vox)
32
33
pressures.
Another fallout may be that a stronger dollar is
FIN-Q-NITIE
The Ullimate Quiz
1. .X received his PHD in economics from the University of Pennsylvania in 1964. His thesis was titled
"Variability of Demand Deposits". In 2002 he received Padma Vibhushan. He served as the governor
of Andhra Pradesh .He has also served as the governor of RBI. Identify X.
34
Centre Index?
A. Hydrabad
B. Mumbai
C. Bangalore
D. Kolkata
8. Which one of the following countries will hold the
presidency of the BRICS new development bank for
the first six years?
A. Brazil
B. South Africa
c. Russia
D. India
9. Once a budget has been presented in Parliament,
the Government has to get all money bills related to
Union Budget passed within
A. 60 days
B. 75 Days
C. 90 Days
D. 120 days
10. Which among the following banks has launched
the
Tatkal scheme that enables the people to transfer
money to their families in their native towns and
villages without opening an account?
A. State bank of India
B. Bank of India
C. Canara bank
D. Union Bank of India
11. Which stock exchange launched first carbon-based thematic index Carbonex?
A. MCX-SX
B. NSE
C. BSE
D. United Stock Exchange of India
12. He is referred as the Father of Index Fund investing who created the first S&P 500 Index fund. Identify this famous person?
A. John Bogle
B. Eugene Fama
C. Leo Melamad
D. Richard Sandor
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