Algorithmic trading is a method of executing trades using pre-programmed automated trading instructions. It accounts for variables such as price, timing, and volume. This method uses mathematical models and formulas to automate financial transactions. The automated trading system has the key benefits of high-speed order execution.

It started as early as the 1980s when program trading was introduced. Program trading is a type of securities trading where stock orders are executed using computer programs based on predetermined conditions. It gained traction with more computers and programming systems being involved in the financial markets. This method of trading combines the potential of financial knowledge and computer coding to generate higher market returns. This is super-efficient in finding arbitrage in markets and capitalizing them with huge volumes to gain profits.

Statistics

·       80% of daily volume in the USA is traded using machines

·       92% of forex trades are executed by algorithmic trading (2019)

·       The global Algorithmic Trading market is expected to grow at a CAGR of 10.36% during 2018-2022

·       JP Morgan has allocated a tech budget of $10 Billion for Algorithmic trading

Technology Used

This system deploys cutting-edge technology and builds an alpha-seeking strategy that is heavily dependent on data. Deep research and deep learning on past data are used to find future trends. The historical database is also used for back testing the programmed algorithms and to check the potential of the strategy used. Since it is also configured with the capabilities of Artificial Intelligence (AI), the programs developed by programmers improve themselves using Deep learning. The Systems Architecture (SA) of the machine and the algorithms used are of prime importance. A small programming glitch can crash the entire architecture. The conditions used for automation can track the consensus that is being built among market participants. High speed transactions can execute trades that can capture even the smallest price difference, thus building a huge opportunity for profits. In 2017 it was reported that many firms across the globe have adopted Machine Learning software for trading

Advantages

·       Used primarily by large institutional investors

·       With large order size and volume, the costs are significantly cut down (economies of scale)

·       Faster trade execution

·       Glitches are reduced as trades are automated

·       Since the volume transacted is more, even a small change in price leads to profits

·       Since there is zero emotional quotient, the behavioral finance and bias of human thinking significantly reduces while trading

Disadvantages

·       Algorithmic trading was the main reason behind the Flash crash of 2010

·       Reduces market liquidity

·       Costly to establish, as it involves huge infrastructure

·       Humans are facing stiff competition from computers and are being fast replaced

High-Frequency Trading (HFT)

HFT is an application of Quantitative Finance. When a large Hedge Fund or Trading Bank buys huge volumes of the shares of a particular company, the volume gets executed in more than one exchange purely because of the high volume transacted and one single exchange can’t fulfill the orders. Thus after exhausting one exchange, the order automatically goes to the next exchange to fulfill the order. Like this, the orders move from one exchange to another until the complete order is fulfilled. Firms involved in HFTs place strong servers near the exchanges and receive the buy orders and immediately transmit the signals to the Bank involved in HFT in milliseconds. Before the Hedge Fund can move to the next exchange, the HFT Bank buys the specific shares in the next exchange and profits by a sudden price rise and quickly clears off its position. The entire demonstration happens in a few microseconds and is extremely fast.

Strategies (Not exhaustive)

1. Index fund rebalancing- Exploiting the timing difference when companies are rebalanced in the Index. The companies listed on an Index are rebalanced based on certain criteria, during rebalancing, their values fluctuate.

2. Arbitrage- It is the practice of taking advantage of a price difference between two or more markets

3. Mean reversion- Finding the trading range for stock and taking positions accordingly. We expect the stock price to get to its average price after small fluctuations in price. Using such price differences to profit

4. Pairs Trading- This is a long-short, ideally market-neutral strategy enabling traders to profit from transient discrepancies in the relative value of close substitutes.

5. Delta-neutral strategies- It describes a portfolio of related financial securities, in which the portfolio value remains unchanged due to small changes in the value of the underlying security.

Opportunities

We see that there is a growing inclination towards coding and automation. The new-age software developers and programmers are building new tools and new programming languages are getting implemented. New areas such as AI, ML, and deep learning make extensive use of coding and automation. This trend has also entered financial markets, coupled with the growing inclination for everyone to trade in the stock markets, the combination of trading using programming and automation has great rewards. The potentials are well analyzed by big hedge funds and banks which are investing in millions to buy such talents and make a profit. Trading along with coding is a very valuable cross-skill that is in great demand now. The standard returns generated using algorithms are higher than Index fund returns. These are developing alternate investment opportunities, which were relatively unexplored. They also have low correlation of returns with traditional investments.

Industries

We must also understand that the penetration of systems in financial markets has replaced the dynamics of the functioning of the industry. There is an increase in software and computer spending, making the states more capital intensive. There is also a shift in the type of employees working in the finance industry. There is a growing demand for computer programmers than for stock traders. The largest employers of Quantitative finance are huge Hedge funds, Investment banks, Mutual funds, and Pension funds.

The increase of technology firms and startups have opened access to troves of consumer data. The evolution of new data-sharing techniques has compromised data security. The data leak in Blackrock and the controversies around the data servers of the State Bank of India have exposed the vulnerability of data and its management, in recent times.

As more Fintech firms evolve, there has to be a framework to regulate the industry and the data that it generates. As there is an increase in the quantity and type of data. This new era presents newfangled challenges for regulators and accentuates why the evolution of Fintech necessitates a parallel development of RegTech.

What is Regtech?

RegTech refers to technological solutions that streamline and improve regulatory processes. It enhances the delivery of compliance requirements. It uses many cutting-edge technologies such as artificial intelligence, big data, cloud computing, machine learning, to name a few, which ensure companies are more effective in reaching regulatory compliance. RegTech has helped to minimize the risk of human error by automating the processes.

Currently, in its second stage of development, RegTech is being used by both institutions and regulators to address increasingly cumbersome compliance processes. However, we are yet to unlock the transformative potential of RegTech.

Not only does it represent a natural response to the digitization of finance and the fragmentation of the industry participants, but it also has the potential to minimize the risk of regulatory capture, similar to the ones that occurred before the GFC. It also helps us to tackle the problem of Risk arbitrage.

The true potential of Regtech lies in its ability to achieve a profound transition from a ‘Know Your Customer’ (KYC) to a ‘Know Your Data’ approach- underpinned by efficient and effective processes for collection, formatting, management, and analysis of reported data, accompanied by a fundamental data-centric mindset.

Evolution of RegTech

RegTech has unfolded in three stages. The first, RegTech 1.0, was led by large financial institutions that integrated technology into their internal processes to combat rising compliance costs and complexity, as epitomized in the Basel II Capital Accord. The second stage, RegTech 2.0, has been driven by the new-post GFC regulatory requirements. It is primarily centered on the digitization of regulatory compliance and reporting process. At the same time, regulators are seeking to mirror the increasingly digitized nature of the markets they monitor and enhance their capacity to analyze the rising volumes of data generated by post-GFC reporting obligations. In the future, RegTech will exhibit its greatest potential in the third stage of development- RegTech 3.0. Where the technology will help us conceptualize finance and its regulation to build a better financial system

The FinTech sector is shifting its focus from the digitization of money to the monetization of data, making it imperative for new frameworks to accommodate novel concepts, such as data sovereignty and algorithm supervision. A sequenced (sequential) approach to the development of FinTech within a RegTech framework is necessary.

Fintech 3.0

Fintech is the delivery of financial services using technology. Fintech 3.0 started around 2007 to 2008, owing to a confluence of factors, which have all contributed to the shift from Regtech 2.0 to 3.0.

· The growth of technology firms and startups.

· The poor performance of banks.

· The Global Financial Crisis (GFC), which led to the loss of trust in banks amongst people owing to huge collapses and bankruptcies.

· Smartphone penetration.

· Increased sophistication of Application Programming Interfaces (API).

Advantages:

1.     Cloud-based Solutions- In Cloud-based solutions, the data is remotely maintained, managed, and backed up. It provides advantages concerning cost, flexibility, performance, and security.

2.     Data Analysis- It has a flexible and secured operating model, which enables Big Data and proper analysis of data. It Enables clarity and efficiency in the interpretation of ‘Regulations’

3.     Efficiency-It improves agility and speed.

4.     Compliance and regulation- It’s a robust framework that enhances regulatory and compliance requirements. Thus, there is greater harmony in the industry.

Challenges:-

1.     Cost- The cost and time involved in establishing Reg-tech are expensive and capital intensive. Regulators must invest heavily in the development of proportionate, data-driven regulation to effectively handle innovation without having to compromise on their mandate.

2.     Data processing- Proper management and process systems are required to process the large volumes of data that the technology itself generates.

3.     Data management- Data depreciates and this has to be accounted for. With such a large scale system, the recurrence and relevance of data have to be monitored so that only relevant information is obtained.

Mitigation:

1.     Proper data warehousing can provide some harmony in data processing and management.

2.     Increasing partnerships between financial and technology-based firms can help cut costs and provide data for both parties. This also has benefits of cross-analysis of data for both parties

Market Opportunities:

1.     Regtech has great potential to enable real-time monitoring of financial markets. Thus it can overthrow traditional concepts about financial regulation.

2.     The increasing shift to pivot more on data has opportunities for enhanced data management. Thus, the institution with the most data on borrowers will be the best place to assess their credit risk and extend credit.

3.     If FinTech can support multiple industries such as telecom, healthcare, infrastructure, then the scope of RegTech will automatically increase as it has a derived demand.

Opportunities for Deloitte:

1. The Consulting wing of Deloitte can partner with financial service firms and the government to offer data management services.

2. They can offer services to corporate clients on strategies to mitigate the risk of non-compliance as they already got the algorithm of existing regulatory non-compliance.

3. The existing large database of Deloitte can be used for analysis and this data analysis has great value in the industry and partnering with existing Regtech firms can provide synergistic benefits.

4. The Risk Advisory department of Deloitte can help existing RegTech firms on Regulatory policies and enterprise-level adoption to the futuristic Regtech evolution.

Early in the morning, at dawn, just before sunrise, the sky seems just chaotic. We see that it is as confused as a 12^th grade student. But as minutes pass, we get some clarity and then only to realize that it were we who were confused all this while and not the sky, which was clear on its moves and colors right from the beginning. The beautiful sunrise is the answer for all the doubts, to an extent where we lose the question itself in the awe of sunrise.

The political landscape today draws a lot of similarities to the above imagery. We find that the per person data consumption today had gone up 3 fold and is still expected to rise. Data availability to the common public is also increasing. Reliance Jio comes out of the blue and storms the headlines. In just two years, they sign the biggest deals in the country. On top of all this, the political parties too favor the digital platform to be the right way to expand their coverage. Also, every major political party is also plunging into this virtual world, with different portals and their own accounts to connect to the public easily. Sound chaotic isn’t it. Well, there can be order from this chaos.

The per person data consumption in early 2016 was less than 1GB. After September 2016, when Reliance Jio became publically available, the records have increased. The per person monthly data consumption has increased to 1.8GB in 2017. Later in 2018, this figure has gone up by leaps, touching 4GB per person every month. The data usage pattern can be divided as per –Jio phase and the post –Jio phase. We can effectively see that the post Jio phase is indeed a revolution in the mobile phone data consumption segment. They have changed the grammar of mobile and data usage. With even tier 2 and tier 3 cities getting great access to internet due to mobile phone penetration, it has effectively displaced Television as a mode of entertainment.

This near monopoly by Jio is not possible without the favoritism it receives from the ruling government. Recently, a spectrum deal between Reliance Jio and Reliance communications is in midway. The proposed deal marks the sale of 122.4 MHz of airwaves and 43000 towers from Anil Ambani owned Reliance communications to the Mukesh Ambani owned Reliance Jio. If this is executed, then it will make Jio stronger in the telecom market and a greater access to the airwaves.

This deal not only benefits the multi- product conglomerate but also the political party which supports and receives funds from them. Its quiet common that political parties are actively conducting their political campaigns in social media sites such as whatsapp, facebook, twitter and instagram. They have found this medium to be cost effective and access to a larger population in such a diverse demography such as ours. Especially the new generation of voters, who are still in the process of their political socialization are the biggest market for the political parties. As it’s the youngsters and working youth who are mainly active in the internet.

So increasing data access and availability means increased data consumption by the public. The more data is used; better a platform for the political parties to run their campaign in the digital platform. If a particular network is the most used, then the political party funded by that company can get better advertisements and access to people. If data usage is increasing and Jio too is growing stronger by market force every day, then it means there is a greater playing ground for BJP in the coming general elections. There is a mutual benefit as the business increases for Reliance and the political campaign for BJP too is done.

Another advantage when the people are busy engaged in their mobile phones, the less are the aware about the frauds and corruptions around them. So, the data and phones act as a great distraction. Thus, in both ways, it’s the politicians who benefit by exposing to their political agenda in a cheaper way and also keeping us away from the reality of their frauds and misdeeds.

It’s the common man who is caught between the devil and the deep blue sea. The wisest decision would be to drown the devil in the deep blue sea by using some wit and luring the devil to the sea.

The Greek God of trade- Hermes, stole a number of herd from Apollo and drove them back to Greece. Before retreating, he caught a tortoise, killed it and removed its entrails. Using the intestines from a cow stolen from Apollo and the hollow tortoise shell, he made the first lyre. When Apollo revolted, Hermes began to play his lyre. The sweet music enchanted Apollo, and he offered Hermes the cattle in exchange for the lyre. Apollo later became the grand master of the instrument, and it also became one of his symbols. Apollo’s presence of mind helped him make the most fitting trade. Synonymous to this story, it is expedient for us to brace ourselves to make the best use of deals offered on the days starting on Black Friday and ending on Cyber Monday. In order to achieve this it is cardinal to discern the difference between the two buzzwords.

When does Cyber Monday start, and when do the Black Friday deals end?

In the year 2020, Black Friday “ended” on Friday, November 27, and Cyber Monday “began” on Monday, November 30, but different retailers are either beginning their Cyber Monday deals early or spanning their current deals into a Black Friday weekend. This is a part of the retailer’s strategy to boost sales during this unforeseen time. Black Friday deals were (and still are) a great way to score major discounts on expensive tech like TVs, laptops, headphones, speakers, and smartphones. Early Cyber Monday deals, based on what we’ve seen so far, are more focalized on smaller appliances like vacuums, stand mixers, espresso machines, Fitbits and clothing - but you’ll still find deals for more expensive fare like laptops, Chromebooks, 4K TVs and treadmills.

So, what’s the difference between the two sales events – and most importantly, on which day will you find the best deals?

Let’s start with Black Friday; traditionally, Black Friday is the Friday immediately after Thanksgiving when retailers begin the holiday shopping season. It’s stationed around retailers making such dramatic discounts that customers will try to break the doors down before the shop opens – although recent years have seen Black Friday morph into an online shopping phenomenon. Online shopping is going to be even more important this year, as the pandemic means social distancing measures will be enforced in many stores, and buyers will be more reluctant to shop in person. Apart from the dates, the conventional difference between Black Friday and Cyber Monday is that Black Friday deals can be found online and in physical stores, whereas Cyber Monday is purely dedicated to online discounts. People often want to avoid the crowds and take advantage of promotions from the comfort of their own homes. Cyber Monday is particularly suited to those who are visiting family over Thanksgiving and want to make the best of the holiday discounts without lugging the shopping home with them. This year, with most people staying home for safety, retailers made virtually all of their best deals available online. That, combined with the month-long deal schedule, makes the difference between Black Friday and Cyber Monday more blurred. Cyber Monday also typically sees discounts on smaller items that might get ignored during Black Friday. For example, if you’re more interested in fashion than tech, some online retailers are expected to offer site wide discounts on Cyber Monday, meaning it’s well worth waiting. Cyber Monday is also generally a good time to find deals on small appliances and white goods, so if you’re looking for a new microwave, check when your favorite household store begins its Cyber Monday sale.

How to make the most of Black Friday and Cyber Monday deals?

Much of this comes down to branding, as both sales events will have plenty of fantastic tech deals, whether you’re looking for a new laptop or a pair of swish noise-cancelling headphones. The difference is that some tech will sell so well during Black Friday that it sells out before Cyber Monday, leaving you out of luck; or, some tech will sell at a decent discount during Black Friday only for retailers to slash the price down even further for Cyber Monday, hoping to clear out the rest of their stock. So, If you see an implausible Black Friday deal that checks all your boxes, it’s recommended to go for it as products can sell out in a matter of minutes, and you can usually return the item if you see a better deal on Cyber Monday. Unless you are attached to a very specific product, you’ll likely find a deal on any tech you need whether you shop during extended Black Friday sales or early Cyber Monday deals.

In a well-known story told among Christians, Jews and Muslims, God chose to destroy the Earth but spared one man-Noah and his family. On God’s command, Noah built a huge boat - an ark, and filled it with a pair of every animal. God flooded the Earth, drowning everyone and everything that once roamed the land. Only Noah, his family and the animals on the ark survived and repopulated the planet.

Our understanding of disruptive technology has been very similar to the story of Noah’s ark. We see disruptive technology as anything that has the capacity to shake up the existing market and bring a revolutionary change in the way a process is performed. However, the word tends to be thrown around excessively these days while ignoring certain intricacies. In order to fully unpack the benefits of the “disruptive theory”, it is cardinal to exact its proper meaning.

Ever since the American Business Consultant Clayton Christensen popularized the term, disruptive technologies in his book “THE INNOVATORS DILEMMA”, it has become a buzzword among start-ups seeking to spawn a product with mass appeal.

So, what is disruptive technology?

“A disruptive technology is that which aims at sweeping away existing technology, systems or habits as it has qualities that are recognizably superior”

Disruption also describes the process by which a smaller company with fewer resources is able to challenge the might of established businesses.

KEY FEATURES OF DISRUPTIVE TECHNOLOGY:

1. Aims at eliminating an older process/system

2. Significant superior attributes

3. Start-ups are the dominant source

Disruptive technology has the potential to put start-ups on the industrial map. Disruptive technology initially develops in and caters to low-end or new-markets; the mainstream spenders enter once the quality matches or exceeds existing standards. Most established companies with rigid business models rarely explore this space. They tend to focus on what they already do best while pursuing incremental improvements towards the same. They choose to cater to their largest and most demanding customers simply because they view disruptive technologies as involving too much risk. But in the increasingly disruptive world, only risk-taking companies may have a shot at survival.

The best and current example of disruptive technology is the block chain-the mechanism behind Bitcoin and other cryptocurrencies. The effectiveness of block chain to relocate transactions from a centralized server to a transparent cryptographic network has removed the need for manual verification of financial transactions. This has also extirpated financial intermediary costs and dramatically expedited transaction time. The reason block chain is considered a disruptive technology comes from the fact that it started from low-end segments, has a discernible superior quality of replacing the extant manual system, and has seen numerous start-ups taking the plunge.

Currently there are eight major disruptive technologies whose convergence is crucial to yield powerful business solutions. These are more potent than the sum of their parts. These 8 happen to be-Artificial Intelligence, Augmented Reality, Block Chain, Drones, Internet of Things, Robotics, Virtual Reality and 3-D Printing. This next wave of tech innovation guarantees to proliferate our skill to work exceptionally and in a more harmonious way with technology.

Despite these benefits, the inherent risk such technology carries is colossal. Many times, disruptive technology took years to adopt or was never adopted. Moreover, investing in companies that create or adopt disruptive technology involves the financial bearing of such risks. For instance, the Segway PT is a two wheeled, self-balancing personal transporter invented by Dean Kamen. Though it was a brand-new idea, it wasn’t revolutionary and much to the chagrin of its investors, the company barely touched the transport industry. When the Segway electric vehicle was launched, it was widely touted as potentially “disruptive”. Only that it wasn’t. However, star entrepreneur Elon Musk has really pushed forward with the idea that the future of transport is electric. So, Segway wasn’t a complete dud. It was a seed towards a greener future. Today we see auto-makers lining up electric builds of their famous models and countries competing to make their traffic fossil-fuel-free.

On the other hand, disruptive technologies have been failures too. Take the super-jet Concorde for example. A joint effort by France and Great Britain, the Concorde is a turbojet powered supersonic passenger airline that had a maximum speed over twice the speed of sound. For Trans-Atlantic passengers, it was a dream come true. However, It failed because no airline wanted a plane that went faster than their profits ever could. The economy has also been inhospitable for the Concorde.  Consequently no Concorde has seen the skies since 2003 and it is unlikely one will any time soon. It simply failed to disrupt the market because the normal planes offered airliners the superior alternative- lower operating costs, cheaper fares, and more connectivity.  Still, it could be considered a disruptive technology because of its utility in military and spaceflight. Radical concepts of the Concorde are prevalent in military aircraft and missiles even today. It just could not “disrupt” the consumer market.

So, when it comes to actual disruptive technologies, understanding and incorporating the elementary principles behind the “disruptive theory” over heralding something as a “disruptor” is a must. Else, the only disruption we’d get is the banker knocking at our doors while we rue about how we did not read this article first.

News and announcements are just 10% of what we see and 90% of what we think and expect out of it, rather, what we expect others to do with the news. Thinking about this ratio and its effects (don’t think chaos theory) puts us in a loop, and conventional knowledge can only help us a little but being patient and analyzing past trends does way more to keep us safe. The budget analysis or its breaking down to reach the holy grail of ‘Best investment’ is just another interpretation by us. This should not be taken as an investment recommendation. Conduct your due diligence before making investment decisions.

The budget could mean an increase in many sectors, a few that we intend to discuss here but the most important is the functioning of the capital markets and the safety of the investors. What has the budget done to address this issue? A separate ‘Investor Charter’ is said to be laid for investor protection. The main 4 Acts of the Indian Capital Markets are proposed to be converted into one ‘Securities Market Code’ for better streamlining of processes. The 4 Acts being; SEBI Act, Depositories Act, Securities Contract Regulation Act, and the Government Securities Act. This would give incidental benefits to the investors, but direct benefits would come to the institutions and big companies or even Securities Lawyers, who now must be familiar with just 1 Code to advise all their clients.

The commodity market ecosystem is going to benefit as there is a plan to strengthen the Gold Exchanges. This would be very vital for the domestic investors as Gold has a higher acceptance amongst Indians. There is also a drive to increase the usage of digital gold investing.

Just as there was an announcement to strengthen the debt resolution process, the government has bought in various intensive measures to increase the bond market. A Fintech hub is proposed to be institutionalized at the IFSC to increase the corporate bond market. There is another proposal to set up a Development Financial Institution by an Act, to provide debt funding of five lakh crores for infrastructure.

There seems to be a great future for the hydrogen and solar energy sectors. There is a proposal to infuse 1000 crore to the Solar Energy Corporation of India. Hydrogen energy machines are planned to be strengthened. As a part of Atmanirbar Bharat, an International Solar Alliance is planned to boost this sector. The stocks in this sector could be a good pick.

Overall, there is a great promise for Infrastructure and capital expenditure, as they were the key focus of the budget. Many airports and seaports are planned to be built. The management of ports and shipping will be delegated through Private-Public Partnerships. The recycling of ships will increase the turnover of this industry. This also promises to increase the job opportunities of this sector. There is proposed funding for infrastructure pipeline funding. The share of capital expenditure will be increased in the state and central budget. The focus on the Infrastructure and growth of the City gas distribution network will imply growth in the value of Infrastructural Investment Trust (InvIT) and Real Estate Investment Trust (REIT). There is a proposal to monetize operational ‘Public Infrastructural Assets’. More ‘Brownfield’ infrastructural assets will be launched. This will offer more value and cash returns. More roads and highways are planned to be launched. This will boost the logistics industry; the share prices of the related industry will also increase if more roads are built. Railway Infrastructural assets are also in the pipeline. Power infrastructure and Urban infrastructure are also planned with heavy amounts.

There is a proposal to enhance the metro and public bus transport services, aimed to boost the automobile sector. But does this translate to public benefit, at a time when there is no travel and rural migration? If the proposed actions are executed, it would benefit the investors, but the usage of the infrastructure is necessary to keep the value increasing. What is the use of ‘better travel experience’ when people are locked inside their houses? Economy reviving and better usage of capital assets and infrastructure is the judgment of the investor, but there are heavy chances that work from home and subsequent rural migration might be the new normal.

Many would say that the Software and Technology industry grew after the ‘Dotcom Crash’. The Investment industry and the fintech industry grew after the 2008 Housing bubble. Yes. new industries will become multi-baggers. The quest lies in finding the right industry that would grow after a crash.

Analysis of Health and Wellbeing

The budget 2021-2022 is divided into six pillars, the first being “Health and Wellbeing” instantiating that healthcare is the paramount pivot of the budget. Under this pillar, a total budget of Rs.2.23 lakh crore is allocated for 2021-22.

Spending in the health sector:

The Government of India divulged that there is going to be 134% augmentation in the spending towards health. However, the total budget allocated towards this sector shows a decrease of 9.76%. This is because the increased spending is in respect of sanitization which is not represented under the health sector.

Drinking water and sanitization budget (in lakh crore rupees):

The Finance Minister announced that Rs.35,000 crore had been allocated towards COVID-19 vaccine, which is of supreme importance in the present state of affairs and that additional funds will be allocated, if need be, in the future. The Ministry of Finance has stated that India has already sanctioned the use of two vaccines in January 2021. These vaccines are already in use for restricted groups of people, i.e. 3 crore healthcare and frontline workers. There will be two more vaccines lining up along with them soon. We can observe that the share price of Pfizer has increased by Rs 100 after the vaccine drive was announced.

Further, a new centrally sponsored scheme, PM Aatmanirbhar Swasth Bharat Yojana, was announced at the cost of Rs.64,180 crore. Over a span of six years, the scheme aims to strengthen the primary, secondary, and tertiary healthcare systems’ capacities. It also builds new institutions and boosts the existing institutions to be able to detect and cure any new and emerging diseases in addition to the National Health Mission.

Under the PM Aatmanirbhar Swasth Bharat Yojana, the following proposals were made:

1. Support for 17,788 rural and 11,024 urban health and wellness centers.
2. Setting up integrated public health labs in all districts and 3,382 block public health units across 11 states.
3. Critical care hospital blocks and 12 central institutions will be installed in 602 districts.
4. Support will be provided to the National Centre for Disease Control (NCDC), its 5 regional branches, and 20 metropolitan health surveillance units.
5. Provisions will be made to expand the Integrated Health Information Portal to connect public health labs across all states and union territories.
6. Proposal to build 17 new public health units and strengthen 33 existing public health units at the Points of Entry of 32 airports, 11 seaports, and 7 land crossings.
7. Plans to set up 15 Health Emergency Operation Centers and 2 mobile hospitals.
8. Installation of a national institution for One Health, a regional research platform for WHO South-East Asia Region, 4 regional National Institutes for Virology, and 9 Bio-Safety Level III laboratories.

When it comes to the Nutrition section, the Finance Minister proposed the launch of Mission Poshan 2.0 where the Supplementary Nutrition Program and the Poshan Abhiyan are merged. The new scheme aims to strengthen the nutritional content, delivery, outreach, and outcome of the individual programs. An intense strategy will be adopted to improve the nutritional outcomes across 112 aspirational districts.

On the whole, it is a good maneuver on the part of the GOI to step up the budget for health care. However, in order to garner the benefits of this budget, plans must be implemented and corruption must be obviated. Mismanagement of these funds will emanate invariable outcomes or even worse.

This phrase  managed to grab the headlines in the recent past. In this article I’ve tried to delve deeper into this phrase and hopefully by the time you finish reading, you would be able to better appreciate its importance.  

“India would become a five trillion $ economy by 2025” was one of BJP’s ambitious slogans after they were re-elected. It was first put forward by Nirmala Sitaraman (current finance minister).

For starters, What is a five trillion dollar economy? Is it an economy that is worth 5 trillion dollars? In that case any person having 5 trillion dollars in his pocket should be able to buy India in 2025. That’s definitely not the case. A five trillion dollar economy is a country with a GDP of 5 trillion dollars.

Why express GDP in dollars:

GDP of all the countries is expressed in terms of US dollars. There are two reasons for this. 1) Comparison between countries becomes fairly easy when GDP of all countries is expressed on a uniform basis. 2) The US dollar is considered to be stable and the king of currencies

GDP:

GDP( Gross Domestic Product) is the value of goods and services produced by an economy in a year. A country’s economic progress is generally evaluated in terms of its GDP although other measures such as GNP, per capita income etc. exist.

Indian inefficiencies:

Calculating GDP of a country is a cumbersome process. A number of methods are used, the prominent ones being

1)Output method - Value of all goods produced is aggregated

2)Income method - Incomes generated in India are aggregated

3)Expenditure method - Expenses incurred in the country are aggregated

Income method has proved to be the least efficient method in India. If you think I’m wrong try asking any person what his income is and see if you get an answer without any hesitation. Even if you manage to get a person's bank statements, it might not be sufficient as people in India prefer to hoard cash for various reasons that I do not have to explicitly state.

The Expenditure method is quite useful. People generally have an incentive to disclose their expenses as they may get tax deductions and other benefits under the GST Act. Accounting procedures have to be very strong to estimate GDP properly. In a country like India, thousands of small and medium sized enterprises exist and millions of transactions go unaccounted. Given the cumulative size of these small and medium sized enterprises, it is impossible to ignore  their contributions to GDP. Hence,  only the best estimate is taken. India’s GDP for the year 2018 was estimated at 2.96 trillion dollars. However, it could be way more or less than this figure. Who knows, India is probably already a five trillion dollar economy.

Let’s assume that India turns into a 5 trillion dollar economy by 2025. Will the world look back at us and applaud? Is it that big an achievement? The list below will give you the answer.

GDP for the year 2018

1. USA - 20.5 trillion$
2. China - 13.37 trillion$
3. Japan - 4.97 trillion$

Hence, India’s benchmark of 5 trillion dollars may not mean much to the rest of the world, but coming close to this benchmark is a perfect indicator that our economy is on the right track.

What’s expected of us:

As mentioned already, India’s GDP for the year 2018 was estimated at 2.96 trillion $. The growth rate for 2019 was concluded as 6%(average). The growth rate for 2020 is estimated to be 5%. These rates are too low considering India’s growth potential. It’s inevitable though. We are currently experiencing a worldwide recession which has caused these figures to be so low. Going by the estimates, I’ve projected India’s GDP for the year 2020 to be 3.29 trillion dollars. From thereon if India has to reach the 5 trillion dollar mark by 2025, it has to grow by at least 10.87% every year. When China was in a period of rapid growth it’s average yearly growth was around 10%. Surely, a lot is expected of us!

{Note: GDP is a yearly figure and not a cumulative one. Eg. After estimating GDP for 2018 at 2.96 trillion $, the count is pushed back to 0 in the beginning of 2019 and doesn't continue from 2.96 trillion $}

Increasing dependence:

India embraced globalization in the 1990s. Exports and imports have increased multi fold since then. India now has so much exposure to foreign trade that it’s well being is determined to a great extent by the fate of all those countries with which it has trade relations. The world wide recession has caused India to slow down as well.

The current slowdown faced by the country has been worsened by Corona which has disrupted economic activity in an unprecedented manner. Who would’ve wondered that the phrase “When China sneezes, the whole world would rub its nose” would become literally true. Corona's grip over the world is still strong and has caused economies to almost come to a stand still. The recovery of India and the world on the whole from the current slowdown requires vigorous economic activity. In the midst of all these fears, the target seems quite far-fetched. Optimists would say ‘Nothing is impossible’ though.

Networking is the process of interacting with others to exchange information and develop contacts. This process adds value not just for us and others but also for many participants who are linked in this value chain. Only when we believe that the person who is going to help us achieve success is right next to us, do we understand the importance of interaction. In this era of globalization and social media, the distance between people is positively reduced. Interaction and sharing of ideas is very easy. Sharing the right idea to the right person can make a huge difference when the prospects of the idea materialize.

Another great advantage of networking is the benefit of synergy that it can result into. Synergy is a theory which advocates that the creation of the whole is greater than the sum of its simple parts. This sort of a synergy is possible when great networks are built. One the earliest attempts to encourage networking were the idea of temples, where people met, discussed issues and joined hands to get into productive activities. If it were not for interaction, the world wouldn’t have moved this far.

This networking is very important in the professional sphere. The result of which can be huge; both for the individuals and the organization. There are a few ways by which this networking can start. We will see the ways in which valuable networking is constructed. Our ideas for networking are localized to the present situation, where we have a lot of mobile application and internet operating. We propose to build this networking by considering and incorporating the presence of social media sites such as LinkedIn, Instagram, Facebook, etc. There are positive chances that we can build our prospective clientele by proper contact building. This step would be a great head start for anyone and it surely contributes to our future operations. Networking need not be limited with just our peer and seniors, we can also network with people from different industries to gain knowledge on the kind of service that they require. We can find people who need certain service and respond by helping them reach the solution.We can either perform it ourselves or link them with someone in our network chain who is specialized in it, by acting as an intermediary. In both ways we are enhancing value and building trust.

The primary factors in networking are informing people of your professional capabilities and then inculcating trust. Firstly, focus on your public profile; LinkedIn, Facebook, etc. Keep it perfectly updated with your work, experience and accolades. These profiles are the portals through which people can reach you. It becomes easy for people to find us and also to refer us to others who might need our expertise. Keep your public profiles updated with industry facts and news, this communicates to others that we are staying relevant in the industry. Regular posting of information communicates to others that we are aware of the industry changes and makes us a go-to person once they encounter any issue related to the industry we operate in. Once they have any doubt or need any information, we will be the first person they approach for assistance.

Start your own website, blog page or Youtube channel and enhance it with content. In this way, we are giving value at free of cost to others and smartly building our client base. Once people understand that we have solutions, they address their problems to us. Since, we have initially benefited them with free value; they psychologically feel they are economically better as they have our content even before the paid service. Posting regular snippets or updating the story page in Instagram can also serve the purpose.

Join social groups and get connected with people. Discuss current issues with them. They can be from our industry or a different industry, in both ways it’s better for us. Join Public writing and speaking forums and deliver your opinion, we can find people who agree as well disagree with us. This polarity that is created when there is a disagreement of opinion can help people to remember us and reach out to us for any suggestions or help. Another personalized way would be to form or join Whatsapp or Facebook groups and discuss important issues with our peers; this can update us with industry new. Whether to be active or passive in the group is a choice based out from the composition and information in the group.

Actively attend events such as lectures, conferences, workshops and seminars. This is the easiest way to meet and network with people. We can also learn expert opinion and suggestions from these forums. Another suggestion would be to surf through our contacts and bifurcate it into two categories. The first one is the set of people who belong to our industry; juniors or seniors. The second is the set of people who are from different industries. We can use the first set to discuss opinions and take suggestions. Then use the second group to share feedback and pass professional advice. The first group is our potential resource, from where we get our information and the second is our potential clientele to whom we can pass on the service. Maintaining this dichotomy would benefit us in the long run.

An changing trend is the growing options and choices present in social media sites to aid business nexus. We have Instagram Professional, WhatsApp Beta,etc which are tailor made to suit the growing professional and business needs. These are interactive social networking which enable us to advertise our products, interact with customers, quote prices and also check trends and analysis. These tools are very handy and if the features are exploited better, great outcomes can be reaped. The best take away from these social media sites is the active feedback and review mechanism, which leave a big room for improvement and personalisation

The above ideas are just the first step to become active in the professional world. A larger part remains in how we market ourselves and bring the concept of personal branding. Personal branding is how one promotes oneself. Its the combination of our skills, experience and personality that we want the world to see us.Professionally, it is the picture that we paint for ourselves and how the world sees us. All of this can be used to capitalize on the potential, existing and emerging markets. For, the only thing that remains in between the world and us is opportunity.

Its November and normally the month that favors barbers the least and cracker manufacturers the most. The former part of the statement may not be subject to change but the latter is definitely bound to. While most industries have started to come out of the lull caused by Covid-19, the 2000 crore seasonal fireworks industry is all set to get the worst punch ever.

Issues in the past:

The lives of the firework supply chain stakeholders wasn't a bed of roses. Historically, this industry had faced several threats from environmental activists who are concerned about the hazardous effects of bursting crackers. The repercussions of bursting crackers though made aware largely could not resist the triumph of this industry. No amount of pollution taxes, caps on production and other measures to dampen the damages that are caused by bursting crackers were sufficient to soften what was like an ever inelastic demand for crackers.

Diwali- the festival of crackers

As per a survey, the month of November contributes to around 75% of cracker sales. The sole reason for such numbers is Diwali. What's supposed to be a festival of lights always ends up being a festival of noise, air pollution. With Covid-19 however, things are about to shape out differently. The virus that sucked the breath out of more than a million people has found yet another victim. The fireworks industry has been expecting a subpar Diwali sale on account of Covid-19. With social distancing norms and personal safety concerns operating, the urge to gather and celebrate is expected to decline. To add to the woes certain states like Odisha, Delhi, Sikkim, Karnataka  have flatly imposed bans on bursting crackers. On account of these bans around 30% of the expected sales has been wiped out. If the effects of personal safety & social distancing are factored in, the numbers would be devastating.

Who gets affected the most:

A whooping 95% of the industry is situated in Sivakasi (the firework hub).Close to 8 lakh workers are dependent on this industry. Any severe decline in sales shall majorly impact all these stakeholders as the fireworks industry is seasonal. Losing this opportunity might prove to be very costly as no other time of the year is as viable as Diwali.

The possibility of pent up demand?:

A section of the industry believes that the demand for crackers might be normal because it is pent up. Easing of quarantine restrictions  might boost demand because the psychological impact of quarantine on people will force them to step out and have fun. However such demand is likely to be minimal as a large segment of the population still operates under the fear of the virus. Who would've thought that an industry that was unscathed by so many issues and legitimate concerns in the past would succumb to a virus?

As they say, ‘the proof of the pudding is in the eating’, the success of the budget is in its implementation. A budget is a financial plan for a defined period, mostly one year. This year, while announcing the Union Budget 2020, the Finance Minister used some technical jargon which led many people to conclude that they were hearing some aimless blabber. After two months, we realize that their conclusion was indeed correct. So, what was announced and why was the conclusion correct?

The Finance Minister said that they were working to use artificial intelligence (AI) and machine learning (ML) to improve disease detection and pre-emption. This was a part of the PM Jan Arogya Yojana and was announced to be a preventive regime. Out of the Rs. 69000 cr allocated to healthcare, Rs. 6400 cr is earmarked for the PM Jan Arogya Yojana (Ayushman Bharat). The USP of this program is the preventive structure than the diagnostic one. A preventive model aims to prevent the disease before its occurrence. There was another announcement saying that more hospitals will be empaneled in tier 2 and tier 3 for poor people to benefit, under the PMJAY. The idea was to have more hospitals with state-of-the-art facilities to bring a next level healthcare regimen.

If all of this was implemented as said or at least if efforts were taken in that direction, we would have been armored with some health defense. In the case the implementation was at least half way done, the COVID-19 would look like a ‘harmless sneeze’ in front of our Indian hospital’s preventive and diagnosis facilities. The viral outbreak would have been a great opportunity for the healthcare sector to scale up its capacity and we would have become the global healthcare advisory with such cutting edge technology in place (Assuming AI and ML were implemented).

Of course, the number of hospitals has increased many-fold, but this too was not a preventive but diagnostic. The hospital's count increased after the virus took its toll on human life. If healthcare was supposed to be preventive, then we should have predicted the virus and should have brought in appropriate measures. The predictive analysis is not all that tough as it is assumed. There is one simple way out. Search query analysis.

A ‘search query analysis’ is a simple data analysis tool. When people get the initial symptoms of a flu, they will start cross checking their symptoms with any flu and look for medication suggestions. When many start doing this, the search query spikes for a particular result and this information can be passed to the Disease Control Division who can intimate the government to provide the requisite beds and treatment space and arrange for medicines. Though these measures are not completely preventive, they are far better than waiting for a flu to take a big shape like a snowball rolling down a mountain to gather volume.

Any threat comes with an opportunity with it. If our healthcare ideas were implemented and if the results were positive, then, we would have shared the history along with this great epidemic, which is sure to be popular for another hundred years. While the epidemic would be known for the havoc it wreaked, we would be known for healthcare we engineered to stop it.

Even though smart home technology is in its infancy, one thing has become clear: consumers are inclined towards accrediting routine and repeated purchases of product accessories to their machines. Considering our busy schedules, having machines that could track household requirements saves time and makes our life more comfortable.

More impressively, the smart appliance can even complete the transaction without any human input by simply accessing account information. Although these types of behaviors will need some time to be entirely adopted due to security concerns or sheer discomfort, they can significantly add to the long list of advantages extended by the smart home system.

The smart home technology was developed in the early 2000's and has gained momentum only in the recent past. This was because Smart homes started to become affordable options and therefore viable technologies for many consumers. Smart home automation has grown to the level where it is ubiquitous in the current market and has penetrated into most households.

Currently, 53% of people own a smart home device and around One-third (33%) plan to invest in a smart home device in the next three years.

The global home automation market was valued at about $24 billion in 2016. That figure is expected to grow as more people begin to adopt smart home technology to the tune of about $53.5 billion by 2022. Video entertainment is expected to be the largest component of smart home technology, followed by home security and monitoring services. Smart speaker technology has already successfully penetrated the U.S. market, where roughly 31% of households use a device like the Amazon Echo or Google Nest.

All these devices bestow customers with an immense level of comfort and personalization. Rather than controlling appliances, thermostats, lighting, and other features using different devices, homeowners can control them all using one device—usually a smartphone or tablet.

Since they're connected to a portable device, users can get notifications and updates on issues in their homes. For instance, smart doorbells allow homeowners to see and communicate with people who come to their doors even when they're not at home. Users can set and control the internal temperature, lighting, and appliances as well.

For the cost of setting up the smart system, homeowners can benefit from significant cost savings. Appliances and electronics can be used more efficiently, lowering energy costs.

While the smart home offers convenience and cost savings, there are still challenges. Security risks and bugs continue to plague makers and users of the technology. Adept hackers, for example, can gain access to a smart home's internet-enabled appliances. In October 2016, a botnet called “Mirai” infiltrated interconnected devices of DVRs, cameras, and routers to bring down a host of major websites through a denial of service attack, also known as a DDoS attack. Measures to mitigate the risks of such attacks include protecting smart appliances and devices with a strong password, using encryption when available and only connecting trusted devices to one's network.

The costs of installing smart technology can run anywhere from a few thousand dollars for a wireless system to tens of thousands of dollars for a hardwired system. It's a heavy price to pay, especially since there may be a steep learning curve to get used to the system for everyone in the household. Billionaire investor Mark Cuban sees a huge opportunity in writing skills for Amazon’s Alexa or Google Home.

“If I were going to start a business today, I’d build it around Alexa and Google Home,” Cuban told Recode’s Peter Kafka at Vox Media’s The Deep End at South by Southwest 2019. “Alexa skills and scripting Alexa skills is really, really easy. But everybody thinks it’s really, really hard. And so that disconnect is a great opportunity.”

Skills for Alexa-enabled devices or Google Homes cover everything from interactive games to purchasing transactions. Though a nascent business at this point, skills are the primary means to monetize a smart speaker beyond the point of sale.

With more than 20,000 third-party integrations, Alexa is undoubtedly one of the most comprehensive smart home ecosystems available today. While you have likely heard of using Alexa in Eco-speaker form (“Alexa, what’s the weather today?”), you might not know that Alexa is now built into plenty of other smart products, including thermostats and TVs.

• Skills for Alexa-enabled devices or Google Homes cover everything from interactive games to purchasing transactions.
• Though a nascent business at this point, skills are the primary means to monetize a smart speaker beyond the point of sale.
• Cuban said a job scripting skills for the smart speakers could garner anywhere from $25 to $40 an hour.

“Personalization is Still King”

One thing that will remain perpetual in the future of smart home technologies is that companies must be prepared to create a customized user experience through engaging content and social media. Using data accumulated by a product, more opportunities exist for companies to craft messaging, plus deliver product and service information that is specific to the user’s tastes, past purchasing habits and product usage. Companies can provide access to social network-powered communities that generate positive experience feedback and share helpful tips and product recommendations.

Smart homes are more about living greener and providing security. Smart home technologies can make homes sustainable and allow consumers to reduce energy spending. Interactivity and connectivity are helping families to manage their homes and lives. This technology is currently being incorporated into other sectors including schools, offices, retail stores and airports. The market is expected to witness an increased demand for this technology in the coming years due to expanding awareness regarding smart home advantages. These characteristics of smart home technology make it the starting point for myriad millennial businesses to develop around.

Among the various benefits that a company form of business provides, the best one unarguably is the feature of limited liability which essentially means that the shareholders' liability is restricted to the unpaid value of shares. This feature of limited liability also restricts' the lenders rights as they cannot directly hold the shareholders' responsible if their loans are not fully recoverable from the assets of the business. The landscape of doing business and risk taking has changed tremendously because of this feature.

To avoid the risk of non-recovery or partial recovery lenders are now seeking personal guarantees from the promoters. This means that the promoters would now become personally liable if their company isn't able to service its debts.

Taking a personal guarantee from  promoters almost defeats the very purpose of a corporate status. Risk aversion is acceptable but is holding one man or a few men accountable for an organisation reasonable?

Some lenders require the shares of promoters to be pledged for obtaining loans. This scenario is more absurd. The Companies act ranks lenders superior to shareholders. so even if a company fails badly and its assets are sold off the proceeds must first be used to clear debts. Why then do lenders demand shares to be pledged? Further if share prices drop the lenders have a right to demand additional collateral (shares) forcing promoters to put more of their holdings at stake. Adding personal touch to corporate debts only makes promoters jittery.

For instance, the grand future empire which was once dominating the retail segment is now reeling because its promoter Kishore Biyani took excessive debts by pledging his shares. Few initial failures forced him to pledge additional shares. Currently almost his entire stake in the group is pledged. The former retail giant has now succumbed to reality and is in talks with Reliance which is expected to decide the future of Future.

Another famous promoter who failed miserably trying to take on excessive debt is VG Sidhartha(of CDEL). VGS gave both personal guarantees and pledged his shares. The result ....

The corporate status  largely benefits owners as their risk is limited to the amount of funds invested. The status is important to owners as it helps them operate without much burden at the back of their heads. Every major business decision will be affected by the promoter's bias when he assumes personal responsibility for the affair of his company. Breaching the status by means of personal guarantees and pledging of shares brings owners back to square one where they have the risk of losing their personal assets. Thus, lenders demanding personal guarantees in the name of risk neutralization only hampers growth of businesses.

This era has been characterized by change. From telegram to pager to phones to smart phones each and every change has had a disruptive effect on the globe. Are you ready for yet another change? In a few years no one is going to ask a person whether he has a job. The queries would hereafter be about his gig. Strange right?

A gig is an activity or a service provided by a person on a contractual basis. A traditional employer- employee system,  has been prevalent for many years. Though it has provided a lot of benefits to both the employer and the employee, it is now being shunned at by the new age entrepreneurs. Having full time employees is coupled with too much burden in the form of high costs. Employees some times receive a lot more than what they rightfully deserve. Many organizations have employees whose work can either be automated or substituted by a gig worker. Also, several laws, in the process of protecting employees' interests add up too much costs for the employers eg. PF contribution. The gig economy, if not a perfect alternative can be quite viable . The gig workers are hired by people only when their services are needed. Payments made to gig workers are mostly fair. Gig workers also are forced to provide high quality services as their future engagements with any organisation are dependent on the ratings they receive on their performance. Thus the gig economy  places an implicit check on the quality of a service provided. The gig styled workforce isn't new to the world. Over the years all of us must have encountered gig workers at some point. However the transition from a predominantly employer- employee system to a gig economy is a big shift. The transition is now in full swing. In 2018, almost 36% of USA's workforce constituted gig workers. That's not a small number!

Gig economy offers several changes to the traditional work culture. While traditional employees, especially those in India have a sense of job security which hampers their efficiency, the gig economy forces them to be on the run. Only the fittest survive here. It doesn't end there! Since, the gig economy offers a level playing field for all freelancers one must resort to provision of services at a relatively low fare when compared to his competitors, the failure of which would lead to loss of potential clients.

However, on a positive note, a gig economy could be a huge opportunity for efficient growth oriented workers. Sky is the limit here. A gig worker has the luxury of not being stuck up in an organisation, following a set of rigid guidelines and thereby capping his growth. Most employees in a traditional work setup are restricted from working elsewhere while a gig worker can choose when, where and for whom to work for. (Going forward apps like 'Linked in' would see a massive surge in terms of usage as it is easy to establish valuable connections via this platform. )

Among the various disruptions created by Covid-19 is the expedition of the transition towards a gig economy. With revenues down, cash flows taking a serious hit and the entire financial position of businesses at stake, employers are looking to cut costs by extending reliance towards automation and gig workers. For instance, major conglomerate Tata which generally looks to safeguard it's employees' interests has come out with a statement that the post Covid operations of the company would be automated to a large extent causing layoffs of existing workers.

Everyone desires a comfortable job with constant monthly paychecks hitting their bank accounts. This comfort zone though extremely appealing can put us in a fix if some unforeseen event happens. The advent of the gig culture is not uncertain. It is a slow process that is sure to cripple every industry's workers. We can either insulate ourselves by upgrading our skills or fret over losing cosy and attractive jobs.

For starters, I was of the opinion that our government was not smart and efficient. However, post the announcement of a 20 lakh crore revival package I've partly modified my opinion. Our government is definitely smart. Efficiency still remains a question though. I do not urge people to become hardcore critics of the government, however it is not necessary to succumb by welcoming every move with a red carpet. The govt has been very cautious to avoid using the phrase "fiscal stimulus" in any of their public releases. It is only the newspapers that portray so.

Businesses currently are in a shock and are in dire need of fiscal support. Instead of providing them cash to operate, our govt seems to put the public's own money in the hands of the public. Following are some moves which are expected to boost liquidity.

1)Provident Fund:

For the next three months, the contributions to be made by employers and employees to the employees' PF a/c has been lowered from 12% of salary to 10% of salary. This move is aimed at boosting liquidity to the extent of Rs.6750 crore. It is crucial to note that this move virtually has no transfers to be made by the govt. A PF contribution can be viewed as a compulsory loan given to the govt by employees. Lowering the loan  to be paid by the already cash stripped businesses struggling to pay wages and salaries,  is of no help to the businessmen or their employees. This 6750 cr is a part of the 20 lakh cr revival package.

2) Lower TDS and TCS rates:

 TDS and TCS are two popular tax collection mechanisms. These rates are lowered and this move is expected to infuse Rs.50000 cr into the economy. The tax rates haven't been lowered though. Which means payment of tax has been deferred but not avoided by this move. Once again this move doesn't even budge the govt's cash outflow. Still, it is claimed to be a part of the recovery package.

3) MSMEs:

A hefty Rs. 3 lakh crore has been earmarked for supporting MSMEs.  Though the sum sounds huge, it roughly works out to only Rs. 6 lakh per unit. Whether this amount would satisfy the needs of these units is a mystery. One really intriguing aspect of the announcement was that all  dues to MSMEs by the govt would be released within 45 days. It clearly indicates that both laymen and the government are running out of cash.It's also pertinent to note that these loans would be made via banks and NBFCs while the government merely guarantees them. Hence, this move also doesn't kindle any immediate outflow from the government's coffers.

4) NBFCs:

Non banking Financial Companies have been battered to pulp because of Covid 19. Even prior to the pandemic their operations weren't smooth. To support these vulnerable companies which are crucial for the financial system as a whole, a window has been set up for them to borrow money. The earmarked amount for this purpose is Rs.45000 cr. The government merely guarantees that losses if any would be reimbursed (only the first 20% of the loss though). Though this move, is expected to stimulate lending and thereby economic activity, it again adds to the list of moves which doesn't affect the government's purse.                                  (Banks and NBFCs seem too reluctant to lend and have parked a lot of funds with the RBI inspite of the reverse repo rate being lowered.)

Comparison:

Here are some measures taken by countries across the globe;

• In order to support 5 million self employed individuals whose cash flows have dried up, the British government has decided to provide them 80% of their annual profits or 2500 pounds whichever is lower.
• USA has supported their people by sending out 1200 dollars to millions of Americans and an additional 500 dollars per child. Also a range of measures have been announced to protect the interests of self employed individuals and freelancers.                    

These kind of measures will surely deepen the fiscal deficit. However such direct transfers are inevitable in situations like these. While countries across the globe have boldly decided to take a blow to safeguard their people, the Indian government seems to be too naive to do so. Though some good measures have been announced,they may not be substantial to trigger a speedy revival. Further, every move seems to be targeted at protecting the interests of the rich and the upper middle class but not the masses. For instance, the government(so far) has not pledged any amount for the benefit of freelancers.

The current situation is unprecedented where both demand and supply across the country have been hit severely. The demand issues are even more dangerous than the supply shocks. The only way to boost demand would be to put money in the hands of the masses. Though this would entail a serious widening of the fiscal deficit, it is in the best interests of the country.

The world has almost come to a standstill and as all the spotlight is on Covid-19, I am left with no choice but to welcome Covid into our domain as well. The globe has acknowledged Covid as not just a virus that kills lives but also a pest that disturbs livelihood. Government's first priority should and has been saving lives, but the cost of doing so has proved to be very high. The virus will continue to exist as long as a vaccine is invented. However quarantines cannot continue till then and people must be able to restart their livelihoods at a minimal pace. The virus has shown no bias and mercy, taking even the best billionaires  for a ride.

To quote few examples- savvy investor Warren Buffet who normally enjoys bearish phases is surprisingly silent and reluctant to make new investments. His partner Charlie Munger mentioned in a conference that Berkshire would not reopen all the businesses in it's portfolio. Business tycoon Richard Branson (founder of Virgin Airlines) has seen his net worth drop by almost a billion and a half dollars. He has decided to put up his island for sale to raise funds and clear debts.  Such is the intensity and seriousness of the outbreak. While it is almost impossible for naive businesses to survive this turmoil, its the government's duty to ensure that a large chunk of businesses escape bankruptcy.

Will 1930 repeat itself:

There's no surprise if we face another depression. With demand sinking (making Buddhists happy) rapidly and businesses on their knees, the near future looks foggy. Further with supply chains extending their spread across multiple countries, every country would require the other countries as well to recover from the pandemic. With all these factors at play and our so called efficient governments to add worry to the woes the worst is yet to show itself.

How do we restart:

When and how to restart the economy is a challenge faced by all the governments. It's absolutely vital that they ensure a balance between saving lives and safeguarding livelihoods. The government must have a list of priorities. It is impossible to protect every business and some may have to meet their fate. But crucial businesses in vulnerable industries such as banking, tourism, aviation need and deserve financial support. Policies must be drafted to boost these companies. Traditional methods employed during a crisis such as lowering repo rate may or may not be sufficient. It's imperative that the support extended by the government is strong enough to keep these businesses afloat. Secondly, all businesses would look to minimize costs. In doing so, they would not just try to defer unnecessary capital expenditure but would also layoff a big chunk of their employees. Further, to lower reliance on man power, businesses are trying to automate their business processes. So, the post Covid era may see a surge in unemployment and underemployment. More than two thirds of the business world in India is characterized by small industries and freelancers. They have taken a major blow. It will be interesting to see how support is extended to these informal and unregulated businesses.

The challenge presented in front of the world is tricky and intimidating. As every business is connected and dependent on other businesses supply chain disruptions and thereby modifications are bound to occur. To the extent possible they must try to reduce emphasis on imports and shorten supply chains.

As consumers we have a huge role to play in reviving our economy. In the coming days people would tend to not spend a lot and be conservative. However, we must ensure that we do not become misers in the process.