Tuesday, 31 January 2017

India at Glance : Economic Survey 2017

Finance Minister Arun Jaitley presented economic survey 2016-17 in parliament today. After the historic decision of demonetisation, Indian economy took a hit with expected GDP growth of 7.1% in fiscal year 2016-17. Although the impact will be short term and rebound in GDP growth is expected in fiscal year 2017-18. India GDP is expected to recover back to 7.5% in 2017-18. GST Bill received presidential nod and the roll-out is expected in the month of September 2017.

Economic Survey says economic growth to return to normal as new currency notes in required quantities come back into circulation and follow-up action on demonetisation is taken. The CPI based core inflation remained stable in the current fiscal year averaging around 5 per cent. The Economic Survey says that the rupee performed better than most of the other emerging market economies.

The Indian Economy has sustained a macro-economic environment of relatively lower inflation, fiscal discipline and moderate current account deficit coupled with broadly stable rupee-dollar exchange rate. The Economic Survey 2016-17 presented in the Parliament today by the Union Finance Minister Shri Arun Jaitley states that such a sustenance is despite continuing global sluggishness. It says:

  • As per the advance estimates released by the Central Statistics Office, the growth rate of GDP at constant market prices for the year 2016-17 is placed at 7.1 per cent, as against 7.6 per cent in 2015-16.This estimate is based mainly on information for the first seven to eight months of the financial year. Government final consumption expenditure is the major driver of GDP growth in the current year.

  • Fixed investment (gross fixed capital formation) to GDP ratio (at current prices) is estimated to be 26.6 per cent in 2016-17, vis-à-vis 29.3 per cent in 2015-16.

  • For 2017-18, it is expected that the growth would return to normal as the new currency notes in required quantities come back into circulation and as follow-up actions to demonetisation are taken. On balance, there is a likelihood that Indian economy may recover back to 6.75 per cent to 7.5 per cent in 2017-18.

  • Indirect taxes grew by 26.9 per cent during April-November 2016.

  • The strong growth in revenue expenditure during April-November 2016 was boosted mainly by a 23.2 per cent increase in salaries due to the implementation of the Seventh Pay Commission and a 39.5 per cent increase in the grants for creation of capital assets.

  • The headline inflation as measured by Consumer Price Index (CPI) remained under control for the third successive financial year. The average CPI inflation declined to 4.9 per cent in 2015-16 from 5.9 per cent in 2014-15 and stood at 4.8 per cent during April-December 2015.

  • Inflation based on Wholesale Price Index (WPI) declined to (-) 2.5 per cent in 2015-16 from 2.0 per cent in 2014-15 and averaged 2.9 per cent during April-December 2016.

  • Inflation is repeatedly being driven by narrow group of food items, of these pulses continued to be the major contributor of food inflation.

  • The CPI based core inflation has remained sticky in the current fiscal year averaging around 5 per cent.

  • The trend of negative export growth was reversed somewhat during 2016-17 (April-December), with exports growing at 0.7 per cent to US$ 198.8 billion. During 2016-17 (April-December) imports declined by 7.4 per cent to US$ 275.4 billion.

  • Trade deficit declined to US$ 76.5 billion in 2016-17 (April-December) as compared to US$ 100.1 billion in the corresponding period of the previous year.

  • The current account deficit (CAD) narrowed in the first half (H1) of 2016-17 to 0.3 per cent of GDP from 1.5 per cent in H1 of 2015-16 and 1.1 per cent in 2015-16 full year.

  • Robust inflows of foreign direct investment and net positive inflow of foreign portfolio investment were sufficient to finance CAD leading to an accretion in foreign exchange reserves in H1 of 2016-17.

  • In H1 of 2016-17, India’s foreign exchange reserves increased by US$ 15.5 billion on BoP basis.

  • During 2016-17 so far, the rupee has performed better than most of the other emerging market economies.
External Debt

  • At end-September 2016, India’s external debt stock stood at US$ 484.3 billion, recording a decline of US$ 0.8 billion over the level at end-March 2016.

  • Most of the key external debt indicators showed an improvement in September 2016 vis-à-vis March 2016. The share of short-term debt in total external debt declined to 16.8 per cent at end-September 2016 and foreign exchange reserves provided a cover of 76.8 per cent to the total external debt stock.

  • India’s key debt indicators compare well with other indebted developing countries and India continues to be among the less vulnerable countries.

  • Agriculture sector is estimated to grow at 4.1 per cent in 2016-17 as opposed to 1.2 per cent in 2015-16; the higher growth in agriculture sector is not surprising as the monsoon rains were much better in the current year than the previous two years.

  • The total area coverage under Rabi crops as on 13.01.2017 for 2016-17 is 616.2 lakh hectares which is 5.9 per cent higher than that in the corresponding week of last year.

  • The area coverage under wheat as on 13.01.2017 for 2016-17 is 7.1 percent higher than that in the corresponding week of last year. The area coverage under gram as on 13.01.2017 for 2016-17 is 10.6 percent higher than that in the corresponding week of last year.

Growth rate of the industrial sector is estimated to moderate to 5.2 per cent in 2016-17 from 7.4 per cent in 2015-16. During April-November 2016-17, a modest growth of 0.4 per cent has been observed in the Index of Industrial Production (IIP).

The eight-core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity registered a cumulative growth of 4.9 per cent during April-November 2016-17 as compared to 2.5 per cent during April-November 2015-16. The production of refinery products, fertilizers, steel, electricity and cement increased substantially, while the production of crude oil, natural gas fell during April-November 2016-17. Coal production attained lower growth during the same period.

The performance of corporate sector (Reserve Bank of India, January 2017) highlighted that the growth of sales grew by 1.9 per cent in Q2 of 2016-17 as compared to near stagnant growth of 0.1 per cent in Q1 of 2016-17. Growth in net profit registered a remarkable growth of 16.0 per cent in Q2 of 2016-17 as compared to 11.2 per cent in Q1 of 2016-17.


Service sector is estimated to grow at 8.9 per cent in 2016-17, almost the same as in 2015-16. It is the significant pick-up in public administration, defence and other services, boosted by the payouts of the Seventh Pay Commission that is estimated to push up the growth in services.

Social Infrastructure, Employment and Human Development

The Parliament has passed the “Rights of Persons with Disabilities Act, 2016”. The Act aims at securing and enhancing the rights and entitlements of Persons with Disabilities. The Act has proposed to increase the reservation in vacancies in government establishments from 3 per cent to 4 per cent for those persons with benchmark disability and high support needs.

Source – Ministry of Finance & Press Information Bureau, New Delhi.

Friday, 20 January 2017

The Global Demonetization Analysis

Demonetization can be largely associated with the transition of monetary assets. Exchanging the illegal tender with the legal one. Be it the transition from barter to bronze coins or from cash king to less cash society.  Demonetization in India was largely a hit on pirates’ buried treasure – Black Money. This was a part of long war on cash that the country has waged. Cash is just a tender issued by central banks and it cannot act as a commodity. Black marketeer consider cash as a revenue stream generated from illegal activities or activities which go beyond legal framework. In a rich country like India with poorer citizens, demonetization is a human issue as it also questions the earnings of low wager. I fear that war against black money would associate pain and even some collateral damage. The historic move of demonetization has always been cherished by nationalists and criticized by economists. Mostly because economists analyse by examples.

The issue of high value bank notes is not unique to India. The note in questions – Euro 500. European authorities and law makers had a difficult time with combating money laundering. A small bag of Euro 500 notes means a lot of money for black marketeers. And there is an added risk of its use by blow-yourself-up jihadis. 1,000 swiss franc note was the largest in European countries but its less in circulation than the Euro 500. The Euro was easier to launder with than the currencies it replaced. Before the introduction of Euro, Europeans ‘pirates’ practised excessive cash based tax avoidance. When forced to exchange the paper currencies, bundles of lira/ francs/ mark emerged in suitcases to buy other cash generating assets like real estate and gold.

The value of Euro 500 is too high for smaller economies of European union. These notes are rarely seen by the citizens in Eurozone. Euro 500 has a tag of everything going bad in European countries. This rare note has been nicknamed as ‘Bin Laden’. British and Spanish police are using these bills to track black money. Nearly 90% of Euro 500 notes were used in organised crime forcing UK to stop its use. In May 2016, European Central Bank agreed to the argument that the bill in question were used in illegal practices. ECB announced to phase out Euro 500 notes by the end of 2018.

The African struggle for demonetization didn’t go well for the economy. In 1982, Ghana president announced the demonetization of 50 Cedis note. The public was given two weeks to exchange their notes with paper chits. The paper chits would be redeemed later with legal notes of smaller denomination. They never were. Ghana shut down its border for two years as economic measure to control use of 50 Ghanaian cedi notes outside Ghana. The intent was honest – to shut down tax evasion and stop corruption by public authorities. People were insisted to submit 50 cedis in bank accounts. Then exactly one day before the deadline, Ghana announced for tax inquiry on those who submitted more than 50,000 cedis in bank accounts. In one stroke, people lost confidence on president and banking system. Post Ghanaian demonetisation, people preferred investing in physical assets and keeping foreign currency.

In 1984, Nigeria decided to go for demonetisation citing ‘‘there was too many money in circulation’’. The military government of Major Buhari sealed Nigeria’s border to catch black money hoarders. Unlike Ghana, ECB and India, Nigeria replaced all currency notes. Then the people who deposited more than 5,000 naira had their accounts blocked for several months. Anger in Nigerians was mounting and next year president Buhari was outthrown after a coup. The effect of demonetisation on Nigeria’s economic was a long-term disaster. 8 years later, 46 Nigerian commercial banks were declared as insolvent.

Zimbabwe, the country where inflation rate is 1200% had no other choice but demonetisation. A pack of biscuits cost more than 2 million Zimbabwean dollars. Zimbabweans prefer dealing in USD, Euro and INR to avoid truck load of cash. To tackle hyper-inflation, the central bank slashed 3 zeros from the note in a single night. Economist agree that demonetisation proved to be boon for Zimbabwean economy. But later, Zimbabwe decided to opt for USD. The demonetisation process also failed in Venezuela, in South America. Mafia hit country opted for rioting and looting which forced president Mudaro to extend the use of 100 bolivar bills. Demonetisation attempt in Myanmar and North Korea proved to be fatal as people died of starvation.

President Nixon of US decided to nullify bills above USD 100. The use of high denomination bills above USD 100 had shrunk to 1.2% from 6.5%. Demonetisation in US was largely aimed for promotion of payments through cheques. In 2016, several economists are mulling demonetisation of USD 100 bill to save US from recession. Australia successfully replaced paper currency with plastic notes to restrict counterfeit of fake notes. Pakistan, Philippines introduced new design of notes and phased out the call back of old currency notes. It can be said that impact of demonetisation depends on factors like economy strength and public perception. Until now, demonetisation across the globe hasn’t been good at-large. Can India change this?

Wednesday, 18 January 2017

Aroma on wheels - Best Car Perfume in India

Spices, Wet sand, camphor, sandalwood agarbatti, an aroma of masala chai and industrial oduor.. these are the smells associated with India. The best way to feel the aroma of India is road trip. You can feel the real spirit of India on National Highways. There are certain smells associated with different parts of India. I love to drive of Mumbai - Goa highway. An aroma of masala chai for an overnight drive through the Western Ghats. Through Khandala, you can smell an aroma of stream water. Stream water is associated with freshness and purity.

Godrej Aer, the aroma expert has introduced Godrej Aer Click which has the looks to kill with an amazing fragrance which reminds us of nature. Godrej Aer offers a range of car fresheners available in various designer fragrances. With a technology that makes sure your car smells consistently good for two months. Kolhapur is associated with red hot chilly masala ( lal tadka as the locals call it). Feel the tadka of spices when you travel through the holy city of Kolhapur.

Nipani is small border town in Karnataka. Filter coffee is highly recommended for State Highway drive through Amboli Ghats. It is scientifically proven that aroma of coffee sharpens our senses which is utmost important while driving a cars through twisty ghats which reach Banda. After descending the ghats, a take to Morjim and avoid state entry toll ( saved your Rs. 400 so that you can refill Godrej Aer after 2 months ). Goa!!! Tune to reggae music and Godrej Aer cool surf blue fragrance. The freshness delivered from godrej aer click will inspire to paraglide and surf on Arambol beach. And there will always be a friend who smokes in car. Turn on Godrej Aer musk after smoke fragrance to kill the smell so that at least your nose is spared.

Godrej Aer Click is among the best car freshener you can find online. Try out different fragrances of Godrej Aer Click on different terrains of National Highway.

- Chaitanya Kulkarni

Monday, 2 January 2017


If you love your body today, it will care for you tomorrow. Health is wealth! Physical fitness leads to mental stability and happiness. Because when you exercise, endorphins (happy hormones) are releasedYour fitness is an asset not just for your loved ones but also for your insurer. It is now scientifically proven that healthy individuals live a longer illness-free life. To cherish an act of exercise, Bajaj Allianz Life Insurance has integrated an exclusive fitness app with the newly launched eTouch Online Term Plan.

BajajAllianz Life eTouch Online Term is a pure term and health cover insurance plan. Customers have the flexibility to choose from four variants namely – Shield, Shield Plus, Shield Super and Shield Supreme. The Shield Supreme variant of eTouch term plan offers financial protection on accidental critical illness, accidental total or permanent disability along with waiver on future premiums and traditional life cover. In today’s uncertain times, people are looking for a worry-free protection solution which not only gives them a plain vanilla life cover but additional protection against disability and 34 critical illnesses.

With eTouch online term plan, customers get maturity period till the age of 75. Having ample cover for all eventualities is always a wise choice. Bajaj Allianz Life eTouch term insurance is an awesome policy to ensure future insurability. A person who desires large amount of cash value insurance may be financially unable to pay for it immediately. Inexpensive term insurance can be conveniently converted to cash value insurance later on, when the capacity to pay improves. Bajaj Allianz Life Insurance is one of the first to integrate a health and wellness app with an insurance policy. It is a revolutionary attempt from insurance company to reward a healthy lifestyle.

Fitness is utmost important for all of us, because our daily routine and eating habits are going to change day by day and its affecting on our health. One thing we should keep in mind that, our health is more important than other things. And for that, we must exercise regularly and eat healthy home-made food to stay fit and fine. B-fit, a revolutionary initiative of Bajaj Allianz Life Insurance is your on-the-go health tracker which can be integrated with Fitbit, Mi Band and Apple Watch. Complete the gamified challenges and stand a chance to win amazing vouchers from Flipkart, Amazon and BookMyShow. Regular users get discounts on nutritionist and diagnostic appointments and hobby classes. Download the app today from play store because your health is the greatest wealth. Wish you great years ahead!

-          Chaitanya Kulkarni