Friday, 27 October 2017

JP Morgan rolls out blockchain-based inter-bank payments network

JP Morgan rolls out blockchain payments on Quorum

Blockchain technology is already on its path to reshape our financial systems. With its shared ledger being verified by miners, transactions are verified swiftly and can be accounted in computer systems. Blockchain, a shared ledger of transactions maintained by a network of computers on the internet, is the technology that underpins cryptocurrency bitcoin. The blockchain is more than bitcoin, a technology which is well accepted by global central banks including the Reserve Bank of India. It’s the technology behind bitcoin but its use far exceeds digital currencies. The importance of blockchain to finance and financial markets is its potential beyond bitcoin. The chain of transactions is recorded at not one place, but at multiple locations at the same time making it more transparent. FinTech experts have already formed the opinion that blockchain is the next big thing in the financial world.

Wall Street giant JP Morgan along with Royal Bank of Canada and Australia & New Zealand Bank recently launched an interbank information network powered by blockchain technology. JP Morgan in its press release said the new initiative uses blockchain technology to limit the friction in the global payments market. Using blockchain, the new payment network will be able to reach beneficiaries faster with fewer steps and enhanced security.

“The Interbank Information Network will enhance the client experience, decreasing the amount of time – from weeks to hours – and costs associated with resolving payment delays,” said Emma Loftus, head of global payments and FX for JPMorgan Treasury Services. “Blockchain capabilities have allowed us to rethink how critical information can be sourced and exchanged between global banks.”

Royal Bank of Canada and ANZ are the first two banks who joined the network and JP Morgan is expecting more banks to join in coming months. JP Morgan Chief Jamie Dimon lauded the blockchain technology adapted by his bank. It is interesting to note that Jamie is considered to be the biggest critic of bitcoins. He recently referred to bitcoins as a fraud. If any JP Morgan trader is using bitcoins, he would be fired in seconds. Trading in bitcoins is against JP Morgan rules and the users are stupid, he said at an Investment Conference in New York.

Bitcoin has soared in recent months, spurred by greater acceptance of the blockchain technology that underpins the exchange method and optimism that faster transaction times will encourage broader use of the cryptocurrency. Prices have climbed more than four-fold this year -- a run that has drawn debate over whether that’s a bubble.

The blockchain technology adapted by JP Morgan and banks uses Quorum, a legal variant of Ethereum (a bitcoin-like cryptocurrency). According to the company, its Treasury Services business processes around $5 trillion in payments every day for clients in more than 100 countries, and has been investing in technology to enhance the client experience. A particular focus is on emerging technologies like blockchain, machine learning and robotics.

- Chaitanya Kulkarni | Twitter - @chai2kul

Thursday, 26 October 2017

India will be an early adopter of 5G technology

5G internet in India

Recent trends in 4G LTE mobile telephony has shown that dependency on data is increasing at an immense rate. The telecom war started by Reliance Jio has forced telcos namely Airtel, Idea- Vodafone to increase their data usage limits and rival down the prices. Those who refused to change are now a history in the Indian Telecom industry. The rivalry between the operators is now focused on to deliver excellent user experience. Telecom companies have started thinking out of the box. Today, they no longer just provide you with the data but are also building entertainments and health apps.
The wireless communication services are expected to expand into new market segments to facilitate the digital economy, e.g. smart grid, e-health, intelligent transport systems, traffic control, agriculture, retail, trade and tourism which would bring requirements beyond what can be addressed in today’s 3G/4G connected environment. To meet these new challenges, there is a need to understand these requirements with respect to Indian consumer perspective and create and support standards which enable implementation of these next-generation services. This needs to create a new generation of network systems and radio technology which could deliver extreme broadband, ultra-robust, low latency connectivity and massive machine to machine networking and create a seamless platform for the Internet of Things (IoT). It is expected that next generation technology (5G) will handle vast variations in different use cases. However, different use cases will have different spectrum requirements in terms of frequency, coverage, bandwidth, etc.
Cellular Operators Association of India has laid crucial benchmarks for use cases of 5G. It should be able to work flawlessly on systems other than mobiles. The technology needs to be supporting use cases such as:
  • New form factors, wearables and massive proliferation of sensors and machine to machine type communication, or human to machine communication.
  • Sensing what is around for new services and experiences, autonomous vehicles, with connectivity for example for collision avoidance.
  • Smart homes/buildings/cities that require various connectivity needs, from high definition surveillance video to simply connecting parking meters.
  • Control of critical infrastructure such as the electric grid, and industrial process automation
  • Remote control of vehicles, such as cars, drones and other flying vehicles.
  • Health services, emergency response and remote control of critical medical procedures where failure is not an option.
  • Extreme mobile broadband both indoor and outdoor that no longer makes the distinction between fixed and wireless access meaningful.

The increasing web of high-speed fibre optic network will help in early adoption of 5G architecture. It may be easy for a country like Japan or South Korea to deploy 5G tech but India is a different case. It all depends on commercial viability as recharge patterns in India are different than other countries. Nonetheless, experts believe that the telecommunication services will migrate to 5G architecture sooner or later, and time has come to start serious preparation for standardization and network upgradation. Consumers side demand, resource deployment and commercial viability will be the main drivers for the operators for 5G rollout.
Currently, Airtel and state-run BSNL have partnered with Nokia for developing 5G architecture in-line with future-proof smart cities and IoT infrastructure. 5G is supposed to be the next level of evolution in wireless broadband technology, but at speeds which are much higher than the current 4G LTE networks. The idea with 5G is not just fast internet, though the speeds will be at upwards of 20GBPs, but it will also be an ultra-low latency network. VMWare is also mulling its Network Virtualisation common platform for 5G deployment to Indian telcos. Ericsson India has set up a Centre of Excellence with a 5G test bed and incubation centre at IIT Delhi to drive the development of the country’s 5G ecosystem.
A report by communication technology and services provider Ericsson said, the revenue from 5G-enabled digitisation in India will reach $25.9 billion by 2026. The Indian operators can generate additional revenues of $13 billion or half of the stated potential if they take up roles beyond being connectivity and infrastructure providers to become service enablers and service creators.
– Chaitanya Kulkarni
Originally published on | Tech that transforms life.

Tuesday, 17 October 2017


Connected cow with IoT

Each and every task we do today will be transformed tomorrow with the Internet of Things. With its unlimited applications with various genre of industries, IoT has today become the Internet of Everything. With the use of technologies like sensors, high tech camera, Global Positioning Systems and big data, the source can be mined for meaningful information. Connected Cow concept has become a globally accepted technology in precision agriculture space.

The advent of technology can create ‘food for everyone’ keeping in mind the outburst of the ever-growing population. The quality of the food is deteriorating with continuous manual intervention. But technology has helped us to increase food production due to technologies like tractors, accurate weather forecasting and biotechnology. By 2050, the world will need to produce 70% more food than it did 10 years ago.

For hundreds of years, the dairy business remained essentially the same. A family would milk its own cows and sell any surplus to neighbours or the local community. But over the last century, new machines were invented, urban populations exploded and the price of land and manpower has skyrocketed. These trends and others put pressure on farms of all types to consolidate, specialize and increase production to keep supermarket shelves full. The connected cow concept has the potential to manage 1000s of cows by a handful of people.

Launched in the 1970’s, the Operation Flood mission by India’s Dairy Development Board has helped India to be the largest producer of milk in the world. Not just the largest consumer of milk, but today we are also the largest consumer of cheese, butter, buttermilk and ice-creams made by milk. Our love of milk is associated with the exponential sales of Shrikhand, Basundi and Mithais. To meet the demands of ever-growing middle-class Indians, we need to re-launch Operation Flood with the mix of Artificial Intelligence.

The concept of the connected cow was first introduced in the Startup Nation of Israel. With geo-tagging of cows and accurate use of big data, an average cow in Israel gives 12,000 litres of milk per year i.e whopping 32 litres per day. An average Indian breed of cow has the capacity of giving only 3 litres per day. Although, the milk quality of Indian desi is A2, which is much superior to of Israeli cows. Agricultural experts are of an opinion, Desi Indian cows can give 5 times more milk if proper care of cow nutrition and health is guaranteed.

SCR Dairy, Israel uses Microsoft Azure on a windows software. They have a software named HealthCow24 which is a modern breakthrough for a traditional industry. It transmits big data through RFID tags which are located on the ear of the bovine. This cow-monitoring system gives farmers insights that can boost milk production, smooth the calving process and ensure healthier cows — all while saving time. All you need is PC to check updates about the status of the cow. The system aggregates data from the sensors and conveys it to the farm’s office, and it’s available through a mobile application so farmers have access to data about cows’ heat cycles and health from anywhere at any time. It also allows farmers to make lists, prepare reports, sort cows by category and track each animal’s overall history.

Pune’s Chitale Dairy which is famous for awesome Bhakarwadi and milk products has been an industry first in India to implement connected cow solution. Chitale Dairy produces 400,000 litres of milk per day, as well as cream, butter, and yogurt—all from a remotely managed herd of almost 200,000 cows. Only 1,000 of the animals are kept at the company’s facility in Maharashtra state, the rest are owned and cared for by 10,000 small family farmers. Chitale is helping its satellite farmers keep their cows healthy and productive through its “Cows to Cloud” program. The cow-cloud connection is enabled by a radio-frequency identification (RFID) tag attached to the animal. Data on each cow (such as blood profile, nutritional needs, and milk production) is automatically collected daily and sent to Chitale’s data centre which is powered by Dell VMWare. The data can be easily accessed through a secured web or even mobile app.

India is investing big in big data analytics to improve its milk production. The government has decided that all 88 lakhs bovines in India should get mandatory ear tags enabled with RFID tags along with Unique Identification Number (Just like Aadhaar Card) which then can be tracked through an application. It is spending more than Rs 150 crores for the project. The UID tags are tamper-proof made of a polyutherine material with UID number. The project could double the production of milk by improving the health of Indian cows/buffalos. Within a few years, cattle owners using connected cow tech will see tangible benefits of precision agriculture.

– Chaitanya Kulkarni

Originally published on | Tech that transforms life.

Friday, 6 October 2017

The economics behind bullet train

Mumbai Ahmedabad Shinkansen E5 bullet train

The best way to travel in India is the Indian Railways. The glory of India, the railways is one of the largest rail networks in the world. It is well connected with major cities and district heads and comparatively cheap when compared to Roadways. Sleeper class ticket on Vivek Express, India’s longest running train from Kanyakumari to Dibrugarh (4244 km and 80-hour journey) costs little more than Rs 1000. Indian Railways has prospered growth wherever it reached. It is extremely well connected but it is very slow when compared to High-Speed Rail Systems. India’s second fastest train, the New Delhi – Bhopal Shatabdi express covers a distance of 708km in 8 hours and 25 minutes averaging at 83 kmph. In comparison, the Beijing – Guangzhou covers the distance of 2,298 km in just 8 hours averaging at 287 kmph.

India has the demography and the money to implement high speed railway to its length and breadth. High-speed corridors currently under consideration are Mumbai – Ahmedabad, Bengaluru – Chennai, Delhi – Chandigarh, Mumbai – Nagpur, Trivandrum - Kannur and Vijayawada – Amaravati. Mumbai – Ahmedabad is one of the oldest planned routes for HSR and the first to be implemented.

As planned by National High-Speed Rail Corporation of India, the Mumbai – Ahmedabad HSR route will be 508 km long and would have 12 stations namely – Bandra Kurla Complex, Thane, Virar, Boisar, Vapi, Billimora, Surat, Bharuch, Vadodara, Anand, Ahmedabad and Sabarmati. The Shinkansen E5 series train is likely to connect two International Financial Services Centres in just 2 hours. G block in BKC is proposed to be Mumbai’s IFSC centre and aims to bring trillion-dollar investment with its 6,05,000 sq metre investment arena. Gujarat International Financial Tech City (GIFT City) is amongst India’s finest emerging smart cities (359 hectares) and IFSC centre. It plans to create 1 million jobs in finance, fintech and arbitration by 2022 and has recorded transactions worth $4 billion since operations. GIFT City was recently ranked 10th in Global Financial Centre Index, ahead on Luxembourg, Seoul, Abu Dhabi and Beijing. BKC – Sabarmati bullet train routes will also connect major tier 2 cities namely Surat and Vadodara and is likely to spur the growth of emerging smart cities on the route.

The proposed cost of Mumbai – Ahmedabad high-speed rail is estimated at Rs 1,10,000 crore. Japan International Cooperation Agency has come forward to provide the loan of 88,000 crore at just 0.1%, much less than London Inter-Bank Operating Rate of 4%. International loans to India are generally provided at the rate of 5% (LIBOR 4% + 1% interest). India has agreed to pay back the loan amount in Yen after 50 years from today and with the moratorium period of 15 years.  The per km cost is expected to be (110000 cr divided by 508 km) 216 crores. The state government of Maharashtra and Gujarat will share 25% cost respectively.

There has been a national debate in Indian Media on the cost and need of the project in the wake of Mumbai Stampede incident which killed 23. Bullet Train is an inter-city model and it cannot be compared with 150-year old Mumbai Suburban Railway. Similarly, investments in Shatabdi and Rajdhani Express cannot be compared with Mumbai local. The only valid comparison with Mumbai local would be intra-city Mass Rapid Transport Systems like metro, monorail, Maglev or Metrino Pod technology.

Per Kilometre Cost of Proposed projects along with Bullet Train

Mumbai Metro 3 (24,000 crore divided by 33 km) = Rs 727 crore

Mumbai Metro 2 (17,000 crore divided by 42 km) = Rs 404 crore

Mumbai Trans Harbour Sea Link (18,000 crore divided by 22 km) = Rs 818 crore

Bandra Versova Sea Link (7500 crore divided by 17 km) = Rs 441 crore

CSTM – Panvel Fast Corridor (12,000 crore divided by 48 km) = Rs 250 crore

BKC Sabarmati Bullet Train = Rs 216 crore

Mumbai Monorail (4,000 crore by 20 km) = Rs 200 crore.

Political opportunists are unaware about financial models of bullet trains and are spreading misinformation about the project to gain political points in upcoming elections. Japan is willing to lend us a huge amount at low rates keeping in the account of demography and financial strength of India’s growing middle class. The project is not intended towards the rich and speculations regarding the fare being high as Rs 5,000 is totally untrue. With Mumbai – Vadodara expressway (Rs 44,000 crore project) in tendering, people who are on a low budget could also travel to Ahmedabad in ST corp. bus under 6 hours. is of an opinion that the fare of economy class of BKC – Sabarmati bullet train will be below Rs 1000 for a single journey.

Projected income* of BKC – Sabarmati Bullet Train route

Total passengers per train - 1,200.

Trains per hours – 8 trains from both direction. Each train departs with the gap on 15 minutes on average.  

Total operating time – 5 am to 12pm (19 hours)

Projected passenger ridership per day – 1,82,400. (1200 x 8 x 19 hours)

Average fare per person = Rs 800.

Projected daily income = Rs 14.5 crore

Projected yearly income from passenger fare = 5325 crore.

Non-fare revenue model – Vehicle parking, electric charging of e-vehicles, feeder transport, passenger amenities, food in trains, shopping malls in stations, duty-free liquor store in Maharashtra state, advertising revenue, station renaming (SBI Thane station), in-train entertainment system, passenger lounges.

Projected yearly non-fare revenue – Rs 3,000 crore

Total projected revenue = Rs 8325 crore.

Projected commercial profitability = Rs 1,10,000 crore divided by 8325 crore = 13 years & 2 months.

*- Subject to approximation.

India, being the IT hub of the world shouldn’t shy away in adapting new transportation technologies. The Mumbai – Ahmedabad bullet train project is set to provide reliable and comfortable service with high standards of safety. When the first Rajdhani Express was introduced in 1969, it collapsed the journey from New Delhi to Dibrugarh to just 17 hours from 24 hours. The ticket price of brand new Red Rajdhani was just Rs 90 for AC Chair Car. It was immediately branded by politicians and media as elitist.

One must be careful not to confuse leapfrogging technology development with elitism whether it is mobile phones, satellite launches, regional air-connectivity or high-speed rail.

- Chaitanya Kulkarni

Tuesday, 3 October 2017

Morgan Stanley on India: Bullish or Foolish?

BSE Sensex reach 30,000

Equity and Mutual fund investments are subject to market risks. The fact that investment banks and Asset Management Companies fail to tell you. They want to portray the picture of Sensex as ‘Evergreen Market’ so that you could not miss out investing on ‘The India Story’. On a long-term, investments in India’s stock are strictly a no-miss. But that doesn’t mean that market would not see a downward trend. India needs to upgrade its economy, we still suck at Ease of Doing Business. A recent report by World Economic Forum suggests that India ranks 40th on Competitive Market Index.

As predicted by political experts, Modi wave is likely to clean sweep in 2019 elections. In three years, the opposition has yet not managed to gain popularity even after a controversial decision like demonetisation and issues in GST implementation. With a mandate, Modi may have the power to deal with a more controversial decision like Uniform Civil Code, Article 370, Demonetisation of Rs. 2000 & Rs.500 or even topics like Reservation which have the potential to create security issues across India. India’s stock market, being the pulse of the nation, will react to these political decisions. The shift from oil guzzling vehicles to all electric is likely to create chaos in global markets. A fall in RIL, IOCL, HP, BPCL or the likes of ONGC have the power to shake BSE Sensex.

When we compare historical data, the performance of India’s stock market is fascinating. 20 years ago, BSE Sensex index for September 1997 series ended at 3902 points. The September series of 2017 ended at approx. 31,200 points. A rise of average 12% per year and much more income generated than bank fixed deposits. Numbers have the power to deceive us. Here’s how the investment bankers would say, “If you had invested Rs 1,00,000 in the stock market in 1997, today you would have a disposable income of more than Rs. 12,00,000”. But they would ignore the fact that in 1997, a sum of One Lakh rupees was really a big amount and most of the middle class would not have such huge savings.

The future, like any complex problem, has far too many variables to be predicted. Quantitative models, historical models, even psychic models have all been tried and have all failed. Mathematicians are struggling to find probabilities in the game of chess. Predicting stock markets is no joke when factors like political stability, global positions and natural disasters cannot be accounted for. The human brain is great at predictions but horrible at long-range forecasting. But, to get in news, organisations like Morgan Stanley, Karvy, Ambit etc publish exaggerated figures about the futures BSE Sensex. Let’s see how they miserably fail.

Claim 1 – Sensex may reach 50,000 by 2018.
Date of Claim – January 2013
Organisation – Morgan Stanley

Reality – With the wake of demonetisation and lacklustre implementation of GST, the GDP of India has narrowed to 5.7%. BSE Sensex currently at 31,400 points may see a correction of 1500 to 2000 points in next 6 months. GDP is expected to improve significantly with government infrastructure spending and improved digitisation. Financial experts suggest, that a turnaround in GDP is expected by Q1 2018. Although, at current scenario of markets and global slowdown, reaching 50,000 points by 2018 is far from possible.

Claim 2 – Sensex seen at 1,00,000 by 2020
Date of Claim – June 2014
Organisation – Karvy

Reality – Being humans, we all don’t have the capability to predict the future. No analyst at Karvy would have predicted the historic reforms of 2016. Although, the stock market had no negative effect on its index. Even after demonetisation, we saw a historic IPO of Avenues Supermart which gave almost double returns in just a few days. Karvy’s claim of Sensex reaching 1,00,000 has no numeric backing and is mere speculation. Looking at current levels of GDP growth and market trajectory, we may fall short with 60,000 or even more.

Claim 3 – Sensex can cross 1,00,000 mark in 10 years
Date of Claim – October 2017
Organisation – Morgan Stanley

Justification – India’s economy is expected to reach $6 trillion mark on account of JAM troika, improved digitisation and infrastructure spending. There are no doubts about India’s shining growth story. Future earnings from stock market are impossible to predict. Wall Street expert Peter Bernstein has said that our stock market excel sheets are bogus as they are based on faulty maths. Stock market earnings only earn you around 8% in counted for inflation. These so-called stock market experts have failed to predict every single stock market crash. To summarise, I would like to quote Keynes – In long term, we all are dead. It is likely to note that Yashwant Sinha and Manmohan Singh also quoted Keynes recently. Keep investing!

- Chaitanya Kulkarni