General Affairs
'It Pays To Be Honest': Arun Jaitley Explains Decision To Abolish Rs. 500 And Rs. 1000 Notes
-
NEW DELHI: It pays to be honest, said Finance Minister Arun Jaitley today, describing the government's decision to scrap 500 and 1000 rupee notes overnight as a "gamechanger." People with black money are worried, he said.
The minister said the bold move would put an end to the parallel economy. "If a longer window was given, people would have found ways to evade tax," he said, explaining the government's sudden withdrawal on Tuesday of Rs.500 and Rs. 1,000 banknotes in the country's biggest crack down against black money, corruption and counterfeit currency.
Teething troubles in the transition to new high denomination notes of 500 and 2,000 rupees would be sorted put soon, the minister promised.
Mr Jaitley said it must be clear that the deposit of the now-defunct notes in bank accounts will "not provide any relief from taxation."
"It should be clear that it is no immunity scheme. This (deposit) does not provide any relief from taxation. The law of land will apply," Mr Jaitley said, but also emphasised, "If the money is legitimate which had been previously withdrawn from the bank or earned legally and saved and had been disclosed, there is nothing to worry about."
However, he said, if it is illegal money, the source will have to be disclosed, and it could land a person in trouble.
Prime Minister Narendra Modi made the currency announcement in an address to the nation on Tuesday evening and detailed how citizens left holding the invalid money could exchange the notes at banks and post offices.
The Finance Minister today said housewives and farmers with genuine savings need not worry about depositing cash in their bank accounts. "The small amounts that people will deposit like Rs. 25,000, 30,000 or 50,000 lying in house for expenses, whatever money could be there for meeting normal family expenses they need not worry. They can go to banks," he said.
The minister said for the first one or two weeks there could be a shortage of the replacement currency, but he expected it to be streamlined after 2-3 weeks.
The move would help make more transactions digital, he said, adding now people would disclose income and pay taxes. "India will become a more tax compliant society," Mr Jaitley said.
The minister said the bold move would put an end to the parallel economy. "If a longer window was given, people would have found ways to evade tax," he said, explaining the government's sudden withdrawal on Tuesday of Rs.500 and Rs. 1,000 banknotes in the country's biggest crack down against black money, corruption and counterfeit currency.
Teething troubles in the transition to new high denomination notes of 500 and 2,000 rupees would be sorted put soon, the minister promised.
Mr Jaitley said it must be clear that the deposit of the now-defunct notes in bank accounts will "not provide any relief from taxation."
"It should be clear that it is no immunity scheme. This (deposit) does not provide any relief from taxation. The law of land will apply," Mr Jaitley said, but also emphasised, "If the money is legitimate which had been previously withdrawn from the bank or earned legally and saved and had been disclosed, there is nothing to worry about."
However, he said, if it is illegal money, the source will have to be disclosed, and it could land a person in trouble.
Prime Minister Narendra Modi made the currency announcement in an address to the nation on Tuesday evening and detailed how citizens left holding the invalid money could exchange the notes at banks and post offices.
The Finance Minister today said housewives and farmers with genuine savings need not worry about depositing cash in their bank accounts. "The small amounts that people will deposit like Rs. 25,000, 30,000 or 50,000 lying in house for expenses, whatever money could be there for meeting normal family expenses they need not worry. They can go to banks," he said.
The minister said for the first one or two weeks there could be a shortage of the replacement currency, but he expected it to be streamlined after 2-3 weeks.
The move would help make more transactions digital, he said, adding now people would disclose income and pay taxes. "India will become a more tax compliant society," Mr Jaitley said.
Foreign Media On PM Narendra Modi's 'Masterstroke' Cash Ban
-
Cash may no longer be king in India. The nation's nascent digital economy stands to be the biggest beneficiary from its strongest crackdown on corruption since 1978.
In a surprise announcement late Tuesday, Prime Minister Narendra Modi banned 500-rupee ($7.50) and 1,000-rupee notes effective midnight, sweeping away 86 percent of total currency in circulation.
Paytm, India's largest digital wallet startup, hailed the move in the morning newspapers as it splashed Modi's photograph in a full-page advertisement.
"This is the golden age to be a tech entrepreneur in India. Specially a fintech one," tweeted Vijay Shekhar Sharma, the founder of Paytm, whose investors include Alibaba Group Holding Ltd. "Keep the money digital."
In a nation where 98 percent of consumer payments are still made in cash and about a quarter of the $2 trillion economy is unaccounted for, Modi's pushing for electronic transactions to improve transparency. The latest move is estimated to more than double annual growth at payment companies.
Transaction volumes at companies including Itz Cash Card Ltd. could increase about 120 percent each year over the next few years instead of the 50 percent gain previously estimated, said Managing Director Naveen Surya, who's also chairman of representative body Payments Council of India. "This is a strong and loud signal that physical cash is no longer welcome."
India's technology services trade body Nasscom termed Modi's move a "masterstroke," and Bhavish Aggarwal, co-founder and chief executive of ride-sharing app Ola, said it's the first major step toward a cashless economy.
Paytm will achieve its three-year targets within one year, Sharma told Mint newspaper. Freecharge saw an "unprecedented" 12-fold jump overnight in its average wallet balance, the company said in a statement on Wednesday.
Consumption Hit
Stocks and the rupee -- already hit by the possibility of a Donald Trump victory at the U.S. presidential elections -- slumped on Wednesday as investors grappled with a potential near - term drop in consumption. Global giant Amazon.com Inc.'s India unit said it would no longer accept the scrapped notes for existing orders. Cash-on-delivery has been the preferred payment method for more than half of total transactions in India's e-commerce industry.
The impact also risks hurting rural India, where demand has just been recovering after healthy rainfall this year following back-to-back droughts. About 75 percent of the population live in villages, mainly earning daily wages in cash.
To bring each of India's 1.3 billion citizens into the financial system and remove unaccounted cash, Modi started a massive campaign in 2015 to open no-frills bank accounts. He's betting that this initiative, together with biometric identifiers to cut illegal payments and more mobile payments, will ensure a cashless future and reduce opportunities for graft.
India is also planning to ban cash transactions of more than 500,000 rupees, said people with knowledge of the matter, asking not to be identified as they aren't authorized to speak with the media.
It's crucial for Modi to be seen tackling corruption before state elections next year and a national contest in 2019. Concern about corruption has risen to levels last seen before Modi swept to power in 2014, a Pew survey showed in September, though Modi still remains India's most favored leader.
Tuesday's "bold move will push all those fence-sitters to make a jump into the world of mobile and digital banking," Ashutosh Khajuria, chief financial officer at Federal Bank Ltd. said in a phone interview. "The learning curve will be steeper and faster as this innovative move has pushed people against a wall and is forcing them to change transactions into lesser cash intensive ones."
In a surprise announcement late Tuesday, Prime Minister Narendra Modi banned 500-rupee ($7.50) and 1,000-rupee notes effective midnight, sweeping away 86 percent of total currency in circulation.
Paytm, India's largest digital wallet startup, hailed the move in the morning newspapers as it splashed Modi's photograph in a full-page advertisement.
In a nation where 98 percent of consumer payments are still made in cash and about a quarter of the $2 trillion economy is unaccounted for, Modi's pushing for electronic transactions to improve transparency. The latest move is estimated to more than double annual growth at payment companies.
Transaction volumes at companies including Itz Cash Card Ltd. could increase about 120 percent each year over the next few years instead of the 50 percent gain previously estimated, said Managing Director Naveen Surya, who's also chairman of representative body Payments Council of India. "This is a strong and loud signal that physical cash is no longer welcome."
India's technology services trade body Nasscom termed Modi's move a "masterstroke," and Bhavish Aggarwal, co-founder and chief executive of ride-sharing app Ola, said it's the first major step toward a cashless economy.
Paytm will achieve its three-year targets within one year, Sharma told Mint newspaper. Freecharge saw an "unprecedented" 12-fold jump overnight in its average wallet balance, the company said in a statement on Wednesday.
Consumption Hit
Stocks and the rupee -- already hit by the possibility of a Donald Trump victory at the U.S. presidential elections -- slumped on Wednesday as investors grappled with a potential near - term drop in consumption. Global giant Amazon.com Inc.'s India unit said it would no longer accept the scrapped notes for existing orders. Cash-on-delivery has been the preferred payment method for more than half of total transactions in India's e-commerce industry.
The impact also risks hurting rural India, where demand has just been recovering after healthy rainfall this year following back-to-back droughts. About 75 percent of the population live in villages, mainly earning daily wages in cash.
To bring each of India's 1.3 billion citizens into the financial system and remove unaccounted cash, Modi started a massive campaign in 2015 to open no-frills bank accounts. He's betting that this initiative, together with biometric identifiers to cut illegal payments and more mobile payments, will ensure a cashless future and reduce opportunities for graft.
India is also planning to ban cash transactions of more than 500,000 rupees, said people with knowledge of the matter, asking not to be identified as they aren't authorized to speak with the media.
It's crucial for Modi to be seen tackling corruption before state elections next year and a national contest in 2019. Concern about corruption has risen to levels last seen before Modi swept to power in 2014, a Pew survey showed in September, though Modi still remains India's most favored leader.
Tuesday's "bold move will push all those fence-sitters to make a jump into the world of mobile and digital banking," Ashutosh Khajuria, chief financial officer at Federal Bank Ltd. said in a phone interview. "The learning curve will be steeper and faster as this innovative move has pushed people against a wall and is forcing them to change transactions into lesser cash intensive ones."
With High Security Features, New 500, 2000 Rupee Notes Hard To Fake
-
NEW DELHI: The new 500 and 2,000 rupee notes that Central Bank RBI will issue starting from Friday are being called "high security" notes and have several new features to make them harder to fake than the 500 and 1000 rupee notes that were scrapped last night.
The new notes will be available at bank ATMs when they start operating again from Friday, Finance Secretary Ashok Lavasa said today. The RBI, he said, would closely monitor the fresh notes that will be issued.
People, Mr Lavasa said he hoped, understood the objective behind the government's abrupt announcement on Tuesday that it was immediately withdrawing Rs. 500 and Rs. 1,000 notes from circulation to crack down on black money and counterfeit currency.
The new 2,000 rupee note, said the Reserve Bank or RBI in a statement, will include several features like a see-through register with the denominational numeral 2,000 which can be seen when the note is held up against light.
There will also be a latent image with the denominational numeral 2,000, which can be seen when the bank note is held at a 45 degree angle at the eye level.
The note will also have a colour-shifting windowed security thread with the inscription 'à¤ारत', RBI and 2,000. The colour of the thread will change from green to blue when the note is tilted.
For the visually-impaired, there will a raised print of Mahatma Gandhi's portrait, the Ashoka Pillar emblem, bleed lines and identity marks.
The RBI said the 2,000 rupees notes have a motif of the Mangalayan, India's Mars mission and the base colour is magenta.
NEW DELHI: The new 500 and 2,000 rupee notes that Central Bank RBI will issue starting from Friday are being called "high security" notes and have several new features to make them harder to fake than the 500 and 1000 rupee notes that were scrapped last night.The new notes will be available at bank ATMs when they start operating again from Friday, Finance Secretary Ashok Lavasa said today. The RBI, he said, would closely monitor the fresh notes that will be issued.
The new 2,000 rupee note, said the Reserve Bank or RBI in a statement, will include several features like a see-through register with the denominational numeral 2,000 which can be seen when the note is held up against light.
There will also be a latent image with the denominational numeral 2,000, which can be seen when the bank note is held at a 45 degree angle at the eye level.
The note will also have a colour-shifting windowed security thread with the inscription 'à¤ारत', RBI and 2,000. The colour of the thread will change from green to blue when the note is tilted.
For the visually-impaired, there will a raised print of Mahatma Gandhi's portrait, the Ashoka Pillar emblem, bleed lines and identity marks.
The RBI said the 2,000 rupees notes have a motif of the Mangalayan, India's Mars mission and the base colour is magenta.
Border Security Force (BSF) Kills 7 Pakistan Rangers, 1 Terrorist At Hiranagar In Jammu
-
Seven Pakistani Rangers or paramilitary soldiers have been killed today by the Border Security Force or BSF along the International Border in Hiranagar sector in Kathua district of Jammu and Kashmir.
Sources said that since Wednesday night, the BSF's posts had been targeted by snipers from across the border.
A BSF constable named Gurnam Singh was hit by Pakistani fire this morning in Kathua, which is about 90 km from Jammu. He was evacuated to Jammu while his colleagues provided cover with retaliatory firing at Pakistan. He is in critical condition in a Jammu hospital.
A "befitting reply" was given by the border-guarding force, it said in a statement which stressed it as "an aggressive offensive."
However, the Pakistan army has denied there have been any casualties on their side.
The action comes as Prime Minister Narendra Modi has told the army it has the right to respond forcefully to provocation and to attacks on soldiers.
After 19 soldiers were killed at an army base in Uri in Kashmir last month, India crossed the Line of Control to target staging areas for terrorists. Pakistan has denied the cross-border raids which came after PM Modi launched a global campaign to diplomatically isolate Pakistan.
Since the surgical strikes in Pakistan-Occupied Kashmir, cross-border firing has been increased substantially by Pakistan.
The BSF said that on Wednesday night, it prevented a major infiltration and killed a terrorist. The Pakistani paramilitary troops were killed this morning.
Sources said that since Wednesday night, the BSF's posts had been targeted by snipers from across the border.
A BSF constable named Gurnam Singh was hit by Pakistani fire this morning in Kathua, which is about 90 km from Jammu. He was evacuated to Jammu while his colleagues provided cover with retaliatory firing at Pakistan. He is in critical condition in a Jammu hospital.
A "befitting reply" was given by the border-guarding force, it said in a statement which stressed it as "an aggressive offensive."
However, the Pakistan army has denied there have been any casualties on their side.
The action comes as Prime Minister Narendra Modi has told the army it has the right to respond forcefully to provocation and to attacks on soldiers.
After 19 soldiers were killed at an army base in Uri in Kashmir last month, India crossed the Line of Control to target staging areas for terrorists. Pakistan has denied the cross-border raids which came after PM Modi launched a global campaign to diplomatically isolate Pakistan.
Since the surgical strikes in Pakistan-Occupied Kashmir, cross-border firing has been increased substantially by Pakistan.
The BSF said that on Wednesday night, it prevented a major infiltration and killed a terrorist. The Pakistani paramilitary troops were killed this morning.
How Trump Won: The Revenge Of Working-Class Whites
-
For the past 40 years, America's economy has raked blue-collar white men over the coals. It whittled their paychecks. It devalued the type of work they did best. It shuttered factories and mines and shops in their communities. New industries sprouted in cities where they didn't live, powered by workers with college degrees they didn't hold.
They were not the only ones who felt abandoned by a rapidly globalizing economy, but they developed a distinctly strong pessimism in its face.
On Tuesday, their frustrations helped elect Donald Trump, the first major-party nominee of the modern era to speak directly and relentlessly to their economic and cultural fears. It was a "Brexit" moment in America, a revolt of working-class whites who felt stung by globalization and uneasy in a diversifying country where their political power had seemed to be diminishing.
It was a rejection of the business-friendly policies favored at various points by elites in both parties, which deepened trade relationships with foreign countries and favored allowing more immigrants in. And it was a raw outburst at the trends of rising inequality and economic dislocation that defined America's economy thus far this century.
Whites without a college degree - men and women - made up a third of the 2016 electorate. Trump won them by 39 percentage points, according to exit polls, far surpassing 2012 Republican nominee Mitt Romney's 25 percent margin. They were the foundation of his victories across the Rust Belt, including a blowout win in Ohio and stunning upsets in Pennsylvania and Wisconsin.
In polling, these voters have expressed deep racial and cultural anxieties. In exit polls they were more likely than the country as a whole to say that illegal immigrants should be deported. But those polls also suggested economic concerns and hostility toward leaders in Washington were much more important factors driving them to Trump.
Half of these voters said the economy was the most important issue in their vote, compared to 14 percent for immigration. A majority said international trade takes away American jobs. Three-quarters said the economy is "not good" or "poor" and nearly 8 in 10 said their personal financial situation was the same or worse than it was four years ago. Two-thirds said they preferred Trump to handle the economy instead of Democrat Hillary Clinton, compared with less than half of the electorate overall.
These frustrations were not new. They had mounted for decades, boiling over in the slow recovery from the Great Recession. That was particularly true among men. From 1975 to 2014, according to census data analyzed by the Center on Budget and Policy Priorities, white male workers without a college degree saw their median incomes fall by more than 20 percent, after adjusting for inflation. Their incomes fell 14 percent between 2007 and 2014.
Last year, amid a much improved U.S. economy and a tightening labor market, their incomes had jumped by 6 percent, according to the Center's analysis. But that increase was nowhere close to enough to make up the ground lost in the recession - let alone since the 1970s.
"It's completely understandable how these workers feel left behind," said Jared Bernstein, an economist at the center who is a former aide to Vice President Biden.
At the same time, these working class whites have seen the fruits of American prosperity increasingly go to the very rich. "Superstar" cities, like San Francisco, Boston and yes, Washington, gained even more wealth, and they have been responsible for an increasingly large share of the country's job growth.
Meanwhile, non-college whites saw jobs go away and businesses fold in the rural communities and smaller cities where they are more likely to live, particularly in the Rust Belt.
"Their access to economic opportunity in large measure comes down to the luck of geography," said John Lettieri, co-founder of the Economic Innovation Group, an advocacy group whose research also showed that this group of voters is underrepresented in America's most prosperous regions.
Many of the downtrodden areas have lost factory jobs over the last several decades, as expanding trade and advancing technology pushed the economy away from production work and into services. Some areas suffered as coal mines closed. Others experienced rapid growth in high-paying energy extraction and support jobs several years ago as hydraulic fracturing boomed, only to watch many of those jobs evaporate when oil prices fell.
The workers increasingly came to see trade deals as the culprit - namely the North American Free Trade Agreement with Mexico and Canada in the 1990s and the effort to open up trade up trade with China in 2000, a decision that economic research suggested has cost America at least 2 million jobs on net.
Trump courted working class whites by promising a restoration of the old industrial economy - through renegotiated trade deals and tariffs on imports; by pledging to deport immigrants, which he said would reduce competition for native-born workers; and by promising rapid economic growth from tax cuts, deregulation and more drilling.
Many economists, including several conservative ones, warn Trump's plans will not deliver the relief those workers are seeking. Some say tariffs won't bring back jobs and could actually lead to recession. Others say Trump's plans ignore more critical issues for the working class, such as the need for improved worker training or measures to encourage workers to migrate to higher-opportunity regions.
"That's the most disappointing part of the 2016 election," said Abby McCloskey, an economist who focuses on the middle class and who advised some of Trump's rivals for the GOP nomination. Like Clinton, she said, Trump had "resorted to partisan talking points that the system is rigged against these workers."
Trump's message did not resonate with black or Latino workers, who earn less at every education level than whites do. Those workers lean Democratic by various degrees but appeared especially repelled by Trump's attacks on immigrants and his stoking of racial resentments.
Critically, his huge margins among blue-collar whites would not have sufficed to deliver him the presidency, if he had not also maintained a slim advantage among whites with college degrees as well. As a group, those workers have been the winners of the new economy, blessed with cheaper imported consumer goods and a persistent wage advantage over their non-college counterparts.
Trump's challenge was inspiring the blue-collar whites without alienating the college-educated ones. He succeeded, and it won him the White House.
They were not the only ones who felt abandoned by a rapidly globalizing economy, but they developed a distinctly strong pessimism in its face.
On Tuesday, their frustrations helped elect Donald Trump, the first major-party nominee of the modern era to speak directly and relentlessly to their economic and cultural fears. It was a "Brexit" moment in America, a revolt of working-class whites who felt stung by globalization and uneasy in a diversifying country where their political power had seemed to be diminishing.
Whites without a college degree - men and women - made up a third of the 2016 electorate. Trump won them by 39 percentage points, according to exit polls, far surpassing 2012 Republican nominee Mitt Romney's 25 percent margin. They were the foundation of his victories across the Rust Belt, including a blowout win in Ohio and stunning upsets in Pennsylvania and Wisconsin.
In polling, these voters have expressed deep racial and cultural anxieties. In exit polls they were more likely than the country as a whole to say that illegal immigrants should be deported. But those polls also suggested economic concerns and hostility toward leaders in Washington were much more important factors driving them to Trump.
Half of these voters said the economy was the most important issue in their vote, compared to 14 percent for immigration. A majority said international trade takes away American jobs. Three-quarters said the economy is "not good" or "poor" and nearly 8 in 10 said their personal financial situation was the same or worse than it was four years ago. Two-thirds said they preferred Trump to handle the economy instead of Democrat Hillary Clinton, compared with less than half of the electorate overall.
These frustrations were not new. They had mounted for decades, boiling over in the slow recovery from the Great Recession. That was particularly true among men. From 1975 to 2014, according to census data analyzed by the Center on Budget and Policy Priorities, white male workers without a college degree saw their median incomes fall by more than 20 percent, after adjusting for inflation. Their incomes fell 14 percent between 2007 and 2014.
Last year, amid a much improved U.S. economy and a tightening labor market, their incomes had jumped by 6 percent, according to the Center's analysis. But that increase was nowhere close to enough to make up the ground lost in the recession - let alone since the 1970s.
"It's completely understandable how these workers feel left behind," said Jared Bernstein, an economist at the center who is a former aide to Vice President Biden.
At the same time, these working class whites have seen the fruits of American prosperity increasingly go to the very rich. "Superstar" cities, like San Francisco, Boston and yes, Washington, gained even more wealth, and they have been responsible for an increasingly large share of the country's job growth.
Meanwhile, non-college whites saw jobs go away and businesses fold in the rural communities and smaller cities where they are more likely to live, particularly in the Rust Belt.
"Their access to economic opportunity in large measure comes down to the luck of geography," said John Lettieri, co-founder of the Economic Innovation Group, an advocacy group whose research also showed that this group of voters is underrepresented in America's most prosperous regions.
Many of the downtrodden areas have lost factory jobs over the last several decades, as expanding trade and advancing technology pushed the economy away from production work and into services. Some areas suffered as coal mines closed. Others experienced rapid growth in high-paying energy extraction and support jobs several years ago as hydraulic fracturing boomed, only to watch many of those jobs evaporate when oil prices fell.
The workers increasingly came to see trade deals as the culprit - namely the North American Free Trade Agreement with Mexico and Canada in the 1990s and the effort to open up trade up trade with China in 2000, a decision that economic research suggested has cost America at least 2 million jobs on net.
Trump courted working class whites by promising a restoration of the old industrial economy - through renegotiated trade deals and tariffs on imports; by pledging to deport immigrants, which he said would reduce competition for native-born workers; and by promising rapid economic growth from tax cuts, deregulation and more drilling.
Many economists, including several conservative ones, warn Trump's plans will not deliver the relief those workers are seeking. Some say tariffs won't bring back jobs and could actually lead to recession. Others say Trump's plans ignore more critical issues for the working class, such as the need for improved worker training or measures to encourage workers to migrate to higher-opportunity regions.
"That's the most disappointing part of the 2016 election," said Abby McCloskey, an economist who focuses on the middle class and who advised some of Trump's rivals for the GOP nomination. Like Clinton, she said, Trump had "resorted to partisan talking points that the system is rigged against these workers."
Trump's message did not resonate with black or Latino workers, who earn less at every education level than whites do. Those workers lean Democratic by various degrees but appeared especially repelled by Trump's attacks on immigrants and his stoking of racial resentments.
Critically, his huge margins among blue-collar whites would not have sufficed to deliver him the presidency, if he had not also maintained a slim advantage among whites with college degrees as well. As a group, those workers have been the winners of the new economy, blessed with cheaper imported consumer goods and a persistent wage advantage over their non-college counterparts.
Trump's challenge was inspiring the blue-collar whites without alienating the college-educated ones. He succeeded, and it won him the White House.
Business Affairs
Will the ban on Rs 500 and Rs 1000 be the end of black money?
-
At the stroke of eight on 8th November night, Prime Minister Narendra Modi announced that all 500 and 1000 rupee notes that are in circulation will seize to be legal tender by the midnight. Lengthy queues in front of bank ATMs and the scramble to withdraw lower denomination currencies followed. High value denomination rupee notes losing validity were sold at huge discounts in wholesale markets across the country and people, in hundreds, with unaccounted cash in their hands, were left dumbstruck.
The fact that the announcement came from none other than PM Modi was enough indication of the critical nature of the problem. India was taking an unprecedented step of withdrawing or demonetizing 16.5 billion 500 rupee notes and 6.7 billion 1000 rupee notes - which together accounts for over 80 percent of the value of cash that was in circulation in India to tackle the twin menace of fake currency, and black money. In a press conference the same night, finance ministry officials made it very clear that the objective was to curb financing of terrorism through the proceeds of Fake Indian Currency Notes (FICN) and use of such funds for subversive activities such as espionage, smuggling of arms, drugs and other contrabands into India, and for eliminating black money which casts a long shadow of parallel economy on India's real economy.
THE PROBLEM OF FICN
In spite of the additional workload that he anticipates, Pradip Thakur (name changed) is happy about the government's decision to invalidate existing 500 and 1000 rupee currencies. As the branch manager of a public sector bank in Delhi, he was getting overtly worried about the fake currency problem. The counterfeit notes were increasingly becoming more difficult to detect, and his officials or key customers with mass customer interface (like petrol pumps) were increasingly losing money because they had to destroy such currencies. "Fake notes were becoming a bigger problem each day. While we are supposed to file police case against the customer if we detect more than five pieces of counterfeit notes in single transaction, we could not do that all the time as it puts our genuine customers - traders, hotel operators, petrol bunks, etc., in trouble. They have been coming across fake notes on a daily basis".
What made the problem worse was the increase in the supply of high denomination currencies. According to the finance ministry, while the total number of bank notes in circulation rose by 40 percent between 2011 and 2016, the increase in number of notes of Rs.500 denomination was 76 percent and for Rs.1,000 denomination was 109 percent during this period.
Thakur's worry is something that will resonate with the opinion of almost every bank manager in charge of retail operations across the country. The decision of the government to take the ultimate step to counter fake currency menace has only endorsed this reality. Or else, if one goes by the official statistics, there was no need for such a hard step as the seized and recovered fake FICN was only 0.003 percent of the Rs 1000 notes that were in circulation in the last three years (2015, 2014 and 2013). As percentage of notes in circulation, fake Rs 500 notes were also in the same range, o.002 percent in 2015 and 2014, and 0.003 percent in 2013. Fake 100 rupee notes accounted for about 0.001 percent of the total 100 rupee notes in circulation during these years.
The trends in FICN seizures points to the states where the fake currency problem was severe. While Delhi saw 66 police complaints filed in this connection in 2015, it was over 100 in Maharashtra and Andhra Pradesh. Overall, 788 fake currency related police cases were filed in India last year. The value of the currency, mostly 1,000 and 500 rupee notes, seized was Rs 30.44 crore. The fact that the value of seizures has been decreasing over the years - Rs 36.11 crore in 2014 and Rs 42.9 crore in 2013, thus do not reflect the magnitude of the problem.
The government has stated that the New Series bank notes of Rs.500 and Rs.2,000 denominations will be introduced for circulation from 10th November, 2016. Since the infusion of Rs.2,000 bank notes will be monitored and regulated by RBI and the new series of banknotes will be distinctly different from the current ones in terms of look, design, size and colour, the current move will bring be the strongest move to tackle the fake currency problem. Will that be a permanent solution? Especially if the source of fake currency is a hostile neighbouring country as is often reported? Hard to say, but there is no doubt about its positive impact in the short and medium term.
Thakur has a tough job ahead. He will have to do lot of due diligence while exchanging the invalid notes with either smaller denomination or freshly minted 500 rupee or 2,000 rupee notes of equivalent value for several weeks now. It is easy, when the amount that needs to be exchanged is small, but that may not always be the case as the cash that is lying outside the banking system is astronomically huge.
BLACK MONEY
Every bank manager in India will tell you, the locker facility is not only for securing your gold or valuable documents. Across the country, bank lockers also serve as a storage space for hard currency for some people who possess unaccounted money. As a study published by industry chamber Ficci last year indicates that India's black economy estimates can be anywhere between from 75 percent of the economy to 20 percent. Finance ministry quotes the World Bank study which pegged the size of the shadow economy for India at 20.7 percent of the GDP in 1999 and rising to 23.2 percent in 2007. And 20 percent of GDP means Rs 22.7 lakh crore, today. The large swathe of unaccounted hard currency, which forms part of the shadow economy, lying in outside the banking system - be it lockers or houses or offices, will now have to emerge or perish forever. Since the government has allowed exchange of old currencies only through the banking or post office channels, that too with proper documentation and KYC (know your customer) norms, banks will have a tough time managing such funds. By making the decision a surprise, the government has effectively plugged the possibility of hitherto loss making establishments earning huge revenues, and business suddenly flourishing to push some portion of such unaccounted money into the system.
As the Ficci study states, the sectors that are going to be most affected due to the purging of black money would be the real estate, manufacturing, jewellery and consumer goods segments, with real estate accounting for about a third of India's black money transactions. "We have just witnessed a tremendous step towards increased transparency in the Indian real estate industry. Stricter measures against black money have for long been required to help bring about greater transparency, give the Indian real estate sector more credibility and make it more attractive for foreign investors", says Anuj Puri, Chairman and India head of global real estate services firm Jones Lang LaSalle (JLL).
ON PREDICTED LINES
The government has been adopting a series of measures in the last two years, to curb the menace of black money in the economy. It began with the setting up of a Special Investigation Team (SIT) and the enactment of a law regarding undisclosed foreign income and assets. The amendment of the Double Taxation Avoidance Agreement between India and Mauritius and India and Cyprus followed and India reached at an understanding with Switzerland for getting information on bank accounts held by Indians with HSBC. It has been encouraging the use of non-cash and digital payments; amended the Benami Transactions Act and implemented the Income Declaration Scheme 2016. After the closure of the Income Disclosure Scheme, operational from 1st June to 30th September, 2016, the government had hinted that it would like to focus all our resources for bringing people with black money to books.
The ban on 500 and 1000 rupee notes is the latest. Will that be the end of black money?
Unlikely, though, with strict monitoring and enforcement of tax laws, the government can have a better control over the generation of black money, and to that extent, a welcome move.
At the stroke of eight on 8th November night, Prime Minister Narendra Modi announced that all 500 and 1000 rupee notes that are in circulation will seize to be legal tender by the midnight. Lengthy queues in front of bank ATMs and the scramble to withdraw lower denomination currencies followed. High value denomination rupee notes losing validity were sold at huge discounts in wholesale markets across the country and people, in hundreds, with unaccounted cash in their hands, were left dumbstruck.
The fact that the announcement came from none other than PM Modi was enough indication of the critical nature of the problem. India was taking an unprecedented step of withdrawing or demonetizing 16.5 billion 500 rupee notes and 6.7 billion 1000 rupee notes - which together accounts for over 80 percent of the value of cash that was in circulation in India to tackle the twin menace of fake currency, and black money. In a press conference the same night, finance ministry officials made it very clear that the objective was to curb financing of terrorism through the proceeds of Fake Indian Currency Notes (FICN) and use of such funds for subversive activities such as espionage, smuggling of arms, drugs and other contrabands into India, and for eliminating black money which casts a long shadow of parallel economy on India's real economy.
THE PROBLEM OF FICN
In spite of the additional workload that he anticipates, Pradip Thakur (name changed) is happy about the government's decision to invalidate existing 500 and 1000 rupee currencies. As the branch manager of a public sector bank in Delhi, he was getting overtly worried about the fake currency problem. The counterfeit notes were increasingly becoming more difficult to detect, and his officials or key customers with mass customer interface (like petrol pumps) were increasingly losing money because they had to destroy such currencies. "Fake notes were becoming a bigger problem each day. While we are supposed to file police case against the customer if we detect more than five pieces of counterfeit notes in single transaction, we could not do that all the time as it puts our genuine customers - traders, hotel operators, petrol bunks, etc., in trouble. They have been coming across fake notes on a daily basis".
What made the problem worse was the increase in the supply of high denomination currencies. According to the finance ministry, while the total number of bank notes in circulation rose by 40 percent between 2011 and 2016, the increase in number of notes of Rs.500 denomination was 76 percent and for Rs.1,000 denomination was 109 percent during this period.
Thakur's worry is something that will resonate with the opinion of almost every bank manager in charge of retail operations across the country. The decision of the government to take the ultimate step to counter fake currency menace has only endorsed this reality. Or else, if one goes by the official statistics, there was no need for such a hard step as the seized and recovered fake FICN was only 0.003 percent of the Rs 1000 notes that were in circulation in the last three years (2015, 2014 and 2013). As percentage of notes in circulation, fake Rs 500 notes were also in the same range, o.002 percent in 2015 and 2014, and 0.003 percent in 2013. Fake 100 rupee notes accounted for about 0.001 percent of the total 100 rupee notes in circulation during these years.
The trends in FICN seizures points to the states where the fake currency problem was severe. While Delhi saw 66 police complaints filed in this connection in 2015, it was over 100 in Maharashtra and Andhra Pradesh. Overall, 788 fake currency related police cases were filed in India last year. The value of the currency, mostly 1,000 and 500 rupee notes, seized was Rs 30.44 crore. The fact that the value of seizures has been decreasing over the years - Rs 36.11 crore in 2014 and Rs 42.9 crore in 2013, thus do not reflect the magnitude of the problem.
The government has stated that the New Series bank notes of Rs.500 and Rs.2,000 denominations will be introduced for circulation from 10th November, 2016. Since the infusion of Rs.2,000 bank notes will be monitored and regulated by RBI and the new series of banknotes will be distinctly different from the current ones in terms of look, design, size and colour, the current move will bring be the strongest move to tackle the fake currency problem. Will that be a permanent solution? Especially if the source of fake currency is a hostile neighbouring country as is often reported? Hard to say, but there is no doubt about its positive impact in the short and medium term.
The government has stated that the New Series bank notes of Rs.500 and Rs.2,000 denominations will be introduced for circulation from 10th November, 2016. Since the infusion of Rs.2,000 bank notes will be monitored and regulated by RBI and the new series of banknotes will be distinctly different from the current ones in terms of look, design, size and colour, the current move will bring be the strongest move to tackle the fake currency problem. Will that be a permanent solution? Especially if the source of fake currency is a hostile neighbouring country as is often reported? Hard to say, but there is no doubt about its positive impact in the short and medium term.
Thakur has a tough job ahead. He will have to do lot of due diligence while exchanging the invalid notes with either smaller denomination or freshly minted 500 rupee or 2,000 rupee notes of equivalent value for several weeks now. It is easy, when the amount that needs to be exchanged is small, but that may not always be the case as the cash that is lying outside the banking system is astronomically huge.
BLACK MONEY
Every bank manager in India will tell you, the locker facility is not only for securing your gold or valuable documents. Across the country, bank lockers also serve as a storage space for hard currency for some people who possess unaccounted money. As a study published by industry chamber Ficci last year indicates that India's black economy estimates can be anywhere between from 75 percent of the economy to 20 percent. Finance ministry quotes the World Bank study which pegged the size of the shadow economy for India at 20.7 percent of the GDP in 1999 and rising to 23.2 percent in 2007. And 20 percent of GDP means Rs 22.7 lakh crore, today. The large swathe of unaccounted hard currency, which forms part of the shadow economy, lying in outside the banking system - be it lockers or houses or offices, will now have to emerge or perish forever. Since the government has allowed exchange of old currencies only through the banking or post office channels, that too with proper documentation and KYC (know your customer) norms, banks will have a tough time managing such funds. By making the decision a surprise, the government has effectively plugged the possibility of hitherto loss making establishments earning huge revenues, and business suddenly flourishing to push some portion of such unaccounted money into the system.
As the Ficci study states, the sectors that are going to be most affected due to the purging of black money would be the real estate, manufacturing, jewellery and consumer goods segments, with real estate accounting for about a third of India's black money transactions. "We have just witnessed a tremendous step towards increased transparency in the Indian real estate industry. Stricter measures against black money have for long been required to help bring about greater transparency, give the Indian real estate sector more credibility and make it more attractive for foreign investors", says Anuj Puri, Chairman and India head of global real estate services firm Jones Lang LaSalle (JLL).
ON PREDICTED LINES
The government has been adopting a series of measures in the last two years, to curb the menace of black money in the economy. It began with the setting up of a Special Investigation Team (SIT) and the enactment of a law regarding undisclosed foreign income and assets. The amendment of the Double Taxation Avoidance Agreement between India and Mauritius and India and Cyprus followed and India reached at an understanding with Switzerland for getting information on bank accounts held by Indians with HSBC. It has been encouraging the use of non-cash and digital payments; amended the Benami Transactions Act and implemented the Income Declaration Scheme 2016. After the closure of the Income Disclosure Scheme, operational from 1st June to 30th September, 2016, the government had hinted that it would like to focus all our resources for bringing people with black money to books.
The ban on 500 and 1000 rupee notes is the latest. Will that be the end of black money?
Unlikely, though, with strict monitoring and enforcement of tax laws, the government can have a better control over the generation of black money, and to that extent, a welcome move.
Unlikely, though, with strict monitoring and enforcement of tax laws, the government can have a better control over the generation of black money, and to that extent, a welcome move.
Sensex makes 1,350 points recovery amid Donald Trump win, ends lower
-
The uncertainty in the Indian market seems to be over, with US electing Donald Trump as its 45th President.
With Hillary Clinton accepting defeat, the world markets recovered some losses post the kneejerk reaction on prospects of a Trump presidency.
The Indian market too recovered ground throughout the day owing to its strong fundamentals.
In a kneejerk reaction, the Sensex opened around 1,600 points lower to 25,902 level amid Hillary losing lead against Trump when counting for the US poll was in process. A majority of polls had indicated Hillary to win the election comfortably but a Trump victory made global markets nervous, after traders had taken positions betting on the former.
The Sensex staged a smart recovery intra day of around 1350 points, with losses in the realty space due to the ban on Rs 500 and Rs 1000 notes, still taking a toll. Nifty too fell 111 points to 8,432 level.
The realty stocks took a hit after the Central government's move to withdraw Rs 500 and Rs 1,000 currency notes from circulation to clamp down on the black money menace. Shares of realty companies saw large selling pressure as their business took a beating.
Shares of Godrej Properties, India Bulls Real Estate, DLF, Oberoi, Sobha, HDIL and Unitech were all down in Wednesday's trade.
With Hillary Clinton accepting defeat, the world markets recovered some losses post the kneejerk reaction on prospects of a Trump presidency.
The Indian market too recovered ground throughout the day owing to its strong fundamentals.
In a kneejerk reaction, the Sensex opened around 1,600 points lower to 25,902 level amid Hillary losing lead against Trump when counting for the US poll was in process. A majority of polls had indicated Hillary to win the election comfortably but a Trump victory made global markets nervous, after traders had taken positions betting on the former.
The Sensex staged a smart recovery intra day of around 1350 points, with losses in the realty space due to the ban on Rs 500 and Rs 1000 notes, still taking a toll. Nifty too fell 111 points to 8,432 level.
The realty stocks took a hit after the Central government's move to withdraw Rs 500 and Rs 1,000 currency notes from circulation to clamp down on the black money menace. Shares of realty companies saw large selling pressure as their business took a beating.
Shares of Godrej Properties, India Bulls Real Estate, DLF, Oberoi, Sobha, HDIL and Unitech were all down in Wednesday's trade.
These apps can help you eat, shop, travel if you are stuck with Rs 500 notes
-
The Modi government has made the biggest change in the financial system of our country since their election in 2014. Where this change is being lauded as a surgical strike on the black-money, there are numerous challenges faced by the common man who heavily depends on cash for every day transactions.
Though the government has thoughtfully placed provisions to make the transaction as smooth as possible, these guidelines won't be of much use for next two days. Hospitals, petrol pumps, railway stations and government dispensaries will be accepting the Rs 500 and Rs 1000 notes but over that there'll be no acceptance for these denominations.
Debit/credit cards are still functioning as usual and that will be the key to survival till the time you manage to exchange the worthless Rs 1000 and Rs 500 notes with Rs100 and Rs 50 notes.
Try to ration your Rs 100 and lower notes for urgent purposes only, for all your other needs let e-wallets and online shopping come to the rescue.
For food
Before you go out to eat, make sure the outlet receives debit or credit cards
Use online platforms and mobile applications like Zomato Order, Faasos or Swiggy to order food and pay online.
Use e-wallets or digital wallets like Paytm or Mobikwik wherever possible. Check for offers and cashbacks for added benefits.
For transport
If you use public transport, in bigger cities, metro should be the way to go. Most metro cards can be recharged using Paytm. In smaller cities try using ride-hailing applications like Uber, Ola or Jugnoo.
For shopping
Grocery and vegetable shopping will be one of the biggest challenges during this two day phase with no shopkeeper or vendor accepting any higher denomination notes.
You can use applications like Grofers or Big Basket for groceries and vegetables. Make sure you pay online at check out.
Regrettably, most of these options won't work with small towns and people will have to make deals on good will or exchange the currency as soon as possible. Hospitals, government pharmacies, railway stations will continue accepting these notes.
The Modi government has made the biggest change in the financial system of our country since their election in 2014. Where this change is being lauded as a surgical strike on the black-money, there are numerous challenges faced by the common man who heavily depends on cash for every day transactions.
Though the government has thoughtfully placed provisions to make the transaction as smooth as possible, these guidelines won't be of much use for next two days. Hospitals, petrol pumps, railway stations and government dispensaries will be accepting the Rs 500 and Rs 1000 notes but over that there'll be no acceptance for these denominations.
Debit/credit cards are still functioning as usual and that will be the key to survival till the time you manage to exchange the worthless Rs 1000 and Rs 500 notes with Rs100 and Rs 50 notes.
Try to ration your Rs 100 and lower notes for urgent purposes only, for all your other needs let e-wallets and online shopping come to the rescue.
For food
Before you go out to eat, make sure the outlet receives debit or credit cards
Use online platforms and mobile applications like Zomato Order, Faasos or Swiggy to order food and pay online.
Use e-wallets or digital wallets like Paytm or Mobikwik wherever possible. Check for offers and cashbacks for added benefits.
For transport
If you use public transport, in bigger cities, metro should be the way to go. Most metro cards can be recharged using Paytm. In smaller cities try using ride-hailing applications like Uber, Ola or Jugnoo.
For shopping
Grocery and vegetable shopping will be one of the biggest challenges during this two day phase with no shopkeeper or vendor accepting any higher denomination notes.
You can use applications like Grofers or Big Basket for groceries and vegetables. Make sure you pay online at check out.
Regrettably, most of these options won't work with small towns and people will have to make deals on good will or exchange the currency as soon as possible. Hospitals, government pharmacies, railway stations will continue accepting these notes.
Currency invalidation: small digital payments companies have an advantage over banks
-
You knew the time for digital payments had arrived when a colleague walked up and said he didn't know how to pay the chai guy today. Like many others, his physical wallet had a few Rs 500 notes. Now defunct, and as many on Twitter said, "good only for bonfire".
The czars of digital start-ups knew it on Tuesday night itself; they trumpeted their digital wallets and predicted what all could flow through digital pipes in India, going ahead. By noon on Wednesday, their PR machinery was on overdrive.
Paytm, India's largest mobile payments company reported 200 per cent rise in app downloads, 1,000 per cent increase in 'add money', 400 per cent jump in offline payment transactions, and a 200 per cent ballooning of transaction value.
Rival MobiKwik sent out a press release saying, "Buoyant on the new industry dynamics, MobiKwik set to achieve 10bn GMV by 2017". The company said its wallet registered a 40 per cent growth in app downloads within 18 hours of Rs 500 and Rs 1,000 notes pullout and that "the company's growth projections have been revised to register five times more growth".
The pullout of the higher denomination currency is also good news for many other digital payments start-ups as well as e-commerce companies. They stand to save on expenses if the digital channel replaces cash-on-delivery as the preferred medium for payments. But the real impact of small transactions moving over to wallet companies could be on the banks. After yesterday's decision, it is clear banks have to do more to retain mindshare as well as the new diamond - data.
Needling the banks is a host of start-ups - digital payments companies is just one group. FinTech companies in India include financial product comparison and aggregation companies, remittances firms, those that provide small loans, and start-ups that use technology to judge creditworthiness of a consumer or an SME in less than a day. Both trust and transactions are moving to these start-ups and could soon reflect in a bank's visibility of customer data or their behaviour patterns. It would reduce a bank's ability to cross-sell or upsell other products. The result: over time, they could become reliant on these start-ups for such data.
There's a war on cash - the net cost of cash is 1.7 per cent of India's real GDP in 2014/15, according to a report by Visa - but banks have an immediate battle to fight too.
You knew the time for digital payments had arrived when a colleague walked up and said he didn't know how to pay the chai guy today. Like many others, his physical wallet had a few Rs 500 notes. Now defunct, and as many on Twitter said, "good only for bonfire".
The czars of digital start-ups knew it on Tuesday night itself; they trumpeted their digital wallets and predicted what all could flow through digital pipes in India, going ahead. By noon on Wednesday, their PR machinery was on overdrive.
Paytm, India's largest mobile payments company reported 200 per cent rise in app downloads, 1,000 per cent increase in 'add money', 400 per cent jump in offline payment transactions, and a 200 per cent ballooning of transaction value.
Rival MobiKwik sent out a press release saying, "Buoyant on the new industry dynamics, MobiKwik set to achieve 10bn GMV by 2017". The company said its wallet registered a 40 per cent growth in app downloads within 18 hours of Rs 500 and Rs 1,000 notes pullout and that "the company's growth projections have been revised to register five times more growth".
The pullout of the higher denomination currency is also good news for many other digital payments start-ups as well as e-commerce companies. They stand to save on expenses if the digital channel replaces cash-on-delivery as the preferred medium for payments. But the real impact of small transactions moving over to wallet companies could be on the banks. After yesterday's decision, it is clear banks have to do more to retain mindshare as well as the new diamond - data.
Needling the banks is a host of start-ups - digital payments companies is just one group. FinTech companies in India include financial product comparison and aggregation companies, remittances firms, those that provide small loans, and start-ups that use technology to judge creditworthiness of a consumer or an SME in less than a day. Both trust and transactions are moving to these start-ups and could soon reflect in a bank's visibility of customer data or their behaviour patterns. It would reduce a bank's ability to cross-sell or upsell other products. The result: over time, they could become reliant on these start-ups for such data.
There's a war on cash - the net cost of cash is 1.7 per cent of India's real GDP in 2014/15, according to a report by Visa - but banks have an immediate battle to fight too.
Jewellery stocks sink up to 17% on note ban measures
-
Jewellery stocks on Wednesday took a sharp hit by plunging up to 17 per cent following the government's move to withdraw notes of higher denominations.
Shares of Tribhovandas Bhimji Zaveri fell 16.83 per cent, Gitanjali Gems plunged 6.55 per cent, PC Jeweller tanked 9.19 per cent, Tara Jewels slipped 2.25 per cent and Rajesh Exports dropped 2.38 per cent on BSE.
Sentiment took a hit following the government's surprise move to ban Rs 500 and Rs 1,000 currency notes in a bid to curb black money, triggering all-round selling, dragging down the key indices form their key levels.
The 30-share BSE benchmark Sensex crashed nearly 1,689 points in opening trade.
"This is a rare and black swan event for the country. On markets, this will have a long-term positive effect. A lot of flow and liquidity will be directed and brought in economy," said Mustafa Nadeem, CEO, Epic Research.
India is the world's largest gold consumer and imports a sizeable chunk of its total annual consumption of around 900-1,000 tonnes. The jewellery industry has welcomed the government's decision to ban old Rs 500 and Rs 1,000 notes, saying gold demand will rise as people will have more faith in the precious metal than the currency notes.
"It will create havoc for a little while and the economy will also destablise. But overall, it is going to be good for the country. In fact, the jewellery industry will thrive as people will have more trust on jewellery than currency notes," Gitanjali Gems Chairman and Managing Director Mehul Choksi said.
Jewellery stocks on Wednesday took a sharp hit by plunging up to 17 per cent following the government's move to withdraw notes of higher denominations.
Shares of Tribhovandas Bhimji Zaveri fell 16.83 per cent, Gitanjali Gems plunged 6.55 per cent, PC Jeweller tanked 9.19 per cent, Tara Jewels slipped 2.25 per cent and Rajesh Exports dropped 2.38 per cent on BSE.
Sentiment took a hit following the government's surprise move to ban Rs 500 and Rs 1,000 currency notes in a bid to curb black money, triggering all-round selling, dragging down the key indices form their key levels.
The 30-share BSE benchmark Sensex crashed nearly 1,689 points in opening trade.
"This is a rare and black swan event for the country. On markets, this will have a long-term positive effect. A lot of flow and liquidity will be directed and brought in economy," said Mustafa Nadeem, CEO, Epic Research.
India is the world's largest gold consumer and imports a sizeable chunk of its total annual consumption of around 900-1,000 tonnes. The jewellery industry has welcomed the government's decision to ban old Rs 500 and Rs 1,000 notes, saying gold demand will rise as people will have more faith in the precious metal than the currency notes.
"It will create havoc for a little while and the economy will also destablise. But overall, it is going to be good for the country. In fact, the jewellery industry will thrive as people will have more trust on jewellery than currency notes," Gitanjali Gems Chairman and Managing Director Mehul Choksi said.
General Awareness
India rises to second spot on global business optimism index: Report
-
According to the latest Grant Thornton International Business Report, India was ranked second on the optimism index during the third quarter. India improved its ranking by one spot in a global index of business optimism, with policy reforms and Goods and Services tax (GST) expected to become a reality soon.
About Grant Thornton Business Reports :
Grant Thornton is a leading business adviser that helps dynamic organisations to unlock their potential for growth.
- Their brand is respected globally, as one of the major global accounting organisations recognised by capital markets, regulators and international standards setting bodies.
- Over the last three years they are the fastest growing large accounting organization and are constantly evolving and developing alongside our clients.
- It is designed to help member firms’ clients, audit committees, regulators and the public, who make up our many stakeholders, understand us better and also strive to find out what is important to you and make it important to us.
About the Optimism Index,
According to the Grant Thornton International Business Report (IBR) – a quarterly global survey of 2,580 business leaders across 36 economies, 89 percent of the businesses have shown confidence in the stable government and expect economic recovery in the last quarter of 2015. India was followed by Ireland and Philippines with 88 and 84 percent respectively.
- The optimism, however, suffered a decline in the last few quarters due to slow growth of core sectors. The level of optimism has been continuously increasing with the second quarter witnessing 85 percent businesses expecting economic recovery. This was followed by 87 percent businesses indicating economic recovery in the third quarter.
- The stability of the Indian economy can also be gauged from the fact that India tops the chart on expectations of an increasing revenue (92 percent), selling prices (73 percent) andprofitability (76 percent).
- While there is expectation of a recovery, corporate India continues to cite regulations and red tape as a constraint on growth with 74 percent of the respondents to the survey suggesting bureaucratic hurdle continues to be an impediment in growth.
- Here too India ranks highest in the IBR survey. This highlights the need for the government to remove regulatory bottlenecks and bring in place a mechanism for faster approvals.
- The IBR also shows that 49% Indian businesses plan to ramp up investment in the new buildings and 52% plans to invest in plants & machinery in 2016.
- While 51% businesses expect an increase in R&D activities in the coming year, only 28% businesses are expecting country’s exports to grow.
- Indian businesses also plan to be on a hiring spree in the coming year as 68% businesses expect an increase in employment – ranking #2 in the survey, lack of skilled labour and finance continues to be top two concerns for Indian businesses.
- The geopolitical tensions and the structural stress building up in the developed and emerging economies would continue to present both opportunities and the inherent threats.
- Globally, business optimism heading into 2016 stands at net 36% – only slightly down from Q3 2015 and just above the 35% recorded a year ago.
- For the first time since the financial crisis, it is the EU which provides the bedrock of stability. Net 38% of EU businesses are optimistic about their economy over the next 12 months, exactly the same as in Q3 and Q1.
- It is noted that the US has seen optimism fall from 74% to 50% in Q4, the biggest fall of any of the 36 countries 2016 also looks much brighter for businesses in Asia Pacific and Latin America as both report big quarterly increases in optimism.
According to the latest Grant Thornton International Business Report, India was ranked second on the optimism index during the third quarter. India improved its ranking by one spot in a global index of business optimism, with policy reforms and Goods and Services tax (GST) expected to become a reality soon.
About Grant Thornton Business Reports :
Grant Thornton is a leading business adviser that helps dynamic organisations to unlock their potential for growth.
- Their brand is respected globally, as one of the major global accounting organisations recognised by capital markets, regulators and international standards setting bodies.
- Over the last three years they are the fastest growing large accounting organization and are constantly evolving and developing alongside our clients.
- It is designed to help member firms’ clients, audit committees, regulators and the public, who make up our many stakeholders, understand us better and also strive to find out what is important to you and make it important to us.
About the Optimism Index,
According to the Grant Thornton International Business Report (IBR) – a quarterly global survey of 2,580 business leaders across 36 economies, 89 percent of the businesses have shown confidence in the stable government and expect economic recovery in the last quarter of 2015. India was followed by Ireland and Philippines with 88 and 84 percent respectively.
- The optimism, however, suffered a decline in the last few quarters due to slow growth of core sectors. The level of optimism has been continuously increasing with the second quarter witnessing 85 percent businesses expecting economic recovery. This was followed by 87 percent businesses indicating economic recovery in the third quarter.
- The stability of the Indian economy can also be gauged from the fact that India tops the chart on expectations of an increasing revenue (92 percent), selling prices (73 percent) andprofitability (76 percent).
- While there is expectation of a recovery, corporate India continues to cite regulations and red tape as a constraint on growth with 74 percent of the respondents to the survey suggesting bureaucratic hurdle continues to be an impediment in growth.
- Here too India ranks highest in the IBR survey. This highlights the need for the government to remove regulatory bottlenecks and bring in place a mechanism for faster approvals.
- The IBR also shows that 49% Indian businesses plan to ramp up investment in the new buildings and 52% plans to invest in plants & machinery in 2016.
- While 51% businesses expect an increase in R&D activities in the coming year, only 28% businesses are expecting country’s exports to grow.
- Indian businesses also plan to be on a hiring spree in the coming year as 68% businesses expect an increase in employment – ranking #2 in the survey, lack of skilled labour and finance continues to be top two concerns for Indian businesses.
- The geopolitical tensions and the structural stress building up in the developed and emerging economies would continue to present both opportunities and the inherent threats.
- Globally, business optimism heading into 2016 stands at net 36% – only slightly down from Q3 2015 and just above the 35% recorded a year ago.
- For the first time since the financial crisis, it is the EU which provides the bedrock of stability. Net 38% of EU businesses are optimistic about their economy over the next 12 months, exactly the same as in Q3 and Q1.
- It is noted that the US has seen optimism fall from 74% to 50% in Q4, the biggest fall of any of the 36 countries 2016 also looks much brighter for businesses in Asia Pacific and Latin America as both report big quarterly increases in optimism.
No comments:
Post a Comment