Post- Budget Panel Discussion held at IIFT Kolkata

A Marketable Budget!

2^nd March 2010- The Kolkata wing of ‘Cash-O-Nova’, the Finance club at IIFT, organized a panel discussion on Union Budget 2010-11. The distinguished panel comprised of Dr. Ajitava RayChaudhari, former Head of Economics Department at Jadhavpur University, Mr. Gopal Aggarwal, Indirect Tax Consultant, PricewaterhouseCoopers and Mr. Chetan Panchamia, Head, Equity Research Division, Eastern Financial Ltd. The discussion was moderated by Dr. Ranajay Bhattacharya, an Economics graduate and Fulbright scholar and also a popular professor at IIFT.

Dr. Bhattacharya stated that like every year the current budget too reflected the tussle between economics and politics. He set the tone by stating that this budget was “less popular” than the previous one. However this view was opposed by Dr. RayChaudhary who stated the dual problem of growth and inflation that India faces and said that only innovative budgets would be the way out. He explained how strong social programmes and the rise of the Indian middle class had helped fuel demand but due to poor monsoons we had short supply. This was causing the inflation and he thought only long term measure such as projects under Bharat Nirman like building roads and in general agriculture infrastructure would be the way out. He stressed that budget being basically a one year plan could not cure the problem of inflation; rather what it could do is set the road map for the future. He also emphasized the need to remove the subsidies unless it was absolutely ensured that it benefitted the intended persons. He welcomed the idea of Unique Identification number (UID) programme as a solution to this problem. He did criticize the hike in indirect taxes as this would hit the poorer people more than the middle class and rich.

Mr. Aggarwal voiced a similar opinion on the increase in indirect tax. He reiterated that while the change in slabs made the budget a good one for the middle and high income families, the poor were not incentivized enough. However, he lauded the fact that the honourable finance minister had set a specific date (April 2011) for the Goods and Services Tax (GST). He saw this as a step which will remove the cascading effect of the various excise tax, customs tax etc. He also spotted a trend of a fall in the excise tax and increase in service tax. He said that this was an indicator that India was slowly but steadily moving towards service taxes. He rated the budget a modest 7 on a scale of 10.

Stock market’s reaction is an important indicator of the marketability of a budget and according to Mr. Panchamia the budget was a very marketable one. It not only addressed the question of fiscal consolidation but also stated that the aim was to get the fiscal deficit down to 5.5% of GDP. This was in fact what the market was looking forward to hear as this would mean a better rating from credit agencies, thereby ensuring more inflow of FII. However he did mention that the oil subsidy had caused the debt market to give thumbs down to the budget. He was of the view that markets would be bullish as long as we avoided global pitfalls.

We also witnessed a very good discussion at the end of the session with the floor been thrown open to the students. Prof. RayChaudhari pacified the concerns raised by the students regarding overheating of economy by emphasizing on the importance of technological development. He favoured more focus on developing infrastructure over doling out subsidies. Mr. Chetan was optimistic regarding the disinvestment of the PSUs and Mr. Aggarwal felt that there was a high probability of IT tax cuts being extended by the turn of the year. The session was closed on a positive note with the speakers reasserting that there were definite benefits from this budget such as the bringing of the GST. The final assessment termed it a budget on expected lines and definitely not a path breaking one.

By: Sayani Ghosh

MBA(IB)

2009-11, IIFT

Union Budget 2010- Some Highlights

Our honourable Finance Minister Dr.Pranab Mukherjee announced the union budget on 26^th February, 2010. The budget has been termed as disappointing, consolidating, relief oriented and good marketing budget by different people. But I would like to term it as a moderately positive budget. There are some pros and cons for everyone in the budget. Let’s take a look at the objectives behind this year’s budget-

1. To maintain a growth rate of around 8% per year.

2. To reduce the fiscal deficit of the country.

3. To have an inclusive development.

4. Encouraging disinvestment in PSU’s to the tune of Rs. 25000 crore.

5. To ensure good allocation of money in building of infrastructure.

6. To give relief to export sector as well as for agriculture.

7. To reduce the rising Inflation rate.

The budget aimed at achieving all these objectives but sadly, seldom does it happen that we achieve all that we wish. The key announcements that were made in this year’s budget were-

· Changes in the tax slab- A step towards Direct Tax Code

2010-11			2009-10
Income		Tax	Income	Tax
0-160000		Nil	0-160000	Nil
160000-500000		10%	160000-300000	10%
500000-800000		20%	300000-500000	20%
8,00,000 and Above	30%		5,00,000 and above	30%

· Increase in Minimum Alternate Tax from 15% to 18% of book profits.

· Current surcharge of 10 per cent on domestic companies reduced to 7.5 per cent.

· Rate reduction in Central Excise duties to be rolled back

· Standard rate on all non-petroleum products enhanced from 8 per cent to 10 per cent

· Helping growth in agriculture by helping in increasing agricultural production.

· Providing credit support to farmers.

· Providing around 1,73,000 crore for the development of Infrastructure.

· Rs 1,900 crore allocated to the Unique Identification Authority of India (UIDAI)

for 2010-11

The budget was basically aimed at benefitting the common man and as expected did not offer much to corporate India. Some rates like excise duty have been increased keeping in view the government’s plan to implement GST from next year. Similarly, the slabs for tax have been expanded keeping in mind the Direct Tax Code expected to be implemented from next year.

All in all, the budget focused on consolidation and I am hopeful that Indian economy will grow at a good pace this year too and the announcements made in the budget will only help achieve our dream of 9% growth each year.

Contributed By-

Arun Singhal

Coordinator

Cashonova, Finance Club

Indian Institute Of Foreign Trade

Budget analysis session at IIFT Delhi

Corporate Relations Committee of IIFT organised a budget analysis session on 2^nd March 2010. The objective of the session was to analyse various aspects of the budget from different perspectives. The speakers who graced the occasion were

1. Mr. Mohit Satyanand, who is an entrepreneur & Investment Advisor and is also a columnist with Outlook India,

2. Mr. M G Ramachandran, who is an Associate Director, PWC -Tax & Regulatory Services,

3. Prof. Rajan Ratna, Centre for WTO Studies, IIFT.

Ms. Madhuri Ghosh, the co-ordinator of CRC, introduced the speakers to the audience of over hundred.

Mr. Ramachandran started the analysis with his presentation. He elaborated all the changes made in the tax laws – both direct and indirect.

Next speaker was Prof Ratna who pointed out the fact that the budget was not for Aam admi. He justified his opinion by saying that the goods on which the excise duties have been cut like set top boxes, LCD TVs, mobile accessories are not what an ordinary man use heavily in his daily life. He also stressed on the fact of monitoring the funds allocated to various schemes.

The final speaker was Mr. Satyanand who is also a graduate from Delhi School of economics. He stressed upon the economic and political impact of the budget. He opined that the finance minister has taken a very optimistic assumption that fiscal deficit can be controlled by 3G auctioning and disinvestment provisions. Mr. Satyanand also said that we need to restore world confidence in India which is quite low at this point in time. This can be interpreted from the fact that the 10 year bond yields are trading at 7.92 % whereas in an unstable economy like Greece, it is trading at 7 %. So, Government could have done something to make world realise that India is a safe haven for investments.

After the discussions, the floor was opened for questions. Doubts over hike in MAT, rationale behind extra deduction by investing in Infrastructure bonds, deregulation of oil prices etc. came up, which was solved in a very comprehensive manner by the distinguished panellists.

At last, the vote of thanks was given by Madhuri and bouquets were presented to the speakers by the IMF (student body) president Arakkal Vedhus and Ms. Ishaani Gandhar, the convenor of CRC.

The session was very useful in the sense that three different speakers from diversified backgrounds helped us to understand the budget from three separate angles.

By-

Saurav Tibrewal

Co-ordinator, Cash-o-nova, The finance club

MBA(IB) 2009-11 batch

Indian Institute of Foreign Trade

Delhi Campus

GUEST LECTURE ON INTRICACIES OF THE CENTRAL BANK

On 19^th February 2010, Cashonova - the Finance Club of IIFT, organized a lecture at IIFT Kolkata with Samirananda Roy, retired General Manager, Reserve Bank of India. Mr. Roy has also served the Government of India in various other capacities. Presently, he is working with Disha Consultancy, a trust set up under the aegis of ICICI Bank and engaged in imparting financial education among poor people.

The lecture took us on a historical tour of the country’s Central Bank. Mr. Roy, having served the organization for quite a long period of time, presented an insider’s view of the organization. Beginning with the evolution under the colonial masters, the talk encompassed the post reform era of the Indian economy. The brief history of the organization was peppered with several anecdotes involving Mr. Roy and his counterparts, which added a personal touch to the discussion.

The lecture gave the students an insight into the various roles and responsibilities of India’s Central Bank. He reiterated the role of the RBI in the socio-economic affairs of the country. The students were made aware of the numerous obligations of RBI and the importance of an overarching mandate being handed over to it. The role of RBI during different periods of time and the implication of the policies as enunciated by it was made amply clear. “If the central bank of the country earns profit then country’s health is not good.” Such profound observations clearly led the students into appreciating the larger picture and understanding the interrelationship between business of the Central Bank and its impact on our country’s economy.

The lecture was interspersed with thought provoking questions by the students, making it seem more like a dialogue. The talk was drawn to a close with a vote of thanks and the presentation of a token of appreciation by the club coordinators.

Written By: Mritunjay Kumar, Batch of 2009-11, IIFT Kolkata

Welcome New Finance Club Coordinators!!

It has been a stretch of time, since a post came in on our blog. But what better time than the coming on board of the 2 new coordinators!! Congrats Neha and Arun. I am sure with them and the new administrator(To be selected soon!!) in place, the blog is sure to go miles.

I wish both of them loads of luck

Bablish Joshi
Finance Club Coordinator
2008-10

Celebrations Time!!

And the year sailed by!!

It is really a great feeling to witness an entire year of articles and contributions vignette through the blog.

It has been a righteous forum for students as they wrote to share their thoughts, with freedom and zeal.

It has been 1 full year of activities lined up on the blog, And in some time from now, as the baton passes through to the new batch, let's hope that the blog scale newer heights.

Thanks to all for making this forum a great success!!

Happy Blogging!!

The square rooted path to recovery

It has been almost a year since the Lehman collapsed and the world economy is still in its path to recovery. Speculations have been there about the path the recovery is going to take which is giving bulls the sleepless nights and economists are wary of predicting the new path the recovery is going to take. The recovery path charted out seems to be a square root shaped curve with every measure and indicator being back somewhat halfway of the normal level and then what seems to stay at a constant level for sometime. The global market capitalization fell from $75 trillion to $35 trillion post Lehman and market has now recovered $20 trillion of its value. In India sensex closed to 16454.45 after a fall from 21000, an increase in the excise collection over 22% for this month over the previous month and recovery of about $11 billion from the $12 billion capital outflows are a strong indicator that the economy is on its way back despite some hiccups but it is still a long way to say that it will bounce back to the previous levels. Emerging markets particularly the BRICs have returned to their pre Lehman levels but developed ones are still far below. These indicators support the fact about a slow recovery which still does not have the substance and the strength to take it upwards and to bring it back to the same level. For now the best way could be a pervasive action instead of waiting and watching economy bounce back and forth.

Contributed by:-

Divyank Gupta

Money by Magic!!

In the wake of recession, Central Banks around the world are scrambling to increase money supply to boost spending and ease terms of credit. One way is through Borrowings: internal and external but they are weighed down by unwillingness and high terms of credit. Another instrument is Quantitative Easing which literally means reducing the monetary burden by creating more money.



Traditionally, Banks lower interest rates to stimulate economy but with interest rates inching to near zero levels, the method has limited application. Quantitative Easing is a policy where Central Banks purchase government and corporate bonds (issued by Banks), financial assets etc.

As the supply of bonds decrease it increases their price. Consequently, their utility as an attractive investment option shrinks or the yield on bonds diminishes. Hence, the Banks that sold the bonds are flush with excess money and they can lend the money to individuals or businesses as the yield on bonds is lower. This results in greater and easier access to credit and spurs economic activity.
Alternatively, for an economy unilaterally pursuing Quantitative Easing can be negative. For example, for US if too much money is created, it will lead to inflation or even hyperinflation. With rising inflation, investors will search for other financial instruments like gold or other currencies which could weaken dollar.
Quantitative Easing was first used by Central Bank of Japan to counter deflation. Lately, both US and UK have used it vigorously. The Bank of England has announced its intention to increase its exposure to £175 billion of which £125 billion has already been created. Central Banks across the world are taking proactive steps to negate recession, but will they it out to be a magic wand or a hex, can only be conjured.

Contributed By:

Ankit Agarwal

Playing the Weather Game

Today weather is not just an environmental issue – it is a major economic factor, more so if the economy is agriculture driven as is the case with India. It has an impact on corporate revenues and earnings of virtually every industry, including agriculture, energy, entertainment, construction, travel and many others. Until recently, there were very few financial instruments which could help companies in hedging against weather risks. However, since the inception of the weather derivative, things have changed.
In contrast to insurance, weather derivatives cover low risks and high probability events as per certain customised policies. Currently, energy companies and energy-related businesses use Weather Futures. However, there have been growing concerns and signs of potential growth in weather futures trading among agricultural firms and companies involved in tourism and travel as well. As such, India also has witnessed a welcome response to weather derivatives owing to the fluctuations in weather conditions. In India, Rainfall insurance has wide spread implications because despite the technological advancements, India has to depend on monsoon rains, with lack of irrigation. Still, it has been most often used in the U.S. and the U.K.
No doubt, this form of derivative trading is highly applicable in context with the present scenario but this carries along with it certain disadvantages as well for the daily models on the flip side of the coin. It may be as follows:
• Complexity of the model
• Risk of model error due to more complexity in the structure.
• Modelling daily temperature which is no less than a herculean task
Thus, in spite of the above mentioned flaws in the system, chances are high that weather derivatives shall help countries redeem themselves from the clutches of the mercurial rains and work towards strengthening of the economies, thereby, giving a fillip to droughts and floods.

Submitted By:
Ritika Yadav

Subsidies - The Double Edged Sword

Subsidies are a double-edged sword which every country professes to promote in the domestic economy but not without negative implications. Basically, subsidies are a form of financial assistance granted by the Government to a business or an economic sector (Source:Wikipedia). The most important effect of subsidies on the economy is the income redistributive effect. Subsidies are expected to provide some kind of monetary benefit to the underprivileged section of the society, thereby increasing their welfare. However, there could be other types of subsidies, which need not necessarily result in income redistribution: for example, export subsidies. These are typically given to encourage export oriented units, who would otherwise (i.e., without the benefit of subsidy) have to charge much higher prices because cost of production may be high due to smaller scale of production etc. If they charge higher prices, they will lose market and hence will die. So sometimes subsidies are provided to help some specific types of industries, because, they are supposed to lead to larger economic gains like increased foreign exchange earnings etc. Further, there could also be hidden subsidies like tax holidays for export oriented units or emerging sectors in the economy.

Notwithstanding whichever type of subsidy, they will all ultimately lead to resource redistribution in some or the other form. To illustrate it with an example, lets assume that an investor has 2 crore, which she intends to invest in some industry. Now, there are two options available to her : one, in an industry which doesnt receive any subsidy (eg: opening a motor car dealership) and two: an industry which involves some kind of subsidy ( eg. cold storage unit). It is most likely that the investor will choose to invest in the industry which enjoys a subsidy because her income will be more from the subsidized industry. Therefore, investments generally tend to flow to those areas, which have some kind of subsidy. But, considering the situation when the economy needs more motor car garages than cold storage, even though subsidies are available for cold storage, then investment is likely to flow to cold storage than motor car garages, though the other way would have been more desirable. So at times, the subsidies tend to alter the flow of resources to certain sectors from their competing sectors.

Usually, therefore, subsidies are given to those sectors, which the policymakers think need to have greater resource flow.

Since subsidies usually have income redistributing effects, they are widely favoured as a policy choice. If properly designed and implemented, subsidies can give a big boost to an industry or a sector (for instance, tax holiday to software exports led to the software boom in India).

However, subsidies are harmful, if they are poorly targeted or do not reach the intended beneficiaries. Two examples of this are the food subsidy and the fertilizer subsidy granted by the Government of India.

In case of food subsidy, the Government buys food grains at higher prices (called Minimum Support Prices). It enables the farmers to receive higher income, and then sell the same grains at lower prices (called Common Issue Prices) to poor people. Since it buys at higher price and sells at lower price, the difference will have to be borne by the Government as subsidy. This subsidy is called food subsidy. The annual food subsidy bill amounted to Rs 43627 crore in 2008-09 (Source:Public information bureau release). However, just 42% of the deserving people are benefited by it, according to a Planning Commission study released in 2008. A major portion of the allotted money is consumed in the system itself for example, the carrying costs of the Food Corporation of India.

Like-wise, in case of fertilizer subsidy also, it goes to support inefficient fertilizer companies (mostly public sector units). So, the two most important subsidies in India accounting for 4% and 3.5% of the GDP respectively are actually wastage of public money.

Moreover, if subsidies are financed by debt, the Government's debt liability increases. When the debt liability of the government increases, after a certain point, the Government's major part of revenues will go for interest payments, thereby leaving very little scope for developmental work. So subsidies have many drawbacks, if they are not implemented properly. This has led to lot of criticism against the subsidies in India and also across the world.

Submitted By:

Seeona Pani

Sona he, Sada ke Liye!!

Gold investment worldwide has grown dramatically in the last five years, but compared with the total stock of financial assets, gold bullion investment is still just a tiny proportion.
Several factors are now stimulating gold investment by new pension fund money - as well as by private investors.

Demand from New Gold Investment Markets

Sales of gold jewellery across Asia are surging as the local economies boom and private investment grows. China's gold investment demand grew by 20% in 2007, while Indian consumers bought a record 900 tonnes – well over one-fifth of the total world market.
Gold buyers in Asia tend to think of their jewellery as a form of gold investment. Prevented from owning gold bullion until very recently, they buy gold to protect their savings from inflation and currency shocks.
That's why the most popular form of gold jewellery in Asia – heavy chains and bracelets – is known as "investment jewellery" in the gold industry.

Gold Investment vs. the Falling Dollar
As the US Dollar has slumped gold investment has outstripped the gains in all major world currencies.
In the five years to 2008 buying Euros to defend against the Dollar's decline has returned 47%. Gold investment, on the other hand, has returned 131%.
British, Australian, South African and Indian citizens undertaking gold investments in 2007 all enjoyed the gold price reaching record new all-time highs.
When Inflation Looms, Gold Investment Shines
The surge in crude oil prices has closely matched the gains in gold prices since 2003, but many people now thinking about gold investment will also want to consider the surge in world food prices, the boom in base metals such as copper, and the current all-time highs in the cost of shipping.
Rising demand for better housing and durable goods from Asian consumers is certainly a factor. But many gold investment analysts also point to the huge growth in credit and debt in the West.
The money supply in the United States has doubled in the last seven years. In Europe, growth in the money supply hit a near-30 year record in late 2007, increasing the appeal of gold investment as the value of each Euro in circulation threatens to shrink under the weight of new notes and electronic account balances.

Gold Investment: The Antidote to Complex Debt Defaults
The global credit crunch first bit when the alphabet soup of MBS, CDOs, CDS and ABCP turned sour as the US mortgage market turned down.
These instruments thrive in the opaque, off-balance-sheet environment of modern financial engineering.
But transparency is important. The modern world has audited accounts, and open exchanges, and 'public' companies for a good reason: because previous generations understood that when investment stops being open and transparent, and reverts to cosy secret deals, complex contracts, and big executive bonuses, then it is general investors who get cheated. Transparency helps stop these problems developing.
In stark contrast to the burgeoning complexity of modern securities markets gold investment remains uniquely simple , and - dealt the right way - uniquely transparent.
A solid gold investment sets you free from the risk of credit default or banking failures.

Submitted by :
Bishakha Kumar

Green Shoots Vs Yellow Weeds

'Green shoots' has been a favorite phrase amongst economists in recent months, as the slowing momentum of global economic decline raises the hopes that recovery from the recession may be near . After the collapse of Lehman Brothers in September 2008, the global financial system nearly melted down and the world economy went into free fall. Infact, the rate of economic contraction in the fourth quarter of 2008 and the first quarter of 2009 reached near-depression levels.
Come mid-2009 many pundits are suggesting that the recent data from the manufacturing, housing market, labor markets suggest that the “green shoots” of an economic recovery are blossoming. These tentative green shoots that we hear so much about these days may well be overrun by yellow weeds even in the medium term, heralding a weak global recovery over the next two years. First, employment is still falling sharply in the US and other economies. Indeed, in advanced economies, the unemployment rate will be above 10% by 2010. This will be bad news for consumption and the size of bank losses.

Second, in countries running current-account deficits, consumers need to cut spending and save much more for many years. Shopped out, savings-less, and debt-burdened consumers have been hit by a wealth shock. Third, weak profitability, owing to high debts and low economic – and thus revenue – growth, and constant deflationary pressure on companies’ margins, will continue to constrain firms’ willingness to produce, hire workers, and invest. Fourth, rising government debt ratios will eventually lead to increases in real interest rates that may crowd out private spending.
Finally there is a risk that the increase in commodity prices might choke off a sustainable recovery if it weighs on industrial production and consumption. The recent increase in commodity prices, has contributed to an increase in the Baltic Dry shipping index. Moreover although trade finance is no longer quite as impaired as at the turn of the year, global trade continues to be quite weak as evidenced from recent data from China, the US and other countries.
In India’s case, benchmark equity index ,BSE sensex has soared 92 per cent from 2009 lows in early March, mainly driven by foreign fund inflows of almost $7 billion. India Inc has already raised Rs 5,000 crore from qualified institutional placements (QIPs) so far in 2009 and announced plans to raise another Rs 24,000 crore. The government today announced that industry output, as measured by the index of industrial production (IIP), grew 7 percent which may indicate that the decline in factory production has been arrested and adds to hopes of economic recovery.
Recently at the CEO round table organized by The Economic Times on the theme: Green Shoots or Yellow Weeds: Is the Recovery for Real? , Wipro chairman Azim Premji was heartened by the return of stability but warned that a runaway fiscal deficit could end up harming the economy. On the positive side , The panelists unanimously felt that India was on a strong wicket and that immense opportunities exist in the Indian market for companies to tap into.
To sum up, green shoots are more visible as of now but there are yellow weeds too. It is the duty of the governments and the central bankers to protect the green shoots and weed out bubbles. If they fail to do so, bubbles would impact the global economies badly.

Submitted by:
Sachin Matpal

Accelerating disinvestments of Public Sector Enterprises

When India launched measures to reform the economy in 1991, one of the items on its agenda was the restructuring of public sector enterprises. What this implied was that the ownership structure of PSEs had to change gradually from public ownership of equity shares to private holding. The process by which ownership change was to be brought about was through disinvestments.

If the public sector was perhaps necessary in the early stages of India’s economic development, disinvestment has become necessary and desirable – in the prevailing regime of liberalization. Firstly, because majority of the PSU firms are loss making which managed to survive only on the state financial support, thus, not only weakening the economy but were diverting badly need funds away from where they were badly needed. Secondly, it is desirable as resources released by disinvestment can make the State perform its basic functions efficiently, reduce the debt and interest burden. Therefore as recently seen the emphasis in the new economic policy changes is on the supply side, by deregulation and delicensing certain sectors,introducing tax reforms, and through disinvestments and privatization of PSEs.

Economic survey 2009 emphasized the unsustainability of fiscal deficit with borrowed funds. Such borrowed funds were being used for current revenue expenditure, and the casualty was infrastructure development.And it is supposed that if the momentum of disinvestments is maintained the government would be able to garner substantial amounts that should help reduce the whopping fiscal deficit which is 6.8 per cent of the GDP.
The recent issue of IPOs of NHPC and OIL alongwith the proposals for a host of companies waiting for the government nod for disinvestment include Bharat Sanchar Nigam Ltd (BSNL), railway consultancy firm RITES, National Aviation Company, and Ircon is all part of the government’s fund raising plans. However, one of the issues on which no clarity has emerged is the manner in which the unlisted PSUs will be allowed to tap the capital market with an initial public offer. One view is that allowing unlisted PSUs to tap the capital market would not necessarily result in any proceeds for the centre and not help meet the government’s fiscal deficit. Hence, such IPOs should be structured in a manner that will enable the government to also divest its stake and mobilise resources to reduce the fiscal deficit.
Another view is that PSU disinvestment should not be used as an instrument to meet the government fiscal deficit. Instead, it should be used to subject the PSUs to market discipline so that its management can measure its performance from its stock valuation in the open market. Such a view also supports more listed PSUs to float new stock to raise resources from a reviving stock market.

What will emerge out as an outcome of the current disinvestment procedure of the government is yet to be seen. But it is an irony indeed that the private companies in the rest of the nations are being rescued by the Government’s bailouts and in India the reverse is happening through disinvestment.

Jaya Roopwani
MBA(IB)2009-11

Cashonova Quiz- 9

Hi All,

Sorry for the delay in the Cashonova Quiz , but neways here goes.
Hope to have loads of replies:-

1.












Name the film, remember this is a finance quiz

2.









Connect the 3 visuals (you have to think a bit laterally for this)

3.








The above companies are 5th, 4th, 3rd and 2nd in a particular list. Who is 1st?

4.












What does the above graph represent?

5.








Name the character

6.









Logo of which organisation?

7. This is a term coined during the financial crisis to describe a situation where the unemployment rate among men is far greater than that amongst women. What is this term called?

8.

----- Traders is a slang term to describe investors who look to trade in high - risk investments. ------ Traders prefer to invest in riskier endeavours and seek higher risk premium as they go on.Fill in the blanks

Drought- A Painful State

India’s vast farming economy is on the verge of crisis because of the drought that has hit the entire country this year. Out of the 604 districts 161 has been declared drought prone and the sowing of crops nationally has reduced by 20%. This fear of drought has pulled down the sensex by 626 points. Many economists have predicted that this drought will have a downward revision on the India’s growth rate of GDP.

Agriculture and allied activities accounts for a significant share in India’s GDP (17%), with over 60% population earning their livelihood via these activities. Drought has a direct impact on the production and the price of agri goods. Over 50% of the population that depends on agriculture and allied activities are marginal farmers or producers. Its expected that production of rice will fall by 10 million tons this year. This loss in production will lead to higher price, and marginal farmers or producers will end up buying goods at higher price to meet their basic amenities.

Agricultural Labourers are feeling the pain too. Due to low production, employment will also be severely affected. It has also been said that share of agriculture in rural income is down to about 40%. This will affect a large section of the population in India.

Its also feared that the season may turn out to be as bad as 2004 when the GDP fell by 1% from 8.5% to 7.5% due to similar causes. But this prediction of downward revision is likely to be proved wrong. It is predicted that India’s GDP will still grow at the rate close to 7% this year as predicted earlier.

Forecasting the impact that drought can have on our economy, government is taking drought relief measures that will protect the rural income and in turn help in lowering the impact of drought on growth rate.

Though economists are divided whether the drought will have much impact on the GDP or not, any impact on the production and price due to drought will have a direct impact on the employment and demand which in turn negatively affect GDP. Surely, drought is a serious issue that the government is facing. Relying on the old buffer stock for consumption problem may be a short term solution to the problem of drought, but it’s time for the government officials to put on their thinking caps on and take some substantial steps to cure this problem.

Submitted By:

Neha Daga

Chetan Raghav